March 7, 2016 Newsletter

Dear Friends,

Tangents:

On March 7, 1875, Francis Kilvert wrote in his diary:
A sudden and blessed change in the weather, a south-west wind, pouring warm rain, and the birds in the garden and orchard singing like mad creatures, the whole air in a charm and tumult of joy and delight.

Mark D. Weinburg wrote a piece in the Wall Street Journal today entitled Appreciating Nancy Reagan (1921-2016).
  He writes “…The last time I saw her was a few months ago.  She was in a wheelchair but looked great.  Her voice was quieter than I remembered, but she was in excellent spirits.  She seemed especially happy to share memories of watching movies at Camp David.  I knew it might be the last time I would see her.
  The Reagans’ relationship initially was a mystery to me.  The first time I heard Ronald Reagan say that he missed Nancy even ‘when she’s just in the next room,’ such devotion seemed way over the tip.
  But it soon became clear that theirs was a rare and lifelong romance…Mrs. Reagan was criticized for what some perceived as her obsession with fashion and fancy clothes.  But as first lady, she felt that she represented America and should always look her best…
  The past dozen years for Mrs. Reagan were difficult.  She had watched the love of her life grow sicker, unable to share the memories of their time together.  And when Ronald Reagan died in 2004, it was not the ‘relief’ to her that many predicted. Sadness never left her.  She gradually lost some of her mobility and her vision began to go.  But she remained sharp, engaged and interested in others – in a kindly way, with little tolerance for mean-spirited remarks.  ‘You never know everything,’  Mrs. Reagan would admonish.  ‘There’s always another side to the story.’

  Mr. Weinberg, special assistant to the president and assistant press secretary in the Reagan White House, is writing a book, “Movie Nights With the Reagans,” forthcoming from Simon & Schuster.

PHOTOS OF THE DAY

Flowers are placed on a sign at The Ronald Reagan Presidential Library in Simi Valley, Calif., Sunday in honor of former First Lady Nancy Reagan, who died at the age of 94. Jonathan Alcorn/Reuters

The Northern Lights, or Aurora Borealis, shine over Sycamore Gap at Hadrian’s Wall in Northumberland, northeast England, early Monday. Owen Humphreys/PA/AP

Market Closes for March 7^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Jiayue Huang

     (Bloomberg) — Canadian stocks rose for an eighth day, pushing the winning streak to the longest since 2014, as Brent crude oil topped $40 for the first time this year amid speculation demand from China will rebound as the nation adds to stimulus.

     The Standard & Poor’s/TSX Composite Index rose 171.10 points, or 1.3 percent, to 13,383.60 at 4 p.m. in Toronto, as all 10 main industries advanced. The benchmark equity gauge has gained 5.1 percent in eight days to erase its loss for the year. It’s the best-performing developed market tracked by Bloomberg this year. Trading volume in S&P/TSX shares was 26 percent higher than the 30-day average.

     Canada’s resource-rich index is benefiting from a surge in prices for commodities from oil to copper and iron ore. China’s leaders lowered their goal for economic expansion and said they are planning a record-high budget deficit as they seek to stoke the world’s second-largest economy. Energy and raw-materials stocks account for more than 30 percent of the overall gauge. West Texas Intermediate, the U.S. benchmark for crude, jumped 5.5 percent to settle at almost $38 a barrel.

     Raw-materials producers rose 2.2 percent to the highest level since July. Teck Resources Ltd. added 4.9 percent to the highest since July. Labrador Iron Ore Royalty Corp. surged 5.3 percent to a three-month high after the resource notched its biggest one-day advance on record. Primero Mining Corp. rose 16 percent, the most since November 2014. First Majestic Silver Corp. and OceanaGold Corp. both gained more than 8.5 percent after analysts upgraded the companies’ stocks.

     Energy shares rose 1.8 percent to the highest since Dec. 1. Paramount Resources Ltd. jumped 12 percent, while Encana Corp. added 11 percent.

     Health-care companies gained the most among all sectors, as Concordia Healthcare Corp. surged 8.1 percent, while Valeant Pharmaceuticals International Inc. advanced 6.8 percent.

     Shares in the Canadian gauge trade at more than 21 times earnings, roughly 15 percent more expensive than the valuation of the benchmark U.S. equity index, the Standard & Poor’s 500 Index, data compiled by Bloomberg show.

US

By Oliver Renick

     (Bloomberg) — The Standard & Poor’s 500 Index edged higher, tying its longest rally in more than a year, as commodity producers surged with crude oil to offset declines in technology and consumer shares while investors assessed China’s growth prospects.

     Energy companies in the S&P 500 continued to rise after their best weekly advance since October as crude prices jumped. Exxon Mobil Corp. increased 2.6 percent to a four-month high. Monsanto Co. added 3 percent as the raw-materials group erased 2016 losses. Microsoft Corp. and Apple Inc. slipped at least 1.1 percent to weigh on tech, while Netflix Inc. sank 6 percent. Nike Inc. and Amazon.com Inc. fell more than 2.2 percent.

     The S&P 500 advanced 0.1 percent to 2,001.76 at 4 p.m. in New York, remaining at its highest since Jan. 5 and rising for a fifth day to tie similar winning streaks last October and in December 2014. The gauge closed above its average price during the past 100 days for the second time this year. The Dow Jones Industrial Average rose 67.18 points, or 0.4 percent, to 17,073.95. The Nasdaq 100 Index fell 0.6 percent, while the Russell 2000 Index gained 1.1 percent.

