March 23, 2016 Newsletter

Dear Friends,

Tangents:

Editorial in The New York Times yesterday:

Elegant Bird Discovers Junk Food

By THE EDITORIAL BOARD MARCH 22, 2016

A new study shows that the glorious annual migration of white storks from Europe to Africa is being disrupted by the birds’ growing addiction to junk food in the garbage dumps below their flight path. Thousands no longer make the crossing for the winter, preferring to build year-round nests at rubbish pits in Spain and Portugal where they conserve energy and have an easier time breeding and defending their nests.

The storks have learned to feast on readily available hamburger fragments, pizza scraps and assorted leftovers from overfed humans, rather than fly thousands of miles more for their traditional diet of frogs, beetles and grasshoppers in sub-Saharan Africa.

“We’ve shown how reliant they are on this junk food,” noted Aldina Franco, a conservation ecologist with the University of East Anglia in England, which published the study last week in the journal Movement Ecology. “I couldn’t eat while I was working there,” Dr. Franco said in describing the work at garbage dumps where storks flocked down as each truckload of garbage arrived offering rotting fish, animal offal and other tidbits.

The change in storks’ migration was pinned down by GPS devices attached to four dozen birds, showing how upward of 14,000 of them now stay all winter at Portuguese dumps where there were none 30 years ago.

Every weekday, get thought-provoking commentary from Op-Ed columnists, The Times editorial board and contributing writers from around the world.

The birds preferred the Iberian Peninsula route because there are stronger updrafts over land than over the Mediterranean, making the long flight to Africa safer and less laborious. The trip became a good deal less arduous for those birds that spotted fields of fast food en route.

While the study demonstrates the storks’ adaptability to humans, this talent will soon be further tested. The European Union, busy evolving, like the storks, plans new regulations for garbage disposal to take effect in the next few years. Open refuse pits will be replaced by enclosed composting factories, detouring the storks once more.

Even so, white storks, so conspicuous with their long red legs and six-foot wing spans, are in no danger of losing their special place with humans. Centuries ago, myths were created about the stork’s role in delivering babies, a tale that lets parents avoid discussing the facts of life with youngsters. Or, as Cole Porter wrote in “It’s De-Lovely”: “An absurd bird with a bundle hung on his nose — ‘Get baby clo’es.’

The new Liberal government delivered its first federal budget on March 22 in Ottawa.

Following is an overview of how some of the budget items relate to investments and taxes:

Prime Minister Justin Trudeau spent heavily in this budget, leading to a projected $29.4-billion shortfall this year.

• OAS eligibility returns to age 65 – great news for folks born April 1, 1958 or later.
• The Canada Child Benefit replaces the Canada Child Tax Benefit and the Universal Child Care Benefit. The CCB is tax-free, unlike before, and government says nine out of 10 families will receive more in child benefits than under the current system.
• The promised small business tax cut has been frozen at 10.5%. If you’re a business owner, let’s talk about other ways to save tax.
• Special tax treatment for insurance policy transfers to corporations. If you own a business and were planning on doing such a transfer, we should revisit that strategy, as it’s no longer tax-advantaged.
• The Children’s Fitness and Arts Tax Credits will be phased out by 2017.
• There will no longer be education and textbook tax credits as of January 1, 2017, but the impact should be relatively minor.

PHOTOS OF THE DAY

Bjorn smiles as he poses with a Owl butterfly during an event to launch the Sensational Butterflies exhibition at the Natural History Museum in London on Wednesday. Dylan Martinez/Reuters

A student with her face smeared in colored powder, celebrates Holi at a university campus in Chandigarh, India, on Wednesday. Ajay Verma/Reuters

Market Closes for March 23^rd, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Marx’s great achievement was to place the system of capitalism on the defensive. –Charles A. Madison,

Canada

By Jiayue Huang

     (Bloomberg) — Canadian stocks retreated for a second day as falling commodity prices dragged down shares in energy and raw-materials producers.

     The Standard & Poor’s/TSX Composite Index fell 114.01 points, or 0.8 percent, to 13,379.48 at 4 p.m. in Toronto. The benchmark gauge has gained 2.8 percent this year, erasing a decline that swelled to as much as 9 percent in January. It is the second-best performer this year, after New Zealand, among developed markets tracked by Bloomberg.

