March 4, 2014 Newsletter

Dear Friends,

Tangents:

This is Shrove Tuesday, otherwise known as Pancake Day, when many Christians around the world eat pancakes for dinner this night, ahead of the long period of Lenten fasting which begins tomorrow on Ash Wednesday.  The custom derives from the ingredients for pancakes: eggs, symbols of creation, flour for the staff of life, salt for wholesomeness and milk for purity.  Shrove Tuesday is a day of revelry, sounded off by the ringing of the Pancake Bell in many parts of the world, which was originally a signal for villagers to cease work and go home to make pancakes or join in the games and merrymaking.  It is the last day of Carnival in many Latin countries, including Brazil where Rio Carnival is a spectacular annual event that pits the city’s twelve best samba schools against one another in  showcasing ornate costumes and parades.

We watched the Oscars on Sunday night at  Elton John’s party and a good time was had by all.  He had Gordon Ramsay for the chef for the evening’s food.  Turns out my selection for best picture was a miss – I thought for sure American Hustle would win.  I got best actress right with Cate Blanchette – her  incredible acting performance in Blue Jasmine is difficult to top, and most of the other categories.  I was sort of surprised by how many Oscars Gravity scored.  Well that’s it for another year…

I am always reminded what a small world it really is.…I ran into one of my clients who lives in Toronto at the LA airport yesterday!

The secret of success is sincerity.
Once you can fake that, you’ve got it made.  –Samuel Goldwyn.

Photos of the day

Colored lights shine on the American section of the partially frozen Niagara Falls, during sub-freezing temperatures. Mark Blinch/Reuters

Revellers from the Unidos da Tijuca samba school participate in the annual Carnival parade in Rio de Janeiro’s Sambadrome, Brazil. Sergio Moraes/Reuters

Market Closes for March 4^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Eric Lam

March 4 (Bloomberg) — Canadian stocks rose, for the highest close since 2008, as global markets rebounded from the biggest drop in a month after Russia stepped back from escalating the crisis in Ukraine.

Magna International Inc. added 2.9 percent after analysts with Goldman Sachs Group Inc. and JPMorgan Chase & Co. raised their ratings for the company. Tourmaline Oil Corp. lost 1.1 percent after agreeing to buy Santonia Energy Inc. to increase its exploration properties in Alberta. Lundin Mining Corp. rallied 3 percent as copper prices rose for the first time in two weeks.

The Standard & Poor’s/TSX Composite Index rose 77.12 points, or 0.5 percent, to 14,289.86 at 4 p.m. in Toronto. The index has gained 4.9 percent this year.

“This is a very macro-driven tape with the Russia-Ukraine situation and whether or not it was going to break out,” said Brian Huen, managing partner at Red Sky Capital Management Ltd. in Toronto. He helps manage about C$225 million ($203 million).  “Putin’s commentary this morning has helped to stabilize things and you’re seeing broad gains. Gold, which people use as a protective trade, is selling off.”

Russian President Vladimir Putin said today he’s not considering taking control of Crimea and would send in troops to Ukraine only in an extreme case. The worst stand-off between Russia and the West since the Cold War ended sent stocks tumbling around the world yesterday. The MSCI All-Country World Index rebounded 1.3 percent today.

The S&P GSCI Index of 24 raw materials declined 0.8 percent after surging to the highest since Sept. 6 yesterday on speculation the threat to commodities from the Crimea tensions was exaggerated. Gold for April delivery fell 0.9 percent to settle at $1,337.90 an ounce in New York.

AuRico Gold Inc. declined 4.7 percent to C$5.27 and China Gold International Resources Corp. lost 1.8 percent to C$3.35.

Tourmaline Oil fell 1.1 percent to C$49.74 after agreeing to buy Santonia Energy for C$189.1 million in stock. The board of Santonia has approved the deal, with shareholders to vote on the sale in late April.

Major Drilling Group International Inc. jumped 8 percent to C$9.68, the biggest gain since September 2012, after Kam Mangat with Salman Partners Inc. raised the stock’s rating to buy from hold, citing the company’s improving gross margins and strong balance sheet.

Lundin Mining rallied 3 percent to C$5.22 and First Quantum Minerals Ltd. added 1.8 percent to C$21.34 as copper prices rebounded from a three-month low.

Valeant Pharmaceuticals International Inc. added 2.1 percent to C$162.20 as health-care stocks added 1.8 percent as a group. Nine of 10 industries in the S&P/TSX advanced on trading volume 16 percent lower compared with the 30-day average.

Valeant’s Bausch & Lomb unit has sued Novartis AG’s Sandoz unit claiming a generic-drug application violates a patent for the Bepreve eye drug.

Magna International, the auto-parts maker, rallied 2.9 percent to a record C$106.71. The stock has advanced for five days and posted better-than-forecast earnings yesterday. Patrick Archambault, an analyst with Goldman Sachs, and Ryan Brinkman of JPMorgan raised their ratings on the stock to neutral.

USA
By Inyoung Hwang and Callie Bost

March 4 (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding to a record after its biggest loss in a month, as comments from Russian President Vladimir Putin signaled the Ukraine crisis won’t immediately escalate.

Qualcomm Inc. gained 3.4 percent after raising its dividend and boosting its buyback plan. Abercrombie & Fitch Co. advanced 6.7 percent after Credit Suisse Group AG lifted its rating on the teen-apparel retailer. RadioShack Corp. plunged 17 percent after sales missed analysts’ estimates.

