April 29, 2016 Newsletter

Dear Friends,

Tangents:

May:

The Anglo-Saxons called this month thrimilce, because then cows can be milked three times a day.  The present name is the Latin Maius, probably from Maia, the goddess of growth and increase, connected with major.  It was the fifth month in the Julian and Gregorian calendars.  The old Dutch name was Bloumaand, “blossoming month.”  The corresponding month in the French revolutionary calendar was Floréal, “floral”, with a period from modern April 21 to May 20^th. 

May Day:  Polydore Virgil says that the Roman youths used to go into the fields and spend the calends of May in dancing and singing in honor of Flora, goddess of fruits and flowers.  The English celebrated May Day with games and sports, particularly archery and Morris Dances and the setting up of the Maypole.  In due time, Robin Hood and Maid Marian came to preside as Lord and Lady of the May, and by the 16^th century May Day was Robin Hood’s day and Robin Hood plays  became an integral part of the festivities.

May Day was also formerly the day of the London chimney-sweepers’ festival.

HAPPY MAY DAY EVERYONE!

FYI:  I am off to Toronto to visit with clients on Monday and then on to an investment conference in NYC for a couple of days, but I shall be continuously in touch with the office.   Therefore, you can leave a  message with my assistants if you need anything; they will make sure I get the message so I can reply to you at the first opportunity.

PHOTOS OF THE DAY

Two women walk their dogs near a field of rape in Frankfurt, Germany on Friday. Michael Probst/AP

A man paddles on Lake Geneva on a warm spring afternoon in Lausanne, Switzerland, on Friday. Denis Balibouse/Reuters

Market Closes for April 29^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks advanced, capping a third straight monthly gain, as raw-materials rallied on First Quantum Minerals Ltd.’s earnings and the nation’s economy contracted less than expected in February.

     The benchmark S&P/TSX Composite Index rose 0.5 percent to 13,951.45 at 4 p.m. in Toronto. The gauge increased 3.4 percent in April, matching the longest monthly winning streak since August 2014. It also added 0.6 percent in the last five days, to extend the longest stretch of weekly gains since the year began. The S&P/TSX is one of the best-performing developed markets in the world this year as it rebounds from last year’s worst annual decline since 2008.

     Canada’s gross domestic product declined 0.1 percent in February, smaller than the median 0.2 percent estimate in a Bloomberg survey of economists. The decline is the first in five months, a rare setback in a quarter economists expect will actually show the best expansion in more than a year. Statistics Canada kept in place its January growth estimate of 0.6 percent, the fastest since 2013.

     Raw-materials shares surged 5.4 percent to the highest level in more than a year, one of only three groups in the S&P/TSX to climb Friday. Trading volume was 37 percent higher than the 30-day average in April’s final trading session.

     First Quantum jumped 17 percent, climbing to the highest close since July, after reporting first-quarter earnings and revenue ahead of analysts’ estimates. The results reflect higher copper, nickel and zinc output from continuing operations, including the new Sentinel mine, according to Eily Ong, a Bloomberg Intelligence analyst.

     Enbridge Inc. and Crescent Point Energy Ltd. fell more than 0.8 percent as energy stocks slipped 0.1 percent, paring a second monthly advance. Oil dropped from a five-month high in New York as OPEC crude production surged by 484,000 barrels a day in April, the most in monthly data going back to 1989. Oil still rose 20 percent this month for the biggest such advance in a year as U.S. production slumped to the lowest level since October 2014.

     The resource-dominant S&P/TSX remains closely linked to moves in commodities prices, with an 18 percent rally in the benchmark equity gauge from a Jan. 20 low aligning with a rebound in crude from the lowest levels since 2003. Raw- materials and energy producers are the two top-performing industries in Canada so far this year, up more than 14 percent.

     The Canadian benchmark now trades at 21.7 times earnings, about 14 percent higher than the 19 times earnings valuation of the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

     Air Canada soared 13 percent, the most in two years, as the airline reported an unexpected first-quarter profit, benefiting from falling fuel prices and rising traffic.

     Valeant Pharmaceuticals International Inc. dropped 5.5 percent after filing its delayed 2015 annual report and saying it may make significant changes to its business strategy. Neither outgoing Chief Executive Officer Mike Pearson nor former Chief Financial Officer Howard Schiller will stand for re- election and five independent directors have also told the board they will not run again.

US

By Jeremy Herron and Joseph Ciolli

     (Bloomberg) — The dollar fellto the lowest level in almost a year on speculation the Federal Reserve won’t rush to raise interest rates. U.S. stocks fell and commoditiesextended gains in their best month since 2010.

     The Bloomberg Dollar Spot Index fell for third month, the longest since it started a two-year rally of 20 percent, while the yen had its biggest weekly jump since 2008. Declines in the greenback are proving a boon for raw materials, helping lift gold and silver to 15-month highs. Crude oiljumped 20 percent this month to $46 a barrel in New York. U.S. stocks staged an afternoon comeback to pare a decline and end April slightly higher.

