May 27, 2014 Newsletter

Dear Friends,

Tangents:

Spring is my favourite season of the year, at least I always think so when I see the leaf buds on the trees bursting dramatically into green.  A similar feeling comes over me in October as the leaves take on their autumn colours.  Both of these seasons have their individual charm; in spring it is the assurance that all will be lush, green and urgent for the next few months; autumn has a passing beauty and allows time to relax.  It is impossible to decide which is best, but there is no need to; all that is necessary is to enjoy the present.  Here in Gloucestershire, I gather we are behind counties such as Somerset, Kent and Herefordshire, but this does not matter as we will catch up.  While the garden is full of bright yellows and reds, many trees in the countryside are laden with their less conspicuous flowers.  These are easy to overlook if you think they are the leaf buds opening.  From my window I can see the 5 inch long catkins festooning the branches of the silver birch, the leaf buds still brown.  One of the most striking sights is the Norway maple Goldworth Purple, with erect lime-green flowers merging, or is it contrasting, with the rich copper-coloured leaves as they unfold.  Each spring it takes my breath away with its elegance.  A chestnut has young candles, as yet only 3 inches tall but full of expectation.   The pear tree, probably 200 years old, is white with flowers and has its traditional blackbird in residence.  Out of sight, but within smelling distance, are two balsam poplars with red catkins and deliciously scented sticky buds.  I wish we had an alder, the golden-leafed variety with yellow catkins.  I have wanted one ever since I saw it as the principal feature in a small town garden.  The wild crabs and geans in the hedgerows are at their best, and so are the bullace, shoes and other wild plums. –from A Countrywoman’s Notes, by Rosemary Verey.

Photos of the day

Cyclists pedal during the 16th stage of the Giro d’ Italia cycling race from Ponte di Legno to Val Martello, Italy. Fabio Ferrari/AP

People take pictures of released floating lanterns dedicated to deceased loved ones during a ceremony marking remembrance and reflection, held by Shinnyo-en Buddhists honoring victims of war, famine, and natural disasters on Memorial Day, at Ala Moana Beach Park in Honolulu. Hugh Gentry/Reuters

Market Closes for May 27^th , 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

May 27 (Bloomberg) — Canadian stocks fell for the first time in six days, as precious-metals miners declined with the price of gold amid U.S. economic data that boosted confidence in the nation’s biggest trading partner.

Silver Standard Resources Inc. and NovaGold Resources Inc. fell at least 6.5 percent to lead losses among raw-materials producers, as gold slid to a 15-week low. Valeant Pharmaceuticals International Inc. dropped 1.8 percent as Allergan Inc. presented its case against a proposed takeover. Bank of Nova Scotia gained 1.1 percent after an increase in consumer lending helped profit surpass analyst estimates.

The Standard & Poor’s/TSX Composite Index dropped 57.67 points, or 0.4 percent, to 14,658.02 at 4 p.m. in Toronto. The benchmark index is around 400 points away from an all-time high.

The better-than-forecast U.S. data means there is less demand for gold as a safe investment, said Jeff Young, who oversees about C$900 million ($830 million) as chief investment officer of NexGen Financial Corp. in Toronto. “It kind of takes away the case of an economic deceleration and a reduction in interest rates,” he said.

U.S. durable goods orders rose unexpectedly in April, a sign factories will help boost the world’s largest economy. Gold fell 2 percent in New York as better prospects for the American economy reduced demand for haven assets. Crude prices slipped on speculation inventories are sufficient to meet an anticipated boost in demand.

Materials companies lost 2.3 percent as a group, the biggest drop in two months, while energy producers slid 0.6 percent. Companies in the two industries account for almost 38 percent of the benchmark index for Canadian equities.

Silver Standard decreased 7.6 percent to C$7.31 and NovaGold fell 6.5 percent to C$3.19. Barrick Gold Corp., the world’s biggest gold producer, lost 4 percent to C$17.30.

