January 19, 2017 Newsletter

Dear Friends,

Tangents:

On this day in 1981, the U.S. signs an agreement with Iran paving the way for the release of 52 Americans held hostage for more than 14 months.
On Jan. 19, 1937, millionaire Howard Hughes set a transcontinental air record by flying his monoplane from Los Angeles to Newark, N.J., in 7 hours, 28 minutes and 25 seconds.
1870 – Tin can patented.
Janis Joplin, b. 1943
Paul Cezanne, b.1839
Edgar Allan Poe, b. 1809

POINTS OF PROGRESS:
Portland, Oregon
In a novel approach to fighting income inequality, the city will begin imposing a tax increase this year on publicly traded companies that pay their chief executives at least 100 times as much as their median worker salary.  The initiative calls for a 10 percent surcharge in the city’s business tax for any publicly traded company with a CEO-to-worker pay ratio of 100 to 1 or greater, and a 25 % surcharge for companies with a ratio of 250 to 1 or greater. –CSM
Svalbard, Norway
The world’s crop diversity is being safeguarded by a unique facility deep inside the Arctic Circle.  The Svalbard Global Seed Vault, run by The Crop Trust, an independent organization established under international law, sits within a mountain on a remote island, bound by permafrost that will ensure samples stay frozen even without power.  Its aim is to hedge against myriad threats, including natural disasters, war, lack of funding,, and poor management.  The first withdrawal was made in 2015 by a war-ravaged seed bank in Syria. –The Crop Trust, Civil Eats
Kenya
Mobile money services have lifted 2 % of Kenyans out of poverty, according to new research published in the journal Science.  Researchers from the Massachusetts Institute of Technology and Georgetown University in Washington, C.C., found that, since 2008, these initiatives have raised 194,000 Kenyan families out of extreme poverty.  There was an added nuance: The effects were more pronounced in female-headed households.  In addition, the schemes helped approximately 185,000 women move from farming to business occupations.  –Science, MIT.
Worldwide
A $1 billion investment fund is backing clean energy.  Launched by an array of billionaire businessmen including Richard Branson and Mark Zuckerberg, the Breakthrough Energy Venture fund seeks to “build companies that will help deliver the next generation of reliable, affordable, and emissions-free energy to the world,” as chairman Bill Gates puts it.  Meanwhile, the value of global assets being committed to divesting from fossil fuels has reached a milestone of $5 trillion, doubling in just the past 15 months.
PHOTOS OF THE DAY

A snowshoer visits an imitation Greco-Roman temple, built in 1869, on the summit of Donon mountain in Granfontaine, France, on Thursday.Christian Hartmann/Reuters

Believers jump into the water of the Moraca river in an attempt to retrieve a wooden cross during Epiphany celebrations in Podgorica, Montenegro, on Thursday. Stevo Vasiljevic/Reuters
Market Closes for January 19^th, 2017

