January 27, 2016 Newsletter

Dear Friends,

Tangents:

The List: Five unusual claims to fame

                                       -Elsa Court, Financial Times 

The British wet-weather record was set by Eallabus in 1923. Here are five other places with unusual claims to fame:
 
After 83 days of consecutive rainfall, residents of Eglwyswrw in south-west Wales had gone from wishing it would end to wishing for a few more rainy days — the village was just six days short of the British wet-weather record set by Eallabus, north-west Scotland, in 1923. But earlier this week a day of sunshine unexpectedly broke out and the longstanding record remained unbroken. Here are five other places with unusual claims to fame.

1.   Tsovkra-1, Dagestan, Russia, is home to a population made up entirely of tightrope-walkers (pictured above). This remote village in the Caucasus became famous after the second world war for providing tightrope acrobats for circuses across the Soviet Union (it was twice awarded the Artist of the People award, the USSR’s highest artistic distinction). The population of Tsovkra-1 may have dropped from 3,000 to 400 over the past 30 years but those who remain hope to resurrect the village’s unusual history — a tightrope-walking school has just reopened.

2.   Norwich, England, has two cathedrals and 32 medieval churches — more than any other city in northern Europe — yet according to a 2011 census, was the “least religious” city in England and Wales. Some 42.5 per cent of respondents — the highest in the census — reported having “no religion”, compared with an overall average of 25.1 per cent.

3.   Rjukan, Norway, enjoyed winter daylight for the first time in history in 2013. Set deep in a narrow valley, the town is normally bathed in darkness from September to March, but its council invested NKr5m (£544,000) to build three giant mirrors to bounce sun rays on to its main square, which now advertises itself as “a sunny meeting place” at the heart of a once shadowy town.

4.   Woodchurch, Kent, last year sought international recognition by astronomers as one of the darkest places in England. After identifying an area of about 20 miles on the edge of Romney Marsh as having among the darkest night skies in the country, Ashford Borough Council applied for International Dark Sky Community status to help protect the area from light pollution and promote tourism by stargazers. A decision is awaited.

5.   Longyearbyen, Svalbard, Norway, prides itself on being the world’s most northerly town. It is also known for being a place where dying — or rather, dying and being buried — is proscribed. The reason? Svalbard’s extreme cold makes it impossible for bodies to decompose, meaning that corpses can be a health hazard. People who die or are taken ill in the remote Arctic town are immediately airlifted or shipped to mainland Norway.

On this day in…

1967    More than 60 nations signed a treaty banning the orbiting of nuclear weapons.

1973    The Vietnam peace accords were signed in Paris.

1998    First lady Hillary Rodham Clinton, appearing on NBC’s “Today” show, said that allegations against her husband were the work of a “vast right-wing conspiracy.”

2010    Apple CEO Steve Jobs unveiled the iPad tablet computer during a presentation in San Francisco.

2010    J.D. Salinger, the reclusive author of “The Catcher in the Rye,” died in Cornish, N.H. at age 91.

PHOTOS OF THE DAY

A group of visitors walk inside the Holocaust Memorial in Berlin Wednesday on International Holocaust Remembrance Day, marking the liberation of Auschwitz Nazi death camp on Jan. 27, 1945. Markus Schreiber/AP

A woman takes pictures of a big heart made of red roses at the international trade fair for plants in Essen, Germany, Wednesday. More than 1,600 exhibitors from 50 countries presented the latest trends at the world’s leading trade fair for horticulture. Martin Meissner/AP

Market Closes for January 27^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Oliver Renick

     (Bloomberg) — Canadian stocks recovered from early losses on Wednesday as the Standard & Poor’s/TSX Index continued a streak of moving in tandem with commodity and crude prices.

     The S&P/TSX rallied for a second straight day, adding 0.4 percent to 12,377.77 at 4 p.m. in Toronto and erasing a decline of as much as 0.7 percent. Half of the index’s 10 main industries advanced. The S&P/TSX, which entered a bear market earlier this year, is poised for its worst monthly performance since May 2012.

     Canada’s benchmark index has moved closely with raw materials prices this year, as investors in the country’s resource-heavy equities market weigh tumbling oil prices and signs of slowing growth in China. The S&P/TSX has moved in the same direction as a Bloomberg index of commodities every day since Jan. 15, according to data compiled by Bloomberg.