BlackPearl Resources Inc. dropped 4.6 percent to C$2.30 to pace losses among energy producers. American Petrogas Inc. fell 9.2 percent to 99 Canadian cents as the company announced it would sell C$15 million in stock at 90 Canadian cents a share.

Valeant fell 1.8 percent to C$141.13. Allergan disclosed a slide presentation that raised questions about Valeant’s business model. Valeant said this month that it plans to sweeten the bid and will hold a webcast tomorrow to explain why Allergan’s owners should agree to a sale.

Bank of Nova Scotia rose 1.1 percent to C$68.74. Canada’s third-biggest lender by assets also said it will buy back as many as 12 million shares over the next year.

Wi-Lan Inc. rose 3 percent to C$3.39 after its board approved a plan to buy back as much as 10 percent of the company’s public shares.

Tekmira Pharmaceuticals Corp. gained 12 percent to C$13.82 after saying it was beginning a new trial of a cancer drug. Tekmira has risen 64 percent this year.

Alderon Iron Ore Corp. increased 9.5 percent to C$1.38 after getting approval from the province of Newfoundland and Labrador to begin building its Kami mine.

USA
By Lu Wang

May 27 (Bloomberg) — U.S. stocks advanced, with the Standard & Poor’s 500 Index extending a record, after durable goods orders unexpectedly rose and JBS SA offered to buy Hillshire Brands Co. for $6.4 billion.

Hillshire jumped 22 percent as JBS’s Pilgrim’s Pride Corp. unit made an unsolicited bid for the maker of Jimmy Dean sausages and Ball Park hot dogs. FirstEnergy Corp., NRG Energy Inc. and Exelon Corp. added more than 3.6 percent to help lead gains in the S&P 500. Bank of America Corp. climbed 3.4 percent after resubmitting its capital plan to the Federal Reserve. Small-cap stocks and technology companies extended a recovery from a two-month selloff.

The S&P 500 rallied for a fourth day, increasing 0.6 percent to 1,911.91 at 4 p.m. in New York. The Dow Jones Industrial Average gained 69.23 points, or 0.4 percent, to 16,675.50. The Nasdaq Composite Index added 1.2 percent and the Russell 2000 Index jumped 1.4 percent.

“Macro data like the durable number today will continue to do better in the second half of the year,” Daniel Skelly, an equity strategist at Morgan Stanley Wealth Management in New York, said in a phone interview. His firm had more than $1.9 trillion in client assets at the end of first quarter. “That’ll be positive for the market.”

U.S. equity markets were closed yesterday for the Memorial Day holiday. About 5.5 billion shares changed hands on U.S. exchanges today, 14 percent lower than the three-month average.

The value of equities worldwide climbed to a record $63.8 trillion yesterday. European Central Bank President Mario Draghi signaled yesterday a readiness to act on low inflation, while China’s premier said he may fine-tune economic policy.

Investors are returning to smaller companies and technology stocks with the Nasdaq Composite and Russell 2000 rising more than 3.4 percent in the past four days. Concern that valuations were too expensive sparked a selloff in early March, pushing both gauges to losses approaching 10 percent.

Facebook Inc. jumped 3.5 percent to $63.48 today, leading technology shares in the S&P 500 to a 1 percent gain, the most among 10 main industries.

“This market to me looks sturdy on its foundation,” Gene Peroni, portfolio manager at Advisors Asset Management Inc. in Conshohocken, Pennsylvania, said in a phone interview. His firm oversees about $14.7 billion. “Investors are going to recognize, despite the negativity that’s been broadcast, the market is really behaving well.”

The S&P 500 trades at 16.2 times the average projected earnings of its members, up from 14.8 on Feb. 3, according to data compiled by Bloomberg. The Russell 2000 has a multiple of 26 and the Nasdaq Composite is valued at 21.

