May 16, 2014 Newsletter

Dear Friends,

Tangents:

Lord Byron to John Murray, May 18, 1819.

I write to you in haste and at past two in the morning – having besides had an accident.  In going, about an hour and a half ago, to a rendezvous with a Venetian girl (unmarried and the daughter of one of their nobles), I tumbled into the Grand Canal, and not choosing to miss my appointment by the delays of changing, I have been perched in a balcony with my wet clothes on ever since – till this minute that on my return I have slipped into my dressing-gown.  My foot slipped in getting into my gondola to set out (owing to the cursed slippery steps of their palaces) and in I flounced like a carp – and went dripping like a triton to my sea-nymph – and had to scramble up to a grated window…

Dorothy Wordsworth, Journal, May 19, 1800.

Sauntered a good deal in the garden, bound carpets, mended old clothes.  Read Timon of Athens.  Dried linen.  Molly weeded the turnips, John stuck the peas.  We had not much sunshine or wind, but no rain till about seven o’clock, when we had a slight shower just after I had set out upon my walk.  I did not return but walked up into the Black Quarter [Easedale].  I sauntered a long time among the rocks above the church…I strolled on, gathered mosses etc.  The quietness and still seclusion of the valley affected me even to producing the deepest melancholy.  I forced myself from it. –from The Book of Days.

Photos of the day

90-year-old Hiraben blesses her son and India’s next prime minister Narendra Modi at her home in Gandhinagar, in the western Indian state of Gujarat. Saurabh Das/AP

Geisha girls parade down the streets toward Asakusa Shrine in the compound of Sensoji Temple in Tokyo prior to the annual Sanja Festival, one of the three major festivals in Tokyo, scheduled on May 16-18. Eugene Hoshiko/AP

Market Closes for May 16^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

May 16 (Bloomberg) — Canadian stocks fell, capping the biggest three-day retreat in over a month, as shares of Smart Technologies Inc. and BlackBerry Ltd. dropped and data showed an unexpected decline in U.S. consumer confidence.

BlackBerry fell 1.9 percent after the smartphone maker said yesterday Bert Nordberg, a former chief executive officer of Sony Ericsson Mobile Communications, was leaving the board. Air Canada rose 2 percent after TD Securities Inc. recommended buying the shares. Smart Technologies lost 37 percent after reporting a fourth-quarter loss.

The Standard & Poor’s/TSX Composite Index fell 74.15 points, or 0.5 percent, to 14,514.74 at 4 p.m. in Toronto. Eight out of 10 industries in the index fell. The gauge fell 0.1 percent this week.

“What people are doing is de-risking ahead of some uncertainty on U.S. economic growth and the state of the consumer,” said Brian Huen managing partner at Red Sky Capital Management Ltd in Toronto. He helps manage about C$350 million.

Consumer confidence fell in May from a nine-month high, showing Americans are being shaken by rising grocery bills and elevated fuel costs. The Thomson Reuters/University of Michigan preliminary sentiment index decreased to 81.8 from 84.1 in April. The median projection in a Bloomberg survey of economists called for a gain to 84.5.

BlackBerry fell 1.9 percent to C$7.88. The rest of the current directors, including chairman Prem Watsa, are standing for re-election, the company said.

Air Canada gained 2 percent to C$8.07 as TD Securities raised its rating on the stock. The company reported a narrower first-quarter loss yesterday than analysts projected with the help of a cost-savings plan and as revenue climbed faster than estimated.

Smart Technologies lost 37 percent to C$2.90, the most ever. The interactive whiteboard maker reported a fourth-quarter loss of 5 cents a share yesterday and said the company has significant work left in its turnaround plan.

Just Energy Group Inc. decreased 17 percent to C$6.54. National Bank Financial and TD Securities lowered their ratings on the stock and RBC Capital Markets said the utility company may cut its dividend.

Canadian Imperial Bank of Commerce dropped 1.6 percent to C$96.49 after posting a C$420 million impairment charge on its Caribbean banking business. The bank, Canada’s fifth-largest, will report second-quarter earnings on May 29.

Bellatrix Exploration Ltd. fell 1.9 percent to C$9.96 after cutting its forecast for second-quarter production.

HudBay Minerals Inc. rose 1.6 percent to C$10 after Dundee Securities Inc. said the mining company probably won’t increase its offer for Augusta Resources Corp. Augusta lost 6.2 percent to C$3.01.

US
By Sofia Horta e Costa and Joseph Ciolli

May 16 (Bloomberg) — U.S. stocks rose, after the Standard & Poor’s 500 Index had its worst day in a month yesterday, as small-cap shares reversed declines amid a faster-than-forecast gain in the pace of home construction.

