March 7, 2014 Newsletter

Dear Friends,

Tangents:

On this day in …

1869 – The Suez Canal opened.

1876 – Alexander Graham Bell received a patent for the telephone.  If only he could walk down a street in any city today to see the evolution of his invention.

1933 – Monopoly was invented.  I hear it and many other board games are enjoying a resurgence in popularity as people tire of solo screen games and seek social interaction with others.

Tomorrow, March 8^th, on TV, The Trip to Bountiful airs on Lifetime.  “It is that rare gem of a story that celebrates simple values in a quiet but powerful narrative about a matriarch determined to see her hometown one more time.  Starring Cicely Tyson in the lead role, the Lifetime special also includes Vanessa Williams and Blair Underwood.  Horton Foote originally wrote the play for television in 1953, and it went on to Broadway the following year.  It later became a feature film, starring Geraldine Page in a 1985 Oscar-winning performance.”

Photos of the day

Dave LeMote wipes down a post clock at Electric Time Company, Inc. in Medfield, Mass. Most Americans will set their clocks 60 minutes forward before heading to bed Saturday night, but daylight saving time officially starts Sunday at 2 a.m. local time (0700GMT) Elise Amendola/AP

Fishermen pull their net from the sea as the sun sets on Gampong Jawa beach in Banda Aceh, Aceh province, Indonesia. Heri Juanda/AP

Market Closes for March 7^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Nikolaj Gammeltoft and Callie Bost

March 7 (Bloomberg) — Canadian stocks rose, capping a fifth week of gains, on signs economic growth is strengthening after U.S. employers added more workers than forecast.

Constellation Software Inc. soared 12 percent after reporting fourth-quarter earnings that beat estimates. Secure Energy Services Inc. rallied 6.7 percent after the stock was recommended by RBC Capital Markets. Health care and technology stocks increased at least 1.4 percent for the biggest gains among 10 industries in the Standard & Poor’s/TSX Composite Index.

The benchmark gauge added 27.16 points, or 0.2 percent, to 14,299.08 at 4 p.m. in Toronto. The index has gained 5 percent this year and trades near the highest level since June 2008.

The 175,000 gain in U.S. employment last month followed a revised 129,000 increase in January that was bigger than initially estimated, Labor Department figures showed today. The median forecast of economists in a Bloomberg survey called for a 149,000 advance in February. The jobless rate unexpectedly climbed from a five-year low, rising to 6.7 percent from 6.6 percent.

Canadian employment fell for the second time in three months in February, a surprise decline led by a drop in government workers. Employment fell by 7,000 and the jobless rate was unchanged at 7.0 percent, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News projected a 15,000 job increase and an unchanged jobless rate, according to median forecasts.

Nine of 10 sectors in the S&P/TSX advanced. Health-care companies surged 3 percent and technology stocks rose 1.4 percent. Consumer-discretionary shares added 0.7 percent.

Constellation Software jumped 12 percent to a record C$265.48. Earnings for the quarter were $3.26 per share, higher than the $2.50 profit per share analysts predicted.

Energy companies increased 0.7 percent. Penn West Petroleum Ltd. soared 8.2 percent to C$9.41, while Paramount Resources Ltd. surged 3.4 percent to C$45.84. Birchcliff Energy Ltd. rose 2.7 percent to C$10.24.

Secure Energy climbed 6.7 percent to a record C$18.70. RBC Capital Markets analyst Dan Macdonald raised the stock’s rating to outperform, the equivalent of buy, from sector perform, with a target price of C$21.00 a share.

Canexus Corp. plunged 13 percent to C$5.24, the lowest level since December 2009. National Bank of Canada Financial Inc. analyst Patrick Kenny cut the chemical manufacturer’s rating to underperform, similar to sell, from sector perform. Kenny’s 12-month target price for the shares is C$5.

USA
By Nikolaj Gammeltoft and Callie Bost

March 7 (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index erasing losses to close at a record, as data showing stronger-than-forecast jobs growth overshadowed concern the situation in Ukraine could worsen.

Nike Inc. rose 1.6 percent on a report the company signed quarterback Johnny Manziel to a marketing deal. Foot Locker Inc. jumped 8.8 percent after fourth-quarter adjusted profit and sales topped estimates. Safeway Inc. slid 2.2 as investors weighed potential antitrust hurdles to an offer for the company. Peabody Energy Corp. plunged 5.3 percent for the biggest drop in the benchmark index.

