February 28, 2018 Newsletter

Dear Friends,

Tangents: Happy Wednesday!
2010 – Sydney’s Crosby’s overtime goal gives Canada to a 3-2 victory over the United States in the hockey Gold Medal Game at the Vancouver Olympics.

POSSIBILITY
     -by Charles Coe

The new snow covers everything.
This morning the world was bathed
in that sharp-edged light
that comes in winter
after a storm blows through.
Outside my window, on the street below,
a small child, an electric blue bundle,
lets go of an adult’s hand
to charge headfirst
into a towering snowdrift…
…People who pass each other without speaking
each morning on the way to work
are now laughing and shoveling together,
butts of Mother Nature’s joke… 

PHOTOS OF THE DAY

Snow covers Staithes on the Yorkshire Coast.
CREDIT: TOM WHITE/GETTY IMAGES

A horse stands in a snow covered field in Keele, Newcastle-under-Lyme.
CREDIT: CARL RECINE/REUTERS

A dog runs in the snow at Horse Guards Parade in London.
CREDIT: ALEX BURSTOW/GETTY IMAGES
Market Closes for February 28th, 2018

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1827, two dozen business leaders in Baltimore incorporated the Baltimore and Ohio Railway Co. to link Baltimore with Wheeling, W. Va. and connect the western frontier with the eastern seaboard. America’s first great growth industry was born.
Canada
By Kristine Owram
     (Bloomberg) — Canadian stocks fell 3.2 percent in February, their worst month since December 2015, after Wednesday’s losses accelerated through the afternoon.
     The S&P/TSX Composite Index lost 229 points or 1.5 percent to 15,442.58, the biggest drop in nearly three weeks. Energy stocks were the biggest culprit, tumbling 2.9 percent after government data showed U.S. crude stockpiles grew more than expected.
     The financial index retreated 1.3 percent as bank earnings season neared its end. Laurentian Bank of Canada fell 3.2 percent to the lowest since 2016 after earnings missed estimates, while National Bank of Canada lost 2.3 percent amid volatile trading revenues.
     In other moves:
                             Stocks
* Lithium X Energy Corp. fell 9.8 percent as speculation swirled that its prospective buyer may fail to come through
* Valeant Pharmaceuticals International Inc. lost 12 percent to the lowest since November after reporting lower revenue in all three of its major units
* Student Transportation Inc. jumped 26 percent to a record high after reaching a deal to be acquired by a group of investors led by the Caisse de depot et placement du Quebec
                          Commodities
* Western Canada Select crude oil traded at a $25.25 discount to WTI, the narrowest gap in more than two weeks
* Gold fell 0.1 percent to $1,317.90 an ounce
                            FX/Bonds
* The Canadian dollar weakened 0.4 percent to C$1.2832 per U.S. dollar, the lowest since December, following a federal budget that set no path to eliminating the deficit
* The Canada 10-year government bond yield fell four basis points to 2.23 percent, the lowest in more than a month
US
By Kailey Leinz and Sarah Ponczek
     (Bloomberg) — U.S. stocks tumbled in afternoon trading, adding to the worst month for equities in two years, while Treasuries climbed with the dollar.
     The S&P 500 Index dropped more than 1 percent, ending February with a decline of 3.9 percent in one of the wildest months in years. After a torrid January, the stock market sank into a recession a week later, only to claw back half of the rout just as quickly. Trading was heavier than normal Wednesday, with shares swinging between gains and losses for much of the day.
     “February finally cracked the volatility genie out of the bottle, and now the big question is: will he stay out for good?”
Ryan Detrick, senior market strategist at LPL Financial, wrote in a note to clients Wednesday. “The good news is that March kicks off two of the strongest months historically for equities, before we hit a period of seasonal weakness from May through October.”
     The 10-year Treasury yield held just below 2.9 percent, roughly where it began a month that saw it fall as low as 2.70 and come within five basis points of 3 percent, a level it hasn’t touched in four years. The dollar added to its monthly gain, strengthening versus major peers including the euro and pound. Crude plunged after an unexpectedly strong rise in inventories.
     Equities continued to fall one day after major indexes tanked based on a generally upbeat assessment of the U.S.
economy from Federal Reserve Chairman Jerome Powell. His comments left investors wondering if the central bank planned more interest rate hikes than expected in 2018.
     “We saw the treasury market catch a little bid here off of Powell’s comments,” said Sean Simko, head of fixed-income portfolio management at SEI Investments Co. “The market initially took it as a little more hawkish than expected, but I don’t really think he really was, it was just in line with what everybody’s been saying for the last number of meetings.”
     U.S. and European bond yields have soared in recent months amid speculation that the Fed’s monetary policy will be tightened at a faster pace. But in the equity markets that possibility is increasingly testing nerves, as traders try to divine how many increases are coming.
     “Yesterday’s Powell comments in our view were more noise,” said Mike Bailey, the director of research at FBB Capital Partners in Bethesda, Maryland. “You had Powell suggesting four rate hikes as opposed to three and on the margin that’s a little bit better if you’re looking for higher yields and a little worse for a lot of equities. Today, you’re seeing a reversal out of that and a lack of incremental news coming out of the Fed.”
     Miners led a decline in the Stoxx Europe 600 Index after China posted lower-than-expected manufacturing output. The U.K. pound extended a decline and the nation’s bonds rose after the European Union published a draft Brexit treaty, with Prime Minister Theresa May squaring off for a fight. The euro slipped while most bond yields in the region ticked lower.
          Here are some key events scheduled for this week:
* Fed Chairman Powell testifies before the Senate Banking Committee Thursday. Other Fed speakers this week are Neel Kashkari and Bill Dudley.
* In the euro region, investors will be watching manufacturing and jobs numbers Thursday.
* U.K. Prime Minister Theresa May delivers a speech Friday on Britain’s relationship with the European Union.
* Japan capital spending is out on Thursday.
     These are the main moves in markets:
                             Stocks
* The S&P 500 Index sank 1.1 percent, while the Dow Jones Industrial Average lost 1.5 percent.
* The Stoxx Europe 600 Index dropped 0.7 percent.
* Germany’s DAX Index declined 0.4 percent.
* The U.K.’s FTSE 100 Index slid 0.7 percent.
* The MSCI Asia Pacific Index fell 1 percent.
                           Currencies
* The Bloomberg Dollar Spot Index gained 0.2 percent.
* The euro slipped 0.3 percent to $1.22, the weakest in five weeks.
* The British pound dropped 1 percent to $1.3765, the lowest in almost seven weeks.
* The Japanese yen rose 0.6 percent to 106.69 per dollar.
                             Bonds
* The yield on 10-year Treasuries declined three basis points to 2.87 percent.
* Germany’s 10-year yield slid two basis points to 0.66 percent.
* Britain’s 10-year yield fell six basis points to 1.50 percent.
* Japan’s 10-year yield increased one basis point to 0.05 percent.
                          Commodities
* West Texas Intermediate crude plunged 2.4 percent to $61.48 a barrel.
* Gold slid 0.1 percent to $1,317.58 an ounce.
–With assistance from Adam Haigh and Robert Brand.

Have a wonderful evening everyone.

Be magnificent!

As ever, 

Carolann
All the flowers of all the tomorrows are in the seeds of today and yesterday.
                                                                              -Chinese Proverb 

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 

Tel: 778.430.5808
(C): 250.881.0801
Toll Free: 1.877.430.5895
Fax: 778.430.5828
www.carolannsteinhoff.com