January 19, 2016 Newsletter

Dear Friends,

Tangents:

from  A COUNTRYWOMAN’S NOTES:

Some people are far more sensitive to light than others and are at their happiest when there is plenty of sunlight and they can throw open the windows and walk outside.  None of us is immune to seasonal changes, though we may think we are, but we are certainly less so than plants and animals.  Fading and increasing light tells them to hibernate or drop their leaves, mate or be active.  I welcome winter as a time when I can slightly change my way of life, stay indoors more, read, and give way to a lethargy I do not have in summer.  I am aware that the light as it meets our eyes produces a set of nerve impulses that travel  to the gland between the hemispheres of our brain, and that the hormones in this gland have a powerful effect on our sleep as well as our mood, so perhaps my lethargy is quite natural.  “A sad tale’s best for winter”, wrote

Shakespeare.  I believe he meant this to fit the winter mood of the reader.  I have just talked to a friend who is moving back to London after two winters and a summer in the country.  She says she feels depressed in the country and wants the companionship and activity of town life.  I am wondering if it is really the lack of sunlight through the naturally short days that she is missing rather than the glitter of town lights.  Soon spring will be with us and the days much longer, so our spirits should be lightened too. –Rosemary Verey, Gryffon Publications, 1989.

PHOTOS OF THE DAY

Waves crash on the seafront at the Corniche in Beirut, Lebanon on Tuesday. Hassan Ammar/AP

This picture taken through the window of a car shows a couple standing under an umbrella to shield themselves from heavy rain on the seafront at the Corniche, or waterfront promenade, in Beirut, Lebanon, Tuesday. Hassan Ammar/AP

Market Closes for January 19^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Anna-Louise Jackson

     (Bloomberg) — Canadian stocks rose for only the third time this year, as Chinese growth data eased investor concern over a hard landing in the world’s second-largest economy a day before the central bank makes its interest-rate decision.

     Seven of the 10 main industries advanced, as the Standard & Poor’s/TSX Index gained 0.5 percent to close at 12,002.24 at 4:00 p.m. in Toronto. The gauge rebounded after slumping 1.1 percent yesterday when it fell to the lowest since June 2013. The index, which entered a bear market almost two weeks ago, has tumbled 7.8 percent year-to-date.

     More than half the market has put its money on the Bank of Canada cutting its benchmark interest rate back to a record low of 0.25 percent on Wednesday, as oil’s relentless collapse shows no signs of abating and weakness has cropped up elsewhere in the economy.

     Trading Tuesday was volatile, with the Canadian benchmark erasing early gains before rallying into the close to finish higher. The move mimicked action in global equities, as crude resumed its slump below $29 a barrel. The country’s currency weakened for a 13th straight day against its U.S. peer, falling to the lowest since April 2003.

     Canada’s largest consumer companies led Tuesday’s rally, gaining 1.5 percent, with Cogeco Cable Inc. rising 7.1 percent for its biggest advance in seven years. Technology shares increased 1.4 percent. Materials producers fell for a fourth consecutive day, slipping 2.1 percent to the lowest since May 2005 and down 7.9 percent year to date.

     Progressive Waste Solutions Ltd. jumped almost 11 percent, the most ever, to a level last seen in April. U.S.-based Waste Connections Inc. agreed to buy Ontario-based Progressive Waste Tuesday, moving the tax domicile for its garbage-hauling business to Canada. Labrador Iron Ore Royalty Corp. gained 15 percent, the most in seven months, after an analyst at Canaccord Genuity raised the stock to buy from hold.

     Baytex Energy Corp. tumbled 17 percent, the most ever, to a record low, while Silver Standard Resources Inc. slipped almost 14 percent to the lowest since March. Yamana Gold Inc. fell 8.1 percent, its fourth consecutive day of declines, after Macquarie Research downgraded the stock to neutral from the equivalent of buy. Iamgold Corp. fell 13 percent to the lowest since July after the mining company cut its guidance.

US

By Dani Burger and Anna-Louise Jackson

     (Bloomberg) — The Standard & Poor’s 500 Index closed a volatile session little changed, near the lowest level since August as gains in consumer shares offset declines in commodity companies amid fresh signs of weakness in crude oil and corporate earnings.

     Stocks couldn’t sustain an opening rally and weakened throughout the day before rebounding after reaching the lows of August’s selloff. Selling intensified again in small-cap shares, and crude prices remained an influence on fragile sentiment. Chevron Corp. dropped 2.6 percent, and Bank of America Corp. also weighed, falling 1.5 percent. Procter & Gamble Co. added 2.3 percent, the most in six weeks. Netflix Inc. rose in after- hours trading following its quarterly report.

     The S&P 500 gained less than 0.1 percent to 1,881.33 at 4 p.m. in New York, after a whipsaw session that saw the gauge rise as much as 1.1 percent and fall 0.8 percent. The Dow Jones Industrial Average rose 27.94 points, or 0.2 percent, to 16,016.02. The Nasdaq Composite Index sank 0.3 percent, and the Russell 2000 Index dropped 1.3 percent to the lowest since July 2013. About 9.4 billion shares traded hands on U.S. exchanges, 27 percent above the three-month average.

     “The market got down to that 1,865 level again, and we did seem to gain momentum,” said Robert Pavlik, who helps oversee $9.1 billion as chief market strategist at Boston Private Wealth. “Once it hit that technical level, we saw the market turn around almost automatically. It’s a step in the right direction. Coming off a very oversold level, the fact that we held that level from September suggests we could have a near- term bounce.”

