May 22, 2015 Newsletter

Dear Friends,

Tangents:

Van Morrison Shines Again

There has never been much clamor for loner and curmudgeon Van Morrison to make a duets album, but he did and – surprise – it’s his best album in decades.  On Duets: Reworking the Catalogue, Van the Man sounds inspired by the material and invigorated by the company he keeps.  The variety of voices is a timbre-filled treat.  Among the guests are Michael Bublé, Mavis Staples, Stevie Winwood, and Mark Knopfler.  –review from CSM.    It is really terrific!

PHOTOS OF THE DAY

A villager paints his face during the annual ‘Lok Ta Pring Ka-Ek’ religious ceremony, on the outskirts of Phnom Penh, Cambodia. Hundreds of villagers participate in the procession, which ends at a shrine where they would ask for good fortune and rain. Samrang Pring/Reuters

Workers gather rose petals on a rose field near the village of Pevtsite, Bulgaria. Bulgaria is one of the world’s leading producers of rose oil, a key ingredient in perfumes. Stoyan Nenov/Reuters

Market Closes for May 22^nd, 2015

International Markets

Bonds

Currencies

Commodities

Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. – Niall Ferguson.

Market Commentary:

Canada

By Joseph Ciolli

     (Bloomberg) — Canadian stocks closed little changed as gains in health-care shares offset a drop among the consumer staples and energy sectors.

     Valeant Pharmaceuticals International Inc. gained 2.3 percent to a record. Metro Inc. slid 1 percent to send consumer shares lower as April inflation was the slowest since 2013. Ensign Energy Services Inc. and Precision Drilling Corp. dropped more than 2.7 percent amid a decline in crude oil.

     The Standard & Poor’s/TSX Composite Index decreased 2.85 points, or less than 0.1 percent, to 15,200.76 at 4 p.m. in Toronto, trimming its advance in the holiday-shortened week to 0.6 percent.

     Canada’s inflation rate last month was the slowest since October 2013, falling below the central bank’s target band on a drop in energy costs.

     Four of the 10 main groups in the S&P/TSX retreated. Financial companies, which account for about one-third of the index by weighting, fell 0.3 percent.

     Materials companies in the S&P/TSX rose for the first time in four days as Western Forest Products Inc. and Primero Mining Corp. added more than 3.1 percent. The S&P/TSX Gold Index added 0.1 percent, paring its weekly loss to 2.4 percent.

     Energy producers lost 0.3 percent. Pacific Rubiales Energy Corp. decreased 3 percent, while RMP Energy Inc. slipped 2.6 percent.

US

By Joseph Ciolli and Oliver Renick

     (Bloomberg) — U.S. stocks fell after data showed inflation firming, and Federal Reserve Chair Janet Yellen said she expects to raise interest rates this year, though the pace of further increases will be gradual.

     Airline shares dropped, and Boeing Co. lost 1.7 percent. Energy companies retreated with the price of oil, and a stronger dollar weighed on consumer staples. Hewlett-Packard Co. added 2.8 percent after its results exceeded forecasts. Intuit Inc. climbed 2.5 percent as quarterly sales beat estimates. Deere & Co. advanced 4.4 percent after raising its 2015 profit forecast.

     The Standard & Poor’s 500 Index slipped 0.2 percent amid a late selloff to 2,126.06 at 4 p.m. in New York, after closing Thursday at a record. The Dow Jones Industrial Average fell 53.72 points, or 0.3 percent, to 18,232.02. The Nasdaq Composite Index lost less than 0.1 percent after topping its record close in the final hour. The markets are closed Monday for the Memorial Day holiday.

     “Any time you do get a little bit stronger data, people kind of flinch,” said Matt Maley, an equity strategist at Miller Tabak & Co. in Newton, Massachusetts. “Their first reaction is that the Fed is getting what it wants to raise rates. The stock market is at new highs and a little overbought on a near-term basis, and people are taking some chips off the table ahead of the long weekend.”

     Yellen expects to raise interest rates this year if the economy meets her forecasts, with a gradual pace of tightening to follow. While the labor market is nearing full strength, “we are not there yet,” she said Friday in a speech in Providence, Rhode Island.

