April 1, 2016 Newsletter

Dear Friends,

Tangents:

On this day in 1700, April Fools’ Day tradition of playing practical jokes becomes popularized in England.

FIVE THINGS ABOUT APRIL FOOL’S DAY

           -from The National Post, April 1, 2016

1 PRANK HALL OF FAME

ON April 1, 1957, the BBC aired a three-minute segment about Swiss spaghetti farmers plucking long strands of pasta from tree branches.  Hundreds of viewers wrote in asking how they could cultivate their own spaghetti tree.  It has been declared one of the greatest April Fool’s pranks of all time.

2 HILARIA’S MOCKERY

Some historians believe April Fool’s Day has its origins in ancient Rome, with a festival known as Hilaria.  Usually celebrated on March 25, Hilaria was a day for games, masquerades, and generally whiling away the day with relentless moking.

3 MERRY, BUT FOOLISH?

The two-day Hindu celebration Holi, the Persian festival Sizdah Beder and the Jewish holiday Purim also fall in early spring.  While not explicitly about tricking people, the holidays involve various forms of merriment and frivolity.  The Museum of Hoaxes (it’s a real thing) notes there is no evidence  that April Fool’s Day came from any of these celebrations.

4 FEAST OF FOOLS

The Catholic Church’s Feast of Fools was celebrated around Jan. 1 in medieval France and England.  Church officials originally encouraged the carnival-like celebration, which involved dressing in costume and bringing donkeys into church.  But by the 15^th century they decided the feast had become too raucous and banned it.

5 CALENDAR THEORY

Pope Gregory Xlll issued a decree in 1563 ordering that Christian countries adopt a standardized calendar.  The Gregorian calendar moved the new year from the end of March to Jan. 1: people who continued to celebrate on the old day were mocked as “April fools.”  One problem with this theory?  The first unambiguous reference to April Fool’s Day came in a Flemish poem published three years before the switch.

A story in The Vancouver Sun today lends credence to George Orwell’s contention that “We may find in the long run that tinned food is a deadlier weapon than the machine gun.”

Check out this story: http://www.vancouversun.com/health/majority+canned+foods+canada+have+high+amounts+toxic+chemical/11820501/story.html

PHOTOS OF THE DAY

A woman looks at cherry blossoms in almost full bloom in Tokyo, Japan, Friday. Issei Kato/Reuters

Manor driver Pascal Wehrlein of Germany steers his car during the second free practice session ahead the Bahrain Formula One Grand Prix at the Formula One Bahrain International Circuit, in Sakhir, Bahrain, Friday. Hassan Ammar/AP

Market Closes for April 1^st, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Money differs from an automobile or mistress in being equally important to those who have it and those who do not. –John Kenneth Galbraith.

Canada

By Eric Lam

     (Bloomberg) — After the biggest monthly rally since 2011, Canadian stocks stalled to start April, as crude wiped out gains for the year and gold declined after data showed the U.S. economy added more jobs than forecast.

     The Standard & Poor’s/TSX Composite Index fell 0.4 percent to 13,440.44 at 4 p.m. in Toronto for a second day of losses. The Canadian benchmark equity gauge rose 4.9 percent in March, the best monthly advance since October 2011. The S&P/TSX is also up 3.3 percent this year and remains one of the best-performing developed markets in the world, trailing only New Zealand.

     Canadian equities had a seesaw first quarter, as losses by energy and raw-materials producers through Jan. 20 were wiped out by rebounding resource companies during February and March. The broader S&P/TSX trades at 21.3 times earnings, about 13 percent more expensive than the valuation of the U.S. equity benchmark, the Standard & Poor’s 500 Index, data compiled by Bloomberg show. 

     Crude slumped to cap a weekly decline of 6.8 percent in New York, dipping below $37 a barrel and erasing gains for the year after Saudi Arabia said it will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince, Mohammed bin Salman, said in an interview with Bloomberg.

