April 27, 2016 Newsletter

Dear Friends,

Tangents:

THE SPARROWS

Catching winter in their carved nostrils
the traitor birds have deserted us,
leaving only the dullest brown sparrows
for spring negotiations.

I told you we were fools
to have them in our games,
but you replied:
     They are only wind-up birds
who strut on scarlet feet
so hopelessly far
from our curled fingers.

I had moved to warn you,
but you only adjusted your hair
and ventured:
     Their wings are made of glass and gold
and we are fortunate
not to hear them splintering
against the sun.

Now the hollow nests
sit like tumours or petrified blossoms
between the wire branches
and you, an innocent scientist,
question me on these brown sparrows:
whether we should plant our yards with breadcrumbs
or mark them with the black , persistent crows
whom we hate and stone.

But what shall I tell you of migrations
when in this empty sky
the precise ghosts of departed summer birds
still trace old signs;
or of desperate flights
when the dimmest flutter of a coloured wing
excites all our favourite streets
to delight in imaginary spring.

               -Leonard Cohen, Let Us Compare Mythologies.

PHOTOS OF THE DAY

A cloud of insecticide is seen over Havana at dawn Wednesday after fumigation against the Aedes aegypti mosquito in the fight against the Zika virus. Enrique de la Osa/Reuters

Greek rowing World Champion Katerina Nicolaidou lights a cauldron with the Olympic Flame during the handover ceremony of the flame to the delegation of the 2016 Rio Olympics at Panathenaic Stadium in Athens on Wednesday. Alkis Konstantinidis/Reuters

Market Closes for April 27^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks climbed a second day, as energy and raw-materials producers advanced after oil closed at its highest level since November.

     The benchmark Standard & Poor’s/TSX Composite Index rose 0.6 percent to 13,887.66 at 4 p.m. in Toronto. The gauge halted the longest losing streak in three weeks on Tuesday, and is neck-and-neck with New Zealand as the best-performing developed market in the world this year, with a 6.8 percent gain.

     Six of the S&P/TSX’s 10 industries advanced, with utilities and raw-materials rising at least 1.3 percent. Bond yields tumbled after Federal Reserve policymakers signaled they will retain a “gradual” approach to raising interest rates even amid signs of improvement in the world’s largest economy.

     Energy producers climbed 1 percent, after rallying as much as 1.8 percent. West Texas Intermediate crude futures rose 2.9 percent, settling at $45.33 a barrel in New York. The commodity briefly erased gains after data showed crude inventories rose 2 million barrels last week, ahead of a 1.75 million barrel advance projected by analysts surveyed by Bloomberg.

     Cenovus Energy Inc. added 1.6 percent after reporting lower production and operating costs in the first quarter from year- ago levels, offsetting a wider operating loss than analysts expected. The oil and gas producer said the quarterly results are not indicative of potential performance for the rest of the year.

     Potash Corp. of Saskatchewan Inc. added 1.9 percent before its earnings report on Thursday, while Goldcorp Inc. gained 1.8 percent as gold prices climbed for a third day.

     Companies including BP Plc, Nabors Industries Ltd. and explorer Pioneer Natural Resources Co. have all said in the past 24 hours that prices above $50 will help drive a recovery in the oil industry, while The World Bank boosted its forecast for oil prices this year to an average of $41 a barrel, up from a January forecast of $37.

     The resource-dominant S&P/TSX remains closely linked to moves in commodities prices, with a 17 percent rally in the benchmark equity gauge from a Jan. 20 low aligning with a rebound in crude from the lowest levels since 2003. Raw- materials and energy producers are the two top-performing industries in Canada so far this year, up more than 15 percent.

     The Canadian benchmark now trades at 22.2 times earnings, about 15 percent higher than the 19.3 times earnings valuation of the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

US

By Anna-Louise Jackson and Oliver Renick

     (Bloomberg) — U.S. stocks advanced after the Federal Reserve reassured investors by continuing to signal it will proceed gradually in raising interest rates amid slow but steady growth in the economy.

     The Standard & Poor’s 500 Index climbed for a second day as energy producers rallied after oil surged above $45 a barrel in a whipsaw session. Those gains helped to offset losses among technology companies after Apple Inc. tumbled the most since January as its results disappointed. The Nasdaq 100 Index fell 0.8 percent to the lowest in nearly a month. Facebook Inc. jumped after the market closed as its results beat estimates.

     The S&P 500rose 0.2 percent to 2,095.15 at 4 p.m. in New York, after erasing a decline of as much as 0.5 percent. The Dow Jones Industrial Average added 51.23 points, or 0.3 percent, to 18,041.55, even with a roughly 45-point negative drag from Apple. About 7.3 billion shares traded hands on U.S. exchanges, 8 percent below the three-month average.

     In its statement, the Federal Open Market Committee today omitted previous language that “global economic and financial developments continue to pose risks,” tacitly nodding to improvement in financial markets, and instead said officials will “closely monitor” such developments. The Fed left its benchmark interest rate unchanged. The committee reiterated that it will probably raise rates at a “gradual” pace.

