April 7, 2016 Newsletter

Dear Friends,

Tangents:

Birthday: April 7, 1915, Billie Holiday.

GOD BLESS THE CHILD
…Mama may have, papa may have
But God bless the child that’s got his own
That’s got his own…

www.cmgww.com/music/holiday.

On this day in 1994, civil war breaks out in Rwanda

Number of the Day

40%

More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay.

Paul Simon is still feeling experimental after all these years.

The musician announced his 13^th studio album, “Stranger to Stranger” today. In a release, the 11-song set is described as “full of thrilling, imaginative textures,” with Simon utilizing instruments developed by 20^th-century composer Harry Partch, like a “cloud-chamber bowl” and a chromelodeon. Simon traveled to where Partch’s instruments are housed at Montclair State University, in Montclair, N.J. to help with the process.

Fans can get a flavor of Simon’s new sounds on the first single, “Wristband” …Other influences that seep into “Stranger to Stranger” include flamenco music and the sound of Italian EDM artist Clap! Clap!

“Sound is the theme of this album as much as it’s about the subjects of the individual songs. If people get that, I’ll be pleased,” Simon said in a statement. “The right song at the right time can live for generations. A beautiful sound, well, that’s forever.”

“Stranger to Stranger” is his first new studio album since 2011’s “So Beautiful or So What,” which hit No. 4 on the Billboard 200 in April 2011.

2016 is seemingly becoming an increasingly busy time for the 74-year-old songwriter. He recently contributed the theme song to Louis C.K.’s new TV show “Horace & Pete,” and will be starting a two-month tour starting on April 29 at the New Orleans Jazz and Heritage Festival.

“Stranger to Stranger” arrives June 3. –Mike Ayers, Wall Street Journal, April 7, 2016.

I’ll be seeing his concert in Vancouver on May 26^th – I’m a huge fan.

PHOTOS OF THE DAY

Cool temperatures and a beautiful sunrise made perfect conditions for early workouts, like this cyclists crossing the Jackson Hill bridge over Memorial Drive, Thursday, in Houston. Steve Gonzales/Houston Chronicle/AP

A Swiss guard stands guard at the Vatican on Thursday. Alessandro Di Meo/Reuters

Market Closes for April 7^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell for the fifth time in six sessions, as energy producers declined to overshadow a resurgence by Valeant Pharmaceuticals International Inc.

     The Standard & Poor’s/TSX Composite Index lost 0.6 percent to 13,266.44 at 4 p.m. in Toronto. While the Canadian benchmark has lost 1.8 percent in the past six trading days, it is up 2 percent this year and remains one of the best-performing developed markets in the world.

     Stocks worldwide retreated Thursday on concern about growth. Federal Reserve officials highlighted persistent risks facing the global outlook at their March meeting, while International Monetary Fund Managing Director Christine Lagarde signaled the organization may lower its outlook for growth.

     A first-quarter rally in the S&P/TSX has lost momentum in the second, as volatility returned to commodities prices. The Canadian benchmark equity gauge now trades at 21.1 times earnings, about 14 percent higher than the 18.6 times earnings valuation of the S&P 500, according to data compiled by Bloomberg.

     West Texas Intermediate crude slipped 1.3 percent in New York amid speculation that an unexpected U.S. crude supply decline won’t be followed by additional drops. Ahead of a meeting of OPEC producers in Doha later this month to debate a production freeze, Saudi Arabia has said no agreement is possible without the participation of Iran while Kuwait said a deal can still be made.

     Energy producers and financial services stocks contributed the most to losses in the S&P/TSX, as six of 10 industries retreated. Trading volume was about 15 percent lower than the 30-day average. Gold producers rallied as the price of the metal jumped to a one-week high after Fed minutes Wednesday indicated caution on interest rate increases.

     Valeant added 4.3 percent for a third day of gains after winning the support of lenders to waive a default and ease some restrictions on its loan terms. Valeant now has until May 31 to file its annual report, and July 31 to file its first-quarter report. The drugmaker has rebounded from a five-year low, increasing 36 percent in the last three days after saying Tuesday a special “ad hoc” board committee found no additional accounting issues that would require more restatements.

     The drugmaker is also actively discussing the sale of its Bausch and Lomb unit, Fox Business News reported late Thursday, according to unidentified bankers.

US

By Oliver Renick

     (Bloomberg) — The burst of bullishness that lifted U.S. stocks on Wednesday evaporated, with the Standard & Poor’s 500 Index posting the steepest selloff in six weeks amid renewed skepticism over global growth.

     The Dow Jones Industrial Average dropped more than 230 points at its worst levels, while banks in the S&P 500 fell the most since February, pacing declines amid falling bond yields as investors sought havens. A measure of volatility had its biggest spike since January, with today’s selloff echoing action that started the year when lenders were also especially hard hit on flaring growth concerns.

     The S&P 500 fell 1.2 percent to 2,041.91 at 4 p.m. in New York, alternating for a third day between gains and losses of at least 1 percent. The Dow sank 174.09 points, or 1 percent, to 17,541.96. The Nasdaq Composite Index lost 1.5 percent, nearly reversing yesterday’s rally. About 7.2 billion shares traded hands on U.S. exchanges, 14 percent below the three-month average.

