February 22, 2016 Newsletter

Dear Friends,

Tangents:  Full moon tonight!

On February 22^nd, 1943, Conrad Russell, the 4^th Earl Russell, the British historian and politician [who was a son of philosopher/mathematician, Bertrand Russell], wrote in a letter to his sister Flora:

I once saw a man threshing with a flail and it was near you.  At Shophouse [near Guilford].  Have you ever thought how odd it would have been to have lived in 800 or 1200?  There was then no idea of change or improvement in any form.  You lived in your village and when you died everything was exactly the same as when you were born.  Since about 1480 the world has been in a state of constant change and turmoil.  And the last sixty years have been the worst. –from The Book of Days.

Poem: “A poem should not mean/But be,” wrote the American poet Archibald MacLeish.  In this poem by Larry Levis, the movement from ideas about blossoms to concrete images – “the petals of the magnolia blossom/Flattened by passing traffic” – reflects a transformation in the mind of the speaker.  From that precise seeing, something ineffable arrives. –Natasha Trethewey, NY Times.

Threshold of the Oblivious Blossoming

                          By Larry Levis

When I said one blossom desires the air,

Another  the shadows, I was free

Of desires.  Beyond the doorsill the café tables

Were empty because it was raining.

The rain was empty as well, & there was no poignancy

Left in it when I looked up at it falling, & went on

Sitting inside & waiting for my dealer to show up…

And finish my coffee.

When I thought of the petals of the magnolia blossom

Flattened by passing traffic to the pavement & the gradual

Discoloration of them, their white like that of communion dresses
 

Becoming gray & a darker gray moment by moment,

When I knew I wanted them to mean nothing
 

And suggest everything, desire rushed back into things,

But not into the blossoms & not into the air.

PHOTOS OF THE DAY Buddhist monks pray during Makha Bucha day at Wat Pan Tao in Chiang Mai, Thailand, on Monday. Makha Bucha Day honors Buddha and his teachings, and falls on the full moon day of the third lunar month. Athit Perawongmetha/Reuters

Black Rock Cottage stands in front of Buchaille Etive Mor in Scotland on Monday. Russell Cheyne/Reuters

Market Closes for February 22, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks, among the worst-performing developed markets last year, advanced to approach a level that would erase declines for 2016.

     A rebound in crude helped the Standard & Poor’s/TSX Composite Index rise 0.3 percent higher to 12,845.63 at 4 p.m. in Toronto. The gauge gave up some earlier gains of as much as 1.3 percent. The index is 1.3 percent away from wiping out declines for the year after the benchmark gauge tumbled as much as 9 percent to a low in January. Oil recovered on Monday to surpass $31 a barrel amid speculation a production freeze by some OPEC members and Russia could help alleviate a surplus that sent prices plunging.

     The S&P/TSX, which slid into a bear market in January as crude prices collapsed, has outpaced equities across the developed world this year, topping returns from markets in the U.S., U.K. and Germany. The MSCI World Index of developed-nation markets is down 6.3 percent in 2016. Material and energy shares have led the Canada’s gauge since last month.

     West Texas Intermediate oil for March delivery, which expired Monday, climbed $1.84 to settle at $31.48 a barrel on the New York Mercantile Exchange, extending gains after a 0.7 percent advance last week. Saudi Arabia, Russia, Venezuela and Qatar reached a preliminary agreement in Doha last week to freeze output at January levels. New York crude is still down 15 percent this year.

     Iran was “constructive” on the deal struck last week to limit output, although it hasn’t said whether it may join the pact, Russian Energy Minister Alexander Novak told state TV on Saturday.

     Energy producers surged 2.4 percent to lead gains as seven of 10 industries in the S&P/TSX advanced. Penn West Petroleum Ltd. and Crescent Point Energy Corp. rallied at least 5.6 percent. Suncor Energy Inc., the nation’s largest oil producer, added 3.1 percent. The S&P/TSX Energy Index has soared 15 percent from a Jan. 20 low, when the gauge slumped to a 2004 low.

     Royal Bank of Canada and Bank of Nova Scotia dropped at least 1 percent to pace declines with financial stocks. Bank of Montreal and National Bank of Canada are set to report first- quarter earnings Tuesday, kicking off earnings week for the nation’s largest lenders. Royal Bank of Canada follows on Feb. 24.

     Valeant Pharmaceuticals International Inc. slumped 11 percent to fall a third day. Valeant, briefly the largest company in the S&P/TSX by market capitalization last year before the stock plunged amid scrutiny over its pricing practices, extended losses last week after analysts at Wells Fargo Securities initiated coverage with an underperform rating, the equivalent of a sell, on Feb. 19.

US

By Anna-Louise Jackson and Jiayue Huang

     (Bloomberg) — U.S. stocks rallied, with the Standard & Poor’s 500 Index closing at a six-week high, amid broad gains as a surge in oil prices helped lessen concern that a slowdown in global growth is deepening.

     Investors continued to load up on some of the year’s worst performers, with banks up for the fifth time in six days as Wells Fargo & Co. and Bank of America Corp. increased at least 2.2 percent. Copper miner Freeport-McMoran Inc. climbed almost 15 percent and is up 62 percent since Feb. 11. United Technologies Corp. jumped as much as 7.6 percent after CNBC reported the company has held merger talks with Honeywell International Inc.

     The S&P 500 rose 1.4 percent to 1,945.50 at 4 p.m. in New York, the highest since Jan. 6 following its strongest weekly advance since November. The benchmark is less than seven points away from its average price during the past 50 days, after falling below that level on Dec. 30. The Dow Jones Industrial Average climbed 228.67 points, or 1.4 percent, to 16,620.66. The Nasdaq Composite Index gained 1.5 percent to a three-week high.

