February 1, 2016 Newsletter

Dear Friends,

Tangents:

February: the month of purification among the ancient Romans (Latin februum, purgation.)

The Dutch used to call the month Spokkelmaand, vegetation month.  The Anglo-Saxons knew it as solmonath, mud month.  In the French Revolutionary Calendar its equivalent, from January 21^st to February 19^th, was Pluviose, rain month.

The days lengthen.  The sun is still more red than gold.  Yet the sky brightens when the clouds part and the rain or snow passes.  The month opens with the Celtic festival of Imbole, marking the lactation of the ewes, the flow of milk announcing the return of life: the joy of becoming.  But spring is still far away.  Patience and faith are called for.  Perhaps this is why the month takes its name from Februa, the Roman festival of Purification.  To purify is to separate the gold from the dross, the good from the bad.  It requires memory and the practice of discernment.  Discernment is often symbolized by a sword, but there is something feminine about February.  It is a gentle month, filled with feasts celebrating female figures like St. Brigit, the Virgin Mary, and the Virgin Goddess Artemis.  They ask us to practice keeping silent, pondering all things in our hearts.  Great strength, you may be sure, will come from such discretion. –from Cosmo Doogood’s Urban Almanac.

Fill-dyke: the month of February, when rain and melting snow fill the ditches to overflowing.

February fill dyke, be it black or be it white;
But if it be white it’s the better to like.
                               Old Proverb

Seattle Opera put on a  fabulous Marriage of Figaro on Saturday night.  Mozart at his comedic best.  Snagged a few hours at the annual boat show on Lake Union yesterday.  Can’t say any particular one stood out, though all were pretty wonderful, Dufours, Hunters, Janneaus, Hanses and many more new models on show.

PHOTOS OF THE DAY

Miss Piggy, with New York Stock Exchange Chief of Staff John Tuttle, rings the NYSE opening bell to highlight the season premier of Disney’s ‘The Muppets’ television show, Monday. Richard Drew/AP

Joaldunaks walk on their way to take part in the Carnival between the Pyrenees villages of Ituren and Zubieta, northern Spain, Monday. In one of the most ancient carnivals in Europe, dating from before the Roman empire, companies of Joaldunak (cowbells) made up of residents of two towns, Ituren and Zubieta, parade the streets costumed in sandals, lace petticoats, sheepskins around the waist and shoulders, colored neckerchiefs, conical caps with ribbons and a hyssop of horsehair in their right hands and cowbells hung across their lower back. Alvaro Barrientos/AP

Italian policemen check masked revelers as they arrive at San Marco Piazza during the Venice Carnival, Sunday. Alessandro Bianchi/Reuters

Market Closes for February 1^st, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — The rebound in Canadian stocks proved to be short-lived, as the Standard & Poor’s/TSX Composite Index ended a four-day rally amid falling oil prices and renewed concerns about a slowdown in China.

     After a month of see-saw trading during January that pushed the S&P/TSX to the top-performing developed market in the world, Canadian equities resumed their slide Monday. The benchmark equity gauge fell 1.2 percent to 12,674.37 at 4 p.m. in Toronto. The index had rallied 8.3 percent in the final trading days of last month, after hitting a two-and-a-half year low on Jan. 20.

     Energy producers slumped 3.1 percent for the biggest slump out of 10 groups. Crude prices fell after government data showed industrial activity in China, the world’s biggest energy consumer, dropped in January to a three-year low. A separate report showed manufacturing in the U.S. shrank in January for a fourth consecutive month as businesses cut staffing plans. The U.S. and China are Canada’s two largest trading partners.

     The resource-rich S&P/TSX remains closely linked to commodity prices with raw-materials and energy producers making up about 28 percent of the overall gauge. Crude futures in New York slumped, erasing its longest rally of the year after the China report and data compiled by Bloomberg showing OPEC nations pumped 33.11 million barrels a day last month following Indonesia’s readmission to the group.

     Royal Bank of Canada and Bank of Nova Scotia lost more than 1.1 percent as financial companies declined. Seven of ten industries in the S&P/TSX retreated.

     Gold producers advanced to a three-week high as the metal climbed for a fifth day in six to the highest in almost three months. China’s continued slowdown boosted the appeal of haven assets. Yamana Gold Inc. and Kinross Gold Corp. advanced more than 3.5 percent.

     Amaya Inc. surged 20 percent, the biggest gain since June 2014, after the company said Chairman and Chief Executive Officer David Baazov has indicated he intends to make a cash offer for the firm. The potential offer for Amaya, the world’s largest online poker company and owner of PokerStars, values the company at about C$2.8 billion.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks closed little changed, with gains in Facebook Inc. and Alphabet Inc. helping to overcome concerns that China’s slowdown will spread as slumping crude oil led a selloff in energy shares.

     Internet companies put a floor under equities, with Facebook and Google parent Alphabet rising more than 1.2 percent. Netflix Inc. increased 2.5 percent amid speculation Apple Inc. could make an offer for the online video company. Energy companies retreated with crude, after capping back-to- back weekly advances for the first time since November. Exxon Mobil Corp. sank 2 percent before its earnings report Tuesday. Alphabet rose in late trading after its earnings report.

     The Standard & Poor’s 500 Index slipped less than 0.1 percent to 1,939.38 at 4 p.m. in New York, after erasing a drop of as much as 1 percent. The Dow Jones Industrial Average lost 17.12 points, or 0.1 percent, to 16,449.18, while the Nasdaq Composite Index rose 0.1 percent. About 8 billion shares traded hands on U.S. exchanges, 4 percent above the three-month average.

