April 22, 2016 Newsletter

Dear Friends,

Tangents:

The Jewish holiday of Passover begins.

Earth Day is celebrated.  A global climate-change treaty is set to be signed at the U.N.

“Dearly beloved, we are gathered here today to get through this thing called life.”

                                                                                 -Prince, 1958-2016

PHOTOS OF THE DAY: NEPAL QUAKE ANNIVERSARY

Shanta Basnet pours water from the family tap outside their temporary shelter in Amppipal, Nepal. Reconstruction after the earthquake in April 2015 is slow as the government has stalled in distributing aid to both Kathmandu and the villages damaged near the epicenter. ANN HERMES/STAFF

Goma Basnet and her son Samir Jung Basnet watch their goats on the hillside in Amppipal. ANN HERMES/STAFF

View of construction is underway on damaged homes in the capital Kathmandul. ANN HERMES/STAFF

Market Closes for April 22^nd, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Dani Burger

     (Bloomberg) — Canadian equities were little changed as lower metals prices weighed on commodity producers, offsetting gains in energy and in health-care companies as takeover speculation increased.

     The Standard & Poor’s/TSX Composite Index closed less than 0.1 percent lower at 13,873.98 at 4 p.m. in Toronto. The benchmark gauge capped its second straight weekly increase of at least 1.7 percent. The Canadian stock market remains the second best-performing developed market in the world this year, with the S&P/TSX up 6.6 percent.

     Investors also assessed mixed economic data. A report today showed Canada’s annual inflation rate slowed for a second month in March to 1.3 percent, led by cheaper gasoline and smaller mark-ups at auto dealers. In separate data, Canadian retail sales had a surprise gain in February, led by motor vehicle dealers.

     The resource-dominate S&P/TSX remains closely linked to moves in commodity prices, as a rebound in producers has fueled a 17 percent recovery since the Jan. 20 low. Oil futures added 1.3 percent in New York, bringing this week’s gain to 8.3 percent. The International Energy Agency reiterated on Thursday it expects non-OPEC output to decline by about 700,000 barrels a day this year, which would be the sharpest drop in a quarter century.

     Energy producers increased amid the group’s best five-day stretch in seven weeks. Cenovus Energy Inc. and Encana Corp. both rallied more than 3.6 percent on Friday. Health-care companies jumped 5.3 percent, the most out of 10 groups in the S&P/TSX. Concordia Healthcare Corp. rose 6 percent after reports that Blackstone Group LP is considering a takeover of the Toronto- based company.

     Among the biggest winners on Friday, Valeant Pharmaceuticals International Inc. advanced 7.3 percent for a fifth day of gains, the longest since July. The company is said to be in talks to hire Perrigo Co.’s chief executive officer to replace outgoing CEO Michael Pearson. Valeant said in March that Pearson would leave once a replacement was found, part of a broader overhaul that included adding activist investor Bill Ackman to its board.

     Material companies sank 1.8 percent, as gold in the spot market retreated 1.6 percent to $1,230 an ounce. Semafo Inc. declined 4.4 percent, while Barrick Gold Corp. slipped 1.4 percent. Miner HudBay Mineral Inc. rallied the most in the S&P/TSX today, up 6.7 percent as prices for copper and zinc advanced.

     Six of the ten groups in the S&P/TSX fell, with raw- materials posting the steepest declines, followed by technology and consumer staples companies.

US

By Joseph Ciolli

     (Bloomberg) — Disappointment with earnings pummeled shares of Microsoft Corp. and Google parent Alphabet Inc., sending the Nasdaq 100 Stock Index to the steepest drop in two weeks.

     While the tech-heavy Nasdaq slid, gains in crude oil boosted energy producers, curbing the Standard & Poor’s 500 Index’s decline. Technology shares in the benchmark index capped the biggest slide since Feb. 5, with Microsoft and Alphabet down at least 5 percent. Banks rebounded to a three-month high, and Norfolk Southern Corp. jumped the most since November as earnings beat estimates and the railroad increased its cost- cutting goal.

     The Nasdaq 100 dropped 1.5 percent to 4,474.19 at 4 p.m. in New York, paring a 2.2 percent retreat, with Microsoft falling the most in almost 15 months. The S&P 500 was little changed at 2,091.58, wiping out a 0.5 percent decline. The gauge gained 0.5 percent for the week. The Dow Jones Industrial Average added 21.23 points to 18,003.75, erasing a 72-point slide. The Russell 2000 Index climbed 1 percent as energy shares jumped 3 percent.

     “The big tech names that have reported in the last day are having a negative influence on major index returns,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “Valuations in the U.S. equity market are full, so market participants are becoming more demanding about what they’re expecting for future gains. The news on the economic front has been steady, if not unspectacular, and the earnings picture has been mixed at best.”