The S&P 500 jumped 1.5 percent, its largest gain this year, to an all-time high of 1,873.91 at 4 p.m. in New York. The Dow Jones Industrial Average advanced 227.85 points, or 1.4 percent, to 16,395.88. The Nasdaq Composite Index climbed to the highest since April 2000 and the Russell 2000 Index advanced the most in a year. About 7.7 billion shares changed hands on U.S. exchanges, 17 percent higher than the 30-day average.

“On a very short-term basis, everything you’ve seen in the market has everything to do with the Ukraine,” Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which oversees about $160 billion, said by phone. “But over last 2 weeks, the market has moved higher with the exception of yesterday. The bet has been made that the economy continues to expand and most of the disruption we’ve seen has been from the weather.”

The S&P 500 fell 0.7 percent from a record yesterday, the most since Feb. 3, joining a global selloff in equities on concern that Russia’s military presence in Ukraine could lead to a larger conflict. Stocks rallied today after Putin said he’s not considering taking control of Crimea and would send in troops to Ukraine only in an extreme case.

The MSCI All-Country World Index increased 1.3 percent, rebounding from its biggest drop in a month. The Europe Stoxx 600 jumped 2.1 percent and Russia’s Micex Index climbed 5.3 percent after $55 billion was erased from the value of the country’s equities yesterday. The yen weakened against all of its 16 major peers and gold fell 1.1 percent.

In his first public remarks since Ukraine said its Crimean peninsula had been taken over by Russian forces, President Putin said he reserved the right to use force to defend ethnic Russians while there’s “no such necessity” at present. U.S. Secretary of State John Kerry arrived in Kiev to offer an aid package to Ukraine’s interim government, as President Barack Obama challenged Putin’s rationale for intervening.

“The drop yesterday and the bounce today are indicative of a lot of nervous investors who are trying to rationalize their long positions,” Tom Stringfellow, president and chief investment officer of San Antonio-based Frost Investment Advisors LLC, which manages about $10 billion, said by phone. “Our investment process thesis long-term has not changed. I am still an optimist that GDP growth will be higher than what downward revisions are. There are underpinnings in the economy that are churning along.”

The S&P 500 yesterday erased its gain for the year after the gauge rallied 4.3 percent in February. Investors have been speculating that recent weakness in data from housing to jobs was caused by inclement weather and that the Federal Reserve will continue to support the economy.

The Labor Department will release its February jobs report on March 7. Economists estimate employers increased the pace of hiring to 150,000 workers after adding 113,000 in January, according to a Bloomberg survey.

Data yesterday showed manufacturing expanded at a faster pace than projected in February, a sign the industry was beginning to overcome bad weather across much of the country. A separate report showed consumer spending rose in January at a faster rate than forecast.

“As far as economic releases go, yesterday was pretty good, and of course everybody is looking toward the job report this Friday,” Walter Todd, who oversees about $990 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said by phone. “Perhaps investors ignored the releases yesterday and are now taking a look at them.”

Stocks are set to enter the sixth year of a bull market that started March 9, 2009. Three rounds of stimulus have helped push the S&P 500 up 177 percent from a 12-year low.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, plunged 12 percent to 14.10 today. Europe’s VStoxx Index dropped 15 percent to 18.65 after jumping 30 percent yesterday, its biggest gain since the European debt crisis in August 2011.

All 10 main industries in the S&P 500 advanced at least 0.8 percent. Health-care and financial shares rose at least 1.9 percent to lead gains. American Express Co. jumped 2.9 percent to $92.61 for the biggest advance in the Dow. Pfizer Inc. gained 2.2 percent to $32.69, the highest since 2004.

Facebook Inc. climbed 2.1 percent to $68.80, snapping a five-day streak of declines. The social-network site owner may buy Titan Aerospace for $60 million, according to TechCrunch, which cited an unidentified person with access to information about the deal.

Qualcomm jumped 3.4 percent to $76.11. The biggest provider of mobile-phone chips boosted its quarterly dividend by 20 percent to 42 cents a share, while giving itself leeway to buy back an additional $5 billion in shares.

J.C. Penney Co. climbed 4.2 percent to $8.29. Standard & Poor’s changed  the retailer’s outlook to stable from negative, citing “modest improvements during the fourth quarter.” S&P also said the company’s revised strategy is “beginning to stabilize the business.”

Abercrombie & Fitch added 6.7 percent to $41.68. Credit Suisse raised its recommendation on the New Albany, Ohio-based company to outperform, similar to a buy rating, from neutral, saying a more competitive pricing strategy, tighter cost controls and inventory management, among other initiatives, will help boost earnings.

SunEdison Inc. gained 12 percent to $20.89, the highest since July 2009. Morgan Stanley raised the St. Peters, Missouri- based provider of solar energy technology to overweight, similar to a buy rating.

RadioShack tumbled 17 percent, the biggest drop since October, to $2.25. The electronics chain posted fourth-quarter sales that missed analysts’ estimates and said it would close as many as 1,100 locations.

Have a wonderful evening everyone.

Be magnificent!

Watching and listening are a great art.

By watching and listening we learn infinitely more than we do from any books.

Books are necessary, but watching and listening sharpen your senses.

Krishnamurti, 1895-1986

As ever,

Carolann

Listen to many, speak to a few.

-William Shakespeare, 1564-1616.

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