     “I actually expect a positive start into the new month but the market is still shaky and February will be not easy,” said Benno Galliker, a trader at Luzerner Kantonalbank AG. “The focus is on China, oil and earnings. The weak numbers out of China and the lower oil price are keeping a lid on the market.”

     Equities began paring declines in earnest in afternoon trading after dovish comments from Federal Reserve Vice Chairman Stanley Fischer, who said the central bank’s policy moves are not predetermined as it assesses the impact of recent market turmoil.

     Worries about a slowdown in the world’s second-biggest economy and a rout in oil have roiled global equities this year. While the S&P 500 recouped some losses in the past two weeks, paring its January drop to 5.1 percent, China’s official factory gauge today signaled a record sixth month of deterioration.

     The main U.S. equity gauge is 9 percent away from an all- time high set in May, and has rebounded 4.3 percent from a 21- month low on Jan. 20, led by a 10 percent climb by phone companies and a 9.8 percent increase in energy producers.

     Amid the turbulence, investors have been loading up on shares of companies with the sturdiest earnings momentum. Qualities that define winning investments no longer include the high-risk, high-reward potential of companies whose balance sheets are laden with debt. Such a shift has been a bearish signal for stocks in the past, often marking the end of bull markets.

     More than 100 S&P 500 companies are due to report results this week. Alphabet rose 6.2 percent as of 4:55 p.m. after Google reported profit and revenue that topped estimates, lifted by robust sales of online ads and tighter cost controls.

     Analysts estimate profits at index members fell 5.6 percent in the fourth quarter, better than Jan. 15 predictions for a 7 percent slump. Of those that have released financial results, 79 percent beat profit projections, while 49 percent topped sales estimates.

     Investors are also assessing economic releases for indications on the strength of the U.S. economy. Data today showed manufacturing shrank in January for a fourth consecutive month as businesses cut staffing plans. A separate report showed household spending cooled in December as Americans used gains in incomes to boost their savings, with little evidence that inflation is gaining traction.

     Attention will turn later in the week to jobs data, with a reading on private payrolls growth scheduled for Wednesday and the government’s January jobs report due Friday. Fed Vice Chair Stanley Fischer said today it was too difficult to gauge the impact on the U.S. economy from recent turmoil in financial markets and uncertainty over China, leaving policy makers undecided about what to do next.

     The Chicago Board Options Exchange Volatility Index fell 1.1 percent Monday to 19.98. The measure of market turbulence known as the VIX rose for a third straight month in January, the longest such streak in 2 1/2 years.

     Phone companies and utilities were Monday’s best performers among the S&P 500’s 10 main groups, rallying at least 0.9 percent. Consumer, raw-materials and technology shares also rose. Energy companies lost 1.9 percent, paring an earlier 3.3 percent drop.

     “Usually when oil’s down this much you’d see stocks down,” said Larry Peruzzi, managing director of international equities at Mischler Financial Group Inc. in Boston. “After the last two weeks traders and investors are just emotionally spent with huge up days and huge down days. Central banks and people searching through earnings numbers offsets it a little bit.”

     CenterPoint Energy Inc. gained 4.2 percent to bolster an advance among utilities. The owner of Houston’s electric utility said it may sell or spin off to shareholders its stake in Enable Midstream Partners LP as falling fuel prices weigh on the pipeline owner’s value. The company’s 2016 profit outlook also exceeded estimates.  Questar Corp. rallied 23 percent after Dominion Resources Inc., the owner of Virginia’s largest utility, said it will buy the company for about $4.4 billion to expand its holdings in better- performing natural gas assets. Duke Energy Corp. added 2.3 percent to a five-month high after Lockheed Martin Corp. agreed to buy 30 megawatts of capacity from a Duke Energy solar farm in North Carolina.  Google parent Alphabet Inc. climbed to a 2016 high before its earnings report and Facebook extended its climb to a fresh record. An index of Internet companies rose for a third session, the longest streak in more than a month. Twitter Inc. surged 6.6 percent, its best advance in almost four months, after a report in The Information said investor Marc Andreessen and private equity firm Silver Lake have “considered some sort of deal.”

     Sysco Corp. jumped 8.4 percent, the most in more than two years to close at a record after the food distributor’s quarterly results exceeded estimates. The shares led gains in consumer staples, with Kroger Co. and Whole Foods Market Inc. increasing at least 2.2 percent.                       

     Kinder Morgan Inc. and Devon Energy Corp. fell at least 6.5 percent to lead the slide in energy. After rising to a three- week high on Friday, West Texas Intermediate crude futures sank 6 percent on signs industrial activity in China is deteriorating, potentially hurting demand as OPEC pumps record amounts of crude.

     Financial shares slid, with banks in the benchmark index falling for the first time in five sessions. Bank of America Corp. and JPMorgan Chase & Co. fell more than 1 percent. Yield on the U.S. 10-Year U.S. Treasury bond has declined 14 percent since the start of the year.

     Industrial companies also fell, led by a 6.8 percent drop in Roper Technologies Inc. The company reported quarterly earnings below analysts’ estimates, and reduced its outlook for 2016 profits. Raytheon Co. and General Electric Co. lost at least 1.5 percent.

Have  a wonderful evening everyone.

Be magnificent!

The word duty indicates compulsion.

The word responsibility indicates freedom.

Duties lead one to demand rightfully.

Responsibilities lead one to command respectfully.

Sense of responsibility is out of love.

Duties can be thrust upon others.

Responsibilities are taken up by oneself.

There can be unwillingness in performing one’s duty.

Responsibility is always taken up willingly.

Maa Purnananda

As ever,

Carolann

Strength and growth come only through continuous effort and struggle.

                                                            -Napoleon Hill, 1883-1970

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