February 18, 2016 Newsletter

Dear Friends,

Tangents:

Points of Progress:

Worldwide:

An iconic doll just got real.

US based toymaker Mattel in late January unveiled a new suite of body types – petite, tall, and curvy – for its ubiquitous Barbie, responding to a long-running and often heated cultural conversation, chiefly in  the United States, about whether the dimensions of the original doll promoted unrealistic expectations about women’s body types.  Global sales had been slipping.  Mattel introduced new skin tones and hair textures last year. – Time

Germany: 

A superhighway for bicycles is getting attention in the land of the Autobahn.  A three-mile stretch of the Radschnellweg, about 13 feet wide and lighted, opened to great fanfare.  Expansion is planned: The system, which uses old rail routes, could cover more than 60 miles and connect several cities and four universities in northwest Germany’s Ruhr district.  It could reduce congestion by 50,000 vehicles, according to one study. –Ecowatch

PHOTOS OF THE DAY

People from the Karamojong tribe wait in line to vote during the presidential elections in a village near the town of Kaabong in the Karamoja region of Uganda Thursday. Ugandans are voting on whether to give Yoweri Museveni, in power for three decades, another term in office. Goran Tomasevic/Reuters

Australian dog trainer and former surfing champion Chris de Aboitiz rides a wave with his dogs Millie (l.) and Rama off Sydney’s Palm Beach Thursday. He is using the discipline of surfing as a way of teaching owners to build healthy relationships with man’s best friend. Jason Reed/Reuters

Market Closes for February 18^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Jiayue Huang

     (Bloomberg) — Canadian stocks rose, sending the nation’s benchmark to the precipice of erasing declines for the year, as a rally in gold boosted miners of the precious metal.

     The Standard & Poor’s/TSX Composite Index rose 0.5 percent to 12,931.36 at 4:00 p.m. in Toronto, capping a four-day gain that’s lifted the benchmark to its highest level this year.

     The index has pared losses for the year to 0.6 percent, making it the best-performing developed market out of 24 benchmarks tracked by Bloomberg, after it was among the worst in 2015. While the resource-rich gauge has been whipsawed by swings in oil and commodity prices, a rebound in those sectors has lifted the measure from a low last month. Investors are also monitoring corporate results, with some 20 companies in the index reporting results on Thursday.

     Gold prices shot up 1.8 percent higher today, as investors sought havens amid signs the global glut in crude may continue. Twenty out of 21 members in a gauge of S&P/TSX gold miners advanced, as the measure jumped the most since October.

     Barrick Gold Corp. gained 6.8 percent to its highest level since September 2014, after posting better-than-expected earnings and saying it intends to cut at least $2 billion debt this year. Kinross Gold Corp. added 8.1 percent, even after becoming the latest miner to have its credit rating cut to junk. Standard & Poor’s on Thursday lowered its rating to BB+ from BBB-.

     Meanwhile, copper miner First Quantum Minerals Ltd. tumbled 11 percent. The stock was cut by BMO Capital Markets and Canaccord Genuity to the equivalent of a hold, following the stock’s 67 percent rally in the last three days.

     Consumer staples and discretionary companies also rose. Cott Corp., a beverage maker, jumped 7.3 percent after unexpectedly posting a fourth-quarter profit of 3 cents a share. Analysts had estimated a loss of 2 cents.

     Canadian Tire Corp. rallied 7.8 percent to its highest price since Dec. 7, after announcing a share buyback of up to 6 million Class A shares.

     Utility shares also advanced. Fortis Inc. added 1.3 percent after the company posted quarterly earnings that beat analysts’ estimate.

     Industrial companies were little changed. Finning International Inc. slumped 1.9 percent, after earlier tumbling as much as 9.3 percent, following the company’s disappointing quarterly results and announcement of a cut of between 400 and 500 jobs. Bombardier Inc. climbed 2.8 percent after Credit Suisse Group AG raised the troubled aircraft maker to the equivalent of a buy rating.

     Energy companies fell the most among the 10 main sectors in S&P/TSX composite, as West Texas Intermediate, the U.S. benchmark for oil, pared gains to close below $31 a barrel after a reporting showing U.S. crude inventories rose to an 86-year high. Encana Corp. sank 9 percent.

US

By Dani Burger

     (Bloomberg) — U.S. stocks declined following the Standard & Poor’s 500 Index’s strongest three-day advance in almost six months, as banks, technology and consumer shares lost momentum after bolstering the rally.

     Wal-Mart Stores Inc. fell 3 percent after lowering its annual sales forecast. JPMorgan Chase & Co. and Citigroup Inc. lost more than 1.6 percent as banks declined for the first time in four sessions. Energy producers sank despite higher crude prices. International Business Machines Corp. rose 5 percent after agreeing to purchase Truven Health Analytics for $2.6 billion.

     The S&P 500 slipped 0.5 percent to 1,917.83 at 4 p.m. in New York, halting a rally after the benchmark on Wednesday capped its first three-day gain of the year. The Dow Jones Industrial Average lost 40.40 points, or 0.3 percent, to 16,413.43. The Nasdaq Composite Index fell 1 percent as Apple Inc. and Google parent Alphabet Inc. sank more than 1.9 percent. The gauge had surged 6.3 percent in the prior three days after falling last week to within 1 percent of a bear market.

