January 5, 2016 Newsletter

Dear Friends,

Tangents:

Just returned last night from spending the holidays in New Zealand.  What a beautiful country – breath-taking scenery, fabulous people and great sailing too.   We went fly-fishing one day – our first time – and we both loved it.  By the end of the first day, I began to understand the aesthetic quality of this beguiling activity. 

Talk soon and the very best to you and yours in this New Year that lies ahead.

Warmest regards, Carolann.

PHOTOS OF THE DAY

A campaigner against the building of a third Heathrow Airport runway helps plant black paper planes in Victoria Gardens next to Parliament in London, Tuesday. 2,000 planes were planted, the estimated number of planes that would use the new runway daily. Kirsty Wigglesworth/AP

People visit ice sculptures illuminated by color lights on the opening day of the Harbin International Ice and Snow Festival in the northern city of Harbin, Heilongjiang province, China, Tuesday. Aly Song/Reuters

Market Closes for January 5^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canadian

By Eric Lam

     (Bloomberg) — Canadian stocks fell a fifth day, the longest streak of losses since November, as declines among retail and raw material companies offset a rebound in energy producers.

     The Standard & Poor’s/TSX Composite Index dropped 7.01 points to 12,920.14 at 4 p.m. in Toronto, paring earlier losses of as much as 0.7 percent. The gauge had its worst opening day yesterday since 2005.

     Magna International Inc., the largest North American auto- parts supplier, fell a sixth straight day after U.S. automakers Ford Motor Co. and General Motors Co. tumbled in New York after missing December sales estimates.

     Fertilizer maker Potash Corp. of Saskatchewan Inc. dropped 2.4 percent to lead raw-materials producers lower. Industrial shares also fell. Canadian National Railway Co. fell 1.3 percent and struggling airplane manufacturer Bombardier Inc. dropped 2.2 percent.

     Energy stocks reversed losses in the final hour of trading. Canadian Natural Resources Ltd. added 2.1 percent and Encana Corp. increased 3.7 percent. Oil fell to a two-week low, holding losses below $37 a barrel in New York ahead of U.S. government supply data Wednesday forecast to be little-changed, according to a Bloomberg survey.

     Valeant Pharmaceuticals International Inc. rose 2.8 percent. Shares had lost 3.2 percent in the last two trading sessions after a regulatory filing on Thursday showed Bill Ackman, the activist investor who has been a staunch defender of Valeant, trimmed his fund’s holdings of the stock for tax reasons. Ackman’s Pershing Square Capital Management sold about 5 million shares of Valeant in order to create a tax loss for investors in two accounts.

US

By Oliver Renick and Dani Burger

     (Bloomberg) — U.S. stocks closed little changed after China’s move to stabilize its financial markets left investors to focus on the prospects for global growth amid renewed selling in crude oil and weaker-than-expected auto sales.

     Gunmakers Smith & Wesson Holding Corp. and Sturm Ruger Co. surged at least 6.7 percent as President Barack Obama unveiled tougher restrictions on arms sales. Wal-Mart Stores Inc., a firearms seller, climbed 2.4 percent. General Motors Co. and Ford Motor Co. slumped after their December sales disappointed. Apple Inc., the world’s most valuable company, closed at its lowest since 2014 on a report it may cut production of an iPhone model. Walt Disney Co. slid 2 percent, down for a fifth day.

     The Standard & Poor’s 500 Index rose 0.2 percent to 2,016.71 at 4 p.m. in New York, after wavering between gains and losses following the gauge’s 1.5 percent drop on Monday. The Dow Jones Industrial Average added 9.72 points to 17,158.66. The Nasdaq Composite Index declined 0.2 percent. About 7 billion shares traded hands on U.S. exchanges, in line with the three- month average.

     “Overall, yesterday wasn’t too bad and may have even been an overreaction,” said Mark Kepner, an equity trader at Themis Trading LLC in Chatham, New Jersey. “We’ve been through this before with China — they’re in the process of changing their economy, you’re going to have ups and downs with that and it’s going to keep happening.”

     Stocks in China rose Tuesday in volatile trading, stabilizing after weaker factory data from the world’s second- largest economy sparked a worldwide selloff on Monday. State- backed funds were said to intervene after yesterday’s 7 percent plunge in the CSI 300 Index of large-capitalization companies listed in Shanghai and Shenzhen wiped out $590 billion of market value. European equities also climbed after a 2.5 percent rout on Monday.