     Trading volume was 14 percent below the 30-day average at the close, continuing a stretch of light activity during the holiday-shortened week that has already brought two of the slowest days this year.

     Sinking commodity prices from oil to gold to copper hit the resource-rich index Wednesday, as a rally in the U.S. dollar sent assets denominated in the greenback tumbling. The Bloomberg Americas Mining Index slumped 6.3 percent, the most since 2013.

     Commodity producers in the Canadian benchmark lost 4.6 percent to cap the biggest one-day loss since December 14. Only four stocks in the 45-member materials sector rose Wednesday, with First Quantum Minerals Ltd. plunging 16 percent, marking the worst slump in more than seven years. Teck Resources Ltd. tumbled 13 percent, the most since 2009.

     Canadian stocks have rebounded 13 percent after hitting a 2 1/2-year low in January and notching one of the worst declines among developed markets last year. The index is now trading at 21 times earnings, about 15 percent more expensive than the valuation of the U.S. equity benchmark, the Standard and Poor’s 500 Index, data compiled by Bloomberg show.

     Energy shares also faltered, as oil prices slipped below $40 a barrel in New York. Canadian Natural Resources Ltd. lost 3.5 percent. MEG Energy Corp. fell 12 percent, while Kelt Exploration Ltd. lost 9.8 percent.

     Health-care stocks rose 3.4 percent, as Valeant Pharmaceuticals International Inc. added 6.5 percent, stretching its rally to a third day. Briefly the largest company in Canada by market capitalization last year, Valeant has lost almost 90 percent of its value from an August peak. The company has rebounded 26 percent in three days.

     Amaya Inc., the world’s largest publicly held online poker company, slumped 21 percent. Chief Executive Officer David Baazov has been charged in an insider trading probe by Quebec securities regulators.

     Boyd Group Income Fund surged 12 percent to an all-time- high, after the Winnipeg, Manitoba-based company reported quarterly sales that topped analysts’ estimates.

US

By Manisha Jha and Anna-Louise Jackson

     (Bloomberg) — U.S. stocks declined in thin trading as commodity shares followed crude prices lower, while investors awaited further clues on the economy and direction of monetary policy.

     Equities may be losing momentum after a five-week rally erased the worst start to a year ever. Before today’s slide, the Standard & Poor’s 500 Index barely budged in the two prior sessions amid the lightest trading in 2016, and has gone without a 1 percent move in either direction for eight days, the longest in seven months. About 6.8 billion shares traded hands on U.S. exchanges Wednesday, 21 percent below the 2016 average.

     The S&P 500 fell 0.6 percent to 2,036.71 at 4 p.m. in New York, below its break-even level for the year. The Dow Jones Industrial Average lost 79.98 points, or 0.5 percent, to 17,502.59. The Nasdaq Composite Index decreased 1.1 percent, ending the lengthiest advance in 11 months. It’s a holiday- shortened week with markets closed on Good Friday.

     “Markets are taking a breather, waiting for a clearer picture of how the economy will play out in the first half,” said Hugh Grieves, who runs the 145 million-pound ($206 million) U.S. Opportunities Fund at Miton Group in London. “Investors have got over immediate recession fears but remain nervous ahead of the first-quarter earnings season.”

     West Texas Intermediate crude declined 4 percent, the most in six weeks, as the dollar gained and a government report showed rising oil stockpiles kept supplies at the highest level in more than eight decades.

     That sent energy producers lower for a third day and raw- materials slipped amid the dollar’s longest rally in a month. Nike Inc. dropped 3.8 percent after its annual forecast missed analysts’ estimates. Amazon.com Inc. advanced 1.6 percent to buoy a group of retailers, while UnitedHealth Group Inc. and Johnson & Johnson gained at least 1 percent to help limit the Dow’s losses.

     The main U.S. equity benchmark has rebounded more than 11 percent from a 22-month low last month, as oil prices firmed, economic data improved and central banks continued to signal a willingness to bolster growth. The S&P 500 dropped 11 percent in the first six weeks of the year as tumbling crude amplified concern that a slowdown in China would drag down global growth. The gauge is heading for its biggest monthly advance since October, rising 5.4 percent.

