February 25, 2016 Newsletter

Dear Friends,

Tangents:

I just finished reading a book that I highly recommend to everyone.  It is entitled The Lucky Years –How to Thrive in the Brave New World of Health.  Its author is David B. Angus, M.D. (Simon & Shuster, 2016).  Dr. Angus is an oncologist (he was on Steve Job’s team) and shares many valuable insights into living your best and ensuring a long and healthy life.  Many of the remarkable insights that have been gleaned since the human genome was elucidated in 2003 are revealed as well as therapies that exist as a result and what the future holds.  I cannot recommend it highly enough for everyone, no matter what age.

PHOTOS OF THE DAY

Men dressed as ancient Roman soldiers walk in front of the Brandenburg Gate in Berlin Thursday on their way to a photo session promoting the exhibition ‘Nero.’ The exhibition about the life of Emperor Nero will run in the town of Trier from May 15 until Oct. 16. Fabrizio Bensch/Reuters

A man looks at a Cadillac CT6 displayed inside a fish tank during an event promoting the car’s environmental-friendly features in Shanghai, China, Thursday. China Daily/Reuters

Market Closes for February 25, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks wiped out a loss in afternoon trading, as oil producers pared declines and better- than-expected earnings from Canadian Imperial Bank of Commerce helped buttress a rally in financial shares.

     The Standard & Poor’s/TSX Composite Index rose 0.1 percent to 12,753.60 at 4 p.m. in Toronto, reversing a loss of as much as 0.8 percent. The advance pushed the benchmark gauge’s rise since Feb. 11 to 5.5 percent and pared its February decline to 0.5 percent. The index is attempting to avoid a ninth loss in the past 10 months.

     The S&P/TSX remains among the best-performing markets in the developed world this year, trailing New Zealand and topping returns from markets in the U.S., U.K. and Germany. Shares in the Canadian benchmark trade at about 19.5 times earnings, roughly 11 percent more expensive than the valuation of the Standard & Poor’s 500 Index, data compiled by Bloomberg show.

     CIBC added 2.6 percent after posting higher profit driven by retail and business banking. The lender also raised its dividend. Toronto-Dominion Bank added 1.4 percent after saying fiscal first-quarter profit rose 7.9 percent on gains in its Canadian and U.S. retail businesses. The lender also raised its quarterly dividend by 7.8 percent to 55 cents a share.

     Among 20 S&P/TSX companies to report earnings today, CCL Industries advanced 6.5 percent to a month high after beating expectations, while grocery store owner Loblaw Cos. lost 0.5 percent as earnings missed.

     Energy companies pared losses as oil rebounded. The S&P/TSX Energy Index erased most of its declines after data showed inventories of gasoline dropped for the first time in 15 weeks. Stockpiles fell 2.24 million barrels last week, according to an Energy Information Administration report yesterday. The decline coincided with a gain in crude stockpiles to the highest level since 1930.

     Valeant Pharmaceuticals International Inc. slipped 0.6 percent. Chief Executive Mike Pearson, who has been on medical leave with severe pneumonia, is recovering, a spokeswoman said Thursday, although he remains sidelined from the job. Former Chief Financial Officer Howard Schiller is still acting as interim CEO, the company said.

     Semafo Inc. climbed 9.6 percent, to a September 2014 high, after posting a feasibility study for its Natougou gold project in Burkina Faso. During the first three years, average annual production will be more than 226,000 ounces, according to a statement today.

US

By Anna-Louise Jackson, Jiayue Huang and Dani Burger

     (Bloomberg) — Gains in bank and technology shares helped send the Standard & Poor’s 500 Index to a seven-week high, amid optimism on the economy after data indicated weakness in manufacturing may be easing while crude oil showed further signs of stabilizing.

     Lenders resumed their role as rally leaders, rising for the first time in three days after bolstering the equity rebound last week, with Bank of America Corp. up 1.6 percent. Microsoft Corp. and Intel Corp. added 1.4 percent to boost tech. Energy producers erased declines as crude wiped out losses. United Technologies Corp. stretched its increase this week to 11 percent amid talk of a possible merger with Honeywell International Inc.

     The S&P 500 climbed 1.1 percent to 1,951.70 at 4 p.m. in New York, with the gauge erasing its February decline to advance 0.6 percent for the month. The Dow Jones Industrial Average added 212.30 points, or 1.3 percent, to 16,697.29. The Nasdaq Composite Index increased 0.9 percent. About 7.3 billion shares traded hands on U.S. exchanges, 11 percent below the three-month average.

     “We got some good news this morning from jobless claims and durable goods orders that came in noticeably stronger than expected,” Alan Gayle, senior strategist for Atlanta-based Ridgeworth Investments, which has about $42.5 billion in assets, said by phone. “We had some encouraging macro news that gave the markets the impetus to move higher, particularly on the back of yesterday’s close. After a tough down market, there’s some budding optimism that the worst is perhaps over.”

