September 9, 2014 Newsletter

Dear Friends,

Tangents:

Beautiful full moon last night.  This time of year it is spectacular as it rises in the early evening sky.

On this day in 1776, Congress named the United States of America from the previous name of United Colonies.

This month’s issue of Bon Apétit lists the Best New Restaurants for the year.  One of the top ten is Westward in Seattle.

PHOTOS OF THE DAY

Apple CEO Tim Cook speaks about the Apple Watch during an Apple event at the Flint Center in Cupertino, California. Stephen Lam/Reuters

This image released by Parks Canada shows a side-scan sonar image of ship on the sea floor in northern Canada. Canadian Prime Minister Stephen Harper announced that one of two fabled British explorer ships, the HMS Erebus and HMS Terror, that disappeared in the Arctic more 160 years ago has been found. The ships were last seen in the late 1840s. The Prime Minister said it remains unclear which ship has been found, but images show there’s enough information to confirm it’s one of the pair. Parks Canada/AP

Market Closes for September 9^th, 2014    

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Sept. 9 (Bloomberg) — Canadian stocks rose, ending a three-day slump, as oil producers gained before a U.S. supply report to offset a drop in gold producers.

     Canexus Corp. jumped 10 percent as the company will resume construction at its rail hub. Encana Corp. advanced 3.3 percent after deciding to sell its controlling stake in PrairieSky Royalty Ltd. for C$2.6 billion following the unit’s initial offering. PrairieSky declined 4.4 percent.

     The Standard & Poor’s/TSX Composite Index rose 27.42 points, or 0.2 percent, to 15,536.81 at 4 p.m. in Toronto. It closed Sept. 3 at a record 15,657.63.

     The S&P/TSX has advanced 14 percent this year, the second- best performer among the world’s developed markets behind Denmark. Trading volume in the S&P/TSX was 14 percent higher than the 30-day average today.

     Encana, Canada’s second-largest natural gas producer, climbed 3.3 percent to C$25.51, the highest since June. A group of banks including Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, which co-led PrairieSky’s IPO in May, will buy Encana’s remaining stake for C$36.50 a share, 30 percent more than the IPO price. The offering was the largest in Canada in 14 years.

     PrairieSky dropped 4.4 percent to C$36.40, its biggest decrease ever.

     Canadian housing starts fell for the first time in five months in August, as declines in Ontario outweighed gains on the west coast. Work on new homes fell 3.7 percent to 192,368 units at a seasonally adjusted annual pace, Canada Mortgage & Housing Corp. said. The figure trailed the 195,000 median forecast.

     Raging River Exploration Inc. increased 4.1 percent to C$10.78 and Whitecap Resources Inc. added 0.6 percent to C$17.44 as West Texas Intermediate crude rose 9 cents to $92.75 a barrel from a seven-month low ahead of data forecast to show U.S.supplies fell.

     B2Gold Corp. lost 1.2 percent to C$2.43 and Argonaut Gold Inc. slipped 0.8 percent to C$3.97. Gold for December delivery retreated 0.5 percent to $1,248.50 an ounce in New York, dropping to a three-month low.

     Canexus surged 10 percent to C$4.93, the biggest gain since August, after a judge ruled in favor of Canexus in its dispute with MEG Energy Corp. over a pipeline construction agreement.

     Canexus estimates construction to link its Cold Lake pipeline system to MEG Energy’s pipeline will take about two weeks to complete.

US

By Elena Popina and Lu Wang

     Sept. 9 (Bloomberg) — U.S. stocks fell, with the Standard & Poor’s 500 Index declining the most in a month, as concerns grew that the Federal Reserve may raise interest rates sooner than anticipated and a rally in Apple Inc. disappeared.

     Apple wiped out a rally of as much as 4.8 percent after unveiling new products including larger-screen iPhones. Garmin Ltd. and Amazon.com Inc. dropped at least 3.5 percent, pacing declines int the technology-heavy Nasdaq 100 Index. McDonald’s Corp. retreated 1.5 percent as its monthly sales missed estimates. Home Depot Inc. lost 2.1 percent after confirming that hackers attacked its computer systems.

     The S&P 500 fell 0.7 percent to 1,988.44 at 4 p.m. in New York, for its largest retreat since Aug. 5. The Dow Jones Industrial Average lost 97.55 points, or 0.6 percent, to 17,013.87. The Nasdaq 100 slumped 0.8 percent, and the Russell 2000 Index of smaller companies tumbled 1.2 percent, its biggest drop since July 31. About 5.8 billion shares changed hands on U.S. exchanges, 3.5 percent above the three-month average.

     “There are still a number of people who fear the Fed will raise rates too soon, but I don’t think there’s anything to be gained by being early in raising interest rates,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. “If the Fed tightens too soon, it will drag the U.S. and the world into another recession.”

