May 6, 2014 Newsletter

Dear Friends,

Tangents:

In the past, I have shared a couple pictures taken by my friend Joe Broadfoot, whose birthday also happens to be today. Recently he was out taking pictures of the mountains and one of the pictures literally took my breath away.  For someone who has only been taking pictures for a year and a half, his talent is truly amazing.  He has the photographer eye, where he can see a backdrop and by using his creativity, turns it into a stunning picture.  The photo below shows Mt. Baker in the background, with a view of the city line.  This picture really gives effect to how big the mountains are, as well as reminds us of what a beautiful city we live in!

“All life is an experiment. The more experiments you make the better.” – Ralph Waldo Emerson

Photos of the day:

Venezuelan artist Cristobal Ochoa (r.) and his performance partner Jean-Paul Fowler promote the Artist Open Houses part of the Brighton Festival with street art performance ‘Los conos de madre (‘mother’s cones’), on the seafront in Brighton. Artists open their homes during the annual Brighton Festival, now in its 48th year, every weekend during May. Luke MacGregor/Reuters

A hummingbird makes an approach to a handy feeder on May 5, 2014 in Thurston County, Wash. Steve Bloom/The Olympian/AP

Market Closes for May 6^th, 2014

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada
By Gerrit De Vynck

May 6 (Bloomberg) — Canadian stocks fell for a second day amid concern about global growth and as Wajax Corp. reported lower-than-estimated profit.

Wajax, which sells industrial machinery, slid 5.1 percent for the biggest drop in the Standard & Poor’s/TSX Composite Index. Canacol Energy Ltd. fell 5.2 percent after saying it would sell 15.8 million new shares. Air Canada rose 6 percent after reporting traffic in April was up 9 percent. Sherritt International Corp. fell 2.4 percent after investors rejected directors proposed by activist shareholder Clarke Inc.

The S&P/TSX retreated 84.74 points, or 0.6 percent, to 14,612.29 at 4 p.m. in Toronto, the biggest drop in more than three weeks. All 10 industries in the index fell, including losses of 1.1 percent for consumer-discretionary companies and 2 percent for technology shares.

The Organization for Economic Cooperation and Development cut its global growth forecast as expansions in China and other emerging markets slow. Developing nations are a key export destination for Canadian mining companies. Raw-material producers in the S&P/TSX slid 0.8 percent.

Ukraine continued its attack on pro-Russian separatists who had captured some towns in the country’s east. “The current campaign that’s being unfolded in eastern Ukraine has been priced into the markets,” said Macan Nia, who helps manage $269 billion with Manulife Asset Management Ltd. in Toronto.

“If we start seeing the same type of pro-Russian rallies in Moldova or in other countries like let’s say Estonia or Latvia, then I think the markets would react,” he said by phone.

Wajax fell 5.1 percent to C$33.75. The company reported first-quarter profit of 39 Canadian cents, missing the average analyst estimate compiled by Bloomberg.

Canacol Energy slumped 5.2 percent to C$7.73. The Calgary- based company said it plans to sell shares for C$7.90 each and use the proceeds to expand its capital program, according to a statement.

Air Canada rose 6 percent to C$8.29, the highest since the end of January. WestJet Airlines Ltd., Canada’s second-biggest airline after Air Canada, said yesterday its April traffic grew 6.5 percent year over year.

Sherritt International, which mines and refines nickel, fell 2.4 percent to C$4.47 as investors voted against board nominees proposed by Clarke Inc. The activist shareholder said in December it owns 5.2 percent of the company and has called for Sherritt to reduce debt instead of funding acquisitions.

US
By Stephen Kirkland and Lu Wang

May 6 (Bloomberg) — U.S. stocks fell for the third time in four days as American International Group Inc.’s profit disappointed investors and Twitter Inc. slumped. The euro and Spanish bonds gained on signs economies are strengthening.

The Standard & Poor’s 500 Index fell 0.9 percent at 4 p.m. in New York as AIG led financials lower. The Nasdaq Composite Index sank 1.4 percent while Twitter slid 18 percent and an exchange-traded fund tracking social media stocks slid to the lowest since July. Ten-year Treasury yields lost 1.5 basis points to 2.59 percent. The euro rose 0.4 percent versus the dollar while the pound added 0.7 percent. Spain’s 10-year yield fell to a record. Nickel and lead rose at least 0.9 percent.

Twitter sank as about 480 million shares from insiders became eligible for sale, more than quadrupling the amount available for trading. After financial markets closed in New York, Chinese Internet company Alibaba Group Holding Ltd. filed for what could become the largest U.S. initial public offering ever. The U.S. trade deficit narrowed as exports grew the most in nine months. Spanish jobless claims fell and services growth quickened in Germany, Italy and Ireland in April.

“It’s not a robust season,” Peter Tuz, who helps manage more than $450 million as president of Chase Investment Counsel Corp. in Charlottesville, Virginia, said by phone. “The market is going to be range bound without a clear trend until economic statistics point one way or another, and companies’ outlooks point one way or another.”

U.S. stocks rose yesterday as an expansion in American service industries offset concern over growth in China and political tensions in Ukraine. The Dow Jones Industrial Average last week climbed to an all-time high, while the S&P 500 briefly rose above its record closing price.

