March 24, 2016 Newsletter

Dear Friends,

Tangents: HAPPY EASTER – HAPPY LONG WEEKEND!

EASTER EGGS:

The egg as a symbol of fertility and renewal of life derives from the ancient world, as did the practice of colouring and eating eggs at the spring festival.  The custom of eating eggs on Easter Sunday and of making gifts of Easter eggs to children probably derives from the Easter payment of eggs by the villain to his overlord.  The idea of the egg as a symbol of new life was adopted to symbolize the Resurrection.  Easter eggs are also known as “pasch eggs” or “pace eggs” from the old French pasche, ultimately from Hebrew pesakh.  This name came to be used for the hard-boiled, hand-coloured eggs that were rolled down slopes as one of the Easter games, a practice surviving in the yearly egg-rolling held on the lawn of the White House in Washington.  –from Brewar’s Dictionary of Phrase & Fable.

PHOTOS OF THE DAY

A man walks beneath rows of parasols at a public park in Beijing on Thursday. Visitors have been coming to parks in China’s capital city in increasing numbers as flowers and trees are beginning to bloom in an annual rite of spring. Mark Schiefelbein/AP

A person digs out a vehicle stuck in the middle of a street in Sioux City, Iowa, early Thursday. A spring snowstorm dropped about 14 inches of snow on the city. Tim Hynds/Sioux City Journal/AP

Market Closes for March 24^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

I’m very big on having clarified principles.  I don’t believe in being reactive.  You can’t do that in the markets effectively. –Ray Dalio, (Money manager, founder Bridgewater Associates, b. 1949).

Canada

By Jiayue Huang

     (Bloomberg) — Canadian stocks retreated for a third day, as disappointing earnings from Concordia Healthcare Corp. dragged drugmakers lower and financial shares slumped.

     The Standard & Poor’s/TSX Composite Index fell 0.2 percent to 13,358.11 at 4 p.m. in Toronto. The benchmark gauge has lost 1 percent in the holiday-shortened week, capping the longest streak of losses since Feb. 11. The index remains one of the top performers among developed markets this year with a gain of 2.7 percent.

     Trading was 35 percent below the 30-day average, continuing a stretch of light volume. Exchanges are closed tomorrow for the Easter holiday.

     Sinking commodity prices from oil to gold to copper hit the resource-rich index in the week, as a rally in the U.S. dollar sent assets denominated in the greenback tumbling. Raw-materials producers pared the weekly decline Thursday, reversing earlier losses.

     Health-care stocks faltered. Concordia plunged as much as 13 percent, the most since October, after the company posted earnings that missed analysts’ estimates. Valeant Pharmaceuticals International Inc. slipped 6.7 percent to halt a three-day rally that added 26 percent to shares in the embattled drugmaker.

     Lenders contributed the most to declines in the benchmark. The group has retreated three consecutive days. Genworth MI Canada Inc. tumbled 4.2 percent, while Home Capital Group Inc. lost 3.5 percent.

     Westshore Terminals Investment Corp. rose 5.2 percent to its highest close since Dec. 4, after the company was upgraded by Toronto-Dominion.

     Canadian stocks have rebounded 13 percent after hitting a 2 1/2-year low in January. The index is now trading at 21.2 times earnings, about 15 percent more expensive than the valuation of the U.S. equity benchmark, the Standard and Poor’s 500 Index, data compiled by Bloomberg show.

US

By Joseph Ciolli

     (Bloomberg) — U.S. stocks closed little changed, with the Standard & Poor’s 500 Index snapping a streak of five weekly gains that had wiped out all of its 2016 losses.

     The benchmark’s recovery from 22-months lows showed more signs of running out of steam as industries that helped underpin the rally — energy, raw-materials and financial shares — posted the steepest losses this week. Oil and gas producers advanced Thursday after erasing a 1.6 percent drop as crude oil trimmed losses.

     The S&P 500 fell less than 0.1 percent to 2,035.94 at 4 p.m. in New York, finishing 0.7 percent lower for the week. The Dow Jones Industrial Average rose 13.14 points, or 0.1 percent to 17,515.73, erasing a drop of more than 100 points. The Nasdaq Composite Index added 0.1 percent. About 6.2 billion shares traded hands on U.S. exchanges Thursday, 28 percent below the 2016 average. U.S. markets will be closed tomorrow for Good Friday.

     “The market is seeing a little bit of a pause in momentum,” said Kevin Caron, a Florham Park, New Jersey-based market strategist and portfolio manager who helps oversee $180 billion at Stifel Nicolaus & Co. “Now we’re looking ahead at what drives us beyond what central-bank actions have been able to curry so far. We don’t really have a catalyst right now.”

     The S&P 500 rallied as much as 12 percent from a Feb. 11 low, bolstered by improving economic data, rising crude prices and support from global central-bank policy. There are signals those gains are losing momentum after a three-day slide, the longest in six weeks, in the lightest trading this year and as the dollar had the strongest rally since November.

     The Bloomberg Commodity Index saw the steepest two-day decline since Feb. 2, after energy and raw-material producers led the five-week surge in equities. Both groups posted their first weekly drop since Feb. 12.

