March 30, 2016 Newsletter

Dear Friends,

Tangents:

March 30^th, 1858: Pencil patented.

1853 – Vincent Van Gogh was born.

1945 – Eric Clapton was born.

On March 30, 1981, President Reagan was shot and seriously injured outside a Washington, D.C., hotel by John W. Hinckley Jr. Also wounded were White House news secretary James Brady, a Secret Service agent and a District of Columbia police officer.

Canada’s first female Supreme Court Justice – Mar 30, 1983

Bertha Wilson was sworn in as Canada’s first female Supreme Court Justice. She was appointed to the Ontario Court of Appeal in 1975, where she captured public attention through her imaginative and humane decisions in cases involving human rights, ethnic and sexual discrimination, matrimonial property and child custody. Wilson was named to the Court by Prime Minister Pierre Trudeau just 17 days before the Charter of Rights and Freedoms was enacted.

Also on this day, in 1921, Virginia Woolf wrote in her Diary, at Zennor:

This is the last evening, and Leonard is packing, and I’m not in the mood for writing, but feel superstitiously that I should like to read something actually written in Cornwall.  By looking over my left shoulder I see gorse yellow against the Atlantic blue.  And we’ve been lying on the Gurnard’s head, on beds of samphire among grey rocks with buttons of yellow lichen on them.  You look down onto the semi-transparent water – the waves all scrambled into white round the rocks – gulls swaying on bits of seaweed – rocks now dry now drenched with white waterfalls pouring down crevices.  We took a rabbit path round the cliff, and I find myself a little shakier than I used to be.  Still however maintaining without force to my conscience that this is the loveliest place in the world.

PHOTOS OF THE DAY

A man carries loaves of baguette near the Eiffel Tower in Paris on Wednesday. Philippe Wojazer/Reuters

A visitor takes a picture of a woman with blooming cherry blossoms as background at a park in Tokyo, Wednesday. Tens of thousands of people will are expected to show up at the park to enjoy the blossoms. Eugene Hoshiko/AP

Market Closes for March 30^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose a third day, as energy producers and the nation’s largest lenders advanced and investors weighed better-than-expected earnings from Dollarama Inc.

     The Standard & Poor’s/TSX Composite Index rose 0.6 percent to 13,503.98 at 4 p.m. in Toronto, boosting gains to 1.1 percent during a three-day rally. The Canadian benchmark equity gauge is on track for a second straight month of gains, something it hasn’t accomplished since February 2015. The S&P/TSX is also up 3.8 percent this year and is one of the best-performing developed markets in the world trailing only New Zealand. 

     Energy producers and banks contributed the most to gains out of 10 industries in the S&P/TSX. Gold producers slipped 1.8 percent as the price of the metal gave back some of its gains after Federal Reserve Chair Janet Yellen’s speech yesterday voiced caution on the pace of interest rate increases.

     The broader gauge now trades at 21.5 times earnings, about 15 percent more expensive than the valuation of the U.S. equity benchmark, the Standard & Poor’s 500 Index, data compiled by Bloomberg show. 

     Crude ended the day near $38 a barrel as the dollar’s loss eased. Government data showed U.S. crude supplies rose, keeping stockpiles at the highest level since 1930. Crude’s rebound from a 12-year low last month has stalled somewhat as investors await the results of upcoming talks among OPEC producers in April on a possible output freeze. Pipeline operators Enbridge Inc. and TransCanada Corp. added at least 2 percent to lead energy stocks higher.

     Dollarama jumped 7.5 percent, the most in almost two years, after the retailer posted fourth-quarter earnings ahead of analysts’ estimates. Dollarama has also appointed Neil Rossy as chief executive officer effective May 1, replacing Larry Rossy, who will remain as executive chairman.

     Bombardier Inc. added 1.5 percent after Canadian Finance Minister Bill Morneau said the government is still weighing aid for the aerospace manufacturer. In an interview with Bloomberg Television’s Erik Schatzker, Morneau said there’s no exact timeline for aid and the government is still working on its “due diligence.”

     Valeant Pharmaceuticals International Inc. retreated for a fourth day, losing 7.2 percent. The drugmaker under fire with investors, U.S. regulators and lawmakers for its business practices is offering lenders a one-time fee and extra interest on its loans in exchange for waiving a default caused by a delayed earnings filing, according to people with knowledge of the matter.

US

By Joseph Ciolli

     (Bloomberg) — U.S. stocks rose, extending to the highest levels this year, as central bankers continued to spur optimism amid assurances that they will act to stave off a global downturn.

     The Standard & Poor’s 500 Index climbed for a third day after yesterday posting the strongest increase in two weeks as Federal Reserve Chair Janet Yellen signaled officials will be cautious in raising interest rates due to heightened economic risks overseas. The dollar headed for its steepest monthly drop since 2010. Apple Inc. rallied to a three-month high, boosting technology shares, while banks rose for the first time in six days.

     The S&P 500 added 0.4 percent to 2,063.95 at 4 p.m. in New York, pushing its 2016 gain to 1 percent. The Dow Jones Industrial Average climbed 83.55 points, or 0.5 percent, to 17,716.66. The Nasdaq Composite Index increased 0.5 percent to close above its average price during the past 200 days for the first time this year. About 6.6 billion shares traded hands on U.S. exchanges, 22 percent below the 2016 daily average.