     “There’s a bit of a risk-off trade going on,” said Don Ellenberger, senior portfolio manager at Federated Investors which oversees $361 billion in assets. “It’s hard to define a clear trend right now without a whole lot going on, but if you look around the market, earnings is something everyone’s focused on. There’s so much negative sentiment in the market right now, you can see it when you look at the money that’s poured out of equity funds.”

     Stocks have made little progress since snapping a five-week winning streak last month that erased losses from the worst-ever start to a year. The S&P 500 has traded in a 35-point range since the Fed’s March 16 meeting, remaining within 1 percent of the 2,050 level over the past three weeks, as sentiment has lurched from optimism that central-bank policies will buttress global growth to worry their efforts may not be potent enough to fend off a slowdown.

     Bank of America Corp. and JPMorgan Chase & Co. dropped at least 2.5 percent as lenders sold off for the third time in four sessions. A rally in the 10-Year U.S. Treasury amid haven demand sent its yield toward the lowest since the equity market bottomed in February, supporting speculation low rates will weigh on bank profits. Verizon Communications Inc. lost 2.8 percent to weigh on the S&P 500, the steepest decline since August after Jefferies LLC downgraded the shares to hold from buy.

     The Chicago Board Options Exchange Volatility Index jumped 15 percent to 16.16, the biggest climb in three months. The measure of market turbulence known as the VIX closed last week at the lowest since August, and is now headed for the steepest five-day gain since January.

     A plunge in bank shares led a selloff that sent the S&P 500 down as much as 11 percent this year, before it erased its decline by the end of last month. After reaching the highest level since Dec. 29 last Friday, the rebound is losing steam, with the gauge starting this week with the biggest two-day loss in almost two months.

     “There’s a worry that what caused the selloff at the start of the year hasn’t entirely gone away,” said Jasper Lawler, a London-based market analyst at CMC Markets Plc. “The minutes were on balance more dovish than most were expecting, but there’s still a lot of concern about the global economy. Heading into earnings season, people are starting to think ahead with some of the bank earnings coming out next week, and it’s one of the biggest areas of concern.”

     Growth anxieties are returning after stocks rebounded yesterday on rekindled merger speculation in the drug industry and as energy producers surged with crude oil. Minutes from the Federal Reserve’s last meeting affirmed policy makers’ hesitation to raise interest rates as they assessed persistent risks in the global outlook, keeping them wary on the pace of future rate increases.

     Following the latest Fed minutes and Chair Janet Yellen’s reiteration that future rate increases will be gradual, traders are assigning zero percent chance of a raise in April. The first month with at least even odds for a boost has been pushed to February. Prior to last month’s meeting, traders saw a roughly 50 percent chance of higher borrowing costs as early as June.

     Attention is also shifting to corporate earnings, with Alcoa Inc. unofficially kicking off the reporting season on April 11. Analysts project profits fell 9.5 percent in the first quarter, the worst in more than six years.

     As policy makers monitor data for progress in the economy a report today showed fewer Americans filed for unemployment benefits last week, illustrating a healthy labor market that’s allowing workers to feel more secure in their job.

     Amid Thursday’s tumble, all of the S&P 500’s 10 main industries declined, with phone, financial, raw-material and technology companies losing at least 1.2 percent. Utilities were little changed.

     “This is picking up a little bit here when you combine tech with financials both down,” said Scott Wren, a senior equity strategist in St. Louis at Wells Fargo Investment Institute. “It’s been a big bounce off the bottom so you’d expect some consolidation. The rebound has been cyclicals all the way, but the interesting thing today is it’s a mix of cyclicals and defensive stocks at the bottom — the market’s not just leaning one way or the other.”

     Financial companies fell to a four-week low under the drag from banks. In the broader group, Charles Schwab Corp. and E*Trade Financial Corp. declined more than 4.7 percent, with Schwab sinking the most in nearly three months. Goldman Sachs Group Inc. fell 3.1 percent, sliding for a fourth day after last week completing its longest winning streak in almost five months.

     EBay Inc. reversed a 4.3 percent rally yesterday, dropping 5.2 percent as one of the biggest losers in technology and the benchmark index today. F5 Networks Inc. slumped 5.9 percent, the steepest since October, after OTR Global said sales trends appear to be worsening. Semiconductors fell the most in four weeks, with Intel Corp. and Texas Instruments Inc. down at least 1.6 percent.

     Verizon’s drop was the biggest weight on phone companies after the group reached a more than eight-year high on Monday. After rallying 24 percent from an August low, telecommunications shares capped their worst three days since January.

     Costco Wholesale Corp. led consumer staples lower, losing 3 percent after a measure of its March sales missed estimates. Drugstore chains CVS Health Corp. and Walgreens Boots Alliance Inc. fell at least 2.3 percent.

     The Nasdaq Biotechnology Index slipped 1.9 percent after yesterday jumping the most since 2011. Alexion Pharmaceuticals Inc. and Vertex Pharmaceuticals Inc. fell more than 5.4 percent. Relypsa Inc. soared 67 percent, the most ever, after Reuters reported the company is exploring a potential sale.

     Wynn Resorts Ltd. was the strongest performer in the S&P 500, rising almost 12 percent for the best climb in almost two months. The casino owner provided a stronger-than-expected outlook, and Telsey Advisory Group upgraded the shares to the equivalent of buy from hold.

Have a wonderful evening everyone.

Be magnificent!

It is not others who must change, but you.

Swami Prajnanpad

As ever,

Carolann

Interpretation is the revenge of the intellect upon art.

                                  -Susan Sontag, 1933-2004

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