September 16, 2014 Newsletter

Dear Friends,

Tangents:

On this date in 2008, the federal government provided an $85 billion emergency loan to AIG to rescue the world’s largest insurance company. The loan came one day after Lehman filed for bankruptcy and Merrill Lynch sold itself to Bank of America.

September 16, 1805,  Meriwether Lewis’s and William Clark’s  journals of their expedition from the Missouri River to the Pacific Ocean – William Clark writes:

A thickly timbered country of eight different kinds of pine, which are so covered with snow, that in passing through them we are continually covered with snow.  I have been wet and as cold in every part as I ever was in my life, indeed I was at one time fearful my feet would freeze in the thin moccasins which I wore,  After a short delay in the middle of the day, I took one man and proceeded on as fast as I could about six miles to a small branch passing to the right, halted and built fires for the party against their arrival which was at dusk, very cold and much fatigued.  We encamped at this branch in  a thickly timbered bottom which was scarcely large enough for us to lie level, men all wet, cold and hungry.  Killed a second colt which we all supped heartily on and thought it fine meat.

PHOTOS OF THE DAY

A thoroughbred is washed as the sun rises after an early morning workout at Woodbine racetrack in Toronto. Michael Burns Jr./The Canadian Press/AP

A cat is silhouetted as it walks over a fence in Sehnde near Hannover, northern Germany. Julian Stratenschulte/AP

Market Closes for September 16^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Sept. 16 (Bloomberg) — Canadian stocks rose from a one- month low, erasing an earlier loss, as commodity producers advanced after China’s central bank increased economic stimulus.

     Bankers Petroleum Ltd. and Raging River Exploration Inc. gained at least 2.4 percent to pace gains among oil producers. Cameco Corp. climbed 1.9 percent as uranium entered a bull market amid new sanctions against Russia. Atlantic Power Corp. plunged 33 percent after the company cut its dividend and said it will no longer seek to sell itself.

     The Standard & Poor’s/TSX Composite Index rose 27.98 points, or 0.2 percent, to 15,510.54 at 4 p.m. in Toronto. The gauge has fallen 0.9 percent since closing Sept. 3 at a record. It has advanced 14 percent this year, the second-best performer among the world’s developed markets behind Denmark.

     The Canadian stock index reversed losses after a report from Sina.com said China’s central bank has started a 500 billion ($81 billion) yuan standing lending-facility to the nation’s five biggest banks. The move comes amid signs that growth is slowing in the world’s second-biggest economy. China is also the biggest commodity consumer.

     West Texas Intermediate climbed to a two-week high after OPEC’s Secretary General said the group may cut output targets next year. The S&P/TSX Energy Index added 0.4 percent.

     U.S. Federal Reserve officials meet today and tomorrow to review policy amid speculation that the timeline for interest- rate increases may be brought forward.

     Seven of the 10 main industries in the S&P/TSX advanced on trading volume 26 percent higher than the 30-day average.

     Canadian factory sales rose to a record in July, surpassing the previous peak set in July 2008 before the last recession. The sales were led by a jump in auto shipments.

     Bombardier Inc. declined 0.4 percent to C$3.68 for a second day of losses. Analysts are concerned the company’s proposed CSeries jet, already two years late, will miss its target to be in service by the second half of 2015.

     Bombardier resumed flight trials earlier this month for the first time since an engine fire in May.

US

By Oliver Renick

     Sept. 16 (Bloomberg) — U.S. stocks advanced, erasing early losses, as rising oil prices spurred a rally in energy shares and China’s central bank reportedly started providing about $81 billion in loans to its biggest banks.

     Health-care stocks added 1.3 percent to lead gains among all 10 of the main industries in the Standard & Poor’s 500 Index. Humana Inc. climbed 3.7 percent after announcing a $2 billion plan to repurchase shares. Zillow Inc. jumped 6.1 percent after Stephens Inc. recommended buying the shares. Wynn Resorts Ltd. slumped amid concern labor protests in Macau will hurt casino earnings.

     The S&P 500 added 0.8 percent to 1,998.98 at 4 p.m. in New York, recovering from a morning loss of 0.3 percent. The Dow Jones Industrial Average climbed 100.83 points, or 0.6 percent, to 17,131.97, seven points below an all-time high. Trading of S&P 500 companies was the highest since Aug. 7 as investors awaited a Federal Reserve policy statement and press conference tomorrow.

     “The market sees the letters ’Q’ and ’E’ combined with China and it’s Happy New Year to the money printers and that’s what the jump is, they want that game to continue,” Joe Saluzzi, co-head of equity trading at Chatham, New Jersey-based Themis Trading LLC, said via phone. “They may not know how or why it’s happening. But get some new QE money in there and that’s how the market reacts.”

     Stocks extended gains as Sina.com reported that China’s central bank is starting a 500 billion yuan ($81.4 billion) standing lending-facility to the nation’s five biggest banks. The report cited Guotai Junan banking analyst Qiu Guanhua at Guotai Junan Securities Co.

     Fed officials, who start a two-day meeting today, are considering how much progress toward their goals of full employment and stable inflation would be needed to prompt the first rate increase since 2006. They will outline their outlook for the economy in quarterly projections for growth, unemployment, inflation and the benchmark federal funds rate.

     Chair Janet Yellen will hold a press conference after the policy announcement on Sept. 17. The S&P 500 had dropped 1.2 percent from its record earlier this month through yesterday.

     “At this point I think anything that comes out of the FOMC meeting can’t be negative, the market’s already expecting some sort of rate change on behalf of the committee certainly by the end of spring and if that’s the case, then economic conditions are supportive and that’s good for the market,” Ron Anari, the Jersey City-based senior vice president of trading at ICAP Plc, said via phone.

     Health-care, utilities and energy companies rose more than 1.1 percent to lead gains in all 10 of the main industry groups in the S&P 500. Exxon Mobil Corp. and Schlumberger Ltd. paced an advance in energy companies in the S&P 500. Oil climbed 2.1 percent to $94.86 a barrel as the report on stimulus in China extended an earlier rally triggered after OPEC’s secretary general said the group may cut output targets next year.

     Humana jumped 3.7 percent to $132.37 after announcing plans for the $2 billion share buyback expiring at the end of 2016. The new buyback replaces a prior $1 billion plan, which had about $782 million remaining.

     Zillow jumped 6.1 percent to $133.36 for its biggest gain since July. Stephens analyst John Campbell initiated the shares with an “overweight” rating and a $170 price estimate, saying the real-estate Web site still leads the category and is in the “early innings” of revenue growth and profitability.

     Wynn Resorts declined 0.5 percent to $179.87 as workers in Macau held protests that threaten to undermine the earnings of casinos there.

     Avanir Pharmaceuticals Inc. fell 3.4 percent to $12.06. The stock soared 85 percent yesterday after saying its experimental Alzheimer’s treatment AVP-923 significantly improved agitation in 220 patients.

     SodaStream International Ltd. added 1 percent to $31.79. The company is in talks to sell itself for $840 million to an unidentified British fund, TheMarker reported, citing people it didn’t name. The talks reflect a value of $40 a share, it said.

     Micron Technology Inc. added 4.8 percent to $31.45, almost erasing yesterday’s loss. The chipmaker may see significant upside from Japanese yen depreciation, according to Stern Agee analyst Vijay Rakesh.

Have a wonderful evening everyone.

Be magnificent!

To slight a single human being is to slight those divine powers

and thus harm not only that being but with him the whole world.

Mahatma Gandhi

As ever,

Carolann

All the arts we practice are apprenticeship.  The big art is our life.

                                                  -M.C. Richards, 1916-1999

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7