     “The big story again is commodities with oil just continuing to move up and breaking $40 which it hasn’t done in awhile,” Thomas Garcia, head of equity trading at Thornburg Investment Management Inc. in Santa Fe, New Mexico, said by phone. “With the general market not up it seems like that’s leading stocks. You’re definitely going to get some short- covering by people who were short and panicking at this point.”

     China’s leaders failed to announce specific measures to support the world’s second-biggest economy at an ongoing annual legislature meeting, damping speculation of more stimulus. They set an expansion goal of 6.5 percent to 7 percent for 2016, down from last year’s target of around 7 percent, and said they will permit a record-high budget deficit.

     Investors will turn their attention later this week to the European Central Bank’s policy meeting, and Federal Reserve officials will gather for their next two-day meeting on March 15. Traders are pricing in a less than one-in-10 chance the central bank will increase interest rates this month, with the probability rising to 45 percent by June. Odds for a December move are 72 percent.

     Fed Vice Chair Stanley Fischer in remarks today contested the idea that the connection between low unemployment and inflation was broken, and said it may be reasserting itself now. Separately, Fed Governor Lael Brainard said the U.S. economy isn’t immune to global risks and called for careful adjustments to the policy rate to preserve the expansion.

     “We’re likely to see a period of heightened volatility and it’s a very frustrating environment,” said Eric Wiegand, senior portfolio manager at the Private Client Reserve of US Bank in New York. “Expectations surrounding the ECB are going to be at play this week as certainly part of the bounceback we’ve seen over the last number of weeks has been part of the expectation that the ECB, Bank of Japan and – to an extent – the PBOC, would go to extraordinary measures to be accommodative.”

     The S&P 500 closed Friday at its highest since Jan. 5 after rising for a third straight week, the longest such stretch this year. The gauge rallied more than 9 percent after reaching a 22- month low last month, as oil prices stabilized and data has shown the world’s largest economy weathering weaker growth abroad.

     A rout in crude amid concerns that a slowdown in China would spread had helped weigh the benchmark equity index down as much as 11 percent this year on a closing basis, a drop that has since been trimmed to 2.1 percent. Energy and industrial shares last week erased their 2016 losses.

     A Goldman Sachs Group Inc. index of the most-shorted shares has rallied 25 percent since Feb. 11, outperforming the S&P 500 by 15 percentage points, the most over any equivalent stretch in the gauge’s history back to January 2008.

     The Chicago Board Options Exchange Volatility Index rose 2.9 percent Monday to 17.35 after closing Friday near the lowest level this year. The measure of market turbulence known as the VIX fell nearly 15 percent last week. About 9 billion shares traded hands on U.S. exchanges, in line with the average in 2016.

     Six of the S&P 500’s main industries climbed today, with energy up 2.4 percent and raw-materials adding 1.2 percent. Technology companies declined 0.7 percent while consumer staples and discretionary shares lost more than 0.4 percent. Through Friday, discretionary stocks were the second-best performers since the benchmark’s recent low on Feb. 11, rising nearly 12 percent. Tech shares were up almost 10 percent in the period.                      

     Energy producers rose Monday to the highest level since Dec. 4. Murphy Oil Corp. soared more than 10 percent for a fourth day, and advanced for a seventh session amid the longest winning streak since September 2013. The shares are up 56 percent since Fed. 26. Chevron Corp. gained 3.1 percent, extending to its longest rally in four months.

     Brent crude rose above $40 for the first time since December as major producers prepared to meet to discuss a production freeze and U.S. output finally shows signs of declining.

     CF Industries Holdings Inc. increased 6.6 percent to lead raw-materials’ advance as the group rose to the highest level since Dec. 29. Alcoa Inc. gained 4.9 percent, up for the fifth time in six days to its highest this year. Steelmaker Nucor Corp. added 4.2 percent to a six-month high. Iron ore soared the most ever after Chinese policy makers signaled their willingness to buttress economic growth, boosting the outlook for steel consumption in the top user.

     Iron ore miner Cliffs Natural Resources Inc. surged nearly 19 percent to bring its climb in the last six sessions to over the period to 88 percent. Another miner, Tronox Ltd. jumped 21 percent to a four-month high.

     Software companies were the worst performers within the technology group, slipping for a third consecutive session, the most in almost four weeks. Facebook Inc. and Google parent Alphabet Inc. lost at least 2.3 percent. MasterCard Inc. fell 1.9 percent, and Visa Inc. declined 2.7 percent, the most since Feb. 8 after falling below its 50- and 200-day moving averages.

     The Nasdaq Internet Index retreated 1.4 percent, the most in two weeks after rallying 15 percent since Feb. 11. Netflix capped the biggest drop in a month, and Amazon slid for a third day, falling 2.2 percent to drag down the consumer discretionary group. Nike Inc. lost 3.3 percent, the most in four weeks. The New York Times reported the company is caught up in a corruption scandal in Kenya in which Nike has denied any wrongdoing.

Have a wonderful evening everyone.

Be magnificent!

Variety is the first principle of life.

What makes us formed beings?

Differentiation.

Perfect balance will be destruction.

Swami Vivekananda

As ever, 
 

Carolann

Life does not consist mainly of facts and happenings.  It consists mainly of the storm of thoughts

that are forever blowing through one’s mind.

                                                                                   -Mark Twain, 1835-1910

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