March 3, 2015 Newsletter

Dear Friends,

Tangents:

On this day in 1931, “The Star-Spangled Banner” became the official national anthem of the U.S. after President Herbert Hoover signed it into law. American lawyer Francis Scott Key composed the lyrics to the song on September 14, 1814, after watching Britain’s overnight bombardment of Fort McHenry in Maryland during the War of 1812. -Wall Street Journal, 3/3/2015.

PHOTOS OF THE DAY

The Villarica volcano erupts near Pucon, Chile, Tuesday. The volcano erupted around 3 a.m. local time (0600 GMT), according to the National Emergency Office, which issued a red alert and ordered evacuations. Aton Chile/AP

Cats crowd the harbor on Aoshima Island in the Ehime prefecture in southern Japan. An army of cats rules the remote island, curling up in abandoned houses or strutting about in a fishing village where felines outnumber humans six to one. Thomas Peter/Reuters

Market Closes for March 3^rd, 2015     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks dropped the most in a month after Bank of Nova Scotia led financial shares lower as profit came up short of analysts’ estimates and materials producers tumbled.

     Scotiabank, the nation’s third-largest lender, lost 1.7 percent after domestic and international banking earnings declined. Major Drilling Group International Inc. sank 7.1 percent after reporting a third-quarter loss. Air Canada, the nation’s largest airliner, rose 1.1 percent to snap a four-day loss.

     The Standard & Poor’s/TSX Composite Index fell 130.20 points, or 0.9 percent, to 15,133.85 at 4 p.m., the biggest drop since Jan. 28. The benchmark Canadian equity gauge has advanced 3.4 percent this year, the fourth-worst performing market in the developed world, ahead of the U.S., Singapore and Switzerland.

     Scotiabank’s drop paced a 1.2 percent retreat drop among financial stocks, which account for one-third of the broader index by weighting. All but one of the 10 industries in the S&P/TSX retreated, with trading volume 13 percent lower than the 30-day average. Raw-materials shares sank 2.2 percent, the most in the benchmark gauge.

     Scotiabank, the last of the country’s six big lenders to report results, joins Bank of Montreal in posting profit that missed analysts’ expectations. Bank of Montreal retreated 1.2 percent.

     Valeant Pharmaceuticals International Inc. lost 1 percent. Salix Pharmaceuticals Inc., the drugmaker to be acquired by Valeant, said U.S. regulators are investigating possible securities law violations connected to the company’s inventory accounting.

     Canada’s economy grew faster than expected in the fourth quarter, at a 2.4 percent annualized pace, Statistics Canada said. The agency also raised third-quarter growth to 3.2 percent from an initially reported 2.8 percent.

     The growth is in line with the 2.5 percent estimated by Bank of Canada Governor Stephen Poloz who is scheduled to release his next interest-rate decision March 4. The central bank unexpectedly cut rates Jan. 21.

     BlackBerry Ltd. fell 1.2 percent, reversing an earlier gain. The smartphone maker unveiled a 5-inch device targeting the lower end of the market. The Leap, which comes in white and gray, will cost $275, less than half of what the latest smartphones from Apple Inc. and Samsung Electronics Co. go for.

US

By Jeremy Herron and Emma O’Brien

     (Bloomberg) — U.S. stocks fell, with benchmark indexes retreating from record highs, as car and technology shares slipped. European equities slid before the release of details on economic stimulus, while metals sank and crude oil rallied.

     The Standard & Poor’s 500 Index dropped 0.5 percent from an all-time high by 4 p.m. in New York, its worst day since Jan. 30. The Nasdaq Composite Index retreated back below 5,000 points. Ford Motor Co. sank as sales missed estimates and Seagate Technology Plc tumbled. The Stoxx Europe 600 Index fell 0.9 percent as Barclays Plc led banking shares lower. The Bloomberg Dollar Spot Index retreated 0.1 percent. Copper lost 1.5 percent on concern China’s economy is weakening. Crude oil jumped in London after an attack on Libya’s biggest oil port.

     Stocks took a breather after the Nasdaq Composite climbed to within 1 percent of its dot-com era record, with Mylan NV driving biotechnology shares lower. Economic data this week may provide clues as to the timeline for Federal Reserve interest- rate increases, with central banks outside the U.S. easing monetary policy to support growth and fight deflation. The European Central Bank issues more details of its 1.1 trillion euro ($1.2 trillion) bond buying plan on Thursday.

     “We’ve had some fantastic gains recently putting stocks at or near all-time highs so the markets are due for a little bit of consolidation,” Kevin Caron, a market strategist and portfolio manager who helps oversee $170 billion at Stifel Nicolaus & Co. in Florham Park, New Jersey, said by phone. “There’s not a lot to move the market, so perhaps this is some momentum carrying the market a little bit.”

     The S&P 500 hit fresh records on four occasions in February, while the Dow Jones Industrial Average — which also retreated from an all-time high Tuesday — climbed 5.6 percent for its best month since January 2013.

     It has taken two bull markets and more than 4,500 days for the Nasdaq Composite to get close to making up all the ground lost in the dot-com collapse. The index surged 7.1 percent in February, its best month since 2012.

     Among stocks moving Tuesday, Micron Technology Inc. retreated 5 percent after Nomura Holdings Inc. lowered its rating on the shares. Mylan, the Canonsburg, Pennsylvania-based drug maker, sank 4.2 percent. Pharmaceutical companies and drug developers have been leading the Nasdaq Composite’s gains this year.

     Ford slipped 2.4 percent. Light-vehicle sales fell 2 percent after analysts had projected an increase, while General Motors Co., Fiat Chrysler Automobiles NV and Nissan Motor Co. rose less than estimated as cold weather slowed showroom traffic. GM shares added 0.5 percent.

