March 11, 2020 Newsletter

Dear Friends,

Tangents:

It’s a roller coaster market right now – yesterday up 5%, today down 5% – all driven by irrational emotion and herd behavior.  Many of you who are reading this have been clients of mine for many years, many of you for three decades or more, so you know well what my response to this type of market volatility is.  Do nothing – this too will pass.  I’ve been writing this nightly Newsletter to my clients for many years – in my first few years in the business I used to send it by post on a monthly basis – times change!

Well it’s worth pointing out that exactly 14 years ago, in 2006 (the 11^th of March was a Saturday), that is 2 years before the global financial crises of 2008 which was the worst correction since 1929, the S&P closed at 1281.58.  Today, it closed at 2741.38, an increase of +114%.  The NASDAQ closed at 2262.04 14 years ago.  Today, despite 2008 and all the other corrections along the way, it closed at 7952.05, an increase of +252%. Nothing can detract from the fact that over the long term, the greatest wealth creation in the world has been generated by owning good quality businesses.

Always remember Warren Buffet’s words of wisdom, “The stock market is a device for transferring money from the impatient to the patient.”

And the cogent words of another of the world’s greatest investors, Peter Lynch, “The key to making money in stocks is not to get scared out of them.”
 
Here are the market numbers from my Newsletter on March 10, 2006:

1985 – Mikhail S. Gorbachev was chosen to succeed the late Soviet President Konstantin Chernenko. Go to article »

Solved: The mystery of the expansion of the universe. -Bloomberg.

The Tiniest Dinosaur in History
Inside a tiny piece of amber from Myanmar — about 99 million years old — is the skull of what a team of scientists say is the smallest known bird and, therefore, dinosaur, ever discovered.
The creature has more teeth in its mouth than any other known bird species, suggesting it was a predator that hunted other creatures, and raising questions about bird evolution.
But the discovery isn’t without controversy. A growing number of scientists want to boycott research involving amber from Myanmar over the Rohingya genocide and the sourcing of the stone from mines in conflict zones. – from The New York Times

PHOTOS OF THE DAY

A Tate Modern Gallery assistant interacts with the ‘Silver Clouds” installation, at a press view of major new Andy Warhol exhibition at Tate Modern, London.
CREDIT: DOMINIC LIPINSKI/PA

The Super Worm Moon rises above Brooklyn and the Statue of Liberty in New York City.
CREDIT: GARY HERSHORN/CORBIS NEWS

Members of the Jewish Community celebrate the festival of Purim in Stamford Hill, north London.
CREDIT: SHUTTERSTOCK/NEIL HALL

Contortionist Elberel performs on stage at the Festival Theatre in Edinburgh, during the launch of the Cirque Berserk! 2020 tour.
CREDIT: JANE BARLOW/PA

Market Closes for March 11^th ,2020 

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 2008, the Federal Reserve agreed to lend $200 billion to Wall Street investment banks in a move aimed at taking hard-to-trade mortgage securities temporarily out of circulation. The Dow industrials surged 417 points, or 3.6%, to 12156.81, their biggest one-day gain in five years, but doubts grew on Wall Street about the viability of Bear Stearns.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 4.6 percent at 14,270.09 in Toronto. The index dropped to the lowest closing level in at least a year. The move follows the previous session’s increase of 3.1 percent. Today, financials stocks led the market lower, as all sectors lost; 227 of 230 shares fell, while 3 rose. Royal Bank of Canada contributed the most to the index decline, decreasing 4.9 percent. ShawCor Ltd. had the largest drop, falling 19.9 percent.
Insights
* In the past year, the index had a similar or greater loss once
* This quarter, the index fell 16 percent, heading for the biggest decline in at least 10 years
* The index declined 11 percent in the past 52 weeks. The MSCI AC Americas Index lost 3 percent in the same period
* The S&P/TSX Composite is 20.6 percent below its 52-week high on Feb. 20, 2020 and 0.6 percent above its low on March 11, 2020
* The S&P/TSX Composite is down 15 percent in the past 5 days and fell 20 percent in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 14.2 on a trailing basis and 13 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.7 percent on a trailing 12- month basis
* S&P/TSX Composite’s members have a total market capitalization of C$2.29t
* 30-day price volatility rose to 40.07 percent compared with 38.15 percent in the previous session and the average of 14.68 percent over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -199.6009| -4.2| 0/26
Materials | -114.2065| -6.6| 0/47
Energy | -95.4821| -4.7| 1/29
Industrials | -68.5361| -3.9| 0/31
Information Technology| -44.5021| -4.4| 0/10
Utilities | -43.1541| -5.2| 0/16
Consumer Discretionary| -31.8431| -5.4| 1/15
Communication Services| -29.7582| -3.3| 0/8
Real Estate | -29.6152| -5.1| 0/25
Consumer Staples | -21.1044| -3.2| 1/10
Health Care | -10.1983| -6.5| 0/10

