May 9, 2016 Newsletter

Dear Friends,

Tangents:

Poem – Selected by Matthew Zapruder, NY Times, 5/8/2016

Along with the epic and the dramatic play, the lyric was one of the earliest forms of poetry: a song of personal emotion, sung by a single voice to the accompaniment of a strummed instrument, a lyre.  For a long time the lyre itself has been implied, but the best lyric poems still sound like songs.

Vall de Núria

By Rowan Ricardo Phillips

The white rose.  The celestial silence.
The lake of light. The bed-like inner thigh
Of empyrean buttermilk and gold,
Call it what you will, it wakes me tonight.
Heaven reheavens.  And the mind’s prelude
To the touch of your lips on my forehead,
On my neck, our drowned echoes celloing
In the dark like flames drawn on the ocean,
Is not the mind’s prelude but its heaven.
How somewhere not in Spain there’s a mountain
Borrowing your name, my soul is its snow,
And so in the summer I am nothing,
When all I want to do is lay my head
Down, lay my head down on the naked slope
Of your chest and listen there for my heart.

Matthew Zupruder is the author of four collections of poetry, most recently “Sun Bear.”  He teaches at Saint Mary’s College of California and is the editor at large at Wave Books.  Rowan Ricardo Phillips is the winner of a Whiting Award.  His second collection f poetry, “Heaven,” was published by Farrar, Straus & Giroux last year.

PHOTOS OF THE DAY

An American flag is silhouetted as the planet Mercury is seen, lower left quadrant, transiting across the face of the sun in Las Vegas, Nevada on Monday. Mercury passes between Earth and the sun only about 13 times a century, with the previous transit taking place in 2006. David Becker/Reuters

‘Maya’ girl Irene Garcia Sieteiglesias sits at an altar during “Las Mayas” festivity in Madrid, Spain on Sunday. ‘Las Mayas’ festival is held annually at the beginning of May to celebrate the awakening of nature in Spring. Susana Vera/Reuters

Market Closes for May 9^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Oliver Renick

     (Bloomberg) — Canadian stocks slid, extending last week’s retreat, as commodity prices fell and wildfires raging through Alberta appeared set to move away from one of the country’s oil- producing regions.

     The benchmark S&P/TSX Composite Index lost 1 percent to 13,563.84 at 4 p.m. in Toronto, falling for the first time in three sessions. The gauge now trades at 20.6 times earnings, about 7.9 percent higher than the S&P 500’s 19.1 times earnings valuation, data compiled by Bloomberg show. Volume in the measure was about 7 percent lower than the 30-day average at closing time.

     The Bloomberg Commodity Index dropped for the fifth time in six sessions. All but seven companies in the S&P/TSX raw- materials index slid on Monday. Teck Resources Ltd. and First Quantum Minerals Ltd. led losses, slumping more than 11 percent.

     Gold producers also fell with the precious metal, which lost 2.1 percent to $1,266.60 an ounce in New York, the biggest loss since Feb. 16. Yamana Gold Inc. sank 7.3 percent, while Barrick Gold Corp. lost 5.5 percent, the most in six weeks.

     Crude oil fell 2.7 percent to a two-week low, as shifting winds moved wildfires away from oil-sands facilities in Alberta, reducing concern that production cuts would make a substantial dent in U.S. oil stockpiles. Suncor Energy Inc. dropped 1.8 percent, and Encana Corp. sank 4.1 percent to a one-month low.

     Consumer discretionary stocks led gains in the S&P/TSX with advances of at least 3.8 percent in Performance Sports Group Ltd and Dorel Industries.

     Temple Hotels Inc. tumbled 15 percent, the most in seven years. The shares had surged 56 percent in the three prior sessions amid the wildfires in Alberta. The company has nine properties in the Ft. McMurray area, with insurance coverage for loss of revenue.

     Valeant Pharmaceuticals International Inc. fell 5.2 percent to weigh on the health-care group, with the stock dropping for the sixth time in seven days. The embattled drugmaker reiterated its revenue and earnings estimates for the first quarter, saying it expects to submit its regulatory filing by June 10, ahead of a July 31 deadline in its debt agreement.

US

By Dani Burger

     (Bloomberg) — The S&P 500 closed little changed as a rally in health-care shares was offset by declines among commodity producers, while investors awaited a final batch of earnings reports and further clues on prospects for the economy.

     Health-care stocks jumped after their worst two weeks since February, while energy producers slid for a second day amid lower crude prices. Weaker metals prices sent other commodity shares lower. Freeport-McMoRan Inc. dropped 11 percent as copper sank and the company agreed to sell one of its mines. LendingClub Corp. tumbled 35 percent after its chief executive resigned as an internal review found abuses tied to the sale of loans.

     The S&P 500 rose 0.1 percent to 2,058.69 at 4 p.m. in New York, after its first back-to-back weekly losses since February. The Dow Jones Industrial Average lost 34.72 points, or 0.2 percent, to 17,705.91. The Nasdaq Composite Index increased 0.3 percent, buoyed by drug developers, to mark its first two-day climb since April 13. About 6.8 billion shares traded hands on U.S. exchanges, 11 percent below the three-month average.

     “What’s helping right now on the upside is consumer discretionary, staples and health,” said Brian Frank, portfolio manager at Frank Capital Partners LLC. “It’s the old bifurcated market story, with energy and materials down while the rest of the market is up. Metals are under a lot of pressure right now, with stockpiles up significantly.”