     Energy stocks in the S&P/TSX reversed losses to jump 0.8 percent, with 40 companies in the 55-member index advancing. Precision Drilling Corp. and Pengrowth Energy Corp. led gains, each adding more than 6.6 percent. Oil erased a decline as stockpiles at the biggest U.S. storage hub dropped even as nationwide crude supplies climbed to the highest level since 1930.

     Raw-materials advanced more than any group in the S&P/TSX, climbing 1.2 percent as the Bloomberg commodity index jumped 0.8 percent. Gold bullion, this month’s best performing metal, was at a two-month high before the U.S. Federal Reserve bank ends a two-day meeting. Concerns over the strength of the global economy has boosted demand for the haven and prompted investors to push back expectations of when the Fed will next raise borrowing costs.

     Technology shares also advanced, adding 0.4 percent on a 4 percent surge in CGI Group Inc. The company reported quarterly earnings and revenue that topped analyst estimates. Profits in the first quarter were C$0.84 a share, compared with expectations of C$0.83, the company said.

     Health-care shares fell the most in the S&P/TSX with a 3.8 percent loss as a 4.6 percent decline in Concordia Healthcare Corp. weighed on the group of five stocks.

     Telephone companies also retreated, after Rogers Communications Inc., Canada’s largest wireless operator, reported fourth-quarter earnings that missed analysts’ estimates as increased competition for subscribers led to higher advertising and promotions costs. Rogers shares slumped 5.4 percent for the biggest drop in the S&P/TSX.

     Bombardier Inc.’s shares briefly fell below C$1, before closing at that level. It’s the latest blow for the iconic Canadian manufacturer as it buckles under $9 billion in debt.

The rout raises the prospect that the aircraft maker will be thrown out of the main Canadian stock gauge.

US

By Anna-Louise Jackson and Oliver Renick

     (Bloomberg) — U.S. stocks sank following no discernible shift in stance from the Federal Reserve amid recent market turmoil, as Apple Inc. and Boeing Co. led a slide after their outlooks disappointed investors.

     Even a gain in crude oil couldn’t stem the afternoon selling Wednesday, as Boeing had its steepest drop in 14 years, and Apple’s loss was the biggest in two years. An index of technology hardware companies slumped to its lowest in 21 months. Biogen Inc. and Capital One Financial Corp. gained at least 4.8 percent after their profits beat estimates. Facebook Inc. rallied in late trading following its earnings report after the markets closed.  

     The Standard & Poor’s 500 Index fell 1.1 percent to 1,882.95 at 4 p.m. in New York, after swinging between gains of as much as 0.7 percent and a 1.6 percent loss. The Dow Jones Industrial Average fell 227.77 points, or 1.4 percent, to 15,944.46 with Apple and Boeing combining for a 123-point drag. The Nasdaq Composite Index lost 2.2 percent. About 8.8 billion shares traded hands on U.S. exchanges, 16 percent above the three-month average.

     “The market was going into the statement pricing in some expectations that the Fed was either going to acknowledge slowing economic data, market volatility and China or sound a little dovish and that didn’t play out,” Brian Rauscher, chief portfolio strategist at Robert W Baird & Co in New York, said by phone. “If every other central bank says we’re loosening and you don’t think the economy here is strong enough, then investors will ultimately price in a more dovish Fed and you see this back-and-forth in the markets.”

     Fed policy makers left interest rates unchanged and said they still expect to raise borrowing costs at a “gradual” pace while watching to see how the global economy and markets impact the U.S. outlook. Since the Fed raised interest rates last month for the first time in almost a decade, turbulence in financial markets and a dimming of the outlook for global growth have spurred investors to expect a slower rise in borrowing costs.

     The median projection of policy makers’ forecasts in December called for four quarter-point rate increases in 2016, while futures markets indicate traders see fewer. The probability of a raise in March has fallen to 19 percent, from even odds at the start of the year.

     Anxiety fueled by China’s slowdown and a rout in oil prices has hammered stocks since the start of the year, wiping as much as $2.4 trillion from the value of U.S. equities alone. The S&P 500 remains on track for its worst January since 2009, with results from Apple and Boeing offering little relief from worries that weakness in China is festering.

