January 22, 2016 Newsletter

Dear Friends,

Tangents:

Lord Byron, poet, was born on this day in 1788.

She walks in beauty, like the night
Of cloudless climes and starry skies,
And all that’s best of dark and bright
Meet in her aspect and her eyes;
Thus mellowed to that tender light
Which heaven to gaudy day denies.

One shade the more, one ray the less,
Had half impaired the nameless grace
Which waves in every raven tress
Or softly lightens o’er her face,
Where thoughts serenely sweet express
How pure, how dear their dwelling-place.

And on that cheek and o’er that brow
So soft, so calm, yet eloquent,
The smiles that win, the tints that glow
But tell of days in goodness spent,
A mind at peace with all below,
A heart whose love is innocent.

              -George Gordon, Lord Byron

On January 21, 1821, Lord Byron wrote in his Ravenna Journal:

  Rode out, as usual, and fired pistols.  Good shooting  – broke four common, and rather small, bottles, in four shots, at fourteen paces, with a common pair of pistols and indifferent powder…

  Tomorrow is my birthday – that is to say, at twelve o’ the clock, midnight, i.e., in twelve minutes, I shall have completed thirty and three years of age!!! –and I go to my bed with a heaviness of heart at having lived so long, and to so little purpose.

  It is three minutes past twelve.  “  ‘Tis the middle of the night by the castle clock” [the opening line of Coleridge’s Christabel], and I am now thirty-three!

PHOTOS OF THE DAY

A water drone demonstrates maritime salvage by flying a lifesaver to a boy in the water at the world’s largest watersports trade fair, BOOT, in Duesseldorf, Germany, Friday. Martin Meissner/AP

DHL’s Twisters & Extra 300 perform during the second day of the Bahrain Air Show 2016 at Sakhir Friday. Hamad I Mohammed/Reuters

Market Closes for January 22^nd, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Joseph Ciolli

     (Bloomberg) — A rally in the price of crude oil and speculation central banks around the world are prepared to tamp down financial-market volatility fueled the biggest gain since November 2011 for Canadian stocks.

     The Standard & Poor’s/TSX Index jumped 2.9 percent to 12,389.58 at 4 p.m. in Toronto, capping the gauge’s first weekly gain of the year. Nine of the index’s 10 main industries rose more than 1.1 percent, with energy, utility and industrial shares the biggest gainers. The S&P/TSX, which entered a bear market two weeks ago, fell on Wednesday to its lowest level since August 2012. It’s down 4.8 percent in 2016.

     Canada joined a rebound among global equities sparked by speculation the European Central Bank and Bank of Japan are poised to add to stimulus at the same time China reassured investors it would do more to damp volatility. Crude oil surged 8.9 percent, bringing its two-day increase past 20 percent.

     Canada’s December inflation rate was the fastest in a year, led by double-digit gains for fruit and vegetables and a reduced drag from gasoline prices. The consumer price index rose 1.6 percent in December from a year ago following the rate of 1.4 percent the prior month, Statistics Canada said Friday from Ottawa. Canada’s currency strengthened for a third straight day against its U.S. peer following 13 straight days of weakening. The so-called loonie is up 3 percent versus the greenback since Wednesday.

     All but one of the 55 companies in the S&P/TSX energy index rose as the gauge climbed 5.5 percent. Baytex Energy Corp. surged 15 percent, while Paramount Resources Ltd. and Enerplus Corp. climbed at least 9.3 percent. Penn West Petroleum Ltd. rose 15 percent to the highest level in more than two weeks.

     Raw-materials producers increased 1.2 percent as a Bloomberg index of commodities rose the most since Aug. 27. Confor Corp. and Interfor Corp. gained more than 9.9 percent, while Western Forest Products Inc. and Lundin Mining Corp. climbed at least 5.8 percent.

     Barrick Gold Corp., the world’s largest producer of the metal, rose 2.2 percent even after it said it may book as much as $3 billion in impairment charges as a prolonged gold slump forces it to revise its price assumptions for 2016. The price of gold was little changed. The resource has slipped 3.8 percent since the start of November.

US

By Anna-Louise Jackson

     (Bloomberg) — The Standard & Poor’s 500 Index capped its strongest two-day rally in three months, amid speculation central banks around the world will act to support the global economy even as the Federal Reserve tightens policy.

     Energy companies led, posting their first weekly advance this year, with Schlumberger Ltd. and Valero Energy Corp. gaining at least 6.1 percent. Technology shares added 2.8 percent, with Apple Inc. rising the most since August. JPMorgan Chase & Co. climbed 3.1 percent to lead a rebound by banks. American Express Co. slumped 12 percent, the biggest drop since 2009, after its quarterly earnings fell 38 percent. 

     The S&P 500 gained 2 percent to 1,906.90 at 4 p.m. in New York, the best back-to-back increase since October after turning positive for the week. The Dow Jones Industrial Average climbed 210.83 points, or 1.3 percent, to 16,093.51, with the decline in American Express a 52-point drag. The Nasdaq Composite Index increased 2.7 percent, the most since September. About 9.1 billion shares traded hands on U.S. exchanges, 20 percent above the three-month average.

