April 1, 2020 Newsletter

Dear Friends,

Tangents: April Fool’s is cancelled.  Happy April 1^st!

On April 1, 1945, American forces invaded Okinawa during World War II. Go to article »

ESPN is airing its Michael Jordan documentary early because there are no sports to watch 
What we wouldn’t give for a single pitch of baseball! A single layup! A single shot on goal! –CNN
Wild goats have taken over a Welsh town amid coronavirus lockdown
This is what you get if you observe coronavirus rules: A visit from wild goats! –CNN

Why life during a pandemic feels so surreal. -Bloomberg.
Antarctica once had a rain forest.-Bloomberg.

From The New York Times today:

Snapshot: Above, zebras in Zambia. Travel restrictions are in place around the globe, so we’re starting a series: “The World Through a Lens.” This week, Marcus Westberg shares photographs from Zambia’s national parks.

PHOTOS OF THE DAY

This is a sheep on a farm in Rothes. The owner has painted it for the children of the area to spot it and bring a message of hope regarding COVID-19.
CREDIT: JASPERIMAGE/ ALAMY LIVE NEWS

These stunning images from a helicopter showcase the mesmerising colours and contrasting textures of the Grand Prismatic Hot Spring in Yellowstone National Park, USA.
CREDIT: GERALD MACAU/SOLENT NEWES &PHOTO AGENCY

Palestinian artists Tamer Al-Deeb and Dorgham Krakeh make a sand sculpture reading “Stay Home” along a beach in Gaza City
CREDIT: MAJDI FATHI/NAURPHOTO
Market Closes for April 1^st  ,2020 

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 2008, Lehman Brothers, which had been battling rumors that it was on the ropes, sold preferred convertible shares to raise $4 billion in new capital. Its shares rose 18%.
Canada
By Michael Bellusci
(Bloomberg) — After suffering its worst quarter since the global financial crisis, Canadian stocks slumped on Wednesday as investors digested worsening U.S. coronavirus figures and assessed the pandemic’s impact on corporate profits.
The S&P/TSX Composite Index lost 3.8% on the first day of the second quarter, with 10 out of its 11 sectors in the red. Gold stocks rallied as market jitters led to a surge in haven assets. Montreal-based Dollarama Inc. suspended its fiscal 2021 guidance, saying “it is impossible to forecast the impact of the pandemic,” while mining firm Teck Resources Ltd. withdrew its financial forecasts and said it was considering a full shutdown of the Fort Hills mine to cut costs as local oil prices hit record lows.
To add to the wall of worry, Prime Minister Justin Trudeau on Wednesday said social distancing measures in place to stop the spread of Covid-19 could be in place for weeks or even months. “Canadian equities are combating a triple threat: fear, economic shutdown and plunging oil,” said Brian Belski, chief investment strategist at BMO Capital Markets. “It seems to us that ‘defaulting to the negative’ has become excessively consensus, with optimism and common sense carrying the label of Pollyanna or flippancy.”
Rock-bottom prices for Canadian oil and a lack of demand are setting the stage for “inevitable” production cuts, according to Goldman Sachs, which says the industry could run out of storage space within weeks. “Yes, the oil shock is a perceived negative for Canada — especially psychologically. However, many investors forget that Canadian equities can ‘stay afloat’ and in some cases do very well when oil is suffering,” Belski said in a report published Wednesday. Canaccord Genuity slashed its S&P/TSX Composite forecast to a year-end target of 14,500 down from 17,900 after the benchmark slumped 22% in the first quarter. The firm’s strategist Martin Roberge expects a 30% profit decline in the “2020 recession” and added that while the period of indiscriminate selling for stocks may have passed, it’s still too early to be overweight in the equity market.
The cost of Trudeau’s fiscal package to protect the economy from the impact of Covid-19 has reached about C$250 billion ($176 billion), according to the latest figures from the finance department. One of the flagship programs, a plan to subsidize 75% of wages for Canadian workers, will cost C$71 billion, Finance Minister Bill Morneau told reporters Wednesday in Ottawa. Along with other measures such as the monthly income replacement scheme, direct support for companies and households will run the government C$105 billion, Morneau said.
Commodities
* Western Canada Select crude oil traded at a $15.50 discount to West Texas Intermediate
* Spot gold rose 0.9% to $1,591.51 an ounce
FX/Bonds
* The Canadian dollar fell 1% to C$1.4197 per U.S. dollar
* The 10-year government bond yield fell 6.6 basis points to 0.631%