     With the flow of corporate earnings picking up, equities have lost momentum in the last three sessions as results failed to inspire investors to fatten a rally that’s lifted the S&P 500 more than 14 percent from a 22-month low in February. A recovery in oil prices, optimism that central banks will continue their efforts to boost growth and signs of improvement in China had bolstered the rebound, with the gauge this week briefly coming within 1 percent of a record set last May.

     The advance has come even as profits are forecast to slide at the steepest pace since the financial crisis. Analysts project first-quarter income shrank 9.3 percent at S&P 500 firms, compared with predictions for flat growth at the start of the year. With 130 index members having reported, roughly 82 percent have beaten profit estimates, while 59 percent have exceeded sales predictions.

     Coca-Cola Co. and Travelers Cos. rebounded Friday from selloffs this week following their results, with both advancing more than 1.8 percent to help the Dow and S&P 500 wipe out earlier losses. Wells Fargo & Co. and Bank of America Corp. climbed at least 1.1 percent to lead banks to a fourth gain in five days.

     Along with earnings, investors’ attention will also turn to the Federal Reserve’s looming two-day meeting, with an interest- rate decision due on Wednesday. Traders are pricing in zero chance the Fed will raise rates next week, pegging November as the first month with at least even odds for a boost.                        

     Meanwhile, the Bank of Japan may offer a negative interest rate on some loans to spur lending, according to people familiar with talks at the central bank, duplicating a policy the European Central Bank adopted in March. The ECB yesterday left its rates at record lows and kept the size of its bond-buying program unchanged.

     In Friday’s trading, eight of the S&P 500’s 10 main industries rose, while technology shares lost 1.9 percent and consumer discretionary companies slipped. Energy producers added 1.3 percent. The Chicago Board Options Exchange Volatility Index fell 5.2 percent to 13.22. The measure of market turbulence known as the VIX is down 5.2 percent for the month, holding near the lowest levels since August. About 7.4 billion shares traded hands on U.S. exchanges, 8 percent below the three-month average.

     Facebook Inc. amplified the rout in technology sparked by Alphabet and Microsoft, with the social network’s shares losing 2.5 percent, after falling as much as 3.9 percent. Visa Inc. sank 2.1 percent after agreeing to amend the terms of its planned acquisition of Visa Europe Ltd, while quarterly results at the world’s largest payments network exceeded analysts’ forecasts.

     Software companies in the S&P 500 slumped along with Microsoft, falling 3.1 percent to a four-week low after the group just reached an all-time high on Monday. Adobe Systems Inc. and Red Hat Inc. lost at least 1.6 percent.

     American Airlines Group Inc. was the biggest decliner in the Dow Jones Transportation Average, slipping 4.5 percent. The world’s largest airline carrier said today it was disappointed with its first-quarter revenue and cautioned that passenger revenue for each seat flown a mile, a benchmark gauge for airlines, will continue falling all year.

     Hawaiian Airlines parent Hawaiian Holdings Inc. plunged 11 percent after its quarterly revenue was short of estimates and the company provided an outlook. The shares had rallied 58 percent from a February low to an all-time high on Tuesday. A Bloomberg index of U.S. airlines lost 2.4 percent Friday to finish the worst week since February.                       

      Energy companies in the S&P 500 closed at the highest level since Dec. 1 as West Texas Intermediate crude futures added 1.3 percent, a third weekly advance as declining U.S. production provided more evidence that the market is rebalancing.

     Southwestern Energy Co. surged 15 percent to a five-month high after reporting profit and sales that exceeded consensus analyst estimates. Anadarko Petroleum Corp. and Chesapeake Energy Corp. climbed at least 5 percent.

     The S&P 500 Financials Index increased 1 percent, its ninth gain in the last 11 trading days. SunTrust Banks Inc. rallied 5.2 percent to a 2016 high after reporting earnings and revenue that beat forecasts. Comerica Inc. and E*Trade Financial Corp. added more than 3.1 percent.

     Consumer discretionary stocks fell as Starbucks Corp. lost 4.9 percent, its steepest selloff in more than two months, after posting quarterly sales that trailed estimates as growth in the coffee giant’s Americas region slowed. Royal Caribbean Cruises Ltd. and Marriott International Inc. decreased more than 2.4 percent, while Amazon.com Inc. lost 1.7 percent, slipping for the third time in four days.

     Advanced Micro Devices Inc. was one of the bright spots in tech, soaring 52 percent, the most on record, after saying it’s licensing technology to a Chinese, state-backed joint venture that will produce server processors for that country’s market.

Have a wonderful weekend everyone.

Be magnificent!

Better than a thousand hollow words,

is one word that brings peace.

Buddha

As ever,

Carolann

Pessimism is a luxury that a Jew can never allow himself.

                                            -Golda Meir, 1898-1978

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