March/09/2020 Newsletter

Dear Friends,

Tangents: Full moon tonight!
Don’t forget to glance up at the night sky.

Take some encouragement after today’s markets’ response to the collapse in the price of oil over the weekend from what the futures are currently doing.  I’m looking at the futures right now at 4:45 pm ahead of tomorrow’s opening and the futures are presently up, pointing to a rebound in share prices tomorrow. 

Gary and I went to Seattle for the weekend to see a brilliant new opera on Charlie Parker.  For all the talk of an epicenter for Coronavirus, the opera was full, the restaurants were full.  

-from CNN today:
Purim, which celebrates the bravery of Queen Esther, is observed by Jews the world over, with children often dressing in costume. Meantime across India, Hindus mark the start of spring with the colorful festival of Holi. Both begin Monday and end Tuesday. -CNN.

Olympic fire begins to glow
The flame lit at the Temple of Hera begins a one-week relay across Greece on Thursday before it’s handed over to Tokyo organizers. They’re still planning for a complete Games, despite fears over the novel coronavirus

Let them eat … pi!
Saturday’s date is 3.14, which also happens to be the approximate ratio of the circumference of a circle to its diameter, or pi. To celebrate, you could recite pi to the 10,000th digit. Or you could sing along to Billboard’s top Pi Day songs, starting with this classic.

141 BC – Liu Che, posthumously known as Emperor Wu of Han, assumes the throne of the Han Dynasty in China and rules for 54 years. Go to article »

Prince Harry and his wife, Meghan, took part in their final engagement before they decamp for western Canada, and an uncertain new life as semi-royals.
Westminster Abbey, the venue for the couple’s last official ceremony honoring the British Commonwealth, was laden with symbols of the life they are leaving behind: It is where Queen Elizabeth, his grandmother, was crowned in 1953; where Prince William, his brother, was married in 2011; and where 30 kings and queens are buried, going back to 1066. -NYTimes.

PHOTOS OF THE DAY

A line of swimmers takes part in the International Women’s Day Sunrise Swim in Edinburgh, Scotland. For more International Women’s Day.
CREDIT: ANNA MOFFAT/PA

Steam locomotive 60103 The Flying Scotsman makes its way along the Mid Hants Railway’s Watercress line between Ropley and Alton in Hampshire.
CREDIT: ANDREW MATTHEWS/PA WIRE

Artisans walk with bulls made of papier-mache and paste paper, decorated with pain in various shades and filled with hundreds of rockets, crackers and shoes, in Tulpepec, Mexico. The paper bulls are then burned at the International Fair of the Pyrotechnics.
CREDIT: HECTOR ALFARON/AGENCIA PRESS SOUTH/NURPHOTO

Market Closes for March 9^th ,2020 

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1929, just in time to suffer through the worst depression in modern history, the forerunner of the Buenos Aires Stock Exchange was established.

Canada
By Jacqueline Thorpe, Divya Balji and Susanne Barton
(Bloomberg) — Canadian markets were battered on all fronts as the collapse in oil sent shockwaves through a country with one of the biggest exposures to the commodity among the Group of Seven. Stocks cratered more than 10% with the biggest drop since Black Monday in October 1987, the loonie weakened and government bond yields plunged to fresh records as investor pessimism deepened for an economy that barely eked out any growth in the fourth quarter and is already grappling with the coronavirus. The slump in oil will exact another heavy toll on the natural resource-dependent country, which generates about 9% of its gross domestic product from energy and has the biggest exposure to the sector on its stock market at  15%.“The oil price crash will do irreparable damage to the Canadian economy and stock market,” said Ed Moya, a senior market analyst at Oanda Corp. in New York. “Canadians will have to brace for lower prices for the foreseeable future and the oil sector will have to consolidate. Even when virus fears ease, the oil-dependent Canadian economy snapback rally will lag their peers,” he said.
The S&P/TSX Composite Index hit a circuit breaker earlier Monday after sliding almost 9% and fell further to 10% when trading reopened. The benchmark bounced around and eventually closed at 14,514.24. The loonie plunged 1.8% against the greenback as of 4:01 p.m. West Texas Intermediate, the North American benchmark, was down 25%, the biggest descent since 1991, after tumbling as much as 34%. “The Canadian dollar is embattled with risks to already weak economic growth coming from all angles,” Simon Harvey a London-based market analyst at Monex Europe Ltd. and Monex Canada Inc., said by email. “Markets are coming to the realization that rate cuts by the Bank of Canada will soon lose their effectiveness on supporting the economy, especially with the latest risk of a lower oil price for longer.” Harvey sees the loonie falling further away from the C$1.30 area if the oil-price rout is sustained while Bipan Rai, North American head of FX strategy at Canadian Imperial Bank of Commerce expects the C$1.40 to breached in the next two quarters. The loonie “needs to weaken further given the high degree of oil exports as a percentage of Canada’s goods exports,” Rai said. U.S. dollar “bulls may require some patience as price action is overbought, but ‘buy the dip’ is still the right strategy for” the dollar-loonie currency pair. With the Canadian dollar’s correlation to oil prices, it’s bound to keep weakening. “The currencies of any country for which the oil sector is a significant growth generator are having an awful day and won’t stabilize until oil finds a bottom,” said Kit Juckes, a strategist at Societe Generale SA, said in an email Monday.
The loonie “is likely to underperform the Australia and New Zealand dollars for example, as long as oil prices are falling.” The yield on Canada’s 10-year benchmark fell to as low as 0.225% on Monday and the five-year note hit 0.276%, according to Bloomberg data. Traders are now betting on the Bank of Canada, which last week lowered its policy rate to 1.25%, to cut another 50 basis points by its next scheduled meeting in April and another 25 basis points by July.