     “We’re seeing a follow-through from yesterday’s strength following Yellen’s comments,” said Terry Morris, a senior equity manager who helps oversee about $3.2 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co. “She backed off any hawkishness she had — it was a complete dovish story, which the markets wanted, and they’ve responded. Now we have some important data coming up later this week, and earnings are right around the corner.”

     The S&P 500 has climbed nearly 13 percent from a 22-month low on Feb. 11, as crude prices rebounded from their lowest in 12 years and central bankers from Europe to Japan and the U.S. signaled they will continue efforts to support growth, calming concerns about a slowdown in the global economy. The gauge erased its 2016 decline and is heading for a second quarterly advance. It has risen 6.8 percent in March, set for the best month since October.

     Traders are pricing in no possibility of an April rate boost following Yellen’s comments, while the chances for a June increase have fallen to about 22 percent from 46 percent a week ago. December is now the first month with at least even odds of higher borrowing costs. Despite those signals from the market, Chicago Fed President Charles Evans said today the economy will probably be strong enough to justify two increases in 2016.

     Policy makers have emphasized that progress in economic data will steer their rate decisions. A report today showed companies in the U.S. added 200,000 workers to their payrolls in March, slightly above the forecast of economists surveyed by Bloomberg. The government’s monthly jobs report due Friday is predicted to show a 205,000 gain with the unemployment rate holding at 4.9 percent. A measure of manufacturing activity is also set for Friday.                          

     “Slow hikes are key for markets at the moment,” said Kully Samra, a London-based client manager at Charles Schwab Corp., which has $2.4 trillion in client assets. “Yellen has taken back a degree of control after other policy makers had warned that rates could rise in April. The policy discussion was very detailed and clear, which always reassures investors. We know exactly what the Fed is looking for.”

     The Chicago Board Options Exchange Volatility Index fell 1.9 percent Wednesday to 13.56, the lowest since Aug. 17. The measure of market turbulence known as the VIX has tumbled 34 percent in March, set for the biggest monthly drop since October.

     Amid a recent slide in trading volume and volatility, the S&P 500 has now gone 12 sessions without a daily swing of at least 1 percent, the longest since June. The benchmark on Friday snapped a five-week surge that had added more than $2 trillion in value to U.S. stocks, and it’s 3 percent from a record set last May.

     The quarter ends tomorrow, meaning the earnings season looms with Alcoa Inc. marking the unofficial start when it reports results on April 11. Analysts forecast profits at S&P 500 companies fell 9.3 percent in the period, compared with predictions for a 4.5 percent drop two months ago.

     Seven of the S&P 500’s 10 main industries advanced today, with technology, consumer discretionary and financial companies leading gains. Utilities, phone and health-care companies were little changed.                       

     Apple rose 1.8 percent to the highest level since Dec. 16 after Cowen & Co. LLC upgraded the shares to the equivalent of buy from neutral. The U.S. said earlier this week that it gained access to the data on an iPhone used by a terrorist and no longer needed the company’s assistance, ending a legal clash. Cisco Systems Inc. added 1.6 percent to an almost five-month high.

     S&P 500’s group of financial stocks climbed for a third day. The increase was aided by a rebound in banks, which added 0.9 percent, snapping a five-session losing streak. JPMorgan Chase & Co. and Wells Fargo & Co. rose at least 1.1 percent.

     MetLife Inc. surged 5.4 percent after a court ruled against a regulatory designation labeling the insurer as too big to fail. Prudential Financial Inc. and American International Group Inc. advanced at least 2 percent.

     Consumer discretionary shares gained for a fourth day while the consumer staples group in the benchmark stretched to an all- time high. Carnival Corp. increased 5.5 percent, the most in a year, after its quarterly results and outlook were better than analysts forecast. Royal Caribbean Cruises Ltd. added 5.7 percent, the biggest gain since July. Dollar Tree Inc. climbed 2.3 percent to an 11-month high.                         

     PepsiCo Inc. and CVS Health Corp. advanced at least 1.3 percent to five-month highs, boosting staples companies to a record. Costco Wholesale Corp. increased 1.5 percent for its first three-day advance in four weeks.

     Among other companies moving on corporate news, Lululemon Athletica Inc. jumped 11 percent, the most in nine months after lower costs and improvements to the company’s supply chain helped it beat analysts’ quarterly earnings estimates.

     Boeing Co. lost 1.8 percent, extending a slide to a sixth session, the longest since November. The company plans to cut about 4,000 jobs from its commercial airplanes division by mid- year as part of a broader effort to reduce costs amid fierce competition from Airbus Group SE. Boeing’s losing streak comes right after its longest rally in 14 months.

Have a wonderful evening everyone.

Be magnificent!

At one pole of my existence,

I am one with the stones and the tree branches.

Thus, I must submit to the yoke of the universal law.

It is this, in the end, that is the very basis of my life.

And that force comes from that which is closely bound up in the unity of the world,

which is in full communication with all things.

But at the other pole, I am district from all of the rest.

Here, I have broken the barriers of equality and I find myself alone, as an individual .

I am absolutely unique, I am me, I am incomparable.

The whole of the mass of the universe can not crush this individuality that is mine.

I maintain it, despite the formidable gravitation of all that exists.

It is small in appearance, but great in reality.

Rabindranath Tagore

As ever,

Carolann

Every action of our lives touches on some chord

that will vibrate in eternity.

                           –Sean O’Casey, 1880-1964

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