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Greg Quinn
     (Bloomberg) — Bank of Canada Governor Stephen Poloz has a message for those betting Canada’s economy will ride shotgun on the U.S. recovery: think again.
     Canada’s central bank chief spelled out Wednesday how his economy is still diverging from the U.S. two years after an oil shock took hold. His statements cast doubt on the recent rally in the country’s dollar and bond yields that, in the past, have accompanied similar rallies in the U.S. Here’s why:                         
     Canadian bond yields that followed U.S. yield higher are out of step with the weaker economy north of the border, Poloz told reporters Wednesday.
     “While this reaction is consistent with past correlations, it is at odds with Canada’s macroeconomic situation where there is material excess capacity, unlike the U.S. economy,” Poloz said, laying the blame for the economic divergence on the oil price collapse.
     In a statement that accompanied the earlier rate decision, Policy makers said the higher Canadian dollar is “exacerbating ongoing competitiveness challenges and muting the outlook for exports.”                      
     The central bank said Canada’s economy continues to operate with “material excess capacity.” It also pointed to a deteriorating labor market, saying that while jobs growth has been firm, the labor market is showing signs of significant slack.
     One area of contrast with the U.S. is wages. Canadian paychecks for permanent employees rose 1.5 percent in December from 12 months earlier. In the U.S., average hourly earnings climbed 2.9 percent, the most since 2009.
     Canada’s relative weakness means Poloz “will remain easy for the time being” with monetary policy, said Darcy Briggs, a fixed income portfolio manager at Franklin Bissett Investment Management.                       
     Federal Reserve Chair Janet Yellen said Wednesday the U.S. economy is close to the central bank’s objectives of full employment and stable prices and she’s confident it will continue to improve. Poloz, meanwhile, cut his inflation estimate for the fourth quarter to 1.4 percent from 1.7 percent. Core price gains are also below 2 percent in Canada.
     Canada’s economy, hit hard by an oil price collapse that was largely beneficial to the U.S. economy, is still suffering an ongoing hit to incomes even amid signs the shock is bottoming out. Ironically, the U.S. energy sector also seems to be benefiting more from the rebound in oil prices since shale oil deposits have become cheaper to produce, giving it a competitive advantage over Canada’s heavy crude.                         
     Poloz signaled a cut to the bank’s 0.5 percent benchmark interest rate remains possible — even as the Fed is hiking — if there’s another major shock. Canada still needs until mid-2018 to restore the economy to full health, and the outlook is also clouded by uncertainties over whether U.S. President- elect Donald Trump will deliver big tax cuts or bring trade restrictions.
Most actively traded companies on the TSX
     (Canadian Press) — Some of the most active companies traded Thursday on the Toronto Stock Exchange:
     Toronto Stock Exchange (15,409.81, up 11.96 points)@ close:
     Tamarack Valley Energy Ltd. (TSX:TVE). Oil and gas. Up 19 cents, or 5.83 per cent, to $3.45 on 13.7 million shares.
     B2Gold Corp. (TSX:BTO). Miner. Down one cent, or 0.27 per cent, to $3.66 on 6.6 million shares.
     Cameco Corp. (TSX:CCO). Miner. Up $1.46, or 10.15 per cent, to $15.85 on 5.5 million shares.
     Encana Corp. (TSX:ECA). Oil and gas. Up one cent, or 0.06 per cent, to $17.39 on 4.9 million shares.
     Kinross Gold Corp. (TSX:K). Miner. Down two cents, or 0.43 per cent, to $4.68 on 4.8 million shares.
     Baytex Energy Corp. (TSX:BTE). Oil and gas. Down 10 cents, or 1.82 per cent, to $5.38 on 4.7 million shares.
     Companies reporting major news:
     George Weston Ltd. (TSX:WN). Grocer. Down 65 cents, or 0.58 per cent, to $112.39 on 58,956 shares. Chairman Galen G. Weston was appointed CEO of the business his father led for decades before stepping aside last year as part of a staged succession plan at the company that controls the Loblaw grocery chain.
     Canadian Pacific Railway Ltd. (TSX:CP). Transportation. Up $7.63, or 3.96 per cent, to $200.11 on 921,250 shares. The railway said in a news release after markets closed on Wednesday that CEO Hunter Harrison, 72, had struck a surprise deal to step down five months ahead of schedule, apparently so he can take a job with a competing railroad. Harrison will give up benefits and stock options worth up to $118 million, including forfeiting his CP Rail pension, in return for cancelling his non-compete agreement. 
US
By Jeremy Herron and Lu Wang
     (Bloomberg) — The Dow Jones Industrial Average erased its 2017 gain, Treasuries slumped and the dollar slipped as investors awaited Donald Trump’s inauguration for clues on whether his policies will boost growth in the world’s largest economy.
     The Dow headed for its first five-day slump since the election. Banks slumped as Steven Mnuchin, Trump’s Treasury nominee, didn’t advocate throwing out tough regulations during his Senate confirmation hearing. The greenback erased gains after he said the dollar was “very, very strong.” Treasury yields climbed to the highest level this year. Oil advanced and gold slumped.
     The rallies in the dollar and equities faltered a day before Trump is sworn in as the 45th American president, with investors growing increasingly anxious for indications the administration will follow through on pro-growth campaign promises. Mnuchin said passing tax reform is a “major component” of the policy stance. The European Central Bank earlier renewed commitment to stimulus, saying there are no signs that inflation is taking hold.
     Equities extended losses amid comments from billionaire investor George Soros, who said the euphoria among stock investors since Trump’s victory will end as uncertainty takes over. The S&P 500 has fallen 0.4 percent since mid-December, while the Dow has churned in its tightest range ever over the past month.
     The ECB’s Mario Draghi said there are “no convincing signs yet of upward trend in underlying inflation” during his first appearance of the year. Accelerating consumer prices have caused alarm in Germany, the region’s largest economy, and sparked calls for him to rein in the ECB’s bond-buying program. The central bank left its benchmark rate unchanged.
     Read our Markets Live blog here.
     Here are the main market moves:
* The S&P 500 Index fell 0.4 percent to 2,263.669 at 4 p.m. in New York, the lowest in two weeks. Real-estate and utility stocks lost 0.9 percent, while banks shares fell 0.6 percent.
* Netflix rose 3.9 percent after reporting its best quarter ever.
* Yields on 10-year Treasury notes rose four basis points to 2.47 percent, the highest since Dec. 29.
* The rate on similar maturity German bunds climbed two basis points to 0.38 percent.
* The euro erased its 0.3 percent advance against the dollar as Draghi began speaking and was little changed at $1.0627.
* The Bloomberg Dollar Spot Index ended little changed.
* West Texas Intermediate crude added 0.6 percent after a government report showed that crude stockpiles at the biggest U.S. storage hub dropped the most since October.
* Gold futures slid 0.7 percent to $1,204.20 an ounce in New York.
* The Stoxx Europe 600 Index fell 0.1 percent and the MSCI
Emerging Market Index lost 0.3 percent.

Have a wonderful evening everyone.

Be magnificent!

Do men fear sleep?
One prepares the bed for sound sleep.
Sleep is temporary death.  Death is longer sleep.
If the man dies while yet alive, he need not grieve over others’ death.
One’s experience is evident with or without the body, as in waking, dream, and sleep.
Then why should one desire continuance of the bodily shackles?
Let man find out his undying Self and die and be immortal and happy.
Sri Ramana Maharshi

As ever,
 

Carolann

You keep putting one foot in front of the other, and then one day,
you look back and you’ve climbed a mountain.
                                              -Tom Hiddleston, b. 1981

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

Tel: 778.430.5808
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