March 12, 2020 Newsletter

Dear Friends,

Tangents:
The markets did not respond well today to Donald Trump’s address to the nation from the Oval Office last night.
His national address on Wednesday night failed to unify or reassure a nation on edge, our chief White House correspondent writes in an analysis.-The New York Times.

This has created a buying opportunity in my view.  Many blue-chip, dividend paying, excellent businesses are currently trading at less than 5X earnings in the US.
In Canada, with the sharp downturn in the share prices of the Canadian Banks, CIBC is now yielding 8.10%/annum whereas the yield on the 10-year Canada bond is 0.60% – yes you get 60 cents per year for the next 10 years on a $100 investment, before tax and before inflation.  CIBC wins this argument.  What investors are missing here is that this is not a financial crises like 2008 – it is a pandemic caused by a virus that will be a temporary set back to the economy until it is contained.

Here are some TV shows to watch if you just want to feel happy right now 
And yes, it is completely OK to crave some escape. -CNN.

Ancient shell shows days were shorter 70 million years ago.

We’re better equipped to look for extraterrestrial life than ever.

PHOTOS OF THE DAY

Visitors walk along the long wooden U Bein Bridge that connects the two banks of Taungthaman Lake as  the sun sets in Mandalay, central Myanmar.
CREDIT: THEIN ZAW/AP

Homer Homer by Cool Shit (Dave Glass) is seen during Sculpture by the Sea at Cottesloe Beach in Perth, Australia.
CREDIT: PAUL KANE/GETTY IMAGES

Indian revellers dance during celebrations to mark Holi, the Hindu festival of colours in Prayagraj, India.
CREDIT: RAJESH KUMAR SINGH/ AP

Market Closes for March 12^th ,2020 

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1986, daily trading volume on the New York Stock Exchange exceeded 200 million for the first time, as 210 million shares changed hands.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 12.3 percent, or 1,761.64 to 12,508.45 in Toronto. The move was the biggest since falling 25.5 percent on May 1, 1940. Today, financials stocks led the market lower, as all sectors lost; 229 of 230 shares fell, while 1 rose. Enbridge Inc. contributed the most to the index decline, decreasing 16.5 percent. Chemtrade Logistics Income Fund had the largest drop, falling 34.4 percent.
Insights
* So far this week, the index fell 23 percent, heading for the biggest decline in at least 10 years
* This quarter, the index fell 27 percent, heading for the biggest decline in at least 10 years
* The index declined 22 percent in the past 52 weeks. The MSCI AC Americas Index lost 13 percent in the same period
* The S&P/TSX Composite is 30.4 percent below its 52-week high on Feb. 20, 2020 and 0.5 percent above its low on March 12, 2020
* The S&P/TSX Composite is down 24 percent in the past 5 days and fell 30 percent in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 12.5 on a trailing basis and 11.5 times estimated earnings of its members for the coming year
* The index’s dividend yield is 4.2 percent on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$2.18t
* 30-day price volatility rose to 54.70 percent compared with 40.07 percent in the previous session and the average of 16.97
percent over the past month
================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================
Financials | -576.6485| -12.8| 0/26
Energy | -351.3307| -18.1| 0/30
Materials | -167.7306| -10.4| 0/47
Industrials | -159.6775| -9.4| 0/31
Communication Services| -112.0202| -12.7| 0/8
Utilities | -98.9108| -12.7| 0/16
Information Technology| -85.1677| -8.8| 0/10
Consumer Staples | -69.2315| -10.9| 0/11
Consumer Discretionary| -66.3277| -11.9| 1/15
Real Estate | -53.6026| -9.6| 0/25
Health Care | -20.9734| -14.2| 0/10
US
By Claire Ballentine, Vildana Hajric and Sarah Ponczek
(Bloomberg) — In a week that brought the wildest market swings since the financial crisis, Thursday hammered investors with something crazier — a 10% drop in the Dow, the end of the longest bull market on record and the biggest sell-off since 1987’s Black Monday. President Donald Trump finally offered some attempt at fiscal stimulus, but the measures fell flat. The European Central Bank took a stab by easing capital constraints and boosting liquidity, and losses only deepened. Not even an unprecedented plan for $5 trillion in bond-buying from the Federal Reserve could mollify investors rattled by the growing likelihood that the coronavirus will plunge the global economy into recession. At the end of the day, U.S. stocks smoldered 27% below records set barely three weeks ago. Europe’s benchmark index suffered its worst day in history. Brazil’s Ibovespa tumbled as much as 20% at one point, extending this year’s loss to almost 50% in dollar terms. Canada’s main gauge was off more than 12%, it’s worst day since 1940. Ten-year Treasury yields erased declines and inched higher as policy makers’ liquidity pledge recalled the quantitative easing used during the financial crisis.
     Oil and precious metals fell, with palladium sinking more than 20%. The S&P 500 wiped out all its gains since the end of 2018. Now investors are trying to guess at the effectiveness of policy makers’ measures to curb the spread of the coronavirus and limit its economic damage.Trump’s travel ban and tepid fiscal measures failed to impress most observers. Spirits were further damped by new bans on public gatherings in the U.S. and professional sports leagues’ move to suspend operations. “Markets likely need more. More innovation from central banks, more targeted help for the most vulnerable parts of the economy — and action from fiscal authorities to stop this transitory shock from developing into a more prolonged insolvency crisis,” said Seema Shah, a global investment strategist for Principal Global Investors. “Emotion is now driving markets.”
On another bruising day across markets:
* The S&P 500, Nasdaq Composite and Nasdaq 100 indexes are all in a bear market now, with losses from February closing records extending well past 20%.
* The slump triggered the second 15-minute trading halt this week shortly after the U.S. open.
* The MSCI All-Country World Index extended losses to enter bear-market territory.
* The cost of insuring debt issued by Europe’s investment grade companies surged to the highest since 2016.
* Japanese stocks closed more than 4% lower even after another liquidity pledge from the country’s central bank. Australian shares sunk deeper into a bear market despite a stimulus plan there.
* Oil extended losses past 5%. Bitcoin took a dive. Gold fell below $1,600 an ounce.

