March 26, 2014 Newsletter

Dear Friends,

Tangents:

Birthday today: Robert Frost, b. 1874

Happiness makes up in height for what it lacks in length. –Robert Frost.

This is for Stephen in Ottawa, with whom I spoke yesterday ~ it was snowing yesterday in Ottawa 🙂!

Dust of Snow

Robert Frost

The way a crow
Shook down on me
The dust of snow
From a hemlock tree

Has given my heart
A change of mood
And saved some part
Of a day I had rued.

Photos of the day

A newly discovered planet-like object, dubbed ‘Sedna’ is seen in this artist’s concept released by NASA. Astronomers have found a small icy body far beyond Pluto and the Kuiper Belt, a discovery that calls into question exactly what was going on during the early days of the solar system. JPL-Caltech/NASA/JPL/Reuters

A woman dressed as a model in the painting poses in front of ‘Revolution at Giverny: A Return To Women in Nature’ by Israeli artist Yigal Ozeri, during the Paris Art Fair, in Paris. Art Paris Art Fair, which runs from the 27th to the 30th of March 2014, brings together some 140 galleries from 20 countries under the dome of the Grand Palais. Thibault Camus/AP

Market Closes for March 26^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

March 26 (Bloomberg) — Canadian stocks dropped the most in almost two months, led by a decline in raw-materials producers, as comments by U.S. President Barack Obama raised concern the situation in Ukraine may escalate.

NovaGold Resources Inc. dropped 7.8 percent as the price of gold retreated. Turquoise Hill Resources Ltd. lost 1.6 percent after copper prices slid. AGF Management Ltd. added 2.2 percent after the investment-management firm’s quarterly revenue topped estimates.

The Standard & Poor’s/TSX Index fell 115.39 points, or 0.8 percent, to 14,184.10 at 4 p.m. in Toronto, for the biggest drop since Feb. 3. The gauge has fallen 0.2 percent this month, paring its gain for the quarter to 4.1 percent.

“Investors around the world have been waiting to see what kind of reaction the United States and the EU would really take regarding Russia’s annexation of Crimea beyond sanctions,”  Frederic Dickson, chief investment strategist who helps oversee $44.5 billion at D.A. Davidson & Co. in Lake Oswego, Oregon, said in a telephone interview. “Any hints of escalation in terms of rhetoric or action would probably trigger investors to stand back and take recent profits.”

Stocks declined as Obama warned that there were consequences for being complacent on the situation in Ukraine. Speaking in Brussels, Obama said Russia can’t run “roughshod” over its neighbors and its incursion into Crimea must be met with condemnation.

Seven of 10 main industries in the equities benchmark retreated today. Materials producers sank 2.9 percent to lead losses.

All 23 members of a gold-miner index declined, as the precious metal’s price slid to a five-week low. NovaGold Resources fell 7.8 percent to C$3.93 and Semafo Inc. lost 8.9 percent to C$3.67.

Turquoise Hill declined 1.6 percent to C$3.76. Copper fell from a two week-high in New York as inventories climbed and the dollar strengthened, reducing the metal’s appeal as an alternative asset.

Capstone Mining Corp. rose 4.7 percent to C$2.87. The company said results of a study indicate its Pinto Valley copper mine in Arizona will produce to 2026, eight years longer than previously estimated.

Bombardier Inc. fell 2.2 percent to C$4.05, pacing declines among industrial shares. The company delayed the first flight of its Learjet 85. Spokeswoman Annie Cossette said the delay was because of a “systems issue” and the company couldn’t say when the plane will fly.

Oculus VisionTech Inc. surged as much as 152 percent after Facebook Inc. paid $2 billion to buy a similarly named company. Trading in Oculus VisionTech, which makes technology for digital media and is based in Vancouver, was temporarily halted and the company said in a statement it was not associated with the Facebook deal. The social-media company acquired Oculus VR Inc., which makes a virtual-reality headset.

Oculus VisionTech closed 19 percent higher at 16 Canadian cents.

AGF Management added 2.2 percent to C$12.66. The firm reported revenue of C$116.9 million while analysts’ estimated C$114 million.

US
By Lu Wang and Callie Bost

March 26 (Bloomberg) — U.S. stocks fell, erasing gains that sent the Standard & Poor’s 500 Index to within three points of a record, on concern the situation in Ukraine may escalate after President Barack Obama said the international order is being tested.

Facebook Inc. sank the most since September 2012 after buying virtual-reality headset maker Oculus VR Inc. King Digital Entertainment Plc, the maker of the “Candy Crush” smartphone game, slumped 16 percent on the first day of trading. Citigroup Inc. lost 5.4 percent in extended trading after the Federal Reserve said the bank’s capital plan failed its stress tests.

The S&P 500 fell 0.7 percent to 1,852.56 at 4 p.m. in New York, with declines accelerating in the final hour of trading. The Dow Jones Industrial Average lost 98.89 points, or 0.6 percent, to 16,268.99. The Russell 2000 Index sank 1.9 percent for its biggest drop in almost two months. About 7.2 billion shares changed hands on U.S. exchanges, 6.8 percent more than the three-month average.

“Investors around the world have been waiting to see what kind of reaction the United States and the EU would really take regarding Russia’s annexation of Crimea beyond sanctions,”  Frederic Dickson, chief investment strategist who helps oversee $44.5 billion at D.A. Davidson & Co. in Lake Oswego, Oregon, said in a telephone interview. “Any hints of escalation in terms of rhetoric or action would probably trigger investors to stand back and take recent profits.”

