January 12, 2016 Newsletter

Dear Friends,

Tangents:

THE POEM:
The Bright Fields
       -by RS Thomas

I have seen the sun break through
to illuminate a small field
for a while, and gone my way
and forgotten it.  But that was the
pearl of great price, the one field that had
treasure in it.  I realise now
that I must give all that I have
to possess it.  Life is not hurrying
on to a receding future, nor hankering after
an imagined past.  It is the turning
aside like Moses to the miracle
of the lit bush, to a brightness
that seemed as transitory as your youth
once, but is the eternity that awaits you.

President Obama’s last State of the Union speech tonight at 9 PM EST, 6 PM PST. 

PHOTOS OF THE DAY

Archaeologists from the University of Cambridge Archaeological Unit uncover Bronze Age wooden houses, preserved in silt, from a quarry near Peterborough, Britain, Tuesday. Archaeologists said they had discovered what were believed to be the best-preserved Bronze Age dwellings ever found in Britain, providing an extraordinary insight into prehistoric life from 3,000 years ago. The settlement of large circular wooden houses, built on stilts, collapsed in a fire and plunged into a river where it was preserved in silt, leaving them in pristine condition, Historic England said. Peter Nicholls/Reuters

A car covered with ice remains stranded on the waterfront in Hamburg, N.Y., Tuesday. The owner left his Mitsubushi Lancer parked overnight outside a restaurant on Sunday. By the next day, spray from Lake Erie had encased it in ice. Lindsay DeDario/Reuters

Market Closes for January 12^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rallied in the final hour of trading to snap the longest losing streak since 2002, as gains from financials outweighed declines by raw-materials and energy producers.

     The Standard & Poor’s/TSX Composite Index closed 0.4 percent higher at 12,373.90, after a seesaw trading day. The equity gauge rose as much as 1.1 percent and lost as much as 1 percent on Tuesday. Toronto-Dominion Bank and Royal Bank of Canada advanced more than 0.7 percent to lead the nation’s lenders higher. Canadian National Railway Co. rose a third straight day.

     Eldorado Gold Corp. led resource-producers lower, as a Bloomberg gauge of global commodities touched a low of at least 1991. Energy companies also slid, as oil briefly tumbled below $30 a barrel.

     Equities worldwide have tumbled to start the year as concern that a slowdown in China will thwart worldwide growth returned, after the nation unexpectedly set lower reference rates for its currency.

     The MSCI All-Country World Index of developed and developing markets snapped a six-day slide while the S&P 500 rebounded from a mid-day drop. China’s central bank had earlier stabilized markets after repeatedly intervened in the offshore market. Crude posted a fresh 12-year low, tumbling 2.5 percent to close at $30.64 after touching $29.93 earlier.

     Canada’s resource-rich benchmark equity gauge lost 7.4 percent during a nine-day slide to start 2016. Canada was the second Group of 7 country to see its benchmark enter a bear market, capping a 20 percent slide Jan. 7, after Germany’s DAX Index did in August.

     Eldorado Gold Corp. sank 19 percent, the biggest drop since December 2008, after the gold mining company suspended activities at its mining project in Greece after a prolonged battle to develop the mine.

     The S&P/TSX Gold Index lost 2.5 percent as the metal retreated for a third straight day. Gold producers had rallied at the start of the year as investors sought a haven from the market turmoil in China. Goldcorp Inc. lost 2.6 percent Tuesday.

US

By Joseph Ciolli

     (Bloomberg) — U.S. stocks rose in late-afternoon trading for a second day, paced by technology and health-care shares as China’s efforts to shore up its currency bolstered optimism that it can tame the turmoil that’s rattled global financial markets.

     Equities have been whipsawed in the first two sessions following their steepest weekly decline in four years, with early rallies evaporating only to see stocks storm back in the final hour of trading. Commodity producers recovered losses and tech shares surged, with Intel Corp. and Apple Inc. pacing the group for a second straight day. Energy companies erased a drop of as much as 2.3 percent as crude trimmed its slide.

     The Standard & Poor’s 500 Index increased 0.8 percent to 1,938.68 at 4 p.m. in New York, the strongest gain in two weeks and the first back-to-back advance since Dec. 23. The Dow Jones Industrial Average added 117.65 points, or 0.7 percent, to 16,516.22. The Nasdaq Composite Index gained 1 percent to halt its longest losing streak since 2008. The Russell 2000 Index added 0.3 percent after flirting with a bear market for a second day.

