February 5, 2018 Newsletter

Dear Friends,

Tangents:

André-Gustave Citroën was born on this day in 1878. The French engineer and industrialist introduced Henry Ford’s methods of mass production to the European automobile industry when he converted his munitions factory into a facility to make low-cost vehicles after World War I.

POINTS OF PROGRESS:
WORLDWIDE
Pirate attacks against ships worldwide fell to their lowest level in more than two decades last year, according to the International Maritime Bureau.  A total of 180 incidents of piracy and armed robbery against ships were recorded in 2017, the lowest since noted, however, that piracy has increased in the Philippines, Bangladesh, and several areas in Africa. -The Straits Times

VANUATU
Vanuatu’s Council of Ministers has banned the manufacturing and importing of single-use plastic bags in this South Pacific nation.  The council made its move after a study showed a large amount of plastic garbage had accumulated on the main island of Efate.  As of Jan. 31, plastic bag manufacturers will only be allowed to use biodegradable plastics on all of the nation’s 80-some islands. -Radio New Zealand

SAUDI ARABIA
As of this month, Saudi women will be allowed to attend professional soccer matches for the first time in the country’s history.  Also, early in 2018, the government will begin issuing tourist visas to women older than 24, allowing them to leave the country without a male guardian.  -The Guardian and The National

CAMBODIA
Wages for worker in Cambodia’s garment industry rose by 11 percent on Jan. 1, evidence of a continuing trend.  The country’s garment workers have seen their wages increase by more than 150 percent over the past five years, from $61 per month in 2012 to a new high of $170 in 2018.  Cambodia’s $7 billion garment industry employs an estimated 700,000 workers. -Reuters

PARAGUAY
Giant lily pads believed to be extinct have reappeared.  The fragrant lilies known for their size (as large as six feet in diameter) and unusual shape (rimmed, like a teacup) – have reappeared at the mouth of the Salado River, a tributary of the Paraguay River.  The lilies had been listed as endangered in 2006 and later were believed to have disappeared. -BBC

PHOTOS OF THE DAY

A winter wonderland scene near Alston, Cumbria. Forecasters warning that the UK will experience the coldest spell of weather this winter in the coming week with heavy snowfalls and sub-zero temperatures.
CREDIT:  PAUL KINGSTON/NNP

Elisa Costantini performs in the Flight of Angel on in Venice, Italy. The traditional event goes back to the Serenissima period, and marks the official start of the Venice carnival.
CREDIT: AWAKENING/GETTY IMAGES

People dressed as ‘Pantallas’ dance and run, enjoying the Corredoiro Carnival Sunday in Xinzo de Limia, Ourense, Spain.
CREDIT: FOTOPRESS/GETTY IMAGES

A traditional Powhiri is given to the New Zealand Governor General Dame Patsy Reddy at Te Whare Runanga on the Waitangi Treaty Grounds in New Zealan. The Waitangi Day national holiday celebrates the signing of the treaty of Waitangi on February 6. 1840 by Maori chiefs and the British Crown, that granted the Maori people the rights of British Citizens and ownership of their lands and other properties.
CREDIT: PHIL WALTER/GETTY IMAGES
Market Closes for February 5^th, 2018

