March 4, 2016 Newsletter

Dear Friends,

Tangents:

On March 4^th, 1802, Dorothy Wordsworth wrote in her journal:

Since he [Wordsworth, away for a few days] has left me at half-past eleven (it is now two) I have been putting the drawers into order, laid by his clothes which we had thrown here and there and everywhere, filed two months’ newspapers and got my dinner, two boiled eggs and two apple tarts.  I have set Molly on to clear the garden a little, and I myself have helped.  I transplanted some snowdrops – the bees are busy.  William has a nice bright day.  It was hard frost in the night.  The robins are singing sweetly.  Now for my walk.  I will be busy.  I will look well, and be well when he comes back to me.  O the Darling!  Here is one of his bitten apples.  I can hardly find in my heart to throw it into the fire. –from The Book of Days.

Springtime is the land awakening.
The March winds are the morning yawn.

                              -Lewis Grizzard

PHOTOS OF THE DAY

St. Paul’s Cathedral is seen from Henry’s Mound in Richmond Park in west London, Britain, Friday. The vista, ten miles west of St. Paul’s, is one of eight protected views across greater London, and remains unimpeded after several centuries despite the huge growth of skyscrapers and office buildings in the city. Toby Melville/Reuters

A tower belonging to the Abengoa solar plant is seen at the ‘Solucar’ solar park in Sanlucar la Mayor, near the Andalusian capital of Seville, southern Spain, Friday. Marcelo del Pozo/Reuters

Market Closes for March 4^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks continued to rally, extending the longest rally in almost a year to seven days as raw-materials jumped after gold cruised into a bull market.

     The benchmark equity index has surged 3.7 percent in the past seven sessions, for the longest winning streak since April. The resource-rich gauge has benefited from a rebound in commodities prices from crude to copper and precious metals, while an unexpected expansion in the nation’s economy bolstered consumer equities.

     The Standard & Poor’s/TSX Composite Index rose 0.7 percent to 13,212.50 at 4 p.m. in Toronto. The surge has erased a loss for the year that almost reached 10 percent, leaving the Canadian benchmark and shares in New Zealand as the only markets in the developed world in positive territory.

     Shares in the Canadian gauge trade at almost 21 times earnings, roughly 16 percent more expensive than the valuation of the benchmark U.S. equity index, the Standard & Poor’s 500 Index, data compiled by Bloomberg show. Canada’s resource-rich index has benefited from a surge in the price of gold and crude’s rebound from a 12-year low.

     U.S. stocks ended the day higher as investors weighed a mixed jobs report with a surge in hiring offset by negative wage growth. Canada reports February jobs next week.

     Raw-materials and energy producers rallied as seven of 10 industries advanced. Trading volume was 37 percent higher than the 30-day average.

     B2Gold Corp. and Eldorado Gold Corp. surged at least 6.9 percent to lead gold producers higher. The S&P/TSX Materials Index, the best-performing industry in Canada this year, has soared 30 percent from a January low. Gold jumped this week more than 20 percent since a December low. First Quantum Minerals Ltd. added 5.9 percent to lead base metals higher with copper.

     Canadian Natural Resources Ltd., Canada’s largest heavy- crude producer, added 4.7 percent to extend a six-day rally, leading energy producers higher. Canadian energy stocks have soared 23 percent after reaching a decade low in January, rapidly returning to a bull market as producers cut costs to weather the slide in crude prices over the past year.

     Crude futures posted a third weekly gain, the longest run since May amid signs of lower output in the U.S. and OPEC. Oil remains down about 2 percent this year.

     Valeant Pharmaceuticals International Inc. fell 5.5 percent for a second day of losses, extending a 2013 low. Valeant CEO Mike Pearson said it would be “reasonable to take a few weeks” to re-engage with his company’s operations before hosting an outlook call, Jefferies analyst David Steinberg said in a report. Shares of Valeant have plunged 77 percent from an August high amid intense scrutiny from investors and lawmakers over its pricing practices.

US

By Inyoung Hwang and Lu Wang

     (Bloomberg) — U.S. stocks rose as Treasuries fell, as investors weighed a surge in hiring that came with negative wage growth, clouding the path of monetary policy. Emerging-market equities posted their best week since December 2011.

     Gains by technology and financial shares offset health-care companies as the Standard & Poor’s 500 Index had a third straight weekly advance. The yield on the 10-year Treasury note climbed to the highest level in a month, as better-than-expected job growth bolstered bets the Federal Reserve will raise interest rates this year. A gauge of emerging-market currencies erased losses for the year, with Brazil’s real jumping after news the federal police raided the house of former President Luiz Inacio Lula da Silva, fueling speculation a change in government is imminent.