The Dow Jones Internet Composite Index jumped 0.5 percent after earlier falling 0.7 percent. Nordstrom Inc. jumped 15 percent as the luxury department-store chain reported quarterly results that exceeded estimates. Verizon Communications Inc. added 2.3 percent as Warren Buffett’s Berkshire Hathaway Inc.disclosed a stake. Chesapeake Energy Corp. sank the most in the S&P 500 after saying it will cut half its workforce.

The S&P 500 climbed 0.4 percent to 1,877.86 at 4 p.m. in New York, erasing its loss for the week. The gauge extended gains today after falling to its average price over the past 50 days, a level technical analysts consider significant. The Dow Jones Industrial Average added 44.50 points, or 0.3 percent, to 16,491.31. The Russell 2000 Index of small stocks jumped 0.6 percent, after earlier falling 0.7 percent. About 5.8 billion shares changed hands on U.S. exchanges, 13 percent below the three-month average.

“When you have sharp sell-offs, you have a lot of buyers on the sidelines waiting for that weakness,” James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $357 billion in assets, said by phone. “Certainly the housing numbers calmed a fair number of fears. People feel secure after a 1 percent sell-off and want to go long into the weekend.”

A report today indicated the pace of U.S. home construction jumped in April to its highest level since November, exceeding all analysts’ forecasts and showing builders returned to sites after freezing temperatures restrained work earlier this year. A surge in construction of multifamily dwellings helped overcome slack demand for single- family homes.

Separate data showed consumer confidence fell this month after reaching a nine-month high in April. The preliminary reading of the Thomson Reuters/University of Michigan index of sentiment dropped to 81.8 from 84.1, economists surveyed by Bloomberg said.

Federal Reserve Chair Janet Yellen said the U.S. economy has further to go to achieve full health and predicted small businesses will play a vital role in the recovery.

Job creation is “crucial to this process,” and small companies “are responsible for a large share” of new employment, Yellen said yesterday in Washington.

Fed policy makers said last month the economy is showing signs of picking up and the job market is improving. The central bank pared its monthly asset-buying and said further reductions in “measured steps” are likely. Interest rates will probably remain low until mid-2015.

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.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as the VIX, dropped 5.5 percent to 12.44. The measure has lost 3.7 percent this week.

Nine of the 10 main S&P 500 groups rose today,with phone shares surging as Verizon advanced 2.3 percent to $49.07 for the biggest gain in the Dow. Berkshire held 11 million Verizon shares as of March 31, Buffett’s company said yesterday in a regulatory filing.

The acceleration in home construction resulted in an increase of just 0.4 percent for an S&P index of homebuilders as starts on projects such as condominiums and apartment buildings accounted for almost all of the April gain.

Nordstrom jumped 15 percent to a record $70.55. The largest U.S. luxury department-store chain posted quarterly results that topped estimates, helped by sales at its lower-priced Rack outlets and online.

J.C. Penney Co. rallied 16 percent to $9.73. The department-store chain that’s posted more than $2.5 billion in losses the past three years reported its first quarterly sales gain since 2011. While the company is still losing money, the first-quarter loss was narrower than analysts expected, and the retailer bolstered its finances with a larger credit line.

Autodesk Inc. added 8.1 percent to $51.67. The maker of architectural and engineering software predicted annual sales will climb as much as 6 percent this year, up from an earlier forecast for as much as 5 percent. First-quarter revenue of $593 million beat the $568 million average analyst estimate compiled by Bloomberg.

Darden Restaurants dropped 4.3 percent to $48.49. The restaurant operator agreed to sell the Red Lobster seafood- restaurant chain to Golden Gate Capital for $2.1 billion, giving it an injection of cash and time to focus on reviving growth in its Olive Garden business.

Chesapeake Energy sank 4.7 percent to $27.64. The U.S. natural gas explorer that was on the verge of running out of cash two years ago plans to shrink its workforce by half to the smallest since 2006 in a rig spinoff by the end of next month.

World Wrestling Entertainment Inc. slumped 43 percent to $11.27 for the biggest drop since its debut in 1999. The company said its new online TV network that began operating Feb. 24 will need 1.3 million subscribers to make up for lost business. WWE predicted it will reach 1 million subscribers this year.

Have a wonderful weekend everyone.

Be magnificent!

The golden rule of conduct therefore, is mutual toleration,

seeing that we will never think alike and we shall see the Truth

in fragments and from different angles of vision.

Conscience is not the same thing for all.

While, therefore, it is a good guide for individual conduct,

imposition of that conduct upon all will be an insufferable interference

with everybody’s freedom of conscience.

Mahatma Gandhi, 1869-1948

As ever,

Carolann

Nearly all men can stand adversity, but if you want to test a man’s character,

give him power.

-Abraham Lincoln, 1809-1865

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