     “Markets now are at least maybe coming to a recognition that while it’s not going to be a great economic outlook, it’s probably not going to be terrible, either,” said Greg Woodard, a senior analyst and strategist at Fairport, New York-based Manning & Napier Inc., which oversees about $46 billion. ”The wheels of the economy are certainly not falling off in the U.S.”

     Oil rose amid speculation that a production freeze by some OPEC members and Russia could eventually help to abate the surplus. Russia said talks on an output freeze will be done by March 1, while Nigeria said some countries should have production capped at higher levels. West Texas Intermediate crude futures soared 6.2 percent, and briefly rose above $32 a barrel.

     Equities showed little indication Monday of the anxiety over the pace of global growth or the impact of persistently low oil prices that helped drive the S&P 500 to a 22-month low on Feb. 11. Signs that crude prices are stabilizing, and speculation that China’s slowdown isn’t as bad as feared have helped the gauge cut its 2016 decline in half in six trading sessions. Some of the year’s most beaten-down shares — including banks, semiconductor, auto and retailer stocks — have paced the rebound

     Concern that some energy producers will have trouble staying solvent amid low oil prices has put pressure on lenders this year, while investors have also been worried that weakness in China’s economy could spread. The main U.S. equity benchmark is still down 8.7 percent from a May record and has slipped 4.8 percent this year.

     “I think it would be very helpful for oil to stabilize at least,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland. “It doesn’t necessary have to start climbing back. A rally, even if it’s fairly short, will definitely help to shore up prices in the equity market in the short term.”

     Investors continue to assess economic data to gauge the health of the world’s biggest economy, and the possible trajectory of interest rates. Reports on consumer confidence, home sales, durable goods, economic growth and personal spending are due this week. Data today showed a measure of January manufacturing in the Chicago area improved more than expected.

     With the earnings season approaching an end, about three- quarters of results from S&P 500 firms exceeded profit projections, while less than half have topped sales forecasts. Macy’s Inc., Target Corp., Transocean Ltd. and Apache Corp. are among those reporting this week. Analysts estimate earnings at S&P 500 companies fell 4.2 percent in the fourth quarter, compared with Jan. 15 predictions for a 7 percent slump.

     The Chicago Board Options Exchange Volatility Index fell 5.6 percent today to 19.38, under 20 for the first time in three weeks. The measure of market turbulence known as the VIX closed at the lowest since Jan. 5 amid the longest streak of declines in four months. About 7.2 billion shares traded hands on U.S. exchanges, 12 percent below the three-month average.

     “This is a continued recovery from the big correction we’ve encountered,” said Eric Green, director of research and senior managing partner at Penn Capital, which has more than $6 billion under management in Philadelphia. “Earnings are coming in a little better than low expectations, valuations in the market have become attractive and sentiment is very, very negative. All those things along with the fact that you’re getting a bounce back in oil prices are contributing to the upside.”

     All of the S&P 500’s 10 main industries rose, with eight gaining more than 1.1 percent. Energy climbed 2.2 percent and closed at a six-week high along with raw-materials and industrials. Consumer staples advanced 0.4 percent to the highest this year.

     United Technologies posted its steepest jump in more than four years on the CNBC report of merger talks with Honeywell, which erased an earlier climb of more than 4 percent. According to regulatory filings analyzed by Bloomberg, nine Honeywell insiders sold 37 percent of their holdings in the past six months.

     Transportation companies also helped push industrials higher, with FedEx Corp. adding 4.3 percent, the most since June 2014. The Dow Jones Transportation Average closed at a 2016 high, paring its decline this year to 1.2 percent after losing as much as 12 percent.

     A group of airline stocks rose 3.7 percent to a six-week high amid the longest rally since September, led today by Delta Air Lines Inc.’s 4.5 percent gain. Carriers climbed even as crude prices rose, amid speculation that higher fuel costs could remove the temptation to increase capacity.

     All but one company in the 27-member raw-materials group rose, as Freeport-McMoran climbed to the highest since Dec. 1. Similarly, Alcoa Inc. added more than 13 percent, the most in almost seven years.

     Chesapeake Energy Corp. soared 20 percent, the most in seven years and best Monday among oil and gas producers in the benchmark index. A financial blog said the shale gas driller may be ripe for acquisition. The volatile shares rose for a fifth day, up about 50 percent after losing more than 52 percent over the preceding seven sessions. Newfield Exploration Co. and Marathon Oil Corp. gained at least 9.8 percent.

     Consumer discretionary companies increased 1.9 percent to a three-week high, led by rallies of more than 4.6 percent for VF Corp. and Amazon.com Inc. Ford Motor Co. gained 3.8 percent, the most in five months. Meanwhile, Expedia Inc. slumped 1.6 percent and TripAdvisor Inc. lost 0.5 percent after an analyst at Stifel Nicolaus & Co. downgraded the stocks to sell from hold.

     Sysco Corp. slumped 4.9 percent, the most since August 2013, on news it agreed to buy food-service distributor Brakes Group from private equity firm Bain Capital in a $3.1 billion deal. Food-maker Kellogg Co. and Whole Foods Market Inc. slid at least 2.2 percent.

     Lumber Liquidators Holdings Inc. sank nearly 20 percent, the biggest drop in six months, after U.S. regulators said some of the retailer’s laminate flooring has a three times greater risk of causing cancer than previously stated.

Have a wonderful evening everyone.

Be  magnificent!

Each one has a special nature peculiar to himself which he must follow

and through which he will find his way to freedom.

Swami Vivekananda

As ever,

Carolann

Experience is simply the name we give our mistakes.

                                      -Oscar Wilde, 1854-1900

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