     The weakness in commodity shares showed evidence of simmering pessimism on the pace of global growth. Chinese trade figures released during the weekend showed exports fell in dollar terms in April and imports dropped for the 18th month in a row. Crude fell 2.7 percent as shifting winds moved wildfires away from oil-sands facilities in Alberta, Canada, reducing concern that production cuts would make a substantial dent in U.S. stockpiles.

     The main U.S. equity benchmark snapped a three-day decline on Friday after worse-than-estimated payrolls data stoked speculation the Federal Reserve will adopt a slower pace in tightening monetary policy. Traders are pricing in only a 4 percent chance of higher borrowing costs in June, compared with 20 percent a month ago.

     Still, influential bond investors warn not to count out the Fed. Bill Gross, former manager of the biggest bond fund, said policy makers may act at their next meeting in June. Mohamed El- Erian, chief economic adviser at Allianz SE, said the Fed may move twice this year. Mark Kiesel at Pacific Investment Management Co. and New York Fed President William Dudley echoed the comments.

     The S&P 500 has slipped about 2 percent since its April 20 peak, putting a brake on a 15 percent rise from the index’s 22- month low in February. Tepid first-quarter corporate results, particularly from technology giants such as Apple Inc. and Microsoft Corp., as well as subdued economic indicators damped investor appetite for risky assets after the gauge approached its all-time high set last May. The benchmark on Monday held within a 10-point band, the narrowest range in three weeks.

     Analysts have moderated their predictions for a declinein first-quarter earnings to 7.4 percent, from 9.5 percent at the start of April. According to one measure of corporate optimism, companies that forecast profit will exceed analyst estimates just outnumbered those that warn earnings will trail projections. A pause in the drumbeat of bad news on earnings would be welcome by bulls who’ve watched stock swings widen and rallies die as share prices approached record levels reached 12 months ago.

     Traders will also parse economic releases for clues on U.S. growth prospects, including data on retail sales and jobless claims later this week. Chicago Fed President Charles Evans said in a panel discussion in London today that the U.S. central bank is “just being careful” by pausing in its campaign to raise rates, and that borrowing costs should increase later in the year if economic fundamentals remain sound.

     “We’re starting to see with Friday’s payrolls that the Fed will not raise rates in June, so at least that risk is gone,” said Jasper Lawler, a London-based market analyst at CMC Markets Plc. “Investors will be looking toward retail sales this week for further indications.”

     Health-care companies were the best performers among the S&P 500’s 10 main industries, capping the strongest daily advance in more than a month. Generic drugmakers pushed the group higher, after Teva Pharmaceutical Industries Ltd. said falling prices of generic drugs would start to stabilize.

     Teva gained 5.1 percent, the most since October, while Mylan NV and Perrigo Co. added at least 1.5 percent. Allergan Plc, whose generic business Teva plans to acquire by June, climbed 6 percent for its biggest increase in six months. The Nasdaq Biotechnology Index rallied 2.5 percent, the most since April 21 after dropping more than 11 percent in the subsequent two weeks. Celgene Corp. and Biogen Inc. each added at least 2.1 percent.

     Krispy Kreme Doughnuts Inc. surged to its best performance in nearly five years after JAB Holdings announced it would buy the doughnut maker in a $1.35 billion transaction. The $21 a share offer is 25 percent higher than Krispy Kreme’s average closing level in the past 20 trading sessions.

     Grocer Kroger Co. added 3.7 percent, the best in almost three months, while Hormel Foods Corp. rose 3.1 percent to lead the advance among consumer staples. The group reached a one- month high and Wal-Mart Stores Inc. climbed for a fourth day, the longest winning streak in more than two months. Chipotle Mexican Grill Inc. and Darden Restaurants Inc. increased at least 3.1 percent to lead gains among discretionary stocks.

     The energy and raw-material groups sank the most as crude and metals dropped to reverse Friday’s advance. Energy producers fell 1.3 percent, cutting early losses by almost half. Diamond Offshore Drilling Inc. and Transocean Ltd. lost more than 6.4 percent, while Chevron Corp. declined 1.5 percent.

     Freeport-McMoRan saw the steepest slide among raw-materials companies, falling 11 percent, and is now down 25 percent since April ended. The copper producer said Monday it agreed to sell its Democratic Republic of Congo mine in an attempt to reduce debt racked up in the commodities boom. Imports of copper by China slumped in April from a record the previous month after swelling stockpiles in the top user discouraged purchases.

     The Bloomberg Commodity Index had its largest drop in six weeks, helping to drag mining machinery maker Caterpillar Inc. to a two-month low. Newmont Mining Corp. sank 6.7 percent, after a 5.5 percent jump in the prior two sessions, as gold fell for the fifth time in six days. Alcoa Inc. dropped 5.8 percent to a one-month low, taking its May retreat to 15 percent. The shares had surged nearly 17 percent in April.

     The CBOE Volatility Index fell 1 percent to 14.57. The measure of market turbulence known as the VIX slipped 6.2 percent last week, its third drop in the last four.

Have a wonderful evening everyone.

Be magnificent!

Nonviolence and cowardice go ill together.

I can imagine a fully armed man to be at heart a  coward.

Possession of arms implies an element of fear, if not cowardice.

But true nonviolence is impossible without the possession of unadultereated fearlessness.

Mahatma Gandhi

As ever,

Carolann

Storms make the oak grow deeper roots.

              -George Herbert, 1875-1957

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