US
By Claire Ballentine and Vildana Hajric
(Bloomberg) — U.S. stocks plunged more than 7.5% in the worst day on Wall Street since the financial crisis, as a full- blown oil price war rattled financial markets already on edge over the spreading coronavirus. Treasury yields plummeted, crude sank 20% and credit markets buckled. The S&P 500 sank the most since December 2008, the Dow Jones Industrial Average tumbled 2,000 points and small caps lost more than 9% as investors fled risk assets with virus cases surging and the Trump administration so far unwilling to step in to soften the expected economic blow.

In a dramatic day across assets globally:
* All but nine S&P 500 companies were lower Monday, with energy producers routed by 20%. Exxon Mobil and Chevron were down more than 12%. Banks lost 11%, with an ETF that tracks regional banks had for its worst day since 2009. Apple sank 7.9% and Dow Chemical plunged 22%.
* The rout began at the open, with losses reaching 7% four minutes in, triggering NYSE circuit breakers that halted trading for 15 minutes. The markets will close if losses reach 20%. The measure is down almost 19% from its Feb. 19 all-time high, threatening to end the record-long bull market that began 11 years ago to the day.
* Crude tumbled the most since the Gulf War in 1991, after an OPEC+ alliance that had contained global production disintegrated. WTI and Brent slumped by about 25%.
* The 10-year Treasury yield fell below 0.5% before climbing back to 0.57%, and the 30-year yield dropped under 0.9%, taking the whole U.S. yield curve below 1% for the first time in history.
* The Stoxx Europe 600 Index fell the most since 2016 on trading volumes exceeding three times the 100-day average. Several of the region’s gauges look set to enter bear markets. Japanese stocks entered one earlier when they tumbled almost 6%.
* A U.S. derivatives index that measures the perceived risk of corporate credit surged by the most since Lehman Brothers collapsed.
* Exchange rates including the yen saw sharp moves as traders struggled to establish where new ranges might be. The yen was up about 3% versus the dollar while the euro and Swiss franc both strengthened more than 1%.

The oil-price crash threatened to upend politics and budgets around the world, exacerbate strains in high-yield credit and add pressure on central bankers trying to avert a recession. It typically would have proved a boon to consumers, but the coronavirus is increasingly keeping them at home. Investors are clamoring for some policy response from the Trump administration, which has so far signaled that it believes the spread is under control. “The market was poised and vulnerable to this volatility and crude oil has just exacerbated it,” said Randy Frederick, vice president of trading and derivatives for Schwab Center for Financial Research. “The coronavirus itself has been the main cause of the correction, but now it’s being exaggerated even further.” President Donald Trump and his economic team will weigh measures later Monday to contain the fallout from coronavirus and a sudden crash in oil prices, with funding for a temporary expansion of paid sick leave and aid for battered U.S. energy producers among possible steps. A Bloomberg gauge of financial stress for the U.S. has deteriorated at the fastest pace since the great financial crisis. “When there’s panic, there tends not to be accurate pricing of assets,” Kristina Hooper, Invesco’s chief global market strategist, said in an interview at Bloomberg’s New York headquarters. “The sell-off today to me is emblematic of that. It really is a knee-jerk reaction to what’s happened over the weekend.”

Here are some key events coming up:
* The European Central Bank’s policy decision comes Thursday amid expectations it may ease policy.
* The U.K. Chancellor of the Exchequer unveils the government’s 2020 budget on Wednesday.
* The U.S. core consumer price index, due Wednesday, is expected to remain subdued in February.

These are the main moves in markets:
Stocks
The S&P 500 Index sank 7.6% to 2,745.92 as of 4 p.m. New York time, the lowest since June.
The Dow Jones Industrial Average sank 7.7%.
The Nasdaq Composite Index sank 6.8%.
The MSCI All-Country World Index sank 5.6% to 485.98, the lowest in more than 13 months on the biggest tumble in more than 11 years.
Currencies
The Bloomberg Dollar Spot Index decreased 0.3%.
The euro surged 1.6% to $1.1464, the strongest in more than 13 months on the biggest jump in almost four years.
The Japanese yen appreciated 3.2% to 102.13 per dollar, the strongest in more than three years on the largest surge in almost four years.
The British pound gained 0.6% to $1.3125, reaching the strongest in more than five weeks on its fifth consecutive advance.
Bonds
The yield on 10-year Treasuries sank 21 basis points to 0.55%, the lowest on record with the largest tumble in more than eight years. The yield on 30-year Treasuries fell 31 basis points to 0.98%, the lowest on record with the biggest fall on record. Germany’s 10-year yield decreased 15 basis points to -0.856%, hitting the lowest on record with its eighth straight decline. Britain’s 10-year yield dipped seven basis points to 0.159%, reaching the lowest on record with its 15th straight decline.
Commodities
Gold futures rose 0.2% to $1,676.60 an ounce. West Texas Intermediate crude fell 25% to $30.96 a barrel, the most since 1991.
–With assistance from Todd White.

Have a great night.

Be magnificent!
As ever,

Carolann

You can’t go back and change the beginning, but you can start where you are and change the ending.
-C.S. Lewis, 1898-1963

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