     The main U.S. equity benchmark has still mostly recovered from a worst-ever start to the year spurred by concern over China’s slowdown and a rout in oil. It’s down 0.4 percent for the quarter — versus 11 percent six weeks ago — and is heading for its biggest monthly advance since October. The index is among the top three best performers this year among developed markets tracked by Bloomberg.

     The Federal Reserve last week helped send stocks to 2016 highs after signaling a slower pace of interest-rate increases, amid risks posed by weak growth and market turbulence overseas. The dovish message was tempered this week as some Fed officials suggested a move higher could still come at any meeting, depending on progress in economic data.

     Reports today were mixed, with orders for durable goods falling in February for the third time in four months, underscoring lingering softness in U.S. capital investment. Separately, filings for unemployment benefits last week rose less than forecast as the number of dismissals stayed consistent with a firm labor market.

     St. Louis Fed President James Bullard said today the central bank could be getting close to raising rates again. In a Bloomberg interview yesterday, Bullard said policy makers should consider lifting rates at their next meeting amid a broadly unchanged economic outlook and prospects of inflation and unemployment exceeding targets.

     Traders are pricing in only a 10 percent chance for an April move and 41 percent probability for a boost in borrowing costs at the central bank’s June meeting. Odds for June rose as high as 54 percent before last week’s Fed gathering amid improving data and the rebound in equities.

     Quarterly earnings will also soon be back in focus when Alcoa Inc. unofficially kicks off the reporting season on April 11. Profit at S&P 500 companies probably slumped 9.4 percent in the first three months of the year, according to analysts’ estimates.

     “We’ve had a pretty substantial rebound across the board, and now there’s the feeling things were getting a bit overdone,” said Steven Santos, a broker at Banco de Investimento Global SA in Lisbon. “Markets will be vulnerable to declines from here, triggered by expectations that the stronger U.S. economy demands more hikes from the Fed. It’s all about dollar strength, lower commodities and weaker stocks all over again.”

     The Chicago Board Options Exchange Volatility Index fell 1.3 percent Thursday to 14.74. The measure of market turbulence known as the VIX snapped the longest stretch of weekly declines in four years.

     Four of the S&P 500’s 10 main industries sank, with financial companies dropping 0.7 percent, while industrial stocks fell 0.3 percent. Phone companies gained 1 percent while utilities added 0.3 percent, while energy shares rose 0.4 percent after crude pared its drop.                       

     A group of financial firms in the benchmark index dropped for a fourth straight day, the longest streak in six weeks. The sector has fallen 1.9 percent over the period. Prudential Financial Inc lost 2.8 percent, while Morgan Stanley declined 1.4 percent. Goldman Sachs Group Inc. retreated 0.7 percent, after losing as much as 2.6 percent, to extend its longest losing streak since the market bottomed last month. The KBW Bank Index sank 0.7 percent.

     Raw-material producers were little changed after losing as much as 1.1 percent. Zinc led industrial-metal declines amid the rising dollar and as falling durable goods orders dimmed demand prospects. Fertilizer makers Mosaic Co. and CF Industries Holdings Inc. sank at least 2.7 percent.

     Automobile-related stocks slid for a third day, the longest stretch in six weeks. The group was the strongest among 24 S&P 500 industries during the equity rebound, surging 20 percent in the prior five weeks. General Motors Co. and Ford Motor Co. fell more than 1.1 percent.

     Energy companies in the S&P 500 rose after crude staged a comeback. Devon Energy Corp. climbed 2.8 percent and Tesoro Corp. added 2.1 percent. Chevron Corp. gained 1.4 percent to wipe out a 1.4 percent decline. West Texas Intermediate crude futures fell 0.8 percent after dropping as much as 3.7 percent.

     Amazon.com Inc. rose 2.3 percent, extending its longest rally in five weeks, while Signet Jewelers Ltd. added 2.9 percent after its full-year profit outlook exceeded some analysts’ forecasts. Gains in the two companies helped boost an index of retailers to a second straight advance.

     Among shares moving on corporate news, Staples Inc. and Office Depot Inc. surged after a federal judge criticized the actions of regulators as they attempt to block a merger of the two office-supply chains. Staples increased 7 percent, while Office Depot jumped 9 percent.

     PVH Corp., the apparel company that owns the Calvin Klein and Tommy Hilfiger brands, rose 7.6 percent, the most in 18 months and the biggest gain in the S&P 500, after reporting quarterly earnings that exceeded analyst estimates.

Have a wonderful long weekend everyone.

Be magnificent!

We are fragmented.  We are one person at the office and another at home,

we speak of democracy and are autocrats in our hearts;

we speak of love for our neighbors even as we kill that love with our competitive spirit;

one part of us works, watches, and acts independently of the other.

Are you conscious of the fragmentation of your existence?  Is it possible for a mind

that has splintered the structure of its thoughts to perceive the broad field of consciousness?

Krishnamurti

As ever,

Carolann

Self-discipline is a form of freedom.  Freedom from laziness and lethargy,

freedom from expectations and demands of others, freedom from

weakness and fear – and doubt.

                             -Harvey A.  Dorfman, b. 1935.

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