Orders for durable goods climbed for a third month in April, a sign U.S. factories will help the world’s biggest economy strengthen. Bookings for goods meant to last at least three years rose 0.8 percent after a 3.6 percent gain in the prior month that was stronger than previously reported, Commerce Department figures showed. The median forecast of 68 economists surveyed by Bloomberg called for a 0.7 percent drop.

In other economic reports, the Conference Board’s index of U.S. consumer confidence increased to 83 in May from 81.7 a month earlier. The S&P/Case-Shiller index of property prices in 20 U.S. cities increased 12.4 percent from March 2013 after a  12.9 percent gain in the year ended in February.

Hillshire rallied 22 percent to $45.19. Pilgrim’s Pride offered $45 a share in cash for the company, according to a statement today. The combined entity would have sales of $12.4 billion.

Utility stocks accounted for three of the 10 best performers in the S&P 500. PJM Interconnection LLC, which runs the largest U.S. power grid, said payments to electricity producers will more than double in the year starting June 2017 to ensure adequate generating capacity.

FirstEnergy rallied 5.6 percent to $33.23. Exelon increased 3.6 percent to $35.38 and NRG Energy advanced 4.7 percent to $35.31.

Pfizer Inc. added 0.4 percent to $29.61. The largest U.S. drugmaker yesterday stopped its attempt to buy AstraZeneca for 69.4 billion pounds ($117 billion), saying the bid rejected by its London-based competitor represented full value. Under U.K. takeover rules, Pfizer had until 5 p.m. London time yesterday to make a firm offer. It must now wait at least three months before talks can restart with AstraZeneca.

Financial companies had the second-biggest group gain in S&P 500, adding nearly 1 percent. Bank of America climbed 3.4 percent to $15.22. The second-biggest U.S. bank said regulators have 75 days to review the plan. The comprehensive capital analysis and review includes the company’s requests for dividends and buybacks. It had to resubmit its proposal after finding botched accounting on structured notes issued by Merrill Lynch.

Cisco Systems Inc. rose 0.8 percent to $24.71 as Deutsche Bank AG boosted its recommendation on the maker of networking equipment to buy from hold. The brokerage cited higher demand for the company’s new switching, routing, security, wireless and cloud-computing products.

Staples Inc. a maker of office stationary and furniture, slipped 2 percent to $11.42. Goldman Sachs Group Inc. cut its rating on the stock to sell from neutral, saying the company’s investments will offset the benefits of closing stores and cutting costs.

The Chicago Board Options Exchange Volatility Index rose 1.3 percent today to 11.51. The gauge of U.S. equity volatility known as the VIX dropped 8.7 percent last week to 11.36, its lowest level since March 2013.

Traders are loading up on VIX call options as history shows there’s a good chance stock-market volatility is about to increase. Calls on the measure, which become more valuable during times of market stress, outnumbered ones betting on a decrease in market swings by 3.4-to-1 this month, the most since 2008, data compiled by Bloomberg show. The index has closed below 15 for the past 27 days. A study from Sundial Capital Research Inc. shows the gauge usually rises after reaching such low levels.

Investors have been watching tensions between Russia and Ukraine as well as developments in Thailand after last week’s coup. Ukraine’s government said it inflicted “significant” losses on pro-Russian rebels and retook a major eastern airport a day after President-elect Petro Poroshenko vowed to wipe out the separatists. The violence highlights that Poroshenko faces a difficult task of uniting Ukraine after his May 25 presidential election victory.

Have a wonderful evening everyone.

Be magnificent!

What is a family?  It is the place where we feel an atmosphere of love and unity.

And if you can feel this unity in a broader sphere, then gradually your family ties will disappear.

What is the purpose of family life?

It is where we can share emotions however we need to and as freely as possible.

The individual is the one who is cut off, separated.

When you are part of a group,

living for others, you broaden yourself.

This really is family life.

Swami Prajnanpad, 1891-1974

As ever,

Carolann

Say little and do much.

from the Pirkei Avod

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