September 26, 2014 Newsletter

Dear Friends,

Tangents:

Poet T.S. Eliot  was born on this day in 1888.

We shall not cease from our exploration and at the end of all our exploring, we shall arrive where  we started and know the place for the first time. –T.S. Eliot.

Going to see comedian Russell Peter’s show in Vancouver tomorrow night, his “Almost Famous World Tour” – should be a lot of laughs – still the best medicine!

PHOTOS OF THE DAY

Chris Vierra, renowned pumpkin carver from Villafane Studios, creates a lifelike Tyrannosaurus Rex sculpture using pumpkins and squash at Field Station: Dinosaurs, a 20-acre outdoor Jurassic learning expedition and family tourist attraction in Secaucus, N.J. Charles Sykes/Invision for Field Station: Dinosaurs/AP

The pack rides during the Men Under 23 road race over 113 miles of the Road Cycling World Championships in Ponferrada, northwestern Spain. Daniel Ochoa de Olza/AP

Market Closes for September 26^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Sept. 26 (Bloomberg) — Canadian stocks advanced the most in five weeks, rebounding from a three-month low, as Bombardier Inc. and BlackBerry Ltd. rallied while crude producers climbed on speculation U.S. economic growth will increase demand.

     Bombardier jumped the most since April after signing a firm purchase agreement with Macquarie AirFinance to sell at least 40 C-Series aircraft. BlackBerry Ltd. added 5.2 percent after reporting a narrower loss than analysts’ projected and selling out its new Passport smartphone. Toronto-Dominion Bank, the nation’s largest lender, gained 1 percent as banks snapped a five-day loss. Torex Gold Resources Inc. and B2Gold Corp. retreated more than 1.9 percent to pace declines among raw- materials stocks.

     The Standard & Poor’s/TSX Composite Index added 133.20 points, or 0.9 percent to 15,026.77 at 4 p.m. in Toronto, the most since Aug. 19. The benchmark equity gauge lost 1.6 percent in the past five days, its fourth straight weekly decline, the longest losing streak this year.

     BlackPearl Resources Inc. jumped 4.7 percent to C$2.23 and RMP Energy Inc. climbed 3.4 percent C$6.96 as energy stocks rallied 1.3 percent as a group. Crude in New York surged 1.1 percent, capping the biggest weekly gain in a month.

     The U.S. economy grew a revised 4.6 percent in the second quarter, up from a previous estimate of 4.2 percent. Busier assembly lines at the nation’s factories and job growth that’s kept Americans spending indicate companies are a bit more upbeat about the prospects for demand.

     Torex Gold declined 1.9 percent to C$1.52 and B2Gold lost 3.8 percent to C$2.27 as the S&P/TSX Materials Index fell 0.1 percent.

     BlackBerry rose 5.2 percent to C$11.44, snapping a three- day loss. The smartphone maker has sold 200,000 of its new square-screen Passport phone in its debut this week and reported a net loss of 2 cents a share, ahead of the 16-cent deficit forecast by analysts.

US

By Callie Bost

     Sept. 26 (Bloomberg) — U.S. stocks rebounded from the worst day since July, with the Standard & Poor’s 500 Index jumping the most in five weeks, as corporate results topped estimates and data showed the fastest economic growth since 2011.

     Nike Inc. jumped 12 percent after reporting first-quarter profit that exceeded analysts’ estimates. Micron Technology Inc. added 6.8 percent after a surge in quarterly sales beat projections. Yahoo! Inc. jumped after Starboard Value LP said it wants the Web portal to explore a combination with AOL Inc. Janus Capital Group Inc. rallied 43 percent after hiring Bill Gross, co-founder and co-chief investment officer of Pacific Investment Management Co.

     The S&P 500 rose 0.9 percent to 1,982.85 at 4 p.m. in New York. The equity benchmark slumped the most since July yesterday and lost 1.4 percent in the past five days, its worst week in eight. The Dow Jones Industrial Average added 165.88 points, or 1 percent, to 17,113.15, its best rally since Aug. 18. The Dow dropped 1 percent this week. About 5.4 billion shares changed hands on U.S. exchanges today, 12 percent below the three-month average.

     “With some decent economic news in GDP, we’re now just seeing an oversold bounce as people get in line for the end of the quarter,” Ryan Detrick, a Cincinnati-based market strategist at the investment research firm, said in a phone interview. “We kept that beach ball down for a while and now it’s popping back up.”                        

     Equities extended gains in afternoon trading as the S&P 500 moved above its average price for the past 50 days. The gauge dropped below the level yesterday for the first time since August. The index has advanced 7.3 percent this year, extending a bull market that has nearly tripled its level since 2009, amid continued Federal Reserve stimulus even as the economic recovery shows signs of strengthening.

