January 9, 2019 Newsletter

Dear Friends,

Tangents:

On this day in 1790, Treasury Secretary Alexander Hamilton submitted to Congress his “Report on the Public Credit,” which proposed buying up distressed bonds to consolidate the national debt. U.S. and state bonds, which had been trading at a fraction of their value, immediately surged in price. In one of the earliest cases of insider trading, several members of Congress hired sailboats and stagecoaches to take them south faster than the news could travel by foot. They snapped up bonds at bargain prices before Southern newspapers spread the news of Hamilton’s proposals.

Joan Baez, b. January 9, 1941 ~ Activist artist in the 1960s…at 18, Baez was introduced on stage a the 1959 Newport Folk Festival to sing in her pure, clear and flexible soprano, resulting in her first album with Vanguard….sang at the Lincoln Memorial as part of Martin Luther King’s march for civil rights and in the fields next to Cesar Chavez, paving the way for the Bonos and Springsteens of today. 

PHOTOS OF THE DAY

Geiko and maiko greet during the ceremony marking the New Year in Kyoto, Japan. Credit: The Asahi Shimbun/Getty Images

Iguanas from Seymour Norte island, being introduced to Santiago island as part of a conversation program in the Galapagos Islands, Ecuador. Credit: Christina Vega/AFP/Getty Images

A tiny Long Tongue bat licks nectar from a flower in Costa Rica. Credit: John Hudson/SWNS
Market Closes for January 9^th, 2019

