June 5, 2020 Newsletter

Dear Friends,

Tangents:  Happy Friday!
On June 5, 1968, Sen. Robert F. Kennedy was shot and mortally wounded just after claiming victory in California’s Democratic presidential primary.
Gunman Sirhan Bishara Sirhan was immediately arrested. Go to article »

Racial justice, outrage, community and change are among the themes being expressed by scores of artists. Here is a selection -The NY Times.

“Drinking rosé this year does not feel like the usual sort of blithe summer pastime,” writes Eric Asimov, our wine columnist. The news is heavy, overshadowing any traditional lighthearted pleasures.
But good wine is still good wine. And yes, it’s pink, but that’s not its only redeeming quality. In his monthly Wine School column, he compares three rosés that differ radically from one another. Here are the bottles he suggests.-The NY Times.

My favorite is Ruinart Brut Rosé champagne J.
PHOTOS OF THE DAY

A great white shark as it leaped three metres into the air for its dinner, only for the disappointed beast to find out it was a decoy. Photographer, Ewan Wilson (24) from Cardiff, Wales, was in Mossell Bay, South Africa, when he captured this extraordinary sight. After a four- hour stake out, a sub-adult great white shark suddenly made an appearance only to be sorely disappoibted.
CREDIT: MEDIADRUMIMAGES/EWAN WILSON

A woman climbs at a cave near the village of Koukouli in Epirus region, Greece.
CREDIT: DIMITRIS TOSIDIS/ EPA-EFE/SHUTTERSTOCK

An octopus holds a cleaning brush during a publicity stunt at Berlin’s Sealife aquarium on as the centre prepares to re-open to the public amid the pandemic.
CREDIT: JOHN MACDOUGALL/ AFP VIA GETTY IMAGES

Dancers perform during the 100^th anniversary of the Treaty of Trianon at Heroes’ Square in Budapest, Hungary.
CREDIT: REUTERS/BERNADETT SZABO
Market Closes for June 5th, 2020 

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1883, John Maynard Keynes was born in Cambridge, England. Between World War I and World War II, Keynes devised the theories that led to massive government intervention in economies around the world. His criticisms of free markets, however, did not prevent him from making a small fortune on the stock market.
Canada
By Divya Balji and Michael Bellusci
(Bloomberg) — Canadian stocks posted their best week in about two months, turbocharged by an unexpected rebound in the U.S. and domestic labor market from the depths of the coronavirus shutdowns.
The S&P/TSX Composite Index jumped 2.1% Friday, to close out the week 4.4% higher, its biggest gain since the week of April 10 as Canada added jobs 290,000 jobs in May, surprising economists who had been anticipating more losses last month. The report dovetailed with a U.S. labor report that showed the market defying forecasts for a Depression-style surge in unemployment.
The Canadian dollar joined in the party, gaining about 2.7%. The benchmark 10-year government bond tumbled, sending its yield to the highest since mid-April at 0.726% as the jobs data bolstered optimism for a quick economic recovery amid new bouts of fiscal stimulus. “This whole fear of missing out has hit very dramatically,” David Prince, founder of Harbinger Capital Markets Inc. said on BNN Bloomberg. Investors have shifted away from “the stay-at- home play” into more cyclical or economically sensitive sectors and the trade has just gone “crazy,” he said.
Oil and gas companies were the biggest gainers as commodity traders anticipate OPEC+ will extend production cuts to prop up crude prices. Some of the worst performers this year in Canada were the biggest gainers this week: Baytex Energy doubled, while Shawcor Ltd. jumped 98%.
“Energy stocks are beginning to reflect that the worst is over for the oil price and that optimism is growing on a swifter-than-consensus demand normalization as economies around the world emerge from their lockdown,” said Eric Nuttall, portfolio manager at Ninepoint Partners. “Despite strong month-to-date gains, many oil stocks remain down 50% or more despite entering the year at already near their lowest valuations in history,” he added.
Other big winners that filled out the top 10 on the TSX this week include Methanex Corp., MTY Food Group Inc. and more energy companies like Seven Generations Energy Ltd., Husky Energy Inc. and Secure Energy Services Inc.
The TSX climbed above its 100 daily moving average earlier this week, signaling room for the benchmark to rally further. It’s edging closer to its 200 daily moving average, a feat unseen since the stock market rout in February. Canadian stocks are now about 7% from breaking even for the year, solidifying its bull market attained in April. “My fear is that reality is going to settle in and we won’t be able to go back to business as usual as quickly. What I’m seeing in terms of the industries that are really being suppressed, it is hard to imagine that suddenly they could go from bankruptcy to full-blown expansion. It’s just really hard,“ Prince said.
Here’s what happened this week.
Economy
     Canada added 289,600 jobs in May, blowing away economist projections for a 500,000 loss and indicating the economy is regaining some of its health after Covid-19. The unemployment rate ticked up to 13.7%, a postwar record as people returned to the labor force. That was also less than the 15% forecast.
In the last policy decision under Stephen Poloz, the Bank of Canada left its benchmark interest rate unchanged while upgrading its outlook for second quarter gross domestic product to a less severe contraction. New Governor Tiff Macklem participated as an observer during the deliberations and endorsed the decision. Canada’s residential real estate market is bouncing back from coronavirus shutdowns with home sales and prices rising in Toronto and Vancouver in May from the near freeze-up of activity caused by the pandemic in early spring.
Prime Minister Justin Trudeau unveiled C$2.2 billion ($1.6 billion) in financial support for Canadian municipalities whose revenues have plunged amid Covid-19 lockdowns. –With assistance from Aoyon Ashraf.

