March 16, 2016 Newsletter

Dear Friends,

Tangents:

The Poem
Penillion for Pussy Riot
      –by John Kinsella

Faux fathers take
Pride away, rake
In the money
Quick fast and pray

Dead souls to make
The count, forsake
Their liberty.
‘Security’

is the serfdom
Of the kingdom
On earth: weapons-
Grade big truncheon

Penetration
To boost nation
Of God Father
To spite Mother.

Shake, rattle, roll.
Kiss sacred scroll
As if worship
is the fillip

To topple self-
Styled god-Himself
Master icon
And his henchmen.

       From ‘Drowning in Wheat’: Selected Poems

PHOTOS OF THE DAY

Horserace attendees wear hats and fascinators on ladies day during the Cheltenham Festival at Cheltenham Racecourse in England Wednesday. Paul Childs/Action Images/Reuters

A model presents a creation by designer ‘writtenafterwards’ during the Autumn/Winter 2016 Tokyo Fashion Week Wednesday. Thomas Peter/Reuters

Market Closes for March 16^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canada stocks rose for the first time in three days as commodities producers gained with crude and gold after the U.S. Federal Reserve scaled back forecasts for how high interest rates will rise this year.

     The Standard & Poor’s/TSX Composite Index rose 0.6 percent to 13,478.13 at 4 p.m. in Toronto, rebounding from a 0.9 percent loss in the previous two sessions. Canadian equities extended gains after the prospect for lower rates sank the U.S. dollar and in turn boosted the prices of resources from oil to copper.

     The central bank’s updated quarterly projections now imply two quarter-point increases this year, down from four in December, due to the potential impact of weaker global growth and financial-market turmoil. The decision came after data in Canada, showed that a gauge of manufacturing sales jumped more than expected, hinting at improvements in the nation’s economy.

     The S&P/TSX has jumped 14 percent after reaching a two-and- a-half year low in January, making it one of the best-performing developed markets in the world this year and posting returns ahead of the U.S., Germany and U.K. 

     The rebound has been led by raw-materials producers, which benefited from rising prices of gold and industrial metals. The advance has left the gauge trading at 21.5 times earnings, roughly 17 percent more expensive than the valuation of the U.S. equity benchmark, the Standard & Poor’s 500 Index, data compiled by Bloomberg show. 

     Canadian manufacturing sales rose 2.3 percent in January, more than four times the consensus economist forecast of a 0.5 percent advance, according to Statistics Canada data. 

     “Canadian exports are starting to show signs of life, and factories are responding in kind,” said Nick Exarhos, an economist with CIBC Capital Economics, in a note to clients.

     Raw-materials producers surged 3.6 percent, reversing an earlier loss, as gold climbed after the Fed decision. Barrick Gold and Goldcorp Inc. rallied more than 4.1 percent. Encana Corp. jumped 9.1 percent as energy producers also advanced.

     Valeant Pharmaceuticals International Inc. slipped 2.9 percent, extending its worst loss on record yesterday. A series of analysts including Nomura Securities’ Shibani Malhotra, slashed price targets on the stock after the company provided lower 2016 outlook yesterday.

     Valeant, briefly the largest company in Canada by market capitalization last year, has lost more than three-quarters of its value from an August peak as regulators and investors have scrutinized its business practices. The company has also had to grapple with an extended medical leave from Chief Executive Officer Michael Pearson, who only returned recently, while pulling its financial guidance and delaying fourth-quarter results.

US

By Jiayue Huang, Oliver Renick and Dani Burger

     (Bloomberg) — The Standard & Poor’s 500 Indexclosed at its highest level this year as the Federal Reserve signaled a slower pace of interest-rate increases amid the potential impact from weaker global growth and financial-market turmoil.

     Commodity shares led the advance as crude rallied with metals prices after the Fed decision sent the dollar tumbling against major peers. Copper miner Freeport-McMoRan Inc. surged 10 percent, while Chevron Corp. rose 1.2 percent. Oracle Corp. rallied to a four-month high, boosting technology shares after its quarterly profits topped estimates. Banks slid on the outlook for a slower climb in rates, with Bank of America Corp. losing 1.9 percent.

     The S&P 500 added 0.6 percent to 2,027.22 at 4 p.m. in New York, halting a two-day slide. The Dow Jones Industrial Average also closed at its highest this year as it gained 74.23 points, or 0.4 percent, to 17,325.76. The Nasdaq Composite Index increased 0.8 percent to its best level since Jan. 6. About 7.6 billion shares traded hands on U.S. exchanges, 14 percent below the 2016 average.