     The S&P 500 had fallen 2.3 percent since reaching a record on Sept. 18. Apple Inc., the largest company in the gauge, led a 1.6 percent selloff yesterday and dragged the Nasdaq 100 Index to its worst performance since April.

     The Nasdaq 100 rebounded 1.2 percent today while the Russell 2000 Index added 0.8 percent after a 1.6 percent selloff yesterday. Apple advanced 2.8 percent.

     “I do think it’s still a buy the dips market,” James Liu, global market strategist at JP Morgan Funds in New York, said by phone. The firm oversees about $400 billion in the U.S. “There’s always short-term news that can derail the market. But in the end, the underlying strength of the U.S. market still comes back so you’ve had upward momentum despite the dips.”

     The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX, retreated 5.1 percent to 14.85 today. The index rallied 18 percent yesterday, the most since July, and added 23 percent this week.

     Data today showed gross domestic product grew at a revised 4.6 percent annualized rate, up from a previous estimate of 4.2 percent, as companies stepped up investment and households boosted spending. A separate report indicated consumer confidence climbed in September to a 14-month high as Americans’ outlooks for the economy improved.

     The Fed last week maintained a commitment to keep interest rates near zero for a considerable time after completing asset purchases. The Fed also said that the timing could move forward if data continues to exceed expectations. Investors are analyzing reports to assess whether growth is strong enough to withstand higher interest rates.

     Economic reports on employment and output from the manufacturing and services industries are due next week.

     “Clearly the economy has seen varying degrees of improvement, but the level of improvement is not at where it warrants higher interest rates,” Terry Sandven, chief equity strategist at Minneapolis-based U.S. Bank Wealth Management, said by phone. “At present, it’s too early to put the bear suit on. It’s a ’buy on the dips’ equity and we may grind higher until earnings.”

     All of the 10 main S&P 500 groups advanced today. Producers of consumer-discretionary products added 1.1 percent, while energy shares surged 1.3 percent.

     Nike Inc. rallied 12 percent to a record $89.50. The world’s largest sporting-goods maker, posted first-quarter profit that topped analysts’ estimates after the FIFA World Cup soccer tournament boosted sales.

     Technology shares jumped 1.2 percent, as Micron and Yahoo surged. The group had its worst day since April yesterday.

     Yahoo added 4.4 percent to $40.66. Starboard, which acquired a stake in the company, said Yahoo should review a tie- up with AOL to “unlock value.” AOL shares gained 3.7 percent to $44.55.

     Micron Technology added 6.8 percent to $33.84. The largest U.S. maker of computer-memory chips said fourth-quarter sales rose 49 percent, exceeding analysts’ estimates, as corporate demand for personal computers boosted prices.

     Janus Capital surged 43 percent to $15.89, the highest since 2008. Gross is leaving Pimco amid record redemptions at his main mutual fund, the $222 billion Pimco Total Return fund. Allianz SE, the German insurer that owns Pimco, declined 6.2 percent in Frankfurt, the most since 2011.

     “It’s a coup for Janus and it shows you with the stock price today how much investors weigh having Gross at Pimco,” said Kevin Headland, director of the portfolio advisory group at Manulife Asset Management in Toronto. The firm manages $281 billion. “The name of the person is the biggest name we have out there in North American money management, he’s all over the news and the news is quite shocking, so it drives people to take the money out and see where the chips lie.”                          

     Pimco’s Global StocksPLUS & Income Fund slipped 5.7 percent, while the firm’s High Income Fund decreased 6.1 percent, after earlier falling the most in almost two years.

     Closed-end funds bore the brunt of the selling because they aren’t subject to the intraday redemption and creation processes that cause exchange-traded funds to hew to the market prices of their underlying assets. For instance, as of yesterday, the Global StockPlus & Income fund traded at a 78 percent premium to its net asset value, while the High Income Fund cost 46 percent more than the value of its bonds.

     “A lot of people bought into Pimco because of Bill Gross who was the face of the organization and so they’re shooting first and asking questions later,” Bill Mann, chief investment officer of Alexandria, Virginia-based Motley Fool Asset Management LLC, said by phone.
 

Have  a wonderful weekend everyone.

Be magnificent!
 

Bees suck nectar from many different flowers, and then make honey.

One drop of honey cannot claim to come from one flower, and another drop of honey from another flower,

the honey is a single consistent whole.

In the same way, all beings are one even though they are not aware of this.

The tiger and the lion, the wolf and the boar, the worm and the moth, the gnat and the mosquito,

all come from the soul, and are part of the soul.

Chandogya Upanishad

As ever,

Carolann

With the new day comes new strength and new thoughts.

                                   -Eleanor Roosevelt, 1884-1962

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