     “I think we’re a heck of a lot closer to the bottom, and I think it’s a better time to put your foot in the water, but don’t back up the truck yet,” said Andrew Brenner, head of international fixed income for National Alliance Capital Markets in New York. “It looks like central banks are on the warpath against weakness. That’s going to put a real risk-on component to today.”

     Equities continued a snap-back from the worst start to a year since 2009, hammered as oil sank to 12-year lows amid rising supplies and concern that flagging global growth, particularly in China, will drag on the U.S. economy. Crude rallied Friday to its biggest two-day advance since 2008.

     The S&P 500 rebounded yesterday from a 21-month low as European Central Bank President Mario Draghi signaled the potential for more stimulus as early as March. Sentiment also received a boost overnight from speculation that the Bank of Japan is considering additional easing.

     The benchmark ended a streak of weekly declines at three, rising 1.4 percent in the holiday shortened period. The S&P 500 on Wednesday dipped below a level technical analysts call oversold, meaning a selloff has gone too far. A rout stoked by concerns about China’s slowdown and plunging oil had wiped off as much as $2.45 trillion from U.S. equities this year.

     “It’s a classic oversold bounce after Draghi’s comments yesterday and the noise on Japanese stimulus overnight,” said Veronika Pechlaner, who helps oversee $10 billion at Ashburton Investments, part of FirstRand Group. “It’s become harder and harder for stimulus to really support the economic fundamentals. But at least we have a bit more stable trading environment for a couple of days.”

     The Chicago Board Options Exchange Volatility Index fell 16 percent Friday to 22.34, the biggest drop in seven weeks. The measure of market turbulence known as the VIX has surged about 23 percent so far in 2016, on pace for its biggest climb since a record-setting jump in August.

     Investors are keeping watch on corporate earnings to gauge the health of the U.S. economy. Analysts estimate profits of S&P 500 firms slumped 6.3 percent in the fourth quarter, better than the 7 percent drop expected a week ago. Of the 73 companies that have reported results so far, 78 percent beat earnings projections while 48 percent exceeded sales forecasts. McDonald’s Corp., Apple, Facebook Inc. and Boeing Co. are among more than 130 companies due to report next week.

     Among the few pieces of data before the Fed’s two-day policy meeting next week, a report today showed purchases of previously owned homes rose more than projected in December, helped in part by warmer weather to finish the best year since 2006.

     Policy makers have made it clear that the pace of interest- rate increases will depend on progress in the economy. While chances for a January Fed rate boost have stayed low, odds for a March lift have fallen since the start of the year, with traders pricing in a 26 percent chance, compared with even odds at the start of the year.

     All of the S&P 500’s 10 main groups rose, led by a 4.3 percent surge for energy companies. Technology stocks climbed 2.8 percent, the most in three months, with Apple’s 5.3 percent gain contributing the most to the group’s increase. Phone and financial companies gained at least 1.9 percent.

     The energy producers had the best back-to-back rally in almost five months. Williams Cos. soared the most in the S&P 500 today, up 23 percent. The shares are still down 23 percent this year. Oneok Inc. and Kinder Morgan Inc. rose more than 10 percent, while Chevron Corp. added 3.1 percent to take its two- day climb to 5.8 percent.

     Qorvo Inc. rallied 8.5 percent, the most since November, following a report that the manufacturer could pick up a power amplifier design win for the Samsung Galaxy S7 in the first quarter. Hewlett Packard Enterprise Co. added 7.6 percent, bringing its two-day gain to almost 11 percent.

     Consumer discretionary companies rose 1.7 percent, with Viacom Inc. adding 3.9 percent. Walt Disney Co. jumped 3.1 percent, its biggest gain since August. D.R. Horton Inc., which is scheduled to release earnings before the market opens on Monday, rose 4 percent. Amazon.com Inc. contributed most to the group’s gains, rising 3.7 percent for its best since October.

     Banks in the benchmark rebounded from four days of declines. JPMorgan Chase and Citigroup Inc. rose more than 2.2 percent. The KBW Bank Index gained 1.6 percent after sliding 6.5 percent during the prior four sessions.

     Industrial shares lagged as General Electric Co.’s 1.2 percent slide weighed on the group. The company reported fourth- quarter sales that missed analysts’ estimates, sending the shares down as much as 3 percent. Union Pacific Corp. fell 1.4 percent to the lowest since April 2013. The S&P 500 Railroads Index fell for a fifth straight day, bringing its losses this week to 4.2 percent.

     American Express Co. lost 12 percent, the most in almost seven years, as fourth-quarter profit declined, driven by a drop in revenue and higher expenses. The stock traded at levels last seen in 2012.

     Freeport-McMoRan Inc. dropped 9 percent, even as the raw- materials group rose 1.8 percent. The world’s biggest publicly traded copper producer is scheduled to report on Tuesday what analysts predict will be its fifth straight quarterly loss. Alcoa Inc. slipped 3.1 percent after rallying 5.2 percent yesterday.

Have a wonderful weekend everyone.

Be magnificent!

Is there any motion in a straight line?  A straight line infinitely projected becomes a circle,

it returns to the starting point.  You must end where you begin; and as you begin in God,

you must go back to God.  What remains?  Detail work.  Through eternity you have to do the detail work.

Swami Vivekananda

As ever,

Carolann

Alone we can do so little; together we can do so much.

-Helen Keller, 1880-1968

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