The S&P 500 rose 0.1 percent to a record 1,878.04 at 4 p.m. in New York. The index erased losses of as much as 0.3 percent in the final hour of trading. The Dow Jones Industrial Average added 30.83 points, or 0.2 percent, to 16,452.72. About 6.9 billion shares changed hands on U.S. exchanges, 4 percent above the three-month average.

“The economy is continuing to gradually improve,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $150 billion of assets, said in a telephone interview. “We’ve had very good market performance over the last several weeks in spite of great uncertainty on the geopolitical front.”

The S&P 500 added 1 percent this week. The gauge recorded its biggest drop in a month on March 3 as the Ukraine situation flared. Signs of easing tensions the next day gave the index its best advance this year. It rose 0.2 percent yesterday after unemployment claims fell to a three-month low.

Today’s jobs report showed the 175,000 gain in employment last month followed a revised 129,000 increase in January that was bigger than initially estimated. The median forecast of economists in a Bloomberg survey called for a 149,000 advance in February. The jobless rate unexpectedly climbed from a five-year low, rising to 6.7 percent from 6.6 percent.

The data “is obviously good news and it suggests the economy remains on an upward track,” Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees $50 billion, said in a telephone interview. “This report is going to be very supportive for those who think the growth slowdown is temporary.”

The Federal Reserve is trying to determine how much of the recent economic cooling has been due to weather. The jobs figures today showed 601,000 Americans weren’t at work because of weather during the survey week, the most since 2010.

Fed Bank of New York President William C. Dudley today said he sees a “reasonably favorable” outlook for the U.S. economy, even as elevated joblessness and too-low inflation warrant a high level of stimulus for a “considerable time.”

Three rounds of Fed stimulus have helped push the S&P 500 up 178 percent from a 12-year low, as U.S. equities are set to enter the sixth year of a bull market that started March 9, 2009.

In Europe, Russia said Ukraine must pay off almost $2 billion its cash-strapped neighbor owes for natural gas by today and signaled it may cut supplies, ratcheting up the pressure as the two nations scrap over the future of the Black Sea Crimea region.

The country, a key transit nation for east-west energy supplies, is struggling to keep hold of Crimea after pro-Russian forces seized control of the peninsula. The West has urged Russia to pull back, and began yesterday to impose sanctions.

“It’s a big deal from a geopolitical and humanitarian perspective, but not so much economically,” Richard Slinn, a San Francisco-based investment specialist at JPMorgan Private Bank, which oversees $977 billion, said by phone. “We’re watching that closely, but you can’t manage portfolios on geopolitical issues.”

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, fell 0.7 percent to 14.11 today, trimming its advance for the week to 0.8 percent.

Five of 10 main S&P 500 groups rose. Financials added 0.5 percent to extend a five-year high. JPMorgan Chase & Co. gained 0.9 percent to $59.40 for a fourth day of gains.

Prudential Financial Inc. rose 2.1 percent to $88.58. Bank of America Corp. raised its rating on the financial services provider to buy from neutral.

Foot Locker jumped 8.8 percent to $46.49. The retailer reported fourth-quarter adjusted profit of 82 cents a share, better than the 76 cents estimated by analysts. Sales also topped forecasts.

Nike rose 1.6 percent to $79.46 for the biggest advance in the Dow. Manziel, projected to be one of the top picks in the National Football League draft in May, has signed a shoe and marketing contract with Nike Inc., ESPN reported.

An index of raw-materials producers dropped 0.5 percent to pace losses in the S&P 500. Peabody Energy fell 5.3 percent to $16.69.

Regeneron Pharmaceuticals Inc. plunged 3.1 percent to $328.11. Sanofi and Regeneron must assess the effect of their experimental cholesterol drug on brain function after U.S. regulators learned of adverse events associated with this new class of medicines.

Safeway slid 2.2 percent to $38.60. Cerberus Capital Management LP’s Albertsons agreed to buy the grocery-store operator for about $40 a share in a deal that may face federal antitrust review. State attorneys general may also request information, CEO Robert Edwards said. The government might require that some of the stores be divested, he said.

H&R Block Inc. dropped 1.8 percent to $30.39 for a fourth straight loss. The tax-preparation company reported third- quarter loss from continuous operations of 77 cents a share. Analysts on average had projected loss of 11 cents a share.

Have a wonderful weekend everyone.

Be magnificent!

Man cannot be broken down into emotions, intellect, or action.

Man is a whole.

When these three element of intellect, feeling, and action are in harmony, they make up man.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

Genius is eternal patience.

-Michelangelo, 1475-1564

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