Merck & Co., Pfizer Inc., Home Depot Inc. and JPMorgan Chase & Co. lost at least 1.6 percent to pace declines in 27 of the 30 stocks in the Dow today. AIG, the largest commercial insurer in the U.S. and Canada, slid 4.1 percent after saying profit declined 27 percent as claims costs climbed at the property-casualty business.

Twitter sank to $31.85, extending its 2014 loss to 50 percent. The stock sold for $26 in its initial public offering in November and closed as high as $73.31 in December.

Other Internet stocks were punished. Yelp Inc. slid 13 percent, the most since November 2012, while Pandora Media Inc. lost 8.9 percent after plunging 17 percent on April 25. LinkedIn Corp. decreased 5.7 percent while Facebook Inc. and Angie’s List Inc. fell more than 4 percent.

Along with Twitter, those companies make up some of the biggest holdings in the Global X Social Media ETF, an exchange- traded fund listed on the Nasdaq Stock Market. That security declined 3.8 percent today, the sixth time in two weeks it has fallen more than 1 percent. It’s down 21 percent in 2014 after rising 64 percent last year.

David Einhorn, the hedge-fund manager who warned of a bubble in technology stocks two weeks ago, refined his stance by saying he’s bullish on the industry and that companies including Apple Inc. look underpriced.

The comments elaborate on an April 22 investor letter when he described an unjustified surge in technology stocks, reminiscent of the late 1990s, and said he was betting against a group of them. Einhorn’s holdings include investments in iPhone maker Apple, Micron Technology Inc. and Marvell Technology Group Ltd., which are “quite inexpensive,” he said on today’s call.

“However, we have identified a number of momentum technology stocks that have reached prices beyond any normal sense of valuation,” he said. “We believe that they are in a bubble and we have shorted a good number of them in what we call the ‘bubble basket.’”

There are dozens of companies in that group, he told Bloomberg Television’s Erik Schatzker and Stephanie Ruhle in an interview today, without providing specifics. The stocks are “completely out of control in terms of their valuation,” he said.

Three shares fell for every two that gained in the Stoxx Europe 600, with trading volumes 18 percent lower than the 30- day average, according to data compiled by Bloomberg. Stocks in the U.K. fell as the equity market reopened following a holiday.

Barclays, Britain’s second-biggest bank, fell 5.2 percent after saying pretax profit dropped 5 percent. Balfour Beatty Plc sank 20 percent after the chief executive officer of Britain’s biggest construction company quit.

Fugro NV lost 7.2 percent after the deepwater-oilfield surveyor forecast its first-half profit margin dropped from the same period a year ago.

PostNL NV rallied 10 percent after the Dutch postal company reported an increase in underlying operating income.

The yield on 10-year Italian bonds slid four basis points to a record 3 percent. The rate on benchmark German bunds was little changed at 1.46 percent.

Spanish jobless claims fell 111,565 in April, the Labor Ministry in Madrid said today, exceeding the median estimate in a Bloomberg News survey for a drop of 51,000. A Purchasing Managers’ Index for services in the euro region rose to 53.1 last month from 52.2 in March, Markit Economics said. A gauge of employment in the U.K. services industry jumped to 56 from 53.5.

“There’s better economic data out of Spain this morning,” said Rainer Guntermann, a fixed-income strategist at Commerzbank AG in Frankfurt. “Economic fundamentals in the peripheral countries are improving and that explains the rally here. This trend is not yet over.”

The Organization for Economic Cooperation and Development cut its global growth forecast as expansions in China and other emerging markets slow. The world economy will expand 3.4 percent this year instead of the 3.6 percent predicted in November, according to its semi-annual report today.

Ukraine’s efforts to regain ground from pro-Russian militants in eastern cities were undermined as insurgents killed four government troops and downed a military helicopter.

Efforts by Ukraine’s government to expel insurgents from the easternmost regions are at risk of stalling before a May 25 presidential election. German Chancellor Angela Merkel and U.S. President Barack Obama have set the vote as a deadline for Russia to reject the separatists’ actions and withdraw support or possibly face deeper economic sanctions.

Russia is convinced that Ukraine has a way out of the crisis, Foreign Minister Sergei Lavrov said today.

Stocks advanced for the first time in three days in Moscow, with the Micex Index climbing 1.6 percent. The ruble gained 0.9 percent against the dollar. Ukraine’s hryvnia slipped 1.4 percent while the equity gauge was little changed.

The S&P GSCI gauge of 24 commodities increased less than 0.1 percent. Nickel jumped 33 percent this year as Indonesia banned exports of unrefined ore. Lead dropped about 5 percent this year.

U.K. natural gas fell 3 percent to 45.75 pence per therm today amid forecasts for warm weather. The high temperature in London will be 19 degrees Celsius (66 Fahrenheit) today, 3 degrees above normal, according to AccuWeather Inc. in State College, Pennsylvania.

Have a wonderful evening everyone.

Be magnificent!

“Thousands of candles can be lighted from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared.” – Buddha

Amanda Parnham

Assistant to Carolann Steinhoff

Queensbury Securities

Suite 340A, 730 View St.,

Victoria, B.C. V8X 3Y7

Tel: 778-430-5808

Fax: 778-430-5828