By Bloomberg Automation:
     (Bloomberg) — The S&P/TSX Composite rose 2.1 percent at 15,854.07 in Toronto. The move was the biggest since rising 2.9 percent on April 29 and follows the previous session’s decrease of 0.3 percent.
Toronto-Dominion Bank contributed the most to the index gain, increasing 4.2 percent. ShawCor Ltd. had the largest increase, rising 69.9 percent. Today, 172 of 229 shares rose, while 55 fell; 8 of 11 sectors were higher, led by financials stocks.
Insights
* In the past year, the index had a similar or greater gain 14 times. The next day, it declined eight times for an average 4.1  percent and advanced six times for an average 1.8 percent
* So far this week, the index rose 4.4 percent, heading for the biggest advance since the week ended April 10
* This quarter, the index rose 19 percent, heading for the biggest advance in at least 10 years
* The index declined 2.2 percent in the past 52 weeks. The MSCI AC Americas Index gained 12 percent in the same period
* The S&P/TSX Composite is 11.8 percent below its 52-week high on Feb. 20, 2020 and 41.9 percent above its low on March 23, 2020
* S&P/TSX Composite is trading at a price-to-earnings ratio of 19.8 on a trailing basis and 26.1 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.3 percent on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$2.35t
* 30-day price volatility rose to 20.20 percent compared with 19.65 percent in the previous session and the average of 27.50 percent over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 143.1563| 3.1| 25/1
Energy | 92.0465| 4.4| 28/2
Industrials | 43.9518| 2.4| 27/4
Real Estate | 17.1033| 3.5| 22/2
Consumer Discretionary | 15.7245| 2.8| 12/2
Utilities | 12.7209| 1.6| 14/2
Communication Services | 10.9830| 1.2| 7/1
Consumer Staples | 5.2419| 0.8| 8/3
Health Care | -0.0157| 0.0| 4/6
Information Technology | -6.9732| -0.5| 6/4
Materials | -7.7366| -0.4| 19/28
US
By Claire Ballentine and Vildana Hajric
(Bloomberg) — U.S. stocks jumped and Treasuries fell after a jobs report that far surpassed analysts’ forecasts bolstered expectations for the economy to rebound quickly from coronavirus lockdowns.
The S&P 500 Index rose 2.6% and posted a third weekly advance, leaving the gauge up more than 40% from its March low. Benchmark Treasury yields rose to an 11-week high. Oil jumped, gold fell and the dollar slumped following data that showed a drop in unemployment and surge in payrolls last month, signaling the economy is picking up faster than anticipated from the virus-inflicted recession.
The tech-heavy Nasdaq Composite underperformed but still set an intraday record. Airlines, automakers and banks soared, signaling that investors are rotating away from the beneficiaries of the stay-at-home economy and into shares that will do well when more normal activity resumes.
While the unemployment rate at 13.3% is still shockingly high by historic standards, markets are riding a wave of enthusiasm as investors bet on a global economy awash with stimulus. Fiscal and monetary aid measures from Frankfurt and Berlin exceeded expectations this week, and reports showed that Trump administration officials expect to spend as much as $1 trillion in the next round of aid.
The jobs report “is a big surprise and good one,” said Kathy Jones, chief fixed-income strategist for Schwab Center for Financial Research. “All of this is subject to a lot of revision and recalculation, but the trend indicators would suggest that as states reopen we’re getting people back to work and that’s a good sign for the economy.”
With this week’s 4.9% gain, the S&P 500 is close to wiping out its losses for the year, even after the coronavirus pandemic killed more than 100,000 Americans and left many more collecting unemployment. The Nasdaq Composite has climbed almost 10% since the end of December.
“Today was a shocking jobs number — and for the first time this year it was a positive shock,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “Unemployment is still extremely high at 13.3%, but at least it’s coming down.”
Oil posted its sixth weekly gain after OPEC+ reached a tentative agreement to extend record production cuts.
In Europe, airlines, automakers and hotels led gains in equities as investors scooped up beaten-up shares. The Stoxx 600 Index posted its best week in two months. Asian stocks were up more than 5% on the week, led by financial shares.
Here are the major moves in markets:
Stocks
* The S&P 500 Index climbed 2.6% at the close of trading in New York.
* The Stoxx Europe 600 Index rose 2.5%.
* The MSCI Asia Pacific Index increased 0.7%.
* The MSCI Emerging Market Index gained 1.5%.
Currencies
* The Bloomberg Dollar Spot Index fell 0.2%.
* The euro fell 0.4% to $1.1293.
* The British pound rose 0.6% to $1.2666.
* The Japanese yen weakened 0.4% to 109.63 per dollar.
Bonds
* The yield on 10-year Treasuries jumped seven basis points to 0.89%.
* Germany’s 10-year yield increased five basis points to -0.28%.
* Britain’s 10-year yield rose five basis points to 0.35%.
Commodities
* West Texas Intermediate crude increased 5.2% to $39.36 a barrel.
* Gold weakened 1.8% to $1,682.94 an ounce.
–With assistance from Garfield Reynolds, Adam Haigh and Yakob Peterseil.
Have a wonderful weekend everyone.

Be magnificent!
As ever,

Carolann

All the problems we face in the United States today can be traced to an
unenlightened immigration policy on the part of the American Indian.
        -Pat Paulsen, 1927-1997

Now, don’t get me wrong, I think border security is important.
And I have no doubt that the Republican plan will put a stop to the
number-one threat facing America today: illegal cleaning ladies.
                                                            -Bill Maher, b. 1956

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
Toll Free: 1.877.430.5895
Fax: 778.430.5828
www.carolannsteinhoff.com