More bad news about the impact of the coronavirus further sapped investor spirits. The leading U.S. infectious-disease official said the testing system in the country is “a failing.” The European Union warned the sickness threatens to exceed health-care capacity across the region “in a few weeks or even days.” The National Hockey League followed the National Basketball Association’s lead and suspended its season, while Major League Baseball said opening day would be delayed. “We need to see what is effectively a ‘declaration of war’ against the virus and full support to offset the economic damage that war will cost,” said Peter Tchir, head of macro strategy at Academy Securities LLC. “Whatever has gone on this week, it’s not a liquidity crunch.” Meanwhile, signs that companies in the hardest-hit industries were drawing down credit lines to battle the effects of the virus on their businesses added to anxiety. “The risks have definitely risen,” said Chris Gaffney, president of world markets at TIAA. “The question is how long will this last and I don’t think anybody can predict that at this point.”
These are the main moves in markets:
Stocks
* The S&P 500 Index declined 9.5% at the close of trading in New York; the Dow Jones Industrial Average lost 10%.
* The Stoxx Europe 600 Index fell 11%.
* The MSCI Asia Pacific Index dipped 5.4%.
* The MSCI Emerging Market Index sank 6.6%.
Currencies
* The Bloomberg Dollar Spot Index gained 1.1%.
* The euro weakened 0.6% $1.1204.
* The Japanese yen fell 0.5% to 105.1 per dollar.
Bonds
* The yield on 10-year Treasuries rose one basis point to 0.88%.
* Germany’s 10-year yield fell one basis point to -0.75%.
* Britain’s 10-year yield declined three basis points to 0.26%.
Commodities
* West Texas Intermediate crude declined 5.8% to $31.07 a barrel.
* Gold weakened 4% to $1,569.79 an ounce.

–With assistance from Sophie Caronello, Min Jeong Lee, Adam Haigh and Anchalee Worrachate.
Have a great night.

Be magnificent!
As ever,

Carolann

One of the lessons of history is that nothing is often
a good thing to do and always a clever thing to say.
                      -Will Durant,1885-1981

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