     “They’ve reassured the market it’s going to be a slow and gradual pace and that they expect the economy to improve moderately,” said Michael Arone, the Boston-based chief investment strategist at State Street Global Advisors’ U.S. intermediary business. “It was about as expected and they made their comments as wide in scope as possible and as a result there’s not much you can grasp onto to say they’re going to change their path.”

     The S&P 500 is up 3.4 percent since the Fed’s last meeting, when policy makers balked at lifting rates and signaled a slower pace for increases, citing risks from “global economic and financial developments” that could weigh on U.S. growth. Fed Chair Janet Yellen reiterated last month that the central bank will proceed cautiously.

     “Looks as if we will continue with the ‘slower growth, lower rates for longer’ scenario,” said Chris Gaffney, president of EverBank World Markets in St. Louis. “Nothing here would indicate a June hike is any more likely than before the statement. Markets are still predicting a ‘hold’ in interest rates until the end of 2016.”

     The recent equity rally had lost momentum following a four- month peak on April 20, as a batch of muted earnings reports failed to provide fresh impetus to send the S&P 500 higher. The benchmark index has rebounded 14 percent since a 22-month low in February, helped by surging oil prices and optimism the Fed will remain supportive of growth. It briefly climbed within 1 percent of its May record last week, before receding.

     Gains of at least 3 percent today in EBay Inc., Boston Scientific Corp. and Mondelez International Inc. after better- than-forecast results helped boost equities. Meanwhile, Apple’s first sales drop in more than a decade sent the broader tech group to the lowest level in six weeks. Microsoft Corp. and Alphabet Inc. sank for the third time in four sessions, with each posting losses of at least 7.5 percent during the period.

     Boeing Co. gained 2.9 percent to help boost the Dow, even as its quarterly profit was short of analysts’ forecasts as a charge for cost overruns on refueling tankers overshadowed improvements in cash flow and the company’s 787 Dreamliner production. United Technologies Corp. advanced 1 percent after its profit beat estimates as the company reined in costs to overcome sluggishness in China.

     Earnings remain squarely in focus, with more than a third of S&P 500 companies reporting this week, including Amazon.com Inc., Ford Motor Co. and Altria Group Inc. Analysts are projecting a 9.2 percent decline in first-quarter profit for firms in the benchmark, the worst performance since the financial crisis. Of those that have released results, 81 percent beat profit projections, while 58 percent topped sales forecasts.                       

     Facebook climbed 8.5 percent as of 4:36 p.m. after reporting sales and profit that beat analysts’ estimates on a boom in mobile advertising, boosted by newer ads on Instagram and video.

     In Wednesday’s trading, nine of the S&P 500’s 10 main industries advanced, while technology shares lost 0.9 percent, cutting the day’s losses by more than half. Energy, utility and phone companies — the benchmark’s strongest performers this year — increased at least 1.4 percent.

     Verizon Communications Inc. gained 2.5 percent, the most in three months, as the company and two labor unions representing 39,000 striking workers plan to resume negotiations on Thursday. Utility companies advanced for a fourth day, the longest streak since March 17.

     The Chicago Board Options Exchange Volatility Index fell 1.4 percent to 13.77, erasing a 7 percent climb. The measure of market turbulence known as the VIX also wiped out a monthly increase.

     Energy stocks rose for a second day to levels last seen in November, even as a report showed U.S. crude stockpiles climbed to the highest since 1929. FMC Technologies Inc. jumped 6.5 percent to a four-month peak even after reporting quarterly results that missed estimates. Hess Corp. slumped 3.1 percent its earnings report.

     Among company’s moving on earnings news, Boston Scientific jumped to a nearly 10-year high after the maker of heart rhythm devices raised its 2016 profit forecast as four of its seven businesses posted double-digit sales growth in the first quarter. Similarly, Assurant Inc. surged 7.6 percent, the biggest gain in six years, on better-than-expected results.

     Robert Half International Inc. tumbled 12 percent, the most in more than 15 years, after it missed earnings estimates and an analyst downgraded the stock. Goodyear Tire & Rubber Co. slipped 7.4 percent, the worst since July 2014, after disappointing sales results as losses in its Venezuelan unit overshadowed demand for its premium tires.

     H&R Block Inc. slumped 14 percent to a three-year low, after the company forecast lower revenue for the current fiscal year and said it plans cost cuts and management changes. The stock has lost 39 percent this year. Chipotle Mexican Grill Inc. dropped 6.4 percent, the steepest in three months, as its latest results showed the company has yet to turn the page on the food- safety crisis that has dogged it for half a year.

Have a wonderful evening everyone.

Be magnificent!

We do not progress from error to truth, but from truth to truth.

Thus we must see that none can be blamed for what they are doing, because they are,

at this time, doing the best they can.  We learn only from experience.

Swami Vivekananda

As ever,

Carolann

When you reach the top. That’s when the climb begins.

                                          -Michael Caine, b. 1933

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