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Bloomberg Automation
     (Bloomberg) — The S&P/TSX Composite rose for the fourth day, climbing 1.4 percent, or 199.58 to 14,804.73 in Toronto.
     The index advanced to the highest closing level since Dec. 6. Royal Bank of Canada contributed the most to the index gain, increasing 2.1 percent. Canopy Growth Corp. had the largest increase, rising 13.3 percent.
     Today, 212 of 240 shares rose, while 25 fell; all sectors were higher, led by financials stocks.
By Ross Marowits
     (Canadian Press) — TORONTO — Canada’s main stock index  posted its strongest four-day gain in three years Wednesday as it was propelled by a large increase in the price of crude oil  and the Bank of Canada’s latest rate announcement.
     The Toronto Stock Exchange continued its rebound from a dreadful autumn and tough December helped by positive news about the trade dispute between China and the U.S. and minutes from the Federal Reserve confirming its patience about raising interest rates, says Anish Chopra, managing director with Portfolio Management Corp.
     “A fantastic four-day stretch,” he said in an interview. The S&P/TSX composite index closed up 199.58 points to 14,804.73 in a broad-based rally that saw all sectors rise. It was the third day of triple-digit gains so far this year  and the best four-consecutive day performance since January  2016.
     “There seems to be a lot more optimism about a U.S.-China  trade deal and when it comes to Federal Reserve interest rate  hikes it appears to be that they’ll take a pause,” Chopra said  referring to minutes released from the central bank and recent  comments from several bank governors.
     The cannabis-heavy health care sector rose by 6.25 per cent  as Canopy Growth Corp. surged 13.3 per cent, while Aurora  Cannabis Inc. and Aphria Inc. gained 7.3 and 6.2 per cent  respectively.
     The key energy sector followed, with financials, industrials and materials also rising. Financial and energy stocks were the biggest gainers on the  day led by Sun Life Financial Inc., Royal Bank of Canada,  Manulife Financial and Suncor Energy Inc. Meanwhile, BCE Inc.  and Nutrien Ltd. lost ground while Imperial Oil and TransCanada  Corp. posted small gains.
     The energy sector was helped again by crude oil prices,  which rose on Saudi Arabia’s energy minister reassuring that its  oil production and exports are falling sharply. West Texas Intermediate prices are up 23 per cent from its December low.
     The February crude contract was up US$2.58 at US$52.36 per barrel Wednesday and the February natural gas contract was up 1.7 cents at US$2.98 per mmBTU.
     Canada’s financial sector was helped by the Bank of Canada’s decision to hold its key rate at 1.75 per cent while the economy absorbs softness from a 44 per cent drop in oil prices from its October peak.
     “The banks tend to be a play on Canadian GDP growth and with the Bank of Canada having a supportive stance to keep the Canadian economy running smoothly that’s certainly positive for the banks,” said Chopra.
     In New York, the Dow Jones industrial average gained 91.67 points at 23,879.12. The S&P 500 index was up 10.55 points at 2,584.96, while the Nasdaq composite was up 60.08 points at 6,957.08.
     The Canadian dollar traded at an average of 75.64 cents US compared with an average of 75.23 cents US on Tuesday.
     The February gold contract was up US$6.10 at US$1,292 an ounce and the March copper contract was up 0.1 of a cent at US$2.66 a pound.
US
By Sarah Ponczek and Reade Pickert
     (Bloomberg) — Stocks rose as investors cheered the dovish approach discussed in minutes from the latest Federal Reserve meeting, but the gains were muted by concerns that the partial shutdown of the U.S. government will continue for some time. The dollar fell and Treasuries rose, while oil surged above $52 a barrel and entered a bull market.
     The S&P 500 Index was up for a fourth consecutive day led by energy producers, reaching the highest level in almost a month. The Nasdaq benchmarks were the strongest performers on strength in semiconductors and technology hardware manufacturers.
     The Fed minutes showed that many central bankers urged patience on future interest rate hikes, an indication that they’re attentive to recent financial-market volatility and risks to the economic outlook.
     “I’m happy to see that there was caution in the minutes because it means that the market didn’t mug the Fed,” Alicia Levine, chief strategist at BNY Mellon Investment Management chief strategist, said on Bloomberg TV. “You want it to be that this is what the FOMC really believes, that caution is warranted, that they’re going to be data-dependent, and there are alternative outcomes that they should be aware of. I take great comfort in these minutes.”
     Stocks surged as the minutes were released, but they quickly retreated as President Donald Trump emerged from a meeting with Senate Republicans. Trump said the GOP was “very unified” behind his plan to keep the government closed until he gets funding to build a wall along the Mexican border, which is at the center of the dispute. He then walked out of a meeting with Democratic congressional leaders Nancy Pelosi and Charles Schumer, calling it a “total waste of time,” which further ate away at the gains.
     If the shutdown goes on for months longer “we’re not going to have a budget, and I think we’re going to see a lot of fallout from that point,” said Rich Guerrini, chief executive officer of PNC Investments, which manages $50 billion. “But I don’t know that I see anything on the short-term other than partisan politics.”
     Earlier, equities gained after the Trump administration confirmed that China committed to buy more U.S. agricultural goods, energy and manufactured products. Trump is said to be eager to reach a trade agreement with China to help revive the flagging stock market. However, the countries remain far apart on some key issues. And Chinese and American officials are reportedly coordinating their messaging to make sure markets interpret the results of the meeting optimistically.
     Although concerns linger about how protectionist tensions and political instability in the world’s largest economy will affect global growth, they also set up a potential Goldilocks scenario for markets after Fed’s apparent dovish shift.
     “A softness in the economy or in some indicators would allow the Fed the space not necessarily to continue to raise,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh. “That is going to drive the market higher.”
     The Stoxx Europe 600 Index climbed to the highest in a month led by carmakers and miners, while Hong Kong stocks set the pace for Asian benchmarks. And most industrial metals advanced after the Asian nation signaled measures to spur consumption.
     Elsewhere, emerging-market stocks extended a rally that’s taken MSCI’s gauge to the highest in more than a month. The Bloomberg Commodity Index rose for a sixth straight day, and gold ticked higher.
Here are some events investors may focus on this week:
* Fed Chairman Jerome Powell will speak to the Economic Club of Washington D.C. on Thursday.
* Britain’s Parliament resumes a debate on the Brexit withdrawal bill, with Prime Minister Theresa May seeking to avoid defeat in a vote set for the week of Jan. 14.
These are the main moves in markets:
Stocks
* The S&P 500 rose 0.4 percent to 2,584.96, while the Nasdaq 100 Index gained 0.8 percent.
* The Stoxx Europe 600 Index increased 0.5 percent to the highest in almost four weeks.
* The MSCI All-Country World Index advanced 1 percent.
* The U.K.’s FTSE 100 Index climbed 0.7 percent to the highest in five weeks.
* The MSCI Emerging Market Index jumped 2.1 percent to the highest in more than a month.
Currencies
* The Bloomberg Dollar Spot Index dropped 0.8 percent.
* The euro gained 1 percent to $1.1552.
* The British pound climbed 0.7 percent to $1.2801.
* The Japanese yen rose 0.7 percent to 108.03 per dollar.
Bonds
* The yield on 10-year Treasuries fell one basis point to 2.719 percent.
* Britain’s 10-year yield added one basis point to 1.2801 percent.
* Germany’s 10-year yield climbed five basis points to 0.279 percent.
Commodities
* The Bloomberg Commodity Index rose 1.2 percent.
* West Texas Intermediate crude advanced 5 percent to $52.28 a barrel, reaching the highest in a month on its eighth consecutive gain.
* Gold increased 0.7 percent to $1,293.71 an ounce.
–With assistance from Andreea Papuc, Heesu Lee and Robert Brand.

Have a great evening!

Be magnificent!

As ever,

Carolann

That brain of mine is something more than merely mortal, as time will show.
                                                                 -Ada Lovelace, 1815-1852

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Senior Investment Advisor

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