May 14, 2014 Newsletter

Dear Friends,

Tangents:

Full moon tonight.

On May 14, 1948, the independent state of Israel was proclaimed as British rule in Palestine came to an end.

1998 – Singer Frank Sinatra died at age 82.

1998 – The TV series “Seinfeld” aired its final episode.

2008 – The Interior Department declared the polar bear a threatened species because of the loss of Arctic sea ice.

Midnight sun until July 30^th, in Norway.

If you fill your mind to capacity with thoughts that you think are good and productive, you won’t have room for the bad ones. –Sir John Templeton, 1912-2008.

It was amazing to see the prices fetched at Christie’s Post War &  Contemporary Art Auction last night.  The highest bid was for a Barnett Newman – Black Fire I sold $84.1 million setting a new record for the artist.  Check it out at www.Christies.com.

Photos of the day

Tate Modern employees install Mark Rothko’s ‘Black on Maroon’ mural (r.) in London. The museum is putting ‘Black on Maroon’ back on display Tuesday, more than a year and a half after it was defaced with black ink by a vandal trying to draw attention to an obscure artistic movement. The gallery has spent 18 months working on the abstract painting, whose surface is made up of layers of oil, pigment, resin, egg, and glue. Lefteris Pitarakis/AP

Market Closes for May 14^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

May 14 (Bloomberg) — Canadian stocks were little changed after two days of gains as declines in technology and health- care companies offset increases among materials producers.

CGI Group Inc. and Celestica Inc. dropped at least two percent, falling the most among technology companies on the Standard & Poor’s/TSX Composite Index. Bear Creek Mining Corp. surged 35 percent after a Peruvian court threw out a government lawsuit against the company. Ainsworth Lumber Co. decreased 8.7 percent after Louisiana-Pacific Corp. scrapped its takeover of the company.

The S&P/TSX fell 6.08 points, or less than 0.1 percent, to 14,673.73 at 4 p.m. in Toronto. The gauge has climbed 7.7 percent this year. Health-care stocks sank 2 percent and technology companies declined 1.8 percent as a group.

The benchmark index was higher for most of the day, gaining as much as 0.2 percent. It dropped in the final hour of trading as energy shares reversed an advance, falling 0.2 percent as a group.

Investors are nervous about whether or not the year’s rally in Canadian energy stocks will continue, said Mike O’Brien, a fund manager with TD Asset Management Inc. in Toronto.

“There’s a lot of uncertainty as to where it’s going to go and whether crude prices break higher or lower from here,” O’Brien said by phone. “My perspective is I don’t think oil prices are going to fall out of bed.” TD manages about C$218 billion ($200 billion).

Materials companies rose 0.9 percent as a group, the most out of 10 industries in the benchmark index, as the price of gold climbed 0.9 percent $1,305.90 an ounce.

Eldorado Gold Corp. jumped 3 percent to C$6.58 and Yamana Gold Inc. added 5.4 percent to C$8.24 to lead advances among gold producers.

Bear Creek Mining advanced 35 percent to C$2 after rising as much as 45 percent, the most since 2005. A Peruvian court said a ruling from the government to take away the company’s rights to a mine was unconstitutional. The court restored Bear Creek’s status as the property’s owner and said the project was in the country’s interest, according to a statement from Bear Creek.

Ainsworth Lumber fell 8.7 percent to $3.15. Louisiana- Pacific called off its C$951 million takeover of the Vancouver- based company after regulators said further asset sales were necessary.

Valeant Pharmaceuticals International Inc. dropped 2.3 percent to C$138.22 after saying it plans to sweeten its rejected cash-and-stock offer for Botox maker Allergan Inc. after talking to investors of the targeted company.

Badger Daylighting Ltd., an excavating company, retreated 2.8 percent to C$36 after saying first-quarter earnings per share fell compared to the same period last year.

SunOpta Inc. increased 12 percent to C$13.78 after reporting first-quarter earnings that beat analyst estimates.  SunOpta distributes natural and organic food.

Torc Oil & Gas Ltd. gained 4.5 percent to C$13.61 after boosting its forecast for 2014 production.

Sears Canada Inc. rose 3.4 percent to C$16.30 after Sears Holdings Corp. said it is considering selling the Canadian unit, which has a market value of $1.5 billion.

US
By Joseph Ciolli

May 14 (Bloomberg) — U.S. stocks fell, sending benchmark indexes down from all-time highs, as investors resumed selling in small-cap and Internet shares.

Groupon Inc. sank 4.4 percent to lead the Dow Jones Internet Index lower by 1.2 percent. Fossil Group Inc. fell 10 percent after the maker of watches and accessories forecast earnings that trailed analysts’ estimates. Deere & Co. slid 2 percent after cutting its full-year revenue projection. International Business Machines Corp. lost 1.8 percent to pace declines among large companies.