     An expected tumble in first-quarter corporate profits may be one factor curbing the rebound in stocks. The earnings season looms with Alcoa Inc. unofficially kicking off the period when it reports results on April 11. Profit at S&P 500 companies probably fell 9.4 percent in the quarter, according to analysts’ estimates, worse than forecasts two months ago that saw a 2.5 percent drop.

     Investor focus also remains locked on the Federal Reserve, which last week reduced its growth forecasts and indicated a slower pace of interest-rate increases. Policy makers continue to stress their rate decisions depend on progress in data, and report today showed purchases of new homes climbed in February for the fourth time in the last five months, indicating residential construction will remain a source of support for the economy.

     Traders are pricing in a 38 percent probability for a boost in borrowing costs at the central bank’s June meeting, in line with the level after last week’s Fed meeting. Odds had briefly crept higher in the past two days amid some more hawkish commentary from Fed officials this week.

     St. Louis Fed President James Bullard said in an interview with Bloomberg today a decline in joblessness below the natural rate may force policy makers to raise rates faster in the future. Chicago Fed President Charles Evans said yesterday two rate increases this year are “not at all unreasonable.”

     “Nobody’s really looking to make a substantial bet at this point,” said Brad McMillan, chief investment officer of Commonwealth Financial Network in Waltham, Massachusetts, which oversees $100 billion. “The big story over the past couple months has been an absolute loss of confidence and then all of a sudden the return of that confidence. The market’s continuing to struggle with the implications of the Fed.”

     The Chicago Board Options Exchange Volatility Index rose 5.4 percent Wednesday to 14.94, marking back-to-back gains for the first time in two weeks. The measure of market turbulence known as the VIX reached a seven-month low on Monday.

     Eight of the S&P 500’s 10 main industries sank, with energy companies dropping 2.1 percent, the most in two weeks, while raw-materials shares slipped 1.2 percent. Utilities rose 0.7 percent, lifted by regulatory approval on an industry merger, and consumer staples edged higher.

     Chevron Corp. fell 2 percent to extend declines to a third day, the longest in two months. Marathon Oil Corp. and Devon Energy Corp. dropped at least 8 percent, among the biggest losers in the benchmark index. Transocean Ltd. slid 7.3 percent, taking its four-day retreat to 21 percent.

     Copper prices had the biggest drop in two weeks, sinking miner Freeport-McMoRan Inc. 11 percent, the steepest retreat since March 8. Still the shares are up 28 percent this month after soaring 66 percent in February. Newmont Mining Corp. sank 8.8 percent, the biggest since July as gold also succumbed to the stronger dollar. Alcoa lost 5.4 percent.

     Banks declined for a second day to weigh on the S&P 500, with Citigroup Inc. down 2.3 percent and Comerica Inc. losing 2 percent. Both stocks are still up more than 21 percent since Feb. 11.

     Vertex Pharmaceuticals Inc. led a slide among drugmakers, falling 7.6 percent as the group ended the strongest three-day climb in a month. Gilead Sciences Inc. fell 3.9 percent, the most in seven weeks, after losing a patent claim to Merck & Co. The Nasdaq Biotechnology Index sank 3.4 percent, reversing more than half of a 6.4 percent surge in the prior three sessions.

     Among shares moving on corporate news, Pepco Holdings Inc. jumped as much as 28 percent after Exelon Corp.’s proposed $6.8 billion takeover of the power company was approved by District of Columbia regulators, clearing the way for the companies to form the nation’s biggest utility.

     Virgin America Inc. climbed 13 percent, the largest one-day increase in 15 months, after Bloomberg reported the airline backed by U.K. billionaire Richard Branson, is reaching out to potential buyers about a sale of part or all of the company, according to people with knowledge of the matter. Yum! Brands Inc. advanced as much as 3.2 percent after a report said it’s holding talks on potentially selling a stake in its China unit.

Have a wonderful evening everyone.

Be magnificent!
 

Why is there this division between man and man, between race and race, culture against culture, one series of ideologies set one against another?  Why?

Why is there this separation?

Krishnamurti

As ever,

Carolann

This is the gift – to have the wonderful capacity to appreciate again and again,

freshly and naively, the basic goods of life, with awe, pleasure, wonder, and

even ecstasy.

                            -Abraham Maslow, 1908-1970

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