The equities benchmark closed at its session low, erasing nine points in the final hour of trading. Today’s drop trimmed the index’s gain this year to 0.2 percent. It remains on course for a fifth consecutive quarterly gain, a feat it has accomplished just seven times since its creation in 1957.

Investors continued to sell riskier assets, as gauges of Internet and biotechnology shares sank, while the Russell small- cap index slid to the lowest since Feb. 19.

The Nasdaq Internet index retreated 2.5 percent for a sixth day of losses and is down 11 percent since a high on March 6 amid concern that some social-media and web stocks may have been risen too far too fast. The iShares Nasdaq Biotechnology exchange-traded fund lost 1.8 percent to the lowest level since Jan. 9.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as VIX, rose 6.5 percent to 14.93 today.

Obama, speaking in Brussels, warned of consequences of complacency in Ukraine and said Russia’s actions must be met with condemnation. Ukraine and the International Monetary Fund are nearing the end of bailout talks today as the U.S. and its European allies warned they’ll further penalize Russia if it intensifies the crisis after annexing Crimea.

Earlier gains in the S&P 500 followed economic data that showed the economy is expanding at a rate that investors speculated won’t spur faster interest rate increases.

Three rounds of bond purchases from the Fed have helped fuel economic growth, sending the S&P 500 up as much as 178 percent from its 2009 low. The rally has pushed the index’s price-earnings ratio to 17.2. While the multiple is near the highest level in four years, it’s close to the average since 1937, according to data compiled by Bloomberg and S&P.

Fed Bank of St. Louis President James Bullard said today policy makers haven’t committed to a specific month to end the bond purchases even as it would take a significant shift in the outlook to alter the path of tapering. Fed Chair Janet Yellen said on March 19 that the central bank’s stimulus program could end this fall and benchmark interest rates may rise about six months later.

American factories received fewer orders for machinery, communications gear and computers in February, signaling business investment is slowing after an unusually harsh winter put a damper on sales, data from the Commerce Department showed today. The S&P 500 rose 0.4 percent yesterday after data showed confidence among American consumers at a six-year high.

“It’s been a mixed picture here, further complicated by severe weather,” Richard Golinski, chief investment officer of San Francisco-based Bingham, Osborn & Scarborough, said in a phone interview. The firm oversees $3.3 billion. “While the market is a little choppy this year, the general sense is that investors are still optimistic. Investors have developed a confidence that the Fed can come to rescue and the environment is relatively safe.”

Nine of the 10 main S&P 500 groups dropped. Raw-materials producers and technology shares fell the most, with each losing at least 1.3 percent.

The Nasdaq Composite Index dropped 1.4 percent today and has fallen 3.1 percent since Yellen’s remarks.

Facebook slid 6.9 percent to $60.39. The world’s largest social network said yesterday that it will spend $2 billion to buy Oculus, expanding into wearable hardware for the first time.  Facebook shares rallied 158 percent in the past 12 months through yesterday.

Zynga Inc., a developer of games for smartphones and tablets, dropped 4.1 percent to $4.64. The stock surged 33 percent in the first two months of this year.

King Digital tumbled 16 percent to $19. The company yesterday raised $500 million in its initial public offering, pricing the shares in the middle of the marketed range.

Peabody Energy Corp. fell 2.7 percent to $15.80. UBS AG cut coal stocks including Peabody to neutral from buy, saying it expects “more financial distress” in the industry over the next one or two years amid an oversupply.

Citigroup dropped 5.4 percent to $47.45 as of 4:45 p.m. in New York after ending the regular session lower by 0.3 percent.  The lender was among five banks that failed Fed stress tests, while Goldman Sachs Group Inc. and Bank of America Corp. passed only after reducing their requests for buybacks and dividends.

Citigroup, as well as U.S. units of Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Banco Santander SA, failed because of qualitative concerns about their processes, the Fed said today in a statement. Zions Bancorporation was rejected as its capital fell below the minimum required. The central bank approved plans for 25 banks.

Health-care companies were the only group among 10 to advance in the S&P 500 today.

Laboratory Corporation of America Holdings climbed 4.2 percent to $98.64 while Quest Diagnostics Inc. increased 5.6 percent to $57.99. The companies will benefit after the House of Representatives last night released a bill that included an adjustment to clinical lab payment rates, Michael Cherny, an analyst with International Strategy & Investment Group LLC, said in a note.

DirecTV jumped 5.7 percent to $77.34. Dish Network Corp.  Chairman Charlie Ergen recently contacted DirecTV Chief Executive Officer Mike White to discuss a merger of the two satellite television companies, according to several people with knowledge of the matter. Dish rose 8.5 percent to $63.38.

PVH Corp. rose 3.6 percent to $121.43. The maker of apparel and footwear said it earned $1.43 a share in the fourth quarter, higher than the $1.40 projected earlier.

Have a wonderful evening everyone.

Be magnificent!

We ask ourselves is it possible to break through this heavy conditioning of centuries immediately

and not enter into another conditioning  – to be free,

so that the mind can be altogether new, sensitive,

alive, aware, intense, capable?

Krishnamurti, 1895-1986

As ever,

Carolann

The art of living is more like wrestling than dancing.

-Marcus Aurelius, 121-180 AD

Carolann Steinhoff, B.Sc., CFP®,CIM, FCSI

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7