     “The U.S. is not heading toward a recession, but everyone is worried where growth is going to come from and will earnings come close to analysts’ estimates,” said Bob Phillips, co- founder and managing principal at Indianapolis-based Spectrum Management Group Inc. “Until we get through the first quarter and see some earnings releases, we likely will be in a tight trading range.”

     Equities lost momentum Thursday after recent gains that have come just as fast as the losses that sent the S&P 500 to its worst start to any year. Almost half of 2016’s decline was erased in the prior three sessions as the most beaten-down industries, including banks, technology and retailer shares, led a comeback. The benchmark is still down 10 percent from its May record, and has lost 6.2 percent this year amid signs of weakness in the global economy and falling commodity prices.

     One notable point: the lockstep moves that have paralyzed investors during the recent rout are beginning to ease. Thirty- day correlations between the S&P 500 and 10 other asset classes including oil and global stock markets have fallen in the past two weeks, data compiled by Bloomberg show. As recently as the beginning of this month, equity gauges around the world were moving broadly in tandem — in several cases by the most in seven years.

     With Federal Reserve members expressing concern over the economy, investors are increasingly scrutinizing reports for signs of any damping in growth. Data today showed the number of Americans filing for unemployment benefits unexpectedly declined last week to a three-month low. A separate report showed an index of leading indicators decreased in January for a second month.

     In a speech Wednesday, Fed Bank of St. Louis President James Bullard said recent market turmoil that’s contributed to a further decline in investors’ expectations for inflation has given the central bank scope to delay interest-rate increases. San Francisco Fed President John Williams said today his outlook hasn’t changed despite the upheaval, and repeated that he expects the Fed to gradually normalize policy.

     The earnings season is drawing to an end and has provided little relief for equities. While about three-quarters of results from S&P 500 companies exceeded profit projections, less than half have topped sales forecasts. Analysts estimate earnings at S&P 500 companies fell 4.5 percent in the fourth quarter and will continue to contract in the following two periods.

     The Chicago Board Options Exchange Volatility Index fell 3 percent Thursday to 21.64. The measure of market turbulence known as the VIX has shaved its February climb to about 7 percent, down from 39 percent a week ago as the S&P 500 surged more than 5 percent. About 8.5 billion shares traded hands on U.S. exchanges, 4 percent above the three-month average.

     “I would expect a little pullback after three straight days of gains, especially since growth has done particularly well, it may give people some pause and some profit taking,” said Mariann Montagne, who helps oversee $870 million as senior investment analyst at Gradient Investments Group.                       

     Eight of the 10 main S&P 500 industry groups fell, led by energy and health-care shares. Financial, technology and consumer discretionary stocks each lost at least 0.6 percent. Utilities rose 1.6 percent, the most in almost three weeks, while phone companies added 1.1 percent.

     Financial companies in the benchmark fell, led by lenders which lost 1.7 percent to hand back some of their best three-day rally in five years. Bank of America Corp. and Regions Financial Corp. declined at least 2.5 percent.

     Energy producers slipped after the strongest rally since October, even as oil settled higher. The commodity traded below earlier levels after a government report showed U.S. crude inventories advanced to an 86-year high as imports surged. Anadarko Petroleum Corp. and Newfield Exploration Co. fell more than 8.5 percent. Anadarko had rallied almost 14 percent in the previous three trading days.

     Marathon Oil Corp. sank 6.5 percent after reporting a fourth straight quarterly loss. The Houston-based explorer also plans to cut spending by more than half, and it reduced its production outlook.                        

     In an about-face from their 3.2 percent three-day gain through Wednesday, consumer staples sank, dragged lower amid the fallout from Wal-Mart’s disappointing forecast. Grocery chain Kroger Co. fell 3.5 percent, while Hormel Foods Corp dropped 3.6 percent. Wal-Mart sank the most in four months after closing yesterday as the Dow’s second-best performer so far this year.

     Among discretionary shares, Netflix Inc. dropped 4.5 percent after a 9.7 percent gain in the previous three sessions. Amazon.com Inc. declined 1.7 percent, halting a five-day advance which was the longest since October.

     IBM was the Dow’s strongest performer today, surging to its biggest gain since July 2011. The Truven deal expands its health-related data services, with the company providing cloud- based data management and analytics to more than 8,500 health- care clients, including hospitals, insurers and government agencies, the companies said in a statement.

     Among companies reporting earnings, Perrigo Co. Plc plunged 10 percent to its lowest level since May 2014. The drugmaker’s fourth-quarter earnings missed analyst estimates and said it would abandon some lower growth consumer brands. Perrigo’s tumble was the biggest drag on the health-care group. Allergan Plc and Biogen Inc. lost more than 1.8 percent, while the Nasdaq Biotechnology Index decreased 2.6 percent.

     Nvidia Corp. jumped 8.6 percent, the most since November, after the biggest maker of graphics chips used in high-end gaming computers predicted sales that may exceed analysts’ estimates.

Have a wonderful evening everyone.

Be magnificent!

For you, now, meditation involves establishing within yourself

the reality of these two unavoidable rules – difference and change.

Try as hard as possible to convince yourself

that these two rules can neither be changed nor avoided.

Swami Prajnanpad

As ever,

Carolann

Painting is silent poetry, and poetry is painting that speaks.

                                               -Plutarch, 45 AD-120 AD

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