     Even as yesterday ranked as the sixth-worst start to a year for the S&P 500 since 1932, the move is less surprising when compared with how the gauge usually fares. The index has moved an average 1.1 percent in either direction on opening day, compared with an average daily move of 0.77 percent on all other days.

     Following Monday’s selloff, investors stuck with what worked last year. Health-care and consumer staples shares, two of 2015’s best performers, were among the leaders. Technology shares slipped the most under Apple’s drag. Seven of the S&P 500’s 10 main industries rose, with phone companies posting the strongest advance.

     Sentiment has turned more cautious on stocks amid the Federal Reserve’s first interest-rate increase since 2006, and forecasts for little to no growth in corporate earnings before the spring. Strategists at Citigroup Inc. cut their view on U.S. equities to underweight Tuesday, saying that while they’re not especially bearish, they see better opportunities in Europe and Japan. “After outperforming for six consecutive years, maybe U.S. equities are due a breather,” the firm wrote in a note.

     The main U.S. equity benchmark slipped 0.7 percent in 2015 to cap its first annual drop since 2011, after reaching a record in May and suffering its first correction in four years in August amid concerns that China’s slowdown would crimp global growth.

     Fed officials expect the pace of future rate increases to be gradual, though they have stressed that the path depends on progress in economic data. A report Monday showed the fastest contraction in U.S. manufacturing in six years, adding to worries that weakness in China’s economy is spreading. Investors will look for further clues this week in data on services industry growth, factory activity, employment and minutes from the Fed’s December meeting.

     The Chicago Board Options Exchange Volatility Index fell 6.5 percent to 19.34. The measure of market turbulence known as the VIX jumped nearly 14 percent Monday, the most since Dec. 11 when the S&P 500 dropped 1.9 percent.

     “What people are looking at are the big three — global growth, especially Chinese growth, the impact of energy and a Fed that’s now in play,” said Stephen Wood, who helps manage $237 billion as chief market strategist for North America at Russell Investments in New York. “Oil is going to continue to be a volatile factor, not only in the broader market but also earnings.”

     Energy companies in the S&P 500 rose, erasing an earlier decline even as West Texas Intermediate crude sank more than 2 percent. Transocean Ltd. and Ensco Plc slipped more than 3.1 percent, which was overshadowed by Valero Energy Corp. and Occidental Petroleum Corp. climbing at least 1.6 percent. Oil dropped to a two-week low on speculation that a government report will show U.S. crude inventories climbed last week.                         

     Among shares moving on corporate news, Apple sank to its lowest level in more than 14 months and weighed on the technology group after Japan’s Nikkei Asian Review reported the company would reduce the output of its latest iPhones by about 30 percent in the first quarter of 2016. Apple supplier Skyworks Solutions Inc. lost 6 percent to its lowest in nearly a year.

     General Motors fell 2.6 percent to a three-month low after December sales disappointed. The fallout hit parts maker Delphi Automotive Plc and Goodyear Tire & Rubber Co., which dropped more than 2.7 percent. Dealer AutoNation Inc. lost 3.3 percent to its lowest since Sept. 29.

     Gunmaker shares rallied on speculation that sales of firearms will rise after President Barack Obama unveiled on Tuesday a package of executive actions to expand background checks.

     Smith & Wesson gained 11 percent to a record and Sturm Ruger added 6.8 percent to a five-month high. Gun sales have surged in recent years any time the threat of new restrictions has made news, normally in the aftermath of mass shootings.

     Wal-Mart led the Dow for a second day, rising 2.4 percent to its highest since Oct. 13 as gun sellers also advanced. The retail giant is recovering from a 29 percent plunge last year, the most since 1974. Dick’s Sporting Goods Inc. and Cabela’s Inc. rose at least 1.3 percent.

     Joining Wal-Mart to boost the consumer staples group, cigarette makers Reynolds American Inc. and Altria Group Inc. gained more than 2 percent. Grocery chain Kroger Co. added 2.3 percent.

Have a wonderful evening everyone.

Be magnificent!

Have you ever tried living with yourself?

If so, you will begin to see that yourself is not a static state,

it is a fresh living thing.

And to live with a living thing your mind must also be alive.

And it cannot be alive if it is caught in opinions, judgements, and values.

Krishnamurti

As ever,

Carolann

Start where you are. Use what you have.  Do what you can.

                                             -Arthur Ashe, 1943-1993

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

Portfolio Manager &

Senior Vice-President

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7