US
By Jeremy Herron and Vildana Hajric
(Bloomberg) — Stocks plunged around the world, oil tumbled and the stress in U.S. credit markets deepened after the World Health Organization called the virus spread a pandemic and the Trump administration remained unable to detail any stimulus measures to combat the economic fallout. The latest bout of virus-fomented turmoil tipped Dow Jones Industrial Average into a bear market, ending the longest bull run in the history of American equities. The blue-chip slumped 5.9% Wednesday and ended 20% below its February closing record. The S&P 500 dipped into bear territory before closing 19% below its high. The WHO declaration rattled already on edge that the spreading virus will upend global growth. President Donald Trump didn’t keep his promise to detail stimulus plans, and late Wednesday said he the U.S. may not need to take those measures “if we get rid of the problem very quickly.” He plans to make a statement at 8 p.m. in Washington. European officials signaled a growing willingness to move soon to combat the virus’s effects on the region’s economy. Signs that companies in the hardest-hit industries were drawing down credit lines to battle the effects of the virus on their businesses added to anxiety. The New York Stock Exchange said it will restrict access to its trading floor, the Wall Street Journal reported. “We have no idea when the coronavirus, the spread, is going to subside. That uncertainty is going to continue to create alot of volatility,” said David Spika, the president of GuideStone Capital Management. “We have no idea how to model it, we have no idea what to expect from it.”
Here are the main moves in global markets:
* Private equity titan Blackstone Group Inc. asked companies it controls to draw down their bank credit lines to help prevent any liquidity shortfalls.
* All but 10 stocks in the S&P 500 retreated Wednesday, with every industry down at least 3.9%.
* Boeing plunged 18% after it said it plans to draw down all of a $13.8 billion loan. Hilton Worldwide lost 9% when it said it would draw some of its credit line.
* An index of consumer services providers that includes hotels, cruise operators, Starbucks and Chipotle plunged 8.3%.
* European equities wiped out a 2.3% advance sparked by an emergency rate cut in the U.K.
* Municipal bonds tumbled, sending rates on 10-year benchmark state and local government debt higher by 22 basis points, the most since records began in 2011.
* The yen surged 1%, while the euro advanced with the pound.
* Crude sank 4.2% to sink below $33 a barrel.
* Asian equities lost 1.7%.

U.S. stocks extended their three-week slide as investors grappled with the potential economic hit from the virus that is upending daily routines around the world. Policy makers are seeking to assure traders they’re on alert, with the ECB indicating it may move as soon as this week, the Bank of England cutting rates and German Chancellor Angela Merkel pledging to do “whatever is necessary” to bolster the economy. In the U.S., the Trump administration continues to promise “major” stimulus, but details remain uncertain. Democrats plan to urge the president to declare a national state of emergency. Markets are now growing worried that whatever does come will not have the ability to stave off a major blow to the world’s largest economy. “Every day we get whipsawed back and forth, and what we’re seeing today is general disappointment that fiscal policy is not at all clear in how it’s going to stimulate the economy,” said Michael Reynolds, an investment strategy officer at Glenmede Trust Co. Meanwhile, Joe Biden cemented his position as front-runner for the U.S. Democratic presidential nomination with primary victories Tuesday, further easing concerns among those opposing Bernie Sanders’s progressive platform.

Have a great night.

Be magnificent!
As ever,

Carolann

You laugh at me because I’m different, I laugh at you because you’re all the same.
                                                                            -Lady Gaga, b. 1986                                              

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Senior Investment Advisor

Queensbury Securities Inc.,
St. Andrew’s Square,
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7

Tel: 778.430.5808
(C): 250.881.0801
Toll Free: 1.877.430.5895
Fax: 778.430.5828
www.carolannsteinhoff.com