     The dollar’s drop comes as personal spending in the U.S. last month reinforced speculation on the pace of Fed tightening as the world’s largest economy struggles to gain traction. The rally in equities spurred by stabilization in the price of crude and the potential for central-bank support has stalled in recent weeks. Corporate results have been mixed, with profits at S&P 500 companies set for a fourth straight quarterly contraction.

     “With the inactivity and ineffectiveness progressively for central bank policy, there’s still certainly a lot of hand- wringing to be done,” said Mike Moran, head of economic research for the Americas at Standard Chartered Bank. “It underscores the issue — we’re not in a very strong growth environment globally.”

     The Bloomberg dollar gauge, which tracks the greenback against 10 major peers, slipped 0.6 percent as of 4 p.m. in New York, capping a 2 percent weekly loss and third straight monthly slide.

     Consumer spending rose less than forecast in March, wrapping up the weakest quarter in a year for the biggest part of the U.S. economy even as incomes accelerated. A tempering of household purchases for the last three quarters has surprised economists given the favorable backdrop of low inflation, job gains and cheap borrowing costs.

     The yen strengthened against all 16 major peers for the second day in a row, climbing as much as 1.1 percent to 106.91 a dollar, the strongest level since October 2014. It surged 5.1 percent this week as the Bank of Japan defied economists’ expectations that stimulus would be stepped up.

     Emerging-market currencies rose for a third month advance as oil rallied. The MSCI Emerging Markets Currency Index touched the highest level since July on Friday. The ruble extended the best start to a year on record as Russia’s central bank left borrowing costs on hold. Colombia’s peso rose 0.7 percent, pushing its gain in April to 5.1 percent. South Africa’s rand advanced 0.4 percent, extending a monthly gain to 3.7 percent. The Brazilian real strengthened 4.4 percent in April.

          The S&P 500 Index fell 0.6 percent to 2,065.50, the lowest in two weeks. It’s fallen 1.4 percent in two days, the most since Feb. 9. The gauge lost 1.3 percent in the week, paring a monthly gain to 0.3 percent. It’s now fallen 1.7 percent since April 20, when it closed at 2,102.40 and was within 1 percent of an all-time high.

     “A lot of optimism came into the market last week as we crossed 2,100, which makes it vulnerable to a short-term pullback,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110 billion. “The market is being supported by very favorable monetary policy, but valuations are very stretched and earnings aren’t coming through.”

     Amazon.com Inc. surged as it reported sales and profit that topped estimates. Chevron Corp. fell after reporting a wider- than-estimated loss. Gilead Sciences Inc. retreated as its profit missed estimates on lower-than-expected sales of its hepatitis C treatments.

     The Stoxx Europe 600 Index fell 2.1 percent, for its biggest drop since Feb. 24 and paring its monthly increase to 1.2 percent. All its industry groups declined Friday.

     The MSCI Emerging Markets Index dropped 0.6 percent, trimming this month’s advance to 0.3 percent. The gauge has climbed 5.7 percent this year, compared with a 1 percent gain in the MSCI World Index of developed markets.

     The global gluts that have plagued markets from crude oil to zinc are finally starting to subside, sending commodities to their biggest monthly gain since December 2010. The Bloomberg Commodity Index, a measure of returns on 22 raw materials, rose 0.8 percent, extending this month’s gain to 8.5 percent.

     Oil dropped Friday from a five-month high as surging OPEC crude production is seen swelling global stockpiles. Futures settled at $45.92 a barrel in New York. WTI is up 20 percent this month, the most in a year, rebounding after slumping to the lowest since 2003 earlier this year. 

     Base metals rallied, with aluminum set for its biggest monthly advance since 2012 amid signs of improved demand in China, the world’s biggest consumer. Raw materials have recovered as China’s property and construction industry rebounded after a slow start to the year. Copper, zinc, lead and nickel climbed at least 1 percent.

     Gold and silver rose, both closing at the highest since January 2015.

     The Bloomberg U.S. Treasury Index declined 0.3 percent in April, set for the first monthly loss of 2016. The 10-year yield was little changed at 1.83 percent on Friday, having started the month at 1.77 percent. Similar-maturity bonds in Japan yielded minus 0.085 percent at the end of their final trading session in April.

     The 10-year break-even rate, which measures the difference between yields on 10-year notes and equivalent Treasury Inflation-Protected Securities, widened for a 10th day. The gauge of the expected annual inflation pace over the next decade climbed to 1.73 percentage points, the highest since July.

     Government bonds from Germany to Spain and Italy capped monthly declines amid signs of optimism about the regional and global economy, with data Friday showing euro-zone economic growth quickened more than analysts predicted in the first quarter. German 10-year bund yields rose two basis points to 0.27 percent, leaving them 12 basis points higher in the month.

Have a wonderful weekend everyone.

Be magnificent!

The sum-total of the experience of the sages of the world is available to us

and would be for all time to come.

Moreover, there are not many fundamental truths,

but there is only one fundamental truth which is Truth itself,

otherwise known as nonviolence.

Mahatma Gandhi

As ever,

Carolann

Enthusiasm is the most important thing in life.

                  –Tennessee Williams, 1911-1983

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