May 11, 2015 Newsletter

Dear Friends,

Tangents:

Carolann is out of the office, I will be writing the newsletter on her behalf.

PHOTOS OF THE DAY

The Villarrica Volcano lights up the sky Sunday night near Pucon town, Chile. Villarrica, located near the popular tourist resort of Pucon, is among the most active in South America. Cristobal Saavedra/Reuters

Workers prepare incense to hang from the ceiling of a temple as they get ready for a ceremony to celebrate the birth of sea goddess Mazu in Shenzhen, Guangdong province, China, Sunday. Reuters

Market Closes for May 11^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, halting a two-day advance, as energy companies retreated with the price of oil amid speculation global oversupply will persist.

     Canadian Energy Services & Technology Corp. sank 3.3 percent as energy shares declined 0.7 percent as a group. Manulife Financial Corp., the nation’s largest insurer, added 0.4 percent to close at the highest level since 2009.

     The Standard & Poor’s/TSX Composite Index fell 17.38 points, or 0.1 percent, to 15,152.64 at 4 p.m. in New York, paring an earlier decline of 0.4 percent in the final hour of trading. The gauge slide cut its advance in 2015 to 3.6 percent.

     Six of 10 industries in the S&P/TSX advanced on trading volume 15 percent lower than the 30-day average. Health-care shares climbed 1 percent as Valeant Pharmaceuticals International rose 1.1 percent.

     Energy shares slid the most in the index, as oil dropped a third day in New York. U.S. crude inventories remain more than 100 million barrels above the five-year average for this time of year, government data show.

     China’s central bank cut interest rates for the third time in six months, reducing the one-year lending rate 0.25 percentage points to 5.1 percent and the one-year deposit rate by the same amount to 2.25 percent, effective Monday. The bank will also raise the limit on what banks can pay savers.

     Imports and exports for the world’s second-largest economy and Canada’s second-biggest trading partner after the U.S. declined in April, underscoring China’s struggle to match its 2015 growth target of 7 percent.

     AutoCanada Inc. jumped 7.8 percent after rallying the most since November 2009 on May 8, after reporting earlier it was in talks with acquisition targets. The stock has surged 29 percent in two sessions, the biggest rally since 2009.

US

By Stephen Kirkland and Jeremy Herron

     (Bloomberg) — U.S. stocks fell, halting a two-day advance as energy shares slid with crude oil. Treasuries tumbled the most in two months, while European government debt resumed a selloff amid doubt Greece can resolve its debt problems.

     The Standard & Poor’s 500 Index lost 0.5 percent by 4 p.m. in New York, after closing Friday two points shy of a record. Noble Energy Inc. sank 6.2 percent to lead energy producers to their worst day since January. The euro fell 0.4 percent to $1.1155 in a third day of declines. German and Italian bond yields climbed, and rates on 10-year Treasury notes gained 13 basis points to 2.28 percent, the biggest climb since March 6.

     U.S. stocks stalled near all-time highs, after rallying the most in two months on Friday, as oil fell for a third day. Policy makers could raise key rates at any meeting, depending on economic data, Federal Reserve Bank of San Francisco President John Williams reiterated on CNBC Monday. The next major report is April retail sales on Wednesday. German bunds and other euro- region sovereign debt declined as China cut interest rates.

     “There’s a little malaise in the stock market after the reaction to the last jobs report and there’s no clear direction from the data,” Kevin Mahn, president of Parsippany, New Jersey-based Hennion & Walsh Asset Management Inc., said by phone. “The best way to characterize the market right now is trendless volatility.”

     Concern the Fed would raise borrowing costs, along with forecasts for a slump in corporate profits, have whipsawed stocks between gains and losses during the past five weeks.

     Almost $100 million worth of options pegged to volatility in U.S. equities changed hands in a split second Monday in Chicago, transactions that together would represent more than half a normal day’s volume.

     About 40 different trades went off at 12:16:04 p.m., encompassing contracts that gain in value should the Chicago Board Options Exchange Volatility Index rise over the next few months, according to options data compiled by Bloomberg. The four biggest were each more than 130,000 contracts. The index known as the VIX climbed 7.7 percent Monday.

     All of the 10 main S&P 500 groups retreated Monday, following Friday’s 1.4 percent advance, the biggest one-day gain since March 16. Energy shares sank 2.1 percent, the most since January.

     Treasuries resumed declines after stabilizing Friday following a global bond rout that sent 10-year yields to a 2015- high of 2.31 percent. The notes fell Monday for the first time in three days as the U.S. prepared to auction $64 billion in coupon-bearing debt.

     The drop was also propelled by the ongoing slump in bonds from Germany and other euro-region nations. Spain’s 10-year bond yield rose eight basis points, or 0.08 percentage point, to 1.75 percent, and German 10-year bund yields increased six basis points to 0.61 percent.

     The euro extended its slide from a 2 1/2-month high as the region’s finance ministers met on aid for Greece before the country’s debt-repayment deadline Tuesday.

     Greece — which needs to pay about 750 million euros ($837 million) to the International Monetary Fund — dodged an economic bullet by persuading an increasingly skeptical German- led bloc of creditors that it is serious about delivering the tight budget policies needed to escape a default.

     “The to-ing and fro-ing on Greece, given they’ve got that payment to the IMF due very soon,” is weighing on the euro, said Joseph Capurso, a strategist at Commonwealth Bank of Australia in Sydney. Uncertainty over Greece’s future is set to continue as negotiations will probably be “kicking the can down the road for a while longer,” he said.

     Greece’s ASE Index of stocks fell 2.5 percent, for the biggest decline among western-European markets. Ten-year bond yields increased 29 basis points to 10.96 percent.

     Gains in retailers and miners sent European stocks up for a third day. Delhaize Group jumped 15 percent and Royal Ahold NV jumped 5.5 percent after reports that the companies are in early stages of merger talks.

     Commodity producers climbed after the People’s Bank of China lowered the one-year lending rate and the one-year deposit rate by 0.25 percentage point as it ratcheted up support for the economy.

     The Shanghai Composite Index advanced 3 percent, posting its largest two-day gain since January. Hong Kong’s Hang Seng China Enterprises Index climbed 1.3 percent, while the MSCI Emerging Markets Index slipped 0.1 percent.

     Copper futures fell the most in more than two weeks amid concern the rate cut won’t be enough to boost demand in China, the world’s biggest consumer of industrial metals.

     Oil dropped a third day amid speculation that a global oversupply will persist. Brent crude futures declined 0.7 percent to settle at $64.91 a barrel in London, and West Texas Intermediate oil for June delivery dropped 0.2 percent to $59.25 a barrel on the New York Mercantile Exchange.

     New Zealand’s dollar tumbled 2.1 percent versus the dollar and sank to its weakest level since January against its Australian counterpart as the number of banks predicting the Reserve Bank of New Zealand will cut rates mounted.

Have a wonderful evening everyone.

Be magnificent!

“Be true to yourself. Make each day a masterpiece. Help others. Drink deeply from good books. Make friendship a fine art. Build a shelter against a rainy day.” John Wooden

As ever,

Karen

“We tend to forget that happiness doesn’t come as a result of getting something we don’t have, but rather of recognizing and appreciating what we do have.” Frederick Keonig

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