March 18, 2016 Newsletter

Dear Friends,

Tangents:

THE DESIDERATA

         -by Max Ehrmann

You are a child of the universe no less than the trees and the stars;
you have a right to be here.  And whether or not it is clear to you,
no doubt the universe is unfolding as it should.

PHOTOS OF THE DAY

A man in a Spiderman costume encourages athletes running outside the Old City during the sixth international Jerusalem Marathon Friday.Baz Ratner/Reuters

A businessman stands by a pond in the Kyu-Shiba-rikyu Garden on a warm, sunny day in Tokyo Friday. Thomas Peter/Reuters

Market Closes for March 18^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Make Money and the whole nation will conspire to call you a gentleman.

                                                         -George Bernard Shaw, 1856-1950
Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, ha
lting a two-week rally, as Valeant Pharmaceuticals International Inc. slid further in a week to forget, while TransCanada Corp. declined amid a deal to buy Columbia Pipeline Group Inc. for $10.2 billion.

     The Standard & Poor’s/TSX Composite Index fell 0.9 percent to 13,497.13 at 4 p.m. in Toronto, drifting to a 0.2 percent loss for the week. The prospect for lower interest rates sank the U.S. dollar, boosting the prices of resources from oil to copper, lifting Canadian equities in the previous two sessions.

     Valeant fell 9.1 percent, extending a five-day slide this week, the longest since August, that included a record 51 percent drop on March 15. The stock has lost 62 percent this week. Embattled Chief Executive Michael Pearson reassured his employees, saying in a Wednesday memo to workers the company won’t go bankrupt and apologizing for the recent turmoil.

     Briefly the largest company in Canada by market capitalization last year, Valeant has lost 90 percent of its value from an August peak after the company announced a weaker 2016 outlook, leading analysts to slash their price targets. It also remains under investigation by U.S. lawmakers and regulators over its business practices.

     The collapse in Valeant shares this week is one of the central themes that have driven the S&P/TSX this year, as a rally in raw-materials and energy stocks have propelled the benchmark equity gauge at the expense of health-care stocks, said Brian Belski, chief investment strategist at BMO Capital Markets.

     “We continue to maintain that 2016 is not 2015, with Canadian stocks poised for surprise outperformance,” Belski said in a note to clients. “This stance also equates to the ‘Valeant effect.’ The stock helped the index last year and is now a detriment to even better performance so far in 2016.”

     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 gold mining companies, with the price of the metal near the highest in a year after the Federal Reserve dialed back expectations for rate increases this week, driving the dollar lower. The S&P/TSX now trades at 21.6 times earnings, roughly 14 percent more expensive than the valuation of the U.S. equity benchmark, the Standard & Poor’s 500 Index, data compiled by Bloomberg show. 

     TransCanada Corp. slipped 0.7 percent after agreeing to purchase Columbia Pipeline Group Inc. in its biggest-ever deal, expanding its reach into the U.S. natural gas market. AutoCanada Inc. lost 6.7 percent after fourth-quarter sales and earnings fell short of analysts’ expectations. The company also appointed Steven Landry as their new chief executive, amid a series of changes to senior management.

     BRP Inc., maker of Ski-Doo snowmobiles and Sea-Doo watercraft, soared a record 18 percent after providing an outlook for earnings and revenue ahead of analysts’ estimates. The company’s fourth-quarter earnings also topped forecasts.

US

By Anna-Louise Jackson

     (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index turning positive for 2016 in the wake of a dovish Federal Reserve that helped the gauge post its longest weekly winning streak since November.

     The equity benchmark joined the Dow Jones Industrial Average to advance for the year, staging one of the biggest turnarounds in history. The Dow surged 12 percent in 24 days through Thursday, boosted by seven separate daily advances exceeding 1 percent. It’s a stunning comeback from what was the worst-ever start to a year, with stocks pushed over the top as the Fed this week signaled a slower pace of interest-rate increases.

     The S&P 500 added 0.4 percent to 2,049.58 at 4 p.m. in New York, and is now up 0.3 percent this year after falling as much as 11 percent. The Dow climbed 120.81 points, or 0.7 percent, to 17,602.30, extending its 2016 increase to 1 percent. The Nasdaq Composite Index advanced 0.4 percent, trimming its decline since the end of 2015 to 4.2 percent from almost 15 percent.

     “It’s been a good week and a great month for equities as stocks have benefited from the winds of change,” said Terry Sandven, who helps oversee $126 billion as chief equity strategist at U.S. Bank Wealth Management in Minneapolis. “Many of the items that have plagued sentiment and overall equity returns, really since the beginning of the year, seem to be of less of an immediate concern.”

