March 13, 2017 Newsletter

Dear Friends,

Tangents: 

Commonwealth Day today.
Planet Uranus was discovered on March 13, 1781.

Out beyond ideas of wrongdoing
RUMI

Out beyond ideas of wrongdoing and rightdoing,
there is a field.  I’ll meet you there.

When the soul lies down in that grass,
the world is too full to talk about it.
Ideas, language, even the phrase each other
doesn’t make any sense.
PHOTOS OF THE DAY

Following a Commonwealth Day service at Westminster Abbey, Prince Harry smiles with school children as he walks through Dean’s Yard in London, Monday. Kirsty Wigglesworth/AP

A couple observe a rain storm over Sydney, Australia, as a supercell hits Australia’s most populous city on Monday. Jason Reed/Reuters

A woman demonstrates AquaCAVE, a system that augments swimming environment with immersive surrounded-screen virtual reality to enhance the swimming experience, during an demonstration event organized by Sony Corp.’s human augmentation research project with the University of Tokyo, in Tokyo, Japan on Monday. Issei Kato/Reuters
Market Closes for March 13^th, 2017

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Oliver Renick
     (Bloomberg) — Canadian stocks climbed as gains in materials stocks and financial companies offset declines in consumer shares.
     The S&P/TSX Composite Index rose 0.3 percent to 15,549.03 at 11:09 a.m. in Toronto. The measure declined 0.7 percent last week, reducing its gain in 2017 to 1.7 percent. Energy companies were little changed Monday as crude fell for a sixth straight session. Toronto-Dominion Bank climbed 2 percent as Bank of Montreal analysts said concern over reports of illegal sales practices at the bank may be an overreaction.
* Seven of 11 sectors higher in early trading with phone companies down 0.9% for biggest drop
* Materials companies 0.6% higher as Bloomberg Commodity Index up 0.2%; poised to snap five days of losses
* Energy shares little changed with crude oil down 0.1%
* DH Corp up 8.9% as Vista Equity Partners LLC says it will buy the company that values the financial services provider at C$2.73 billion
* IAMGOLD Corp and New Gold Inc. down at least 3.5% for biggest losses in index as gold falls for fifth time in six sessions.
US
By Oliver Renick
     (Bloomberg) — U.S. stocks held steady as they kicked off a week dominated by central-bank updates including the Federal Reserve’s rate decision.
     The S&P 500 added less than 0.1 percent to 2,373.47 at 4 p.m. in New York. The benchmark ended a streak of six consecutive weekly gains last week, falling 0.4 percent and paring this year’s gain to 6 percent. The Dow Jones Industrial Average lost 0.1 percent to 20,881.48 on Monday.
* Materials stocks lead market higher with a 0.3% gain as Bloomberg Commodity Index gains for first time in six sessions
* Financial stocks pare losses, close less than 0.1% higher
* Utility stocks up 0.2%, real estate shares little changed as 10-year Yield adds four basis points
* 6.2 billion shares traded hands — lowest volume in more than a month
* VIX down three points to 11.35
* “Fed officials have sent clear signals about their intention to raise the federal funds rate at the March FOMC meeting,” according to Kevin Logan, chief U.S. economist at HSBC. “Yellen may also take this opportunity to discuss the outlook for the Fed’s balance sheet policy”
* Central bank updates from Japan, the U.K. and Switzerland are also due this week
* ECONOMY:
** Fed funds futures traders are certain the Fed will hike rates at its meeting on Wednesday
* EARNINGS:
** None after-market Monday or pre-market Tuesday
* In Europe, gains in commodity producers and auto parts makers lifted stocks; Stoxx Europe 600 Index adds 0.4% for the fourth straight advance
By Lu Wang
     (Bloomberg) — The alarm bells over potential bouts of stock volatility surrounding the Federal Reserve’s anticipated interest rate hike this week may be misplaced.
     The current tranquility in U.S. equities is unprecedented by some measures, but it’s in line with Fed tightenings since the early 1990s, where the S&P 500 Index has shown growing stability about half way into a cycle, according to a research report on March 8 from Bank of America Corp. rates strategists led by Carol Zhang and Vadim Iaralov.
     The monetary environment looks good for stocks, the strategists wrote, as the central bank is all but guaranteed to raise rates Wednesday, following an increase in December, and with more hikes likely to come this year.
     “Based on where we’re historically, the risk is falling,’’ Iaralov said by phone. “Part of it is the aligning of expectations. It’s like you get on a train and you’re half way to your destination, it’s easier to expect what’s going to happen. When you arrive or are trying to catch a train, things can be a little different.’’
     That’s how it has occurred this time. After posting three weeks of at least a 1.5 percent drop in the first seven weeks following the initial rate hike in December 2015, the S&P 500 has since posted only three declines of that size. In total, the number of weekly pullbacks was less than all others at this point in a hiking cycle.
     “Because the correlation between the stock market and bond yields is unusually positive today, even though the Fed is finally starting to increase interest rates, rather than stumble soon, the stock market may just continue to rumble,” Jim Paulsen, chief investment officer at Wells Fargo Capital Management, wrote in a note Monday.
     Not everyone agrees that the equity market can remain calm following another rate hike. Last week, UBS Group AG strategist Julian Emanuel cited the Fed as one likely catalyst for a selloff that may send the S&P 500 to as low as 2,192. MKM Holdings derivatives strategist Jim Strugger urged investors to use options to hedge against potential losses in stocks.
     “It would be a mistake to pooh-pooh the impact of Fed tightening surprising markets with its pace and magnitude,” Strugger wrote in a note last week.
     Options traders are gearing up for rising volatility ahead of the meeting of Fed policy makers tomorrow and Wednesday. The Credit Suisse Fear Barometer, which measures the relative cost of S&P 500 bearish options over bullish ones three months from now, jumped 36 percent last week, the most since 1997.
     The stock market has shown little signs of budging even as the options-implied probability of a Wednesday Fed hike increased to a virtual certainty from about 50 percent at the end of February. The S&P 500 has gone without a 1 percent decline for 104 days, the longest stretch since 1995, data compiled by Bloomberg show.
     “The equity market has grown more comfortable over time,” the Bank of America strategists wrote.

Have a wonderful evening everyone.

Be magnificent!

The human soul travels from the law to love,
from discipline to freedom,
from the moral plane to the spiritual plane.
Rabindranath Tagore

As ever,

Carolann

It is a funny thing about life; if you refuse to accept anything but the best, you very often get it.
                                                                             -W. Somerset Maugham, 1874-1965

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

Tel: 778.430.5808
(C): 250.881.0801
Toll Free: 1.877.430.5895
Fax: 778.430.5828
www.carolannsteinhoff.com