     Gold futures for June delivery fell 1 percent to settle at $1,223.50 an ounce in New York, as demand for the metal as a store of value declined after the latest U.S. jobs report. Employers added 215,000 workers in March, more than forecast, while the unemployment rate climbed to 5 percent as more people entered the labor force. The latest signs of strength in the U.S. economy come after Federal Reserve Chair Janet Yellen this week sounded caution over the pace of interest-rate increases amid uneven global economic growth.

     Energy producers sank 2.4 percent, the most in the S&P/TSX, and financial services stocks retreated. Raw-materials companies rebounded in afternoon trading, erasing a loss of as much as 1.6 percent to finish the day higher. Kinross Gold Corp. added 2.3 percent to its highest since July 2014. The three industries account for about two-thirds of the S&P/TSX. Trading volume was 17 percent lower than the 30-day average.

     BlackBerry Ltd. slumped 7.6 percent, the most since January, after the smartphone maker posted sales that fell short of analysts’ estimates on lackluster demand for its new handset. The company is shifting to software and services and away from devices as it struggles to compete with smartphones from Apple Inc. and Google Inc.

     Bombardier Inc. climbed 5.3 percent, touching a November high, after the struggling aerospace manufacturer secured a firm order for 20 Challenger jets valued at $534 million.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks advanced to the highest levels this year amid optimism on the economy and expectations for only gradual increases in interest rates, overshadowing a selloff in oil.

     Signs of strengthening growth in jobs and manufacturing data, coming right after Federal Reserve Chair Janet Yellen this week indicated global risks warranted restraint on lifting rates, presented the best of both worlds for investors Friday to help to overcome an early retreat sparked by falling crude prices.

     The Standard & Poor’s 500 Index rose 0.6 percent to 2,072.78 at 4 p.m. in New York, the highest close in 2016 while pushing this year’s gain to 1.4 percent. The Dow Jones Industrial Average added 107.66 points, or 0.6 percent, to 17,792.75, the highest since Dec. 4 after reversing a 117-point slide. The Nasdaq Composite Index increased 0.9 percent to its highest this year. About 7 billion shares traded hands on U.S. exchanges, 17 percent below the 2016 average.

     “We now have a super dovish Fed in our corner and jobs data in line with the trend,” said Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in New York. “The market initially sold off on the conflict of a dovish message and then beats on every single line of the data, but now people are realizing you have a combination of better economic data and a Fed that’s being very gentle with the market. It seems the Fed’s more concerned with the global picture than the domestic picture.”

     Equities shook off early losses after data showed manufacturing activity expanded in March for the first time in seven months, in a sign factories are emerging from their worst slump since the last recession. That followed a report showing payrolls and average hourly earnings rose more than forecast, while the jobless rate crept up as more people entered the labor force.

     Additional tightening in the job market that sparks bigger pay gains for American workers may convince Fed policy makers that the economy is more insulated to weakness overseas.

     The S&P 500 rose after its strongest monthly climb since October. Equities staged a sizzling comeback in the first quarter’s final six weeks, as crude rebounded from a 12-year low and central bankers from Asia to Europe and America eased concerns that a global slowdown would deepen as they signaled a willingness to bolster growth. The gauge rose 0.8 percent in the past three months, marking the first time since 1933 it finished a quarter with a gain after falling at least 10 percent.

     Still, the late-quarter rally came amid light trading, with a three-week stretch that’s seen the S&P 500 go its longest without a daily move of 1 percent in more than a year. The index is now 2.7 percent from a record reached last May. The Chicago Board Options Exchange Volatility Index fell 32 percent in March, snapping its longest streak of monthly increases in four years. The measure of market turbulence known as the VIX slipped 6.1 percent Friday to 13.10, its lowest since Aug. 17.