     Trading volume in U.S. equities was boosted Friday by a quarterly event known as quadruple witching, when futures and options contracts on indexes and individual stocks expire. About 11 billion shares traded hands on U.S. exchanges, 25 percent above the 2016 average.

     Stocks capped a fifth weekly advance, with the S&P 500 rebounding 12 percent from a Feb. 11 low amid rising crude prices and optimism that monetary policy will continue to support global growth. Friday’s gains were braced by health-care companies, with the group ending the longest losing streak in two months. Banks halted a three-day slide after also lagging a broader rally in the past two weeks.

     The Dow average Thursday wiped out a year-to-date decline that swelled to as much as 10 percent in February. It’s the fastest that a retreat of that size or more has ever been reversed this early in a year, data compiled by Bloomberg show. The S&P 500 climbed 1.4 percent this week, and is 3.8 percent away from a record set last May.

     The Chicago Board Options Exchange Volatility Index fell 2.9 percent Friday to 14.02, a seven-month low. The measure of market turbulence known as the VIX extended a streak of weekly declines to five, the longest in four years.

     Energy and raw-materials have led the S&P 500 over the last five weeks with gains of more than 16 percent. Energy companies posted the longest streak of weekly advances in 10 months, while raw-materials producers capped the best such stretch since November 2014. A tumble in the dollar Thursday brought on by a more dovish Fed helped push the two groups to three-month highs yesterday.

     The Fed’s tempered outlook for rate increases knocked down traders’ expectations as reflected in futures prices, according to data compiled by Bloomberg. Odds for a June boost to borrowing costs are almost 39 percent, compared with about 54 percent before the Fed’s statement Wednesday.

     Probabilities for rate increases had risen in the past month amid better U.S. data, higher crude prices and a rebound in equities. A report today showed consumer confidence eased in the first half of March as lower-income Americans grew more concerned about prospects for the economy and higher gasoline prices.

     “A lot of investors who missed out on the rally are feeling the pressure to go back into the market, especially with the index turning positive for the year,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “The recovery was pretty stunning and it happened pretty quick. This rally could go on till the end of April.”

     Among shares moving on corporate news, Adobe Systems Inc. climbed 3.9 percent to a 2016 high after reporting a profit that topped analysts’ estimates as more customers signed up for its cloud-based services.

     Starwood Hotels & Resorts Worldwide Inc. added 5.5 percent, closing at the highest since July, as the owner of brands such as Westin, Sheraton and W, said it plans to accept a $13.2 billion takeover bid by China’s Anbang Insurance Group Co. and gave suitor Marriott International Inc. a deadline to make a counteroffer.

     Seven of the S&P 500’s 10 main industries rose Friday, with health-care shares gaining 1.3 percent, while financial and industrial stocks added more than 0.8 percent. Phone companies lost almost 1 percent.

     AbbVie Inc. and Celgene Corp. gained more than 2.1 percent, leading a rebound among drugmakers as health-care shares rose for the first time in five days. UnitedHealth Group Inc. added 1.8 percent to an all-time high. The Nasdaq Biotechnology Index advanced 1.8 percent after falling in seven of the previous eight sessions as struggles at Valeant Pharmaceuticals International Inc. weighed on drug developers.

     Banks led a climb in financial stocks, as the KBW Bank Index rose 1.8 percent to close at a two-month high. Bank of America Corp. climbed 2.9 percent after its board approved the repurchase of as much as $800 million in shares, a day after JPMorgan Chase & Co. said it can expand its buyback program. JPMorgan also added 2.9 percent.

     Industrial companies extended a three-day gain to 3.5 percent, paced by rising airline shares. American Airlines Group Inc. and Delta Air Lines Inc. added more than 2.9 percent. Boeing Co. rose 2.5 percent, extending a rally to eight days, the longest in more than 14 months.

     Wynn Resorts Ltd. jumped 5.9 percent to a seven-month high, while Chipotle Mexican Grill Inc. sank 3.4 percent, bringing its four-day losses to almost 12 percent after earlier this week projecting its first quarterly loss since the company went public.

Have a wonderful weekend everyone.

Be magnificent!

How does seeing the difference permit unity?

Quite simply, because physically speaking there cannot be unity, since the physical plane consists of shapes,

and all shapes are different.

Unity only exists in the heart.  It is a feeling: love.

And in love the notion of self disappears; only the other remains.

Swami Pajnanpad

As always,

Carolann

The greatest good you can do for another is not just to share your riches, but to reveal to him his own.

                                                                                                  -Benjamin Disraeli, 1804-1881

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