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Kristine Owram
     (Bloomberg) — Canadian stocks fell the most in 17 months as a rapid crash in the Dow Jones Industrial Average led North American indexes lower.
     The S&P/TSX Composite Index fell 271 points or 1.7 percent to 15,334.81, the lowest since mid-September. The benchmark has now lost 5.6 percent in the past six trading days.
     All sectors were lower Monday, with financials leading the decline, down 2.4 percent. Bank of Montreal lost 3 percent and Toronto-Dominion Bank fell 2.9 percent.
     The energy index retreated 2 percent along with West Texas Intermediate crude prices. The gap between Canadian crude and WTI remained the widest since 2013.
     In other moves:
                          Stocks
* Hudson’s Bay Co. lost 2.4 percent. The retailer named CVS Health Corp. executive Helena Foulkes as its chief executive officer
* Aurora Cannabis Inc. jumped 8.8 percent, bucking the broader market sell-off, after taking a 20 percent stake in Liquor Stores NA Ltd., which rose 2.1 percent
* Canaccord Genuity Group Inc. lost 6.5 percent. The stock was downgraded to hold at TD Securities
                          Commodities
* Western Canada Select crude oil traded at a $30.60 discount to WTI
* Gold fell 0.1 percent to $1,333 an ounce
                          FX/Bonds
* The Canadian dollar weakened 0.8 percent to $1.2523 per U.S. dollar, the lowest in nearly four weeks
* The Canada 10-year government bond yield fell five basis points to 2.31 percent, the most since December
US
By Sarah Ponczek and Jeremy Herron
     (Bloomberg) — U.S. stocks plunged the most in 6 1/2 years, with the Dow Jones Industrial Average sinking 1,175 points, as the equity selloff reached a fever pitch amid rising concern that inflation will force interest rates higher. Treasuries rallied and gold rose on haven demand.
     Volatility roared back into American equity markets, as the S&P 500 Index sank 4.1 percent to wipe out its January gain and turn lower on the year. The index capped its worst day since the U.S. lost its pristine credit rating, topping the rout that followed China’s shock devaluation of the yuan, the Brexit selloff and jitters heading into the presidential election. Trading volume was almost double the 30-day average. All but two stocks in the broad gauge declined.
     “This is classic risk off that may not end any time soon,” says Win Thin, head of emerging-market currency strategy at Brown Brothers Harriman.
     Selling accelerated shortly after 3 p.m. in New York, with the Dow sinking more than 800 points in a matter of 15 minutes to put its drop at 1,597 points. It snapped back in 10 minutes before turning lower again to end down 4.6 percent — its steepest drop since August 2011, and is also lower for the year. The Cboe Volatility Index more than doubled to its highest level in 2 1/2 years.
     Treasuries popped, sending the 10-year yield down more than 10 basis points, and gold future pushed higher. The dollar stabilized while the yen advanced.
     While Friday’s market rout came amid U.S. wage data on Friday that pointed to quickening inflation, which would lead to higher rates and, in turn, rising borrowing costs for companies, the selling Monday came amid few major data points.
     “I think sentiment was a little too optimistic,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “What was driving the market up in January? It wasn’t the fundamentals, as good as they were, it was excessive confidence.”
     Elsewhere, oil extended declines after U.S. explorers raised the number of rigs drilling for crude to the most since August. Copper climbed the most in a week. Bitcoin slid below $7,000.
     Here are some key events scheduled for this week:
* Monetary policy decisions are due in Australia, Russia, India, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru and the Philippines.
* Earnings season continues with reports from Bristol-Myers Squibb, Ryanair, Toyota Motor Corp., BNP Paribas, BP, General Motors, Walt Disney, SoftBank, Sanofi, Philip Morris, Total, Tesla, Rio Tinto, L’Oreal and Twitter.
* Dallas Fed President Robert Kaplan and New York Fed President William Dudley are among policy officials due to speak in Frankfurt and New York.
     These are the main moves in markets:
                         Stocks
* The S&P 500 fell 4.1 percent as of 4 p.m. New York time, to the lowest since Dec. 7.
* The Dow fell 1,175.21 points, or 4.6 percent, while the Nasdaq averages were off by more than 3.7 percent.
* The Russell 2000 Index lost 3.6 percent.
* The Stoxx Europe 600 Index declined 1.6 percent , hitting the lowest in almost 12 weeks with its sixth consecutive decline.
* The MSCI Emerging Markets Index lost 1.9 percent.
                         Currencies
* The Bloomberg Dollar Spot Index gained 0.4 percent.
* The euro decreased 0.6 percent to $1.2385.
* The British pound declined 1.1 percent to $1.3967, the weakest in almost two weeks.
* The Japanese yen gained 0.8 percent to 109.242 per dollar.
                          Bonds
* The yield on 10-year Treasuries fell 13 basis points to 2.71 percent.
* Germany’s 10-year yield declined three basis points to 0.74 percent, the largest decrease in almost six weeks.
* Britain’s 10-year yield declined two basis points to 1.558 percent.
                          Commodities
* West Texas Intermediate crude dipped 2.2 percent to $64.01 a barrel.
* Gold advanced 0.1 percent to $1,334.76 an ounce.
* Copper gained 1.8 percent to $7,169 per metric ton.
–With assistance from Andrew Dunn, Adam Haigh, Natasha Doff, Kailey Leinz and Lananh Nguyen.

Have a wonderful evening everyone.

Be magnificent!

As ever,

Carolann

Jealousy is all the fun you think they had.
                                    -Erica Jong, b. 1942

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
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www.carolannsteinhoff.com