     Alibaba Group Holding Ltd. tumbled 2.9 percent to the lowest level since it began trading in September, after the company was told to leave Taiwan within six months over alleged investment violations. At the same time, rival online retailer JD.Com Inc. reported better-than-projected earnings, fueling concern that Alibaba’s sales growth may be decelerating.

     Best Buy Co. rose 1.4 percent. The world’s largest electronics chain said it will offer a special dividend of 51 cents a share, or $180 million. Best Buy also said it will repurchase $1 billion in shares over the next three years.

     Stock buybacks vaulted to a record in February, with chief executive officers announcing $104.3 billion in planned repurchases. That’s the most since TrimTabs Investment Research began tracking the data in 1995 and almost twice the $55 billion bought a year earlier.

     Companies in the S&P 500 have spent more than $2 trillion on their own stock since 2009, underpinning an equity rally in which the index has more than tripled. They were on pace to spend a sum equal to 95 percent of their earnings on repurchases and dividends in 2014, data compiled in October showed.

     Treasury yields touched the highest level in more than a week as corporate-bond issuance, led by Actavis Plc’s second- biggest sale on record, drew demand away from U.S. securities. Rates on 10-year Treasury notes rose four basis points, or 0.04 percentage point, to 2.13 percent.

     Actavis wrapped up the $21 billion debt sale after receiving orders equal to more than four times the offering size. Company bond issuance in the U.S. headed for its second- busiest day ever, with $28 billion expected from Actavis Plc and Exxon Mobil Corp. alone, as central bank stimulus pushes investors to avoid low-yielding government debt.

     The Stoxx 600 retreated Monday from a seven-year high before falling on Tuesday by the most in a month. The Stoxx 600 is still up 13 percent in 2015, its best-ever start to a year, after Greece reached a bailout deal and the ECB announced its quantitative easing plans.                         

     “This week is very much about the ECB and the jobs report,” said Witold Bahrke, an asset-allocation strategist at Nomura International Plc in London, referring to monthly U.S.payrolls data due on Friday. “We had a very strong run in the recent week. It’s only natural that people will step a bit more into the sidelines, especially when you’re heading into these big events at the end of the week when we could see larger moves.”

     ECB president Mario Draghi may present details of his QE plans at a Governing Council meeting in Nicosia on Thursday. Policy makers will also unveil their first growth and inflation forecasts for the euro area in 2017.

     Barclays dropped 3.2 percent. The lender set aside an extra 750 million pounds ($1.2 billion) to cover the cost of settling the probe into alleged currency rigging and posted a 32 percent drop in full-year pretax profit at its investment bank.                        

     Denmark’s foreign currency reserves rose to a record in February after the central bank dumped kroner on the market to beat back speculators and defend the nation’s euro peg.

     The Canadian dollar rose the most in two weeks after a report showed the economy grew at a faster rate than estimated with policy makers meeting Wednesday to consider further monetary stimulus.

     Brazil’s real fell more than 1 percent to the lowest level in a decade at 2.9342 per dollar. Signs of conflict between President Dilma Rousseff and lawmakers indicated she may struggle to win support for efforts to cut deficits.

     Ukraine’s hryvnia jumped 8.5 percent versus the dollar to 24.25. The country’s central bank raised its benchmark interest rate to 30 percent from 19.5 percent as policy makers struggle to support a currency that’s lost 60 percent in the past 12 months amid conflict involving Russia in its eastern regions.                       

     Australia’s dollar rose as much as 1 percent after the central bank unexpectedly left key rates at a record-low 2.25 percent Tuesday. A 25 basis-point reduction was forecast by 18 of 29 economists in a Bloomberg News survey, with swaps traders pricing better than 60 percent odds of a cut before the decision.

     Emerging-market stocks fell for a third day as concern grew China will target slower economic growth. The MSCI Emerging Markets Index dropped 0.3 percent in a third day of losses. The gauge is still up 3.1 percent this year as countries from India to Turkey cut rates to preserve growth and amid a rebound in Brent crude, which is up 32 percent from its lowest price since March 2009.

     Beijing may set a China economic-growth target of around 7 percent for this year, the Xinhua News Agency reported. That’s below the 2014 target and may be announced at the start of the National People’s Congress on Thursday.

     Stocks in Shanghai posted the biggest loss in a month amid speculation new-share sales will divert funds from existing equities.

     Brent climbed 2.5 percent to $61.02 a barrel after sinking 4.9 percent on Monday. The port of Es Sider wasn’t damaged in an attack by a plane belonging to Libya’s Islamist-backed government, the nation’s Petroleum Facilities Guard said.

     West Texas Intermediate crude rose 1.9 percent to $50.52 a barrel, settling above $50 for the first time since Feb. 25 as investors awaited U.S. government data on oil supplies in the world’s biggest consumer of the commodity.

     Stockpiles probably expanded by 3.95 million barrels last week, extending a record high, according to a Bloomberg News survey of analysts.

     Copper fell from its highest close in seven weeks, with futures down 1.5 percent to $2.6565 a pound after a 1.4 percent drop in the metal in London. Nickel lost 1.3 percent with zinc on the London Metal Exchange, while gold — viewed as a hedge against inflation — retreated 0.2 percent in the spot market to $1,203.90 an ounce. Silver slid 0.7 percent.
 

Have a wonderful evening everyone.

Be magnificent!

We must always bear in mind

that we are not going to be free,

but are free already.

Every idea that we are bound is a delusion.

Every idea that we are happy or unhappy

is a tremendous delusion.

Swami Vivekananda

As ever,
 

Carolann

Don’t be overly concerned about your heirs.  Usually, unearned funds

do them more harm than good.

                                                -Gerald M. Loeb, 1899-1974

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7