     U.S. shares had rallied early as European and Asian stocks rose amid speculation of further Chinese state stimulus aid. A report showed gross domestic product in the world’s second- largest economy expanded 6.9 percent in 2015, just shy of the government’s 7 percent target, and the least since 1990.

     Crude continued to fall Tuesday, with West Texas Intermediate futures losing 3.3 percent. The International Energy Agency trimmed its 2016 estimates for global oil demand amid weakness in China. Markets could “drown in oversupply,” sending prices even lower as demand growth slows and Iran revives exports with the end of sanctions, according to the agency.

     The S&P 500’s renewed selling sent the gauge toward a technical signal that indicates it’s oversold. Its relative strength index, which measures whether gains or losses have been too fast to sustain, fell to 30, a threshold indicating a rebound may materialize.

     The last time the RSI slipped below that level was on Jan. 13, the day before a 1.7 percent rally. The time prior to that was on Aug. 25, when the S&P 500 hit a bottom and rallied 6.5 percent over the next three days.

     The S&P 500 trades at 15.2 times the forecast earnings of its members, in line with the index’s average of the past four years. It’s more expensive than developed markets in Europe, where the Stoxx 600 Index trades for 14.1 times estimated earnings.

     The equity benchmark is down almost 12 percent from its record set last May, and has slumped 9.3 percent since the Federal Reserve raised interest rates last month for the first time since 2006. Meanwhile, a measure of volatility has jumped the most since a selloff in August which sent the S&P 500 into its first correction in four years.

     The Chicago Board Options Exchange Volatility Index fell 3.6 percent Tuesday to 26.05. The measure of market turbulence known as the VIX is up 43 percent this month.                      

     “I don’t think we’ve resolved all the issues in the market,” said Nick Sargen, who helps manage $46.2 billion as chief economist and senior investment adviser for Fort Washington Investment Advisors Inc. “The questions left are how much is China’s economy in fact slowing down, and when will we see a floor for the price of oil.”

     While investors fret over the impact China’s slowdown will have on global growth, the International Monetary Fund cut its world growth outlook as the commodities slump and political gridlock push Brazil deeper into recession, plunging oil prices hobble Mideast crude producers and the rising dollar curbs U.S.  prospects.

     The fund also said risks to the global outlook remain tilted to the downside, with the world facing three big adjustments: the emerging-market slowdown, China’s shift to growth driven less by exports and manufacturing and the Fed’s gradual exit from ultra-low interest rates.

     U.S. data today showed confidence among homebuilders was unchanged at the start of year, indicating the residential real estate market was sustaining the steady progress made in 2015.                       

     Corporate earnings are gathering more attention with investors weighing the health of the U.S. economy. Analysts project profits for index members fell 7 percent in the fourth quarter. Netflix advanced 7.3 percent as of 4:42 p.m. after it added 5.6 million online subscribers in the fourth quarter, beating analysts’ expectations as international growth made up for slower domestic gains.

     Five of the 10 main groups in the S&P 500 fell, with energy losing 2.2 percent and raw-materials down 1.2 percent. Utilities, phone companies and consumer staples increased at least 1.1 percent.

     Energy companies slid further into five-year lows, with Chesapeake Energy Corp. tumbling more than 13 percent, while Exxon Mobil Corp. lost 1.5 percent. Miner Freeport-McMoRan Inc. sank 9 percent to lead raw-materials lower, even as copper prices rose today. Alcoa Inc. dropped 2.3 percent to its lowest in almost seven years.

     Viacom Inc. and Macy’s Inc. helped power gains in consumer discretionary shares after the group fell for a sixth week out of seven. Macy’s rose 2.3 percent after David Einhorn’s Greenlight Capital LLC reported a new position in the retailer. Greenlight said in a letter that a private equity firm and a real estate investment trust could team up to purchase the company and “unlock the value” of its land and buildings.

     Meanwhile, Viacom advanced 4.7 percent after the media giant was said to be targeted by an activist investor. SpringOwl Asset Management called on Chairman Sumner Redstone and Chief Executive Officer Philippe Dauman to step down from the New York-based media company.

     The second-biggest U.S. lender, Bank of America said profit rose 9.4 percent thanks to fixed-income trading revenue. Still, shares erased early gains to fall as much as 3.1 percent after Chief Financial Officer Paul Donofrio said on a call with analysts that revenue growth will be “challenging,” even as the U.S. economy improves.

     Banks in the S&P 500 fell 0.9 percent, led by Comerica Inc.’s 3.7 percent decline, even after it reported better-than- estimated fourth-quarter profits. KeyCorp dropped 1.6 percent and Citigroup Inc. lost 1.3 percent to bring its 2016 slump to 19 percent.

     Morgan Stanley added 1.1 percent after briefly erasing an earlier 4.5 percent surge. Its earnings were better-than- estimated and the company plans to cut at least $1 billion in costs by next year.
 

Have a wonderful evening everyone.

Be magnificent!

The important question for me is,

is the body a source for creating, for realizing yourself,

for realizing what life is all about?  You ask this question

and you go where it takes you and then you ask another question

and then again you follow.  So this understanding of the body, of the unity within the body

and the innumerable areas which it reveals to you is what I call realization.

Chandralekha

As ever,

Carolann

The most important thing is to stay positive.

                               -Saku Koivu, 1974-

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