February 7, 2018 Newsletter

Dear Friends,

Tangents:
On this day in 1958, the Advanced Research Projects Agency of the U.S. Department of Defense is established. It would later create ARPANET, the prototype of the World Wide Web.

On Feb. 7, 1964, the Beatles arrived in the United States for the first time, giving rise to Beatlemania.
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PHOTOS OF THE DAY

Two swans land on a snow-covered field in Hemmingen, northern Germany.
CREDIT: JULIAN STRATENSCHULTE/GETTY IMAGES

Leo Bartholomew, three, from Bath, cuddles up with a newborn lamb at The Olde House, Chapel Amble, Cornwall, in the middle of lambing season, which is a few weeks earlier than the rest of the country due to much milder Cornish weather.
CREDIT: BEN BIRCHALL/PA WIRE

Hikers follow the Latrigg walk to take in the view of Lake Derwentwater next to the town of Keswick, Lake District National Park.
CREDIT: OWEN HUMPHREYS/PA WIRE
Market Closes for February 7^th, 2018

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Number of the Day
1,167 points
The trading range for the Dow Jones Industrial Average on Tuesday, the second-widest swing for the blue-chip index in its long history. The all-time high is 1,597 points–a record that was set Monday.
Canada
By Kristine Owram
     (Bloomberg) — Canadian stocks were unable to hold onto early gains, closing down for the 7th time in 8 days as U.S. oil stockpiles grew the most since September, weighing on energy stocks.
     The S&P/TSX Composite Index fell 33 points or 0.2 percent to 15,330.58, the lowest since mid-September. Energy shares lost 1% as crude prices tumbled 2.5% to the lowest since early January.
     The materials index retreated 1.1% as precious and base metals fell. Klondex Mines Ltd. was the biggest decliner on the Canadian benchmark, losing 7.1% following several analyst downgrades.
     In other moves:
                          Stocks
* Hudson’s Bay Co. fell 1% after the retailer said its board has unanimously rejected an unsolicited proposal for its German business
* WestJet Airlines Ltd. gained 3.1%, the most since October. At least two analysts upgraded the stock on better-than-expected management guidance
* Canaccord Genuity Group Inc. fell 4.6% despite predicting ‘robust’ financing activity in the cannabis sector
                         Commodities
* Western Canada Select crude oil traded at a $28.75 discount to WTI, the narrowest gap in a week
* Gold fell 1.1 percent to $1,311.60 an ounce, the lowest since December
                         FX/Bonds
* The Canadian dollar weakened 0.6 percent to $1.2567 per U.S. dollar, the lowest since December
* The Canada 10-year government bond yield rose one basis point to 2.37 percent
US
By Kailey Leinz and Lu Wang
     (Bloomberg) — U.S. stocks remained on unsteady footing as the bout of volatility that’s gripped global financial markets persisted amid signs that the rise in Treasury yields has yet to run its course.
     Pressure Wednesday came from a weak 10-year note auction, sending the rate toward the four-year high that days ago sparked the biggest equity selloff in seven years. Stocks swung between gains and losses throughout the session before ending lower after heavy selling in the final 15 minutes of trading. Volume on U.S. exchanges topped 9 billion shares for a fourth straight day after surpassing that total just once in the past seven months.
     The S&P 500 erased a gain that reached 1.2 percent at its highest and closed lower by 0.5 percent in the biggest reversal since 2015. The Dow Jones Industrial Average swung 500 points from peak to trough, and heavy selling in megacap technology shares pushed the Nasdaq indexes to losses of at least 0.9 percent. While the Cboe Volatility Index eased back from levels last seen in August 2015, at 26.84 it remains about 40 percent above its average since 1990.
     The yield surge sparked concern the Federal Reserve would accelerate its tightening schedule, slowing the economy and eroding corporate profit margins. Chicago Fed President Charles Evans signaled as much Wednesday, saying sustained inflation could force more hikes.
     “When the rates began to move higher today seemed to be when the selling started to pick up in the market,” Michael Ball, president and lead portfolio manager of Colorado-based Weatherstone Capital Management Inc., said by phone. “That’s a long-term concern that’s out there. After the waterfall decline we had on Friday and Monday, people are just hyper-sensitive.”
     The U.S. equity decline signaled that Tuesday’s rebound — the S&P 500 had its best day in 15 months, as buyers picked over the wreckage from Monday’s 4.1 percent rout — might not persist into the Asian open. The region’s bid for its own recovery faltered late Wednesday, with the MSCI Asia Pacific Index almost completely erasing a gain of as much as 2.4 percent. Europe proved an outlier, with shares halting a seven-day slide on the biggest rally in nine months.
     A lingering issue for equity bulls is the wisdom of doing what they always do — buy the dip — when more selling by speculators may be imminent after Monday’s break in volatility markets. Accounts of losses and liquidations at hedge funds specializing in the asset class were rife Wednesday morning even as Wall Street strategists urged investors to consider the market’s solid underpinning in economic growth and earnings.
     “I think it’s telling you that people are still unnerved about the past several days,” David Ader, chief macro strategist at Informa Financial Intelligence, said by phone. “The stock market is going to be reacting to this retreat, to higher yields, until the bond market finds a footing.”
     The dollar rallied, adding to pressure in commodities. Bloomberg’s index of materials fell for a fourth day with its biggest drop since November. West Texas intermediate crude declined the most in two months after government data showed a jump in production. Gold futures slid and copper futures tumbled more than 3 percent.
     Here are some key events scheduled for this week:
* Monetary policy decisions are due this week in Russia, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru and the Philippines.
* Earnings season continues with reports from Philip Morris, Tesla, Rio Tinto, L’Oreal and Twitter.
* New York Fed President William Dudley and Dallas Fed President Robert Kaplan are among policy officials due to speak.    
     These are the main moves in markets:
                           Stocks
* The S&P 500 Index fell 0.5 percent as of 4 p.m. in New York.
* The Dow lost 19 points to 24,893.35. The Nasdaq 100 Index fell 1.3 percent.
* The Stoxx Europe 600 Index increased 2 percent, the first advance in more than a week.
* The MSCI Emerging Market Index declined 0.2 percent.
                           Currencies
* The Bloomberg Dollar Spot Index advanced 0.5 percent to the highest in more than two weeks.
* The euro dipped 0.9 percent to $1.227, the weakest in more than two weeks.
* The British pound sank 0.5 percent to $1.3878, the weakest in almost three weeks.
* The Japanese yen declined less than 0.05 percent to 109.60 per dollar.
                            Bonds
* The yield on 10-year Treasuries rose four basis points to 2.84 percent, the highest in about four years.
* Germany’s 10-year yield increased five basis points to 0.75 percent.
* Britain’s 10-year yield climbed three basis points to 1.551 percent.
                            Commodities
* The Bloomberg Commodity Index fell 1.2 percent, its biggest tumble in 12 weeks.
* West Texas Intermediate crude fell 2.4 percent to $61.84 a barrel.
* Gold dipped 0.7 percent to $1,315.24 an ounce.
* Copper declined 2.8 percent to $6,880 a metric ton.
–With assistance from Sarah Ponczek.

Have a wonderful evening everyone.

Be magnificent!

As ever,

Carolann

We die only once, and for such a long time.
                                    –Moliere, 1622-1673

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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