     The jobs report adds to a string of data showing that the U.S. economy continues to strengthen, though at a pace not strong enough to force the Fed to raise interest rates at its policy meeting in March. Global equities have recouped more than half of this year’s losses since sinking to a 2 1/2-year low on Feb. 11, as speculation central banks from Asia to Europe stand ready to boost stimulus. China may announce its plans to revive growth at this weekend’s annual meeting of the National People’s Congress.

     “The actual job gains are better than expected, which is good for those who are looking to the economy to continue to elicit positive activity,” Mark Luschini, chief investment strategist in Philadelphia at Janney Montgomery Scott LLC, said by phone. “At the same time, the backup in wage gains suggests that while the labor market improved, it’s far from being tight as to warrant wage inflation, which would draw the Fed from the sidelines.”

          The S&P 500 added 0.3 percent to 1,999.99 at 4 p.m. in New York, after the benchmark surpassed 2,000 during the day, a level it has failed to close above since the start of the year. The index has rallied 9.3 percent from a 22-month low on Feb. 11 and is now lower by 2.2 percent for the year. The Dow Jones Industrial Average also advanced to surpass 17,000.

     “Part of this is technical, with people saying sell into any decent move over 2,000 with resistance between the 2,000 and 2,020 level,” Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC, said by phone. “June is now also more possible for a rate rise so that’s also gotta be coming into play. You combine that with the rally we had it’s not surprising that sellers came in here.”

     Today’s report showed employers added more workers in February than projected though wages unexpectedly declined. The jobless rate held at 4.9 percent. Bigger wage gains are needed help move inflation closer to the Fed’s goal.

     Futures traders put the odds of the second interest rate hike at 6 percent for the Fed’s March meeting, though projections for later in the year continue to rise, with the September meeting showing a greater than 50 percent likelihood.

     The Stoxx Europe 600 climbed 0.7 percent. The benchmark gauge posted a third weekly gain, amid rallies in miners, carmakers and energy producers.

     The MSCI Emerging Markets Index rose a sixth day, climbing 1.6 percent. The index jumped 7.1 percent this week.

     Brazil’s real jumped and the Ibovespa had its best week since 2008 after entering a bull market yesterday. The police raid of Lula’s home ignited wagers that support will increase to impeach his mentee and successor, President Dilma Rousseff. While markets have been split in the past about whether a Rousseff ouster would be good or bad, many now say it may be the only way out of political quagmire.

     China’s intervention helped the nation’s benchmark index cap its best weekly gain of 2016 before policy makers meet to approve a five-year road map for the economy. The Shanghai Composite Index rose 0.5 percent, extending this week’s gain to 3.9 percent.

     State-backed funds bought primarily bank shares, while some local branches of the securities regulator asked listed companies, mutual funds and brokerages to stabilize the market during the National People’s Congress and the Chinese People’s Political Consultative Conference, said people with direct knowledge of the situation, who asked not to be named because the matter isn’t public.

     Copper jumped 3.6 percent to the highest level in four months on bets for more stimulus in China, the largest consumer of metals. Used in everything from property construction to high-voltage cables and mobile phones, copper is a key indicator for global inflation, helping drive movements in bonds and currency markets.

     Oil had a third weekly gain as the Organization of Petroleum Exporting Countries prepared for a meeting with other major producers on March 20 to renew talks on an output freeze. West Texas Intermediate rose 3.9 percent, to $35.92 a barrel, the highest settlement since Jan. 5.

     U.S. natural gas fell as much as 1.7 percent to $1.611 per million British thermal units, the lowest level since 1998, amid forecasts for mild weather this month.

     The Bloomberg Dollar Spot Index fell 0.4 percent after the payrolls data, after the jobs report showed wages unexpectedly declined last month.

     An index tracking currencies of developing economies advanced 0.8 percent for the fifth day of gains. The measure is now up 1.4 percent for 2016 after wiping out losses this week.

     Ten-year Treasuries note yields rose four basis points to 1.88 percent. Germany’s 10-year bund yield climbed seven basis points to 0.24 percent.

     The risk premium on the Markit CDX North American High Yield Index, a credit-default swaps benchmark tied to the debt of 100 junk-rated companies, fell for a eighth day to the lowest level of the year.

Have a wonderful weekend everyone.

Be magnificent!

When the poor come to you in great need, begging for food,

do not harden your hearts against them.

Remember that the poor may once have been rich,

and you may one day be poor.

When you see people who are thin for lack of food,

beg them to accept your help;

remember that you may need their friendship in times to come.

Rig Veda

As ever,
 

Carolann

Courage is grace under pressure.

   -Ernest Hemingway, 1899-1961

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