     The main U.S. equity benchmark eliminated this month’s slide after losing as much as 6.7 percent at the close on Feb. 11. The S&P 500 continued its rebound from a nearly two-year low and has cut its 2016 drop by more than half. The index also topped its average price during the past 50 days for the first time this year, after last closing above the technical level on Dec. 29.

     U.S. equities broke higher in the early afternoon after struggling for direction throughout the morning amid conflicting signals abroad. China’s stocks tumbled the most in a month as surging money-market rates signaled tighter liquidity. Meanwhile, European shares rallied, pace by Lloyds Banking Group Plc, with the Stoxx Europe 600 Index rising 2 percent. Concern that a slowdown of the Chinese economy is deepening, compounded by falling commodity prices led by crude, has roiled equity markets since August.

     Tumbling oil prices, tighter credit conditions and a flatter yield curve spurred Wells Fargo Securities LLC strategist Gina Martin Adams to lower her S&P 500 target to 2,100, down from a previous call of 2,245. “Stocks will move higher over the next 12 months, but perhaps not as robustly as we forecast in early December,” Martin Adams wrote in a research note to clients Thursday. “There is likely also a lid on multiples given deteriorating credit quality.”

     While the S&P 500’s valuation of 16.3 times the forecast earnings of its members is above the 15 times average of the past five years, the measure is down 6.8 percent since the start of the year. The gauge remains more expensive than developed markets in Europe, where the Stoxx 600 Index trades for 14.6 times estimated earnings.

     Investors are scrutinizing economic data to gauge growth in the world’s largest economy, and a report today showed orders for U.S. capital goods rebounded in January by the most since June 2014. Orders for all durable goods rose 4.9 percent, the most since March. Separate data showed the number of Americans filing applications for unemployment benefits rose last week from a three-month low, in part reflecting the typical swings during holiday periods.

     “The data on durable goods will help assuage fears that a recession is lurking,” Quincy M. Krosby, a market strategist at Prudential Financial Inc., which oversees about $1.2 trillion, said by phone from Newark, New Jersey. “If we can get some more data releases showing some less bad data or stabilization it may help push us higher. The market is craving that right now.”

     With the earnings season wrapping up, about three-quarters of S&P 500 firms have exceeded profit projections, while less than half topped sales forecasts. 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 7.8 percent to 19.11 Thursday. The measure of market turbulence known as the VIX erased a 9 percent intraday jump yesterday, and is now down 5.4 percent this month after rising more than 39 percent as of Feb. 11.

     All of the S&P 500’s 10 main groups rose, with financial, tech, health-care and raw-materials shares up at least 1.2 percent. Energy stocks were little changed after reversing a drop of at least 1.9 percent for a second day.

     JPMorgan Chase & Co. and Citigroup Inc. added more than 1.3 percent to help drive banks higher. Zions Bancorporation rebounded 2.7 percent after a two-day tumble of 6.9 percent, the best performer today among lenders in the S&P 500. In the broader financial group, Morgan Stanley gained 3.9 percent and Goldman Sachs Group Inc. rose 1.9 percent, its third advance in four days.

     Salesforce.com’s 11 percent rally led the benchmark gauge and was the strongest among technology companies. The shares rose the most since April after the software company issued a forecast that easily topped estimates, giving investors another sign that the cloud-computing pioneer will be able to weather economic headwinds. Adobe Systems Inc. increased 3.9 percent, the most in a month.

     Raw-material companies surged 1.3 percent, with fertilizer maker CF Industries Holdings Inc. rising the most, up 4.4 percent. DuPont Co. and Dow Chemical Co. both added at least 1.9 percent.

     Defensive companies also gained traction, as consumer staples shares rallied to the highest ever and utilities rose for a fourth straight day, sending the group to its highest level in more than a year. Within staples, Campbell Soup Co. increased 3.5 percent to a record after reaffirming its full- year profit outlook.

     Energy producers erased losses on crude’s second-straight reversal. Newfield Exploration Co. rallied 4.2 percent after a better-than-estimated quarterly profit. Ensco Plc fell 4.8 percent to a 20-year low after the company slashed its quarterly dividend yesterday. The stock has slid nearly 10 percent in three sessions.

Have a wonderful evening everyone.

Be magnificent!

When you see that everything is different, that everything is unique,

you become one with the whole.

This is because you no longer judge, compare, or attribute particular characteristics.

Remove the characteristics,

and you no longer have an entity.

Swami Prajnanpad

As ever

Carolann

To live a creative life, we must lose our fear of being wrong.

                                -Joseph Chilton Pearce, 1926-

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