     Delaying first rate increase until employment and inflation return to the Fed’s objectives “would risk overheating the economy,” Yellen said.

     A report Friday showed the cost of living excluding food and fuel rose at a faster pace than expected in April, indicating inflation is inching toward the Fed’s goal. The core consumer-price index climbed 0.3 percent, the biggest gain since January 2013. Recent mixed economic reports had prompted investors to push back estimates for when the Fed will begin raising rates, helping to drive equities to all-time highs.

     Data Thursday showed sales of existing homes in April unexpectedly dropped, after the March pace was the strongest in almost two years. A series of factory reports yesterday indicated the industry remains tepid this month against a backdrop of weaker global growth and a strong dollar.

     Most Fed officials have said they are likely to raise rates this year, though they haven’t specified precisely when. Economists expect an increase in September, according to a Bloomberg survey.

     How markets react when they do finally tighten is a source of concern for Fed officials, who have kept the benchmark federal funds rate near zero since December 2008. Chair Yellen and her colleagues are fretting that bond yields near record lows could surge once the Fed starts raising rates, according to minutes of their April meeting released this week.

     Higher costs of everything from mortgages to car loans could result, potentially putting the fragile economic recovery at risk.

     The S&P 500 posted a third consecutive weekly gain, the longest streak since February. The index yesterday snapped a two-day losing streak after three successive sessions of all- time highs. The Dow reached a record Wednesday, topping its previous closing high set on March 2.

     The Chicago Board Options Exchange Volatility Index rose 0.2 percent to 12.13, after falling Thursday to a 2015 low. The gauge, known as the VIX, closed with its second straight weekly decline. About 4.9 billion shares changed hands on U.S. exchanges, 23 percent below the three-month average.

     Transportation shares resumed their slide after bouncing Thursday from their worst drop in two months. Kansas City Southern and Delta Air Lines Inc. fell at least 1.3 percent. The Dow Jones Transportation Average sank 0.8 percent.

     Energy companies declined along with oil as the dollar gained for the fourth time in five days, reducing the appeal of commodities priced in the U.S. currency. Hess Corp. and Oneok Inc. dropped at least 1.3 percent.

     The dollar also weighed on consumer staples shares as the stronger U.S. currency can dent profits from overseas business. Tyson Foods Inc. and Philip Morris International Inc. lost more than 1.1 percent.

     “Any time you do get a little bit stronger data, people kind of flinch,” said Matt Maley, an equity strategist at Miller Tabak & Co. in Newton, Massachusetts. “Their first reaction is that the Fed is getting what it wants to raise rates. The stock market is at new highs and a little overbought on a near-term basis, and people are taking some chips off the table ahead of the long weekend.”

     Quest Diagnostics Inc. climbed 7.7 percent, and soared as much as 20 percent, after a Twitter post that was intended to convey a “market rumor” that the company was weighing a sale. Shares reached an all-time high.

     Deere rose 4.4 percent, the most in more than three years, after its better-than-expected forecast for fiscal 2015, as demand for its construction equipment mitigated the impact of declining sales of its signature green tractors and combines.

     Hewlett-Packard advanced 2.8 percent, the most since February, after reporting quarterly profit that exceeded analysts’ estimates as corporate spending on servers picked up ahead of the computer maker’s planned separation into two companies.

     Expedia Inc. reached a record, rising 6.7 percent for the fifth straight gain and the longest streak since January. The company said Friday it sold a 62.4 percent majority stake in eLong Inc. for about $671 million.

     Intuit Inc. jumped 2.5 percent to an all-time high after the TurboTax software maker reported revenue that exceeded analysts’ estimates for its most important quarter.

     NetApp Inc. rebounded to lead gains in the technology group, along with H-P and Intuit. The data management company rallied 4.3 percent after its worst drop in three years Thursday, sparked by a cut in its full-year outlook.

Have a wonderful weekend everyone.

Be magnificent!

To live completely, fully, in the moment is to live with what is, the actual, without any sense of condemnation

or justification – then you understand it so totally that you are finished with it.

When you see clearly the problem is solved.

Krishnamurti

As ever,

Carolann

Life is something that happens when you can’t get to sleep.

                                               -Fran Lebowitz, 1950-

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