December 19, 2018 Newsletter

Dear Friends,

Tangents:
On Dec. 19, 1998, President Bill Clinton was impeached on charges of perjury and obstruction of justice by a divided House of Representatives, which recommended virtually along party lines that the Senate remove the nation’s 42d President from office. Go to article »

ICYMI:

How the Chinese say “trade”

China and the U.S. may have declared a truce in their trade war, but it’s far from over.

This gives us the opportunity for a language lesson.

Flags at a bilateral meeting of China and the U.S. in Beijing in April.  Jason Lee/Reuters

The English word “trade” is Germanic, originally meaning “track” or “path.” Its modern usage evolved from a Dutch word referring to “means of living,” as in the carpentry trade. Over time, the trade of buying and selling goods came to be called simply “trade.”

In Mandarin Chinese, the word for trade is “màoyì” (“trade war” is “màoyì zhàn,” pronounced MAU-ee-jahn).

The character mào (?) means “to trade,” while yì (?) means “to exchange.”

Yì also has the meaning “easy,” and the character appears in the Chinese word for “easy,” which is “róngyì” (??).

Of course, trade between China and the U.S. is anything but easy these days. -from The New York Times, December 19, 2018

PHOTOS OF THE DAY

A man walks on the boundary wall of a golf course as the sun sets on a cold winter in Srinagar. Credit: Reuters/Danish Ismail

A man stands by an installation depicting “2019” in the Red Square in Moscow, Russia. Credit: Reuters/Maxim Shemetov

Giant waves at Shore Acres State Park, Oregon, U.S. Credit: Wright Aura Photography Via Reuters
Market Closes for December 19^th, 2018

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1927, the Dow industrials closed above 200 for the first time, finishing the day at 200.93. It had taken the Dow nearly 22 years to double. The index closed at 23323.66 today. 
Canada
By Kristine Owram
     (Bloomberg) — Canadian stocks fell to their lowest level since July 2016, making a dramatic reversal following a U.S. Federal Reserve policy meeting that downplayed the recent market sell-off. 
     The S&P/TSX Composite Index lost 1.1 percent to 14,264.06 after rising as much as 0.9 percent earlier in the day. Energy was the only sector that gained as crude prices rose 2.1 percent.
     Health care and materials were the biggest decliners, sliding 4.1 percent and 3.7 percent respectively. Pot stocks weighed on the health sector, with Aphria Inc. down 8 percent, while gold stocks fell along with the price of the yellow metal.
     Yamana Gold Inc. slid 9.1 percent, the most since February 2017.
In other moves:
Stocks
* Home Capital Group Inc. tumbled 15 percent, the most since May 2017, after Warren Buffett’s Berkshire Hathaway Inc. said it will “substantially exit” its investment in the company
* Kinross Gold Corp. fell 6.8 percent. The stock was downgraded to underperform at Credit Suisse
* Emblem Corp. gained 5.3 percent after Aleafia Health Inc. agreed to buy the cannabis company for C$173.2 million. Aleafia lost 4.2 percent
Commodities
* Western Canada Select crude oil traded at a $16.25 discount to WTI
* Gold fell 0.6 percent to $12246.00 an ounce
FX/Bonds
* The Canadian dollar weakened 0.2 percent to C$1.3499 per U.S. dollar
* The Canada 10-year government bond yield fell 5 basis points to 1.97 percent, the lowest in a year
US
By Sarah Ponczek and Vildana Hajric
     (Bloomberg) — U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve’s tightening policy will throttle economic growth.
     The S&P 500 Index dropped 1.5 percent after policy makers raised rates for the fourth time this year and lowered their forecast for hikes next year to two from three. Markets had been priced for just one. Treasury yields slid and the dollar erased losses as Powell said the Fed’s balance sheet normalization would continue “on automatic pilot.”
     Investors had anticipated a less aggressive approach after U.S. stocks tumbled into a correction amid concern that global growth is slowing.
     “This hike is a vote of confidence in our economy for 2018, but essentially that’s a wrap,” said Mike Loewengart, vice president of investment strategy for E*Trade Financial Corp.
     “We’re now in some uncharted territory as 2019 comes into focus.” Amid the recent volatility in stocks and other risky assets, President Donald Trump had stepped up pressure on the central bank to avoid more tightening in the runup to the announcement. Powell said today that political considerations play no role in Fed policy.
     The tech-heavy Nasdaq indexes underperformed Wednesday as Facebook Inc. tumbled as much as 7 percent on mounting concerns over user privacy. FedEx Corp. sank as much as 12 percent after its executives warned that signs of a global trade slowdown are emerging.
     Beyond the Fed, trade and politics remain dominant themes. The U.S. Senate will vote as soon as Wednesday on a bipartisan spending bill to avoid a partial federal shutdown and keep the government funded until Feb. 8. Meanwhile, Treasury Secretary Steven Mnuchin said America and China are planning to hold meetings in January to negotiate a broader trade truce.
     Elsewhere, the yield on benchmark Japanese notes slipped to within striking distance of 0 percent before a rapid turnaround as the surge in demand triggered a margin call. Asian shares were mixed following a disappointing market debut for SoftBank Group’s Japanese telecom business. The Stoxx Europe 600 Index snapped a four-day losing streak. Italian debt surged after the European Commission decided against launching a disciplinary procedure over the country’s budget.
Here are some events investors will focus on in the coming days:
* The Bank of Japan’s monetary policy decision is due Thursday, followed by a briefing from Governor Haruhiko Kuroda. A Bank of England decision is also Thursday.
And these are the main moves in markets:
Stocks
* The S&P 500 Index fell 1.5 percent at the close of trade in New York.
* The Stoxx Europe 600 Index increased 0.3 percent.
* The Nikkei-225 Stock Average fell 0.6 percent to the lowest since March.
* The MSCI Emerging Market Index gained 0.2 percent.
Currencies
* The Bloomberg Dollar Spot Index rose 0.1 percent.
* The euro rose 0.1 percent to $1.1376.
* The Japanese yen fell 0.1 percent to 112.6 per dollar.
* The British pound fell 0.1 percent to $1.2621.
Bonds
* The yield on 10-year Treasuries fell five basis points to 2.77 percent.
* Germany’s 10-year yield was little changed at 0.24 percent.
* Britain’s 10-year yield fell one basis point to 1.27 percent.
* Italy’s 10-year yield plunged 17 basis points to 2.77 percent.
Commodities
* West Texas Intermediate crude increased 2.1 percent to $47.20 a barrel.
* Gold fell 0.6 percent to $1,242.40 an ounce.
–With assistance from Cormac Mullen, Adam Haigh, Christopher Anstey, Eddie van der Walt, Samuel Potter and Luke Kawa.

Have a great night.

Be magnificent!

As ever,

Carolann

Deep in their roots, all flowers keep the light.
                 -Theodore Roethke, 1908-1963

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
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www.carolannsteinhoff.com