     “We’re slowly but surely finding a bottom in this selloff,” said Tim Ghriskey, who helps oversee $1.5 billion as managing director and chief investment officer at Solaris Asset Management. “There’s some talk out there that this blowout in energy provides some technical support, and that this is a short-term bottom forming. The pullback really wasn’t based on much new news.”

     Worries that turbulence in China’s stocks and currency will spread to the global economy has spurred declines in markets in 2016 — the S&P 500 posted its worst-ever start to a year, sliding 6 percent last week. China’s measures today to defend the yuan helped ease investor concerns about a hard landing in the nation’s economy, sparking a record surge in Hong Kong’s money-market rates and deterring bearish speculators.

     The main U.S. equity benchmark’s tumble to start 2016 has left it 9 percent below its all-time high set in May after coming within 1 percent of the record as recently as November. It is 3.8 percent above the bottom of an August swoon, which was also sparked by anxiety over the impact of China’s weakness on worldwide growth.

     Federal Reserve Bank of Atlanta President Dennis Lockhart said yesterday a global selloff in stock markets is unlikely to affect the U.S. economy, and he favors continued tightening of monetary policy this year. Richmond Fed President Jeffrey Lacker said today the current strength of the economy, particularly “robust” consumer spending growth, “is a powerful argument” for higher rates.                        

     Investors will also be turning attention to corporate earnings, after Alcoa Inc. unofficially kicked off earnings season yesterday. The aluminum producer fell 9 percent, the most in more than four years after its sales last quarter dropped 18 percent, and the company reported a net loss as falling aluminum prices dulled the impact of cost-cutting efforts.

     JPMorgan Chase & Co., Intel and Citigroup Inc. are among companies scheduled to post their quarterly results this week. Analysts estimate profits for S&P 500 members fell 6.7 percent last quarter.

     Earnings season will “calm fears” in the U.S. equity market, Adam Parker, chief U.S. equity strategist at Morgan Stanley, wrote today in a client note. Expectations have been lowered so much for sectors like energy and raw-materials that they “should be cleared,” considering the lack of “large headwinds from macro factors,” he wrote.

     The Chicago Board Options Exchange Volatility Index fell 7.5 percent Tuesday to 22.47, adding to yesterday’s 10 percent drop after a 48 percent jump last week to a three-month high. The measure of market turbulence known as the VIX remains on track for its biggest monthly gain since August’s 135 percent jump. About 9 billion shares traded hands on U.S. exchanges, 26 percent above the three-month average.

     Following the afternoon rally, eight of S&P 500’s 10 main industries climbed today, with technology, health-care and consumer discretionary shares increasing at least 1 percent. Utilities and phone companies fell.

     Apple rose 1.5 percent, capping its first three-day advance since Nov. 20. Intel added 1.9 percent for its strongest back- to-back climb also since Nov. 20 before its earnings report on Thursday. Cognizant Technology Solutions Corp. gained 6.3 percent, the most since August, after reaffirming its full-year sales and profit expectations following floods in India last quarter.

     Anthem Inc. and Aetna Inc. added more than 3.8 percent to boost the health-care group after the health insurers said profit will probably increase this year, ahead of presentations at a JPMorgan health-care conference. The Nasdaq Biotechnology Index rose 1.5 percent, snapping its longest losing streak since September, after the gauge wiped out an earlier 2 percent slide.

     Consumer discretionary shares advanced for a second day. Starbucks Corp. added 2.8 percent amid plans to accelerate its expansion in China, while Walt Disney Co. rose 1.5 percent after yesterday ending an eight-day skid.

     Energy companies in the benchmark closed 0.4 percent higher, their first gain in five sessions, even as crude oil sank 3.1 percent with West Texas Intermediate crude reaching its lowest settlement since 2003. The resource was down for a seventh straight day, slipping 18 percent over the period. Exxon Mobil Corp. and Chevron Corp. increased at least 1.7 percent, while Valero Energy Corp. advanced 3.1 percent.

     Raw-materials companies were little changed, despite the price of copper sliding to the lowest since 2009. The decline came as Barclays Plc cut its price forecast and said recent data makes a recovery in the year’s first half less likely in China, the world’s biggest user. Freeport-McMoRan decreased 4.6 percent to the lowest level since December 2000, after falling as much as 15 percent.

Have a wonderful evening everyone.

Be magnificent!

We ask ourselves

is it possible to break through this heavy conditioning of centuries immediately

and not enter into another conditioning – to be free,

so that the mind can be altogether new, sensitive,

alive, aware, intense, capable?

Krishnamurti

As ever,

Carolann

I am not afraid of storms for I am learning how to sail my ship.

                -Louisa May Alcott, Louisa May Alcott, 1832-1888

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