     “By guiding lower on inflation expectations as well as their median forecast, the signal for the market has now been shifted to a more dovish stance,” said Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey. “Investors in a short term will look at it as a bullish signal for the overall market. It moves the Fed in a position of being more accommodative, which will soften the dollar.”

     The Federal Open Market Committee kept the target range for the benchmark federal funds rate at 0.25 percent to 0.5 percent. The median of policy makers’ updated quarterly projections saw the rate at 0.875 percent at the end of 2016, implying two quarter-point increases this year, down from four forecast in December.

     “The committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen,” the FOMC said. “However, global economic and financial developments continue to pose risks.”

     It is the third major central-bank policy event since Thursday, following an unprecedented stimulus package unleashed by the European Central Bank, and after the Bank of Japan held off from adding more to its record stimulus as officials gauge the impact of a negative interest-rate strategy adopted in January.

     Traders responded to the Fed by lowering expectations for rate increases this year, as reflected by futures prices, according to data compiled by Bloomberg. Odds for a June boost to borrowing costs fell to 37 percent, compared with about 54 percent before the Fed’s statement and outlook.

     U.S. stocks have rebounded in the past month, bolstered by improving data, rising crude prices and as central banks around the world indicated a willingness to continue measures to support growth and stabilize markets after a tumultuous start to the year.

     The S&P 500 has risen nearly 11 percent since its February low, trimming its 2016 drop to 0.8 percent. The index is among the best-performing developed-market benchmarks tracked by Bloomberg this year.

     The Chicago Board Options Exchange Volatility Index fell 11 percent Wednesday to 14.99, the lowest in three months. The measure of market turbulence known as the VIX is also on track for a fifth weekly decline, the longest stretch in four years.

     “The trajectory the Fed just articulated both gives them some wiggle room in case things weaken but also puts them on a path toward normalization,” said Matthew Kaufler, a portfolio manager with Federated Investors Inc. who oversees funds with about $2 billion assets. “The Fed has positioned itself as a data-driven decision-making entity, and the data that’s coming in has largely reinforced the idea the economy is on firm footing.”

     Fed officials have stressed that the pace of rate boosts will be gradual and data-dependent. A report today showed consumer prices excluding food and fuel climbed more than forecast in February for a second month, adding to signs inflation is moving closer to the central bank’s target.

Separate measures showed new-home construction rose more than economists forecast last month and factory production increased for a second month, indicating manufacturing may be starting to stabilize.

     “The Fed delivered to the market what the market was anticipating,” said Jeff Mortimer, the Boston-based director of investment strategy for BNY Mellon Wealth Management, which oversees more than $183 billion. “This certainly doesn’t do anything to prevent upward drift in the market going forward. What we’ve seen over the last couple weeks may have been anticipation of this. It’s certainly not a negative.”

     Eight of the S&P 500’s 10 main industries climbed today, led by commodity shares with raw-material and energy producers rising more than 1.6 percent. Technology companies increased 1.1 percent. Declines in banks weighed on the financial group, while drugmakers dragged down health-care stocks for a third day.

     Freeport-McMoRan jumped 10 percent to a four-month high to lead raw-materials, while Alcoa Inc. added 6.3 percent. Southwestern Energy Co. and Devon Energy Corp. advanced more than 8.8 percent to top gains among energy producers.

     Apple Inc. and Microsoft Corp. increased more than 1.3 percent, joining Oracle to lift the technology group to its highest close this year, after gaining 13 percent from a February low. Microsoft rose for a fourth day, its longest rally since October.

     Banks in the benchmark declined for a third day and the sixth time in the last eight sessions. Citizens Financial Group Inc. and Fifth Third Bancorp fell the most Wednesday, losing at least 2 percent. The KBW Bank Index slid 1 percent, the most in a week.

     Allergan Plc lost 3.6 percent and Pfizer Inc. sank 1.7 percent, the biggest drags on health-care as the group dropped for a third day, the most in five weeks. Mallinckrodt Plc declined 6.4 percent, the biggest drop in the S&P 500, after a nearly 15 percent tumble yesterday amid the fallout from Valeant Pharmaceuticals International Inc.’s Tuesday plunge.
 

Have a wonderful evening everyone.

Be magnificent!

Nonviolence is the summit of bravery.

Mahatma Gandhi

As ever,

Carolann

If a window of opportunity appears, don’t pull down the shade.

                                                        -Tom Peters, 1942-

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