April 18, 2016 Newsletter

Dear Friends,

Tangents:

Carolann is out of the office, I will be writing the newsletter on her behalf.

PHOTOS OF THE DAY

An Israeli woman takes a selfie in a buttercup field near Kibbutz Nir Yitzhak in southern Israel, just outside the Gaza Strip, on Monday. Amir Cohen/Reuters

Britain’s Prince William and his wife Catherine, the Duchess of Cambridge, pose at the Taj Mahal in Agra, India, Saturday. Adnan Abidi/Reuters

Market Closes for April 18^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, reversing an earlier loss to close at a five-month high as gold producers gained a second day amid demand for haven assets, while energy shares wiped out declines.

     The benchmark Standard & Poor’s/TSX Composite Index equity gauge added 0.6 percent to 13,719.82 at 4 p.m. in Toronto, the highest close since Oct. 29. The increase extended a rally after the index advanced by the most last week since mid-March. The S&P/TSX remains one of the best-performing developed markets in the world this year with a 5.5 percent gain. Trading volume was 15 percent lower than the 30-day average.

     West Texas Intermediate crude slipped 1.7 percent in New York, clawing back much of an earlier decline that reached as much as 6.8 percent as traders turned their attention to a labor strike in Kuwait that cut output for a second day. Kuwait, the fourth-largest member of OPEC, has seen its output cut by about 60 percent due to the worker strike.

     A meeting between the world’s largest oil producers in Doha on Sunday, which dragged on for more than 10 hours beyond its initially scheduled conclusion, finished with no final accord. Saudi Arabia maintained its stance that it wouldn’t restrain its production without commitments from other producers including Iran to do the same, a move Iran is resisting. OPEC and non-OPEC producers may meet again in June, according to a Nigerian minister.

     Energy producers in the S&P/TSX added 1.4 percent, after retreating as much as 1.8 percent. Canadian Natural Resources Ltd. and Enbridge Inc. added at least 1.9 percent to lead the industry higher in mixed trading, with 36 of 50 companies in the S&P/TSX Energy Index in positive territory.

     Yamana Gold Inc. added 2.9 percent as raw-materials producers advanced 1.1 percent. Gold rose a second day as the selloff in oil increased demand for the precious metal as a haven. Teck Resources Ltd. and First Quantum Minerals Ltd. climbed more than 6.9 percent as copper rebounded from a loss while zinc climbed for a second session as stockpiles in London dropped to the lowest since 2009.

     The resource-dominant S&P/TSX remains closely linked to moves in commodities prices, as a rebound in producers has fueled a 16 percent recovery for the S&P/TSX from a low on Jan. 20. The Canadian benchmark now trades at 21.8 times earnings, about 14 percent higher than the 19.1 times earnings valuation of the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

     Pembina Pipeline Corp. added 1.6 percent, climbing to an August high. The company is raising about C$150 million through a share offering to pay down debt and help fund Pembina’s capital program this year.

US

 By Jeremy Herron and Oliver Renick

     (Bloomberg) — U.S. stocks advanced, pushing the Dow Jones Industrial Average past 18,000 for the first time in nine months, as Brent crude pared losses amid falling output in Kuwait. Japanese index futures signaled advances.

     The Standard & Poor’s 500 Index climbed to a four-month high, while the Dow closed at the highest since July. Crude pared losses as a strike reduced Kuwait’s contribution, though oil in New York settled lower after the breakdown of the Doha talks. Yen-denominated contracts on the Nikkei 225 Stock Average added 0.2 percent to 16,690 on the Chicago Mercantile Exchange at 5:01 p.m. in New York.

     While the failure of large oil producers to agree to a freeze in output initially sent crude lower, losses were limited amid the strike and on speculation China’s slowdown is easing at the same time central banks remain ready to bolster growth. New York Fed President William Dudley added to confidence in the U.S. economy with comments that suggest inflation will firm, and corporate earnings have so far largely topped estimates.

     “We’ve cut our overnight decline in oil and that bounce- back has helped,” Matt Maley, an equity strategist at Miller Tabak & Co. LLC, said in a phone interview. “Unless there’s a big move in crude people will wait to see what happens and will be watching earnings. Revenues are down at these big banks but they beat expectations, they had already priced in negative earnings, and they were able to bounce.

     The S&P 500 rose 0.7 percent to 2,094.34, the highest since Dec. 2. Trading in S&P 500 shares was 6.7 percent below the 30- day average. The Dow average rose 0.6 percent to 18,004.16, the highest level since July 21. Energy producers surged 1.5 percent, erasing a loss. Hasbro Inc. climbed 5.8 percent on earnings that topped estimates thanks to sales of Star Wars items. Walt Disney Co. jumped 3.4 percent.

     Corporate earnings season picks up speed as International Business Machines Corp. and Netflix Inc. are due to release results after markets close, part of about 100 S&P 500 companies that report this week.

     The Ibovespa declined even after the lower house of Congress voted to proceed with Rousseff’s ouster. The scope of gains going forward is seen as limited given the difficulty in tackling the country’s economic and fiscal crises no matter who is in power, according to long-time watchers.

     West Texas Intermediate lost 1.4 percent to $39.78 a barrel, paring declines of as much as 6.8 percent, after Kuwait’s crude production tumbled by 60 percent to 1.1 million barrels a day and its refineries scaled back operations as the state oil company took emergency measures Sunday to cope with the first day of an open-ended labor strike.

     The discussions to freeze output stumbled in Doha as Saudi Arabia and other Gulf nations refused to agree to any deal unless all OPEC members joined — including Iran, which wasn’t present at the meeting. The European benchmark has rebounded from as low as $27.10 in January, which was the lowest since 2003.

     Cotton futures capped their biggest gain in more than eight months amid supply constraints and a sharp change in sentiment over what a liquidation of Chinese inventories will mean for the market.

     Gold futures for June delivery climbed less than 0.1 percent to settle at $1,235 an ounce.

     U.S. Treasuries fell, with the yield on 10-year notes rising by three basis points to 1.78 percent. The yield on the 30-year bond, the security most sensitive to inflation expectations, rose as Dudley said he’s confident that inflation will return to the Fed’s 2 percent target.

     Australian notes due in a decade climbed for the first time in six days, pushing their yield down six basis points to 2.49 percent. Yields on 20- and 30-year Japanese debt declined to record lows of 0.275 percent and 0.355 percent, respectively.

     The euro climbed the most in three weeks amid speculation that the European Central Bank will maintain its monetary policy when it meets this week. The euro rose 0.3 percent, the most since March 31, to $1.1316 per dollar. The currency gained 0.4 percent versus the yen after touching its lowest in three years.

     Brazil’s real, the world’s best performing currency in the first quarter on speculation Rousseff would be ousted, fell Monday after lawmakers voted in favor of impeachment.

     The ruble erased losses, rebounding with Brent crude, amid speculation the market made too much of a failure by oil producing nations to broker an output freeze.
 

Have a wonderful evening everyone.

Be magnificent!

“The privilege of a lifetime is being who you are.” Joseph Campbell

As ever,

Karen
 

“In order to carry a positive action we must develop here a positive vision.” Dalai Lama

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