     The Fed is gauging the strength of the economy as it winds down a bond-buying program and considers the timing of raising rates. Policy officials next meet Sept. 16-17.

     Assessments of the strength of the economy are mixed, after gross domestic product expanded more than previously forecast in the second quarter, while a report on Sept. 5 showed the economy added fewer jobs than anticipated in August. Data this week will likely show a decline in weekly jobless claims and stronger retail sales, according to economists’ forecasts.

     Rick Rieder, BlackRock Inc.’s chief investment officer of fundamental fixed income in New York, said in a report that an improving labor market and signs of inflation argue for the Fed to boost borrowing costs. Meanwhile, former Fed Chairman Alan Greenspan said the U.S. economic rebound has been hindered by a slump in the construction industry as wage growth remains slow and credit conditions tight.

     Wall Street strategists have been raising their targets for the S&P 500. Gina Martin Adams at Wells Fargo & Co. and Tony Dwyer, a strategist at Canaccord Genuity Securities LLC, were the latest today to lift their forecasts for the S&P. They follow increased projections from Morgan Stanley and Deutsche Bank AG and a bullish rating on global stocks from Goldman Sachs Group Inc.’s portfolio strategy team.

     The S&P 500 retreated 0.3 percent yesterday after a five- week rally, its longest winning streak this year. The benchmark is trading at 16.6 times the projected earnings of its members, near the 16.8 multiple reached on Sept. 5 that was the highest valuation since the end of 2009, according to data compiled by Bloomberg.

     The S&P 500 had not posted a move of more than 0.5 percent in either direction for 14 straight days until today, the longest streak since 1995, data compiled by Bloomberg show. The last time the index fell more than 10 percent was three years ago.

     The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX, climbed 6.6 percent to 13.50 today, the most in more than a month. The gauge lost 29 percent last month, the biggest drop in almost three years.

     All 10 groups in the S&P 500 dropped today, with financial companies, utilities and phone shares losing more than 1 percent. Technology shares dropped 0.6 percent, reversing an earlier rally of 0.7 percent.

     Apple fell 0.4 percent to $97.99, after climbing to within one point of its intraday record of $103.74 reached last week. The shares have typically fallen at other events where it debuted new products. Apple is up 22 percent so far this year, exceeding the 7.6 percent gain for the S&P 500.

     The company announced a smartwatch, mobile-payments system, health applications and bigger-screen iPhones that all work together — in the biggest new lineup so far under Chief Executive Officer Tim Cook.

     Garmin Ltd. dropped 3.5 percent to $51.71. The maker of navigation services tumbled as much as 6.1 percent after Apple introduced the Apple Watch, which will include apps for map.

     Amazon.com Inc. retreated 3.7 percent, the most since July, to $329.75. The company yesterday cut the price of its Fire smartphone to 99 cents to boost adoption of the device.

     Other technology companies also slumped. Yahoo Inc. dropped 2.5 percent, EBay Inc. lost 2.8 percent, and Intel Corp. slid1.2 percent.

     Morgan Stanley dropped 2.7 percent to $33.91 and Goldman Sachs Group Inc. lost 1.5 percent to $177.40. The Fed is planning risk-based capital standards for banks that are tougher than those developed by their international counterparts, Fed Governor Daniel Tarullo told lawmakers today.

     McDonald’s retreated 1.5 percent to $91.09. The world’s largest restaurant chain said sales at stores open at least 13 months fell 3.7 percent in August as its U.S. slump continued for the fourth straight month.

     Home Depot lost 2.1 percent to $88.93 after it confirmed that hackers attacked its computer systems at stores in the U.S.

and Canada. The company, which didn’t disclose how many customers may have been affected, said the continuing investigation is focused on purchases made since April.

     Pinnacle Foods Inc. declined 4.7 percent to $31.99. Shareholders affiliated to Blackstone Group LP will sell 15 million shares in the company, according to a statement late yesterday. Blackstone held a 51 percent stake in Pinnacle as of June 30, according to data compiled by Bloomberg.

     Avon Products Inc. retreated 3.6 percent to $13.17. The company said yesterday that Kimberly Ross resigned as chief financial officer, effective Oct. 2. The cosmetics company has dropped 24 percent this year.

     Annie’s Inc. rallied 38 percent to $46.10. General Mills Inc., the maker of Cheerios, Bisquick and Yoplait, will buy the company for about $820 million, gaining a popular lineup of natural and organic foods. General Mills dropped 0.6 percent to $53.32.

Have a wonderful evening everyone.

Be magnificent!

That economics is untrue which ignores or disregards moral values.

The extension of the law of nonviolence in the domain of economics means nothing less

than the introduction of moral values as a factor to be considered with regulating international commerce.

Mahatma Gandhi

As ever,

Carolann

A man cannot be comfortable without his own approval.

                                        -Mark Twain, 1835-1910

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