The Standard & Poor’s 500 Index dropped 0.5 percent to 1,888.53 at 4 p.m. in New York, ending a three-day rally. The Dow Jones Industrial Average lost 101.47 points, or 0.6 percent, to 16,613.97, halting five days of gains. The Russell 2000 Index of small stocks sank 1.6 percent after yesterday sliding 1.1 percent. About 5.4 billion shares changed hands on U.S. exchanges, 19 percent below the three-month average.

“The market is taking a bit of a breather,” Bill Schultz, chief investment officer who oversees about $1.1 billion at McQueen Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. “Earnings have been OK, but now we’re in a slow period. We’re going to have to see earnings pick up to get us to the next level on stocks.”

The S&P 500 rebounded 4.5 percent from its low on April 11 through yesterday, recovering declines after a selloff in technology and small-cap stocks overshadowed optimism about the strength of the economy. The equities benchmark briefly surpassed 1,900 for the first time yesterday, ending the day little changed at an all-time high of 1,897.45. The Dow also finished yesterday at a record.

The Russell 2000 has fallen 2.7 percent in the past two days, extending its drop from a March high to 8.7 percent. The gauge retreated 1.9 percent last week to close below its average price for the past 200 days for the first time since 2012. The Dow Jones Internet Index has plunged 17 percent from a 13-year high in March.

“There’s potential for people to take profits as we reach this record-high area,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said in a phone interview. “When you get these run-ups, people start to look at economic data, and we haven’t exactly had a great run over the last month. People were expecting a pickup following a tough winter.”

Data today showed wholesale prices in the U.S. rose in April by the most in more than a year, reflecting broad-based gains that signal the threat of deflation is ebbing as the economy improves.

A report yesterday showed retail sales climbed 0.1 percent last month, as consumers were less inclined to ramp up spending again after March saw a release of pent-up demand caused by harsh winter weather.

Federal Reserve Chair Janet Yellen will speak tomorrow after saying last week the world’s biggest economy still requires a strong dose of stimulus. She told U.S. lawmakers that while data show “solid growth” in the second quarter, “many Americans who want a job are still unemployed” and inflation remains low.

Three rounds of monetary stimulus have helped fuel economic growth, sending the S&P 500 surging as much as 180 percent from its 2009 low.

Macy’s Inc., Wal-Mart Stores Inc. and Kohl’s Corp. are among 12 companies in the S&P 500 scheduled to disclose results this week, giving investors insight into how retailers performed during the winter months.

Among the 457 companies in the S&P 500 that have posted results this earnings season, 76 percent beat analysts’ estimates for profits and 53 percent exceeded sales projections, according to data compiled by Bloomberg.

Investors have also been watching developments in Ukraine, where rebels yesterday killed seven government soldiers and wounded eight others during an ambush in a breakaway eastern region.

The country “is as close to civil war as you can get,” Russian Foreign Minister Sergei Lavrov said in an interview today with Bloomberg Television. Russia has “no intention” of send its troops anywhere, he said. The country is locked in the worst standoff since the end of the Cold War against the U.S. and Europe over Ukraine in the run-up to presidential elections later this month.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as the VIX, added 0.3 percent to 12.17. The gauge has fallen 43 percent since reaching a two-year high on Feb. 3 and closed yesterday at the lowest since August.

Five of the 10 main S&P 500 groups retreated today, with consumer-discretionary stocks losing 1.1 percent to pace declines. Phone shares added 0.5 percent.

IBM slid 1.8 percent to $188.72 for the steepest slide in the Dow. Chief Executive Officer Ginni Rometty spoke to Wall Street analysts today, saying she remains confident in the company’s 2015 profit forecast despite tumbling sales in hardware and emerging markets like China.

Fossil lost 10 percent to $100 for the biggest drop in the S&P 500. Second-quarter earnings will be 90 cents to 97 cents a share, the company said after the close of trading yesterday. Analysts had projected $1.16. The company predicted sales growth of 8 percent to 9.5 percent, also missing the 10 percent average estimate.

Deere fell 2 percent to $91.70. The largest agricultural- equipment maker said equipment sales will drop by about 4 percent for 2014, compared with a previous projection for a decline of about 3 percent. Equipment sales in the quarter through April slid to $9.25 billion from $10.3 billion, missing the average analyst estimate.

Sears Holdings Corp. fell 5.9 percent to $40.70 after saying it is considering a divestment of its 51 percent interest or the sale of Sears Canada as a whole.

Have a wonderful evening everyone.

Be magnificent!

To love is to understand and feel that the other person is different.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

We would accomplish many more things if we did not

think of them as impossible.

-Vince Lombardi, 1913-1970

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7