     Equities already had a volatile day leading into the Fed’s statement, beginning with a selloff led by Apple and Boeing. Oil prices then recovered from an early drop to spark a late-morning rally in energy shares. Banks boosted the move by building on yesterday’s climb, only to shave their advance after word from the Fed.

     “Buyers moved to the sidelines as an initial reaction to the statement,” said Walter “Bucky” Hellwig, who helps manage $17 billion as a senior vice president at BB&T Wealth Management in Birmingham, Alabama. “There was not a more dovish statement from the FOMC and that disappoints investors.”

     Fed officials have emphasized that the course for rates depends on progress in the economy. A report today showed purchases of new homes in the U.S. surged in December to the highest level in 10 months, closing out the best year for housing since 2007. Sales jumped a stronger-than-forecast 10.8 percent last month. Data yesterday showed consumer confidence improved in January to a three-month high.

     The earnings season is also in full swing, with at least 32 S&P 500 companies reporting today. Of the firms that have posted quarterly results so far, 76 percent beat earnings estimates, while about half of them exceeded sales projections.

     Facebook climbed 8 percent as of 4:55 p.m. after delivering another quarter of record revenue that topped estimates as it sells more ads via videos, mobile devices and the Instagram photo-sharing service. PayPal Holdings Inc. beat sales estimates as it won new vendors, sending its shares up 5.3 percent in late trading. EBay Inc. slumped 9.5 percent after projected earnings that may miss analysts’ estimates as growth on its marketplace stalled.                      

     Even as the pace of the reporting season picks up, equity investors have held to their fixation this year on the direction of crude prices. The S&P 500 has moved in virtual lockstep with oil, with their relationship reaching the tightest since 2011. Today was no different as equities this morning briefly erased losses along with crude.

     The Chicago Board Options Exchange Volatility Index rose 2.7 percent to 23.11. The measure of market turbulence known as the VIX is down about 14 percent in the last seven sessions, trimming its biggest monthly surge since a record jump in August.

     Eight of the S&P 500’s 10 main industries declined Wednesday, with technology shares falling 2.5 percent under Apple’s weight, while consumer discretionary, health-care and industrial companies lost at least 1 percent. Phone and utility companies rose.

     Apple suppliers Qorvo Inc. and Skyworks Solutions Inc. fell more than 5.6 percent after the world’s most valuable company forecast a sales decline for the first time in more than a decade. Apple Chief Executive Tim Cook said yesterday the company is beginning to see “economic softness” in China.                     

     Boeing paced the drop in industrials after predicting weaker profit and fewer jetliner deliveries than analysts expected. Textron Inc. sank 13 percent, the most since April 2013, after its quarterly earnings missed estimates.

     Health-care stocks slumped the most in more than a week, as Illumina Inc. and Regeneron Pharmaceuticals Inc. both tumbled more than 6 percent to the lowest levels since at least November. The iShares Nasdaq Biotechnology ETF fell 3.1 percent, bringing its three-day losses to 5.1 percent, as it closed at the lowest since October 2014.

     Consumer discretionary stocks fell 1.5 percent, dragged down by Amazon.com Inc.’s 3 percent decline. Netflix Inc. tumbled for a sixth straight day and closed down 6.8 percent at a level last seen in June. Travel-related companies also sold off, as Priceline Group Inc. fell 6.1 percent to the lowest in 11 months, while Royal Caribbean Cruises Ltd. and Carnival Corp. both lost at least 3.5 percent.

     Banks continued a rebound, rising for the third time in four days amid speculation that rising rates will help boost profits as bond yields crept higher. Capital One rallied 4.8 percent, the most since October after fourth-quarter profit and revenue exceeded analysts’ estimates. Huntington Bancshares Inc. and Zions Bancorporation added more than 2.4 percent.

Have a wonderful evening everyone.

Be magnificent!

In the search for the Truth, dharma, the real effort does not preclude action

(does not consist in neglecting action), but by trying to accord oneself more and more exactly

with the exterior harmony.  The currency of this effort is in becoming:

whatever work you take on, dedicate it to Brahman.

Rabindranath Tagore

As ever,
 

Carolann

It’s not the load that breaks you down, it’s the way you carry it.

                                                             -Lou Holtz, 1937-

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