May 15, 2015 Newsletter

Dear Friends,

Tangents:

On this day, May 15^th, in 1905, A.C. Benson, wrote this in his diary:

I had one of the most curiously beautiful [bicycle] rides of my life.  I got to Milton:  saw the church, in its green shade, with its elaborately written monuments, its glorious little window of Jacob, with hands like parsnips:  then crossed the line, among the green pastures, so full of great thorn-thickets:  and then along the towpath, riding slowly down the Cam.  Such a sweet clear, fresh day.  I wound slowly along past Baitsbite and the Waterbeach bridge, into the heart of the fen.  The space below the towpath full of masses of cow-parsley:  the river sapphire blue between the green banks – the huge fields running for miles to the right, with the long lines of dyke and lode; far away the blue tower of Ely, the brown roofs of Reach, and the low wolds of Newmarket.  It was simply enchanting!

… so I wound on and on, full of peace and content;  I declare that the absolutely flat country, golden with buttercups, and the blue tree-clumps far away backed by hills, and over all the vast sky-perspective, is the most beautiful thing of all.

PHOTOGRAPHS OF THE DAY

Competitors take part in a coaching marathon along the ‘Long Walk’ during the third day of the Royal Windsor Horse Show at Windsor Castle, Windsor, England, Friday. Steve Parsons/AP

A woman walks along a ‘Street of flying umbrellas’ art installation in St.Petersburg, Russia, Friday. Dmitry Lovetsky/AP

Market Closes for May 15^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose a second day, paring a third week of losses, as raw-materials producers and railway shares climbed.

     Labrador Iron Ore Royalty Corp. surged 11 percent after Osisko Gold Royalties Ltd. bought a stake in the company. Canadian National Railway Co. and Canadian Pacific Railway Ltd. gained at least 0.8 percent to pace gains among industrial stocks.

     The Standard & Poor’s/TSX Composite Index gained 80 points, or 0.5 percent, to 15,108.12 at 4 p.m. in Toronto. The index dropped 0.4 percent this week, for a third decline, its worst streak this year.

     Stantec Inc. rallied 3.7 percent and Air Canada climbed 1 percent as industrials shares increased 1.2 percent as a group. Nine of 10 industries in the S&P/TSX rose on trading volume 17 percent lower than the 30-day average.

     Canadian factory sales rose 2.9 percent to C$51 billion ($42 billion) in March, the fastest pace in almost four years, as production of planes and automobiles rebounded. Economists had forecast a median 1 percent increase. A weaker Canadian dollar is helping manufacturing because it makes their goods cheaper to foreign customers.

     Fortuna Silver Mines Inc. added 3.3 percent as silver futures for July delivery increased in New York. Gold futures capped the biggest weekly rally since mid-January, climbing 2.9 percent. OceanaGold Corp. rose 3.2 percent.

     Manulife Financial Corp. retreated 0.5 percent for a fourth day of losses. The S&P/TSX Financials Index lost 0.1 percent as Toronto-Dominion Bank and Royal Bank of Canada, the nation’s largest lenders, each slipped.

US

By Callie Bost

     (Bloomberg) — The Standard & Poor’s 500 Index closed at record for a second straight day, as investors speculated the Federal Reserve would continue to support economic growth after data showed an unexpected drop in consumer confidence and weak factory output.

     Netflix Inc. added 4.5 percent after people familiar with the matter said the company is in partnership talks with a Chinese media firm. Pepco Holdings Inc. and Exelon Corp. surged after Maryland regulators approved their merger. Keurig Green Mountain Inc. lost 8.6 percent, and bank shares capped their biggest retreat in a month.

     The S&P 500 rose 0.1 percent to 2,122.70 at 4 p.m. in New York. The gauge added 0.3 percent this week for its first back- to-back weekly gain in more than a month. The Dow Jones Industrial Average climbed 20.32 points, or 0.1 percent, to 18,272.56. About 5.7 billion shares traded hands Friday, 11 percent below the three-month average.

     “The data plays into the renewed concern that economy in the second quarter will move at a glacial place, renewing hope that the Fed won’t move aggressively in 2015,” said Chad Morganlander, a money manager at Stifel, Nicolaus & Co., which oversees about $170 billion. “The market is listless today and you had a big move yesterday that took everybody by surprise on the back of economic data.”