By Bloomberg Automation:
     (Bloomberg) — The S&P/TSX Composite fell 3.8 percent at 12,876.37 in Toronto. The move follows the previous session’s increase of 2.6 percent. Royal Bank of Canada contributed the most to the index decline, decreasing 4.7 percent. BlackBerry Ltd. had the largest drop, falling 17.9 percent.
Today, 183 of 230 shares fell, while 45 rose; 10 of 11 sectors were lower, led by financials stocks.
Insights
* In the past year, the index had a similar or greater loss seven times. The next day, it advanced six times for an average 5.6 percent and declined 12.3 percent once
* The index declined 21 percent in the past 52 weeks. The MSCI AC Americas Index lost 15 percent in the same period
* The S&P/TSX Composite is 28.3 percent below its 52-week high on Feb. 20, 2020 and 15.2 percent above its low on March 23, 2020
* The S&P/TSX Composite is down 2 percent in the past 5 days and fell 21 percent in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 12.8 on a trailing basis and 13.7 times estimated earnings of its members for the coming year
* The index’s dividend yield is 4.1 percent on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$2.04t
* 30-day price volatility rose to 88.25 percent compared with 87.93 percent in the previous session and the average of 58.91 percent over the past month
US
By Jeremy Herron and Vildana Hajric
(Bloomberg) — U.S. stocks fell for the third time in four days as investors braced for a longer economic shutdown that’s likely to devastate corporate profits and dividends. The dollar rose with Treasuries.
The S&P 500 dropped the most in two weeks, with sentiment souring after U.S. officials gave sobering assessments of the pandemic’s potential impact. President Donald Trump warned of a “painful” upcoming period for the country, while New York Governor Andrew Cuomo said a model showed the Covid-19 outbreak may not peak in the state until the end of April. Italy also said Wednesday it would extend its lockdown. “Investor pessimism today is as bad as it has been,” said Dennis DeBusschere of Evercore ISI. “All estimates of when this will end are being pushed out, which means even harder hits to GDP/earnings.”
U.S. equities found no relief after enduring the worst quarter since 2008 as the pandemic shut down large swaths of the economy. Losses from the S&P 500’s February record reached 34% before an unprecedented government spending plan sparked a furious three-day rally of 18%. Since then, the index is down almost 5% as signs mount that the downturn will be longer than previously thought.
Banks suffered on speculation the largest will be forced to cut dividends after European lenders including HSBC Holdings Plc and Standard Chartered Plc halted payouts and share buybacks.
The region’s Stoxx 600 index sank, even after the European Union unveiled plans to save jobs during the crisis. The euro extended its drop as manufacturing data from the single-currency region painted a bleak picture, with Italy’s purchasing managers’ index posting a record drop.
Investors disappointed with the loss of dividend income could spark a fresh wave of selling, knowing that analysts are dashing to update earnings forecasts to take into account the looming global recession and the slump in stock prices.
“Markets are looking at global equities in a new light, one with no buyback support and no dividends,” said Chris Weston, head of research at Pepperstone Financial Pty Ltd. The earnings season is likely to trigger a decline in consensus S&P 500 profit expectations which “are far too high relative to dividend futures,” he said.
Elsewhere, West Texas oil fluctuated around $20 a barrel after Trump’s pledge to meet with feuding producers Saudi Arabia and Russia to support the market failed to bolster prices substantially.
These are the main moves in markets:
Stocks
* The S&P 500 Index fell 4.4% as of 4 p.m. New York time.
* The Stoxx Europe 600 Index decreased 2.9%.
* The MSCI Asia Pacific Index fell 2%.
Currencies
* The Bloomberg Dollar Spot Index increased 0.7%.
* The euro fell 0.7% to $1.0949.
* The British pound dropped 0.2% at $1.2393.
* The Japanese yen rose 0.4% at 107.07 per dollar.
Bonds
* The yield on 10-year Treasuries dipped five basis points to 0.62%.
* Germany’s 10-year yield fell three basis points to -0.48%.
* Britain’s 10-year yield decreased five basis points to 0.31%.
Commodities
* Gold rose 0.3% to $1,601 an ounce.
* West Texas Intermediate crude rose 2.2% at $20.93 a barrel.
–With assistance from Robert Brand, Adam Haigh and Brendan Walsh.
Have a great night.

Be magnificent!

As ever,

Carolann

Life is not what one lived, but rather what one remembers,
and how it is remembered to tell the tale.
                             -Gabriel Garcia Marquez, 1927-2014

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