     “There’s good data across the board and it’s consistent with the view that manufacturing sector has bottomed,” said Jon Adams, portfolio manager at BMO Asset Management Corp. in Chicago, where he helps oversee $217 billion. “The weaker dollar over the last couple of months will help as well, as will stabilization in energy prices.”

     Policy makers have stressed the timing of rate increases will depend on progress in economic data, though the Fed’s Yellen boosted stocks this week after saying heightened risks to the global economy warranted a cautious approach to further rate hikes.

     Traders are pricing in no chance the central bank will raise rates in April, while the probability of a June move rose to 24 percent after the jobs report from 20 percent. Odds for June were 38 percent a week ago, before Yellen’s remarks. November is now the first month with at least even odds of higher borrowing costs, replacing December after today’s data.

     As the second quarter begins, attention will shift to the earnings season, which unofficially kicks off when Alcoa Inc. reports first-quarter results on April 11. Analysts estimate profit at S&P 500 firms fell 9.5 percent during the period, compared with forecasts for a 4.5 percent drop two months ago.

     In Friday’s trading, roles were reversed among the S&P 500’s 10 main industries, with investors selling last month’s biggest winners — energy producers — and scooping up health- care shares which lagged the most in March.

     A rally among drug developers propelled health-care higher, after the Nasdaq Biotechnology Index’s worst quarterly drop in nearly 14 years. The gauge rose 2.9 percent Friday, the biggest climb in a month. Regeneron Pharmaceuticals Inc. jumped 12 percent, the most in four years. Its drug to treat a serious skin condition met its goals in two final-stage trials. Amgen Inc. added 2.8 percent to a two-month high, while Pfizer Inc. rose 1.4 percent.

     Banks in the benchmark resumed a climb after their best month in more than a year. Citigroup Inc. and JPMorgan Chase & Co. increased at least 1.1 percent. In the broader financial group, Capital One Financial Corp. and Morgan Stanley added more than 2 percent. Goldman Sachs Group Inc. gained 1.8 percent, rising for a fifth session in its longest rally since November.

     Food and beverage makers boosted consumer staples, which extended an all-time high. ConAgra Foods Inc. and General Mills Inc. both reached records, rising at least 2.5 percent. Drugstore chain Walgreens Boots Alliance Inc. climbed 2.9 percent, the most in three months, to a 2016 high.

     The energy group surged 9.2 percent last month amid crude’s recovery, though the oil selloff today sapped momentum as West Texas Intermediate futures slid 4 percent. Saudi Arabia’s deputy crown prince said the kingdom will only freeze production if Iran and others follow suit. Chevron Corp. lost 1.2 percent, while Transocean Ltd. and Marathon Oil Corp. sank more than 5.2 percent.

     Ford Motor Co. and General Motors Co. both fell at least 2.9 percent and Fiat Chrysler Automobiles NV tumbled 4.1 percent after March sales gains at all three automakers were short of analysts’ forecasts. Parts makers BorgWarner Inc. and Delphi Automotive Plc sank more than 1.7 percent. Auto-related shares in the S&P 500 are coming off their best month since October.

     Airlines dragged down a group of transportation stocks after Deutsche Bank AG analyst Michael Linenberg downgraded ratings to hold from buy on American Airlines Group Inc., United Continental Holdings Inc., Delta Air Lines Inc. and Hawaiian Holdings Inc. citing signs of potential slowing in the economy which would damp business travel. The four carriers fell more than 2.4 percent.

Have a wonderful weekend everyone.

Be magnificent!
 

Two people who have lived together for a  long time have an image of each other which prevents them from really relating to each other.

Therefore, it is important to understand, not intellectually, but actually in your daily life,

how you have built these images about your wife, your husband,

your neighbor, your child, your country, your leaders, your politicians,

your gods – you have nothing but images.

These images create the space between you

and what you observe

and in that space there is conflict.

As ever,

Carolann

The reading of all good books is like a conversation

with the finest men of past centuries.

                               -René Descartes, 1596-1650

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