     Consumer confidence unexpectedly fell in May by the most in more than two years, as the University of Michigan preliminary index of sentiment dropped to the lowest since October.                         

     A separate report showed factory production stalled in April, following a 0.3 percent March gain that was larger than previously estimated. The data add to previous reports that suggest economic growth isn’t strong enough to warrant higher interest rates.

     A report Thursday showed wholesale prices unexpectedly declined in April, indicating inflation is well-contained as Fed officials weigh when to raise the benchmark rate. Concern the Fed would raise interest rates even with worsening economic data and predictions for earnings declines have whipsawed stocks between gains and losses in the previous five weeks.

     Signs that the global bond market selloff has run its course and the dollar’s retreat yesterday spurred gains in multinational companies, helping the S&P 500 erase declines earlier in the week and close at a new high. The weaker dollar lessens the drag on the economy and corporate profits as it makes exports more competitive.                       

     With the earnings season drawing to a close, S&P 500 members are now on track to deliver income growth of 0.4 percent in the first quarter, compared with projections for a 5.8 percent decline as recently as March. Out of 460 S&P 500 companies that have reported earnings, 72 percent have beaten earnings expectations, while 47 percent have exceeded sales estimates.

     The Chicago Board Options Exchange Volatility Index fell 2.8 percent to 12.38, after sliding 7.4 percent Thursday. The gauge fell 3.7 percent in the week, its first drop for the gauge, known as the VIX, in three.

     Seven of the S&P 500’s 10 main groups were higher, with utilities and consumer discretionary companies gaining the most while financial and technology shares led declines.

     Netflix rose 4.5 percent to an all-time high, bolstering gains in consumer discretionary shares. People familiar with the matter said it’s in talks with a Chinese media company backed by Jack Ma and other possible partners as it seeks entry into the country’s $5.9 billion online video market.

     Bed Bath & Beyond Inc. jumped 5.3 percent, its biggest gain since September, after Leonard Green & Partners LP reported a new stake in the retailer.

     Transportation stocks in the S&P 500 advanced, as United Parcel Service Inc. climbed 1.7 percent after Goldman Sachs Group Inc. upgraded its share recommendation to buy from hold. Railroads CSX Corp. and Union Pacific Corp. each increased 1.7 percent.

     The Dow Jones Transportation Average gained 1 percent as Avis Budget Group Inc. jumped 10 percent, the most since May 2012, after competitor Hertz Global Holdings Inc. said it’s raising prices in expectation of a busy summer travel season. Hertz added 5.3 percent.

     Yum! Brands Inc. gained 4.4 percent to $93.96, a record, after JPMorgan Chase & Co. analyst John Ivankoe raised his rating on the shares to overweight from neutral.

     Pepco Holdings rallied 5.2 percent, the most in a year, and Exelon rose 2.9 percent to lead utilities higher after the Maryland Public Service Commission approved Exelon’s $6.8 billion buyout of Pepco.

     Financial shares in the S&P 500 dropped 0.4 percent as yields on 10-year U.S. Treasuries slid the most in six weeks on economic data. Traders are viewing softer-than-projected economic gauges as a challenge to any Fed interest-rate increase this year.

     The group has rallied as much as 2.6 percent this month as 10-year note yields climbed for three straight weeks. Charles Schwab Corp. and E*Trade Financial Corp. slipped more than 2 percent. Regions Financial Corp. fell 1.8 percent, the most in a month, while SunTrust Banks Inc. dropped 1.5 percent.

     Symantec Corp.’s 5.5 percent retreat weighed on the technology group after the the security software maker issued profit and revenue forecasts short of analysts’ predictions. Microsoft Corp. and Facebook Inc. gave back some of Thursday’s gains, each losing 1 percent.

     Keurig Green Mountain declined 8.6 percent after the company said its new cold brewing system won’t be available in all its retail outlets until next year, a slower schedule than investors had expected.

     Deere & Co. dropped 3.3 percent, the most since October, after JPMorgan Chase & Co. analyst Ann Duignan cut the stock to underweight, the equivalent of a sell rating, from neutral.

Have a wonderful  long weekend everyone.

Be magnificent!

There is no weapon more powerful in achieving the truth than acceptance of oneself.

Swami Prajnanpad

As ever,

Carolann

Learning never exhausts the mind.

     -Leonardo da Vinci. 1452-1519

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

Senior Portfolio Manager &

Senior Vice-President

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7