March 9, 2017 Newsletter

Dear Friends,

Tangents:

On March 9^th, 1932, Conrad Russell wrote to his sister Diana, “As to parents, some do and some don’t try and teach manners.  I think many are glad for an excuse not to have anything in the nature of criticism or a reprimand.  Of course it is only shirking something.  Sir John Horner used to say: ‘Shake hands, Katharine, shake hands’, to his daughter [Katharine Asquith] after she was forty if visitors came into the room.  He also never lit a cigarette in his own room without saying to me first, ‘Do you mind if I smoke?’
   Right up to 1914 it was utterly impossible for two young people to dine at a restaurant together.  When Raymond [Asquith] and Katharine were engaged they used to have breakfast together at an ABC shop.  Except both going to the same ball there was no other way of meeting – at least there would have been the risk of being seen.  That’s twenty-five years ago.  Times have changed.” –from The Book of Days.

PHOTOS OF THE DAY

Shelves of hollow hens’ eggs decorated by award-winning Hungarian applied folk artist Ildiko Fekete are on display during her exhibition in Budapest, Hungary on Thursday. Zsolt Szigetvary/MTI/AP

Fireworks explode off of a wheeled paper bull rigged with pyrotechnics in the middle of the packed town square in Tultepec, on the outskirts of Mexico City, during the annual pyrotechnics fair on Wednesday. Rebecca Blackwell/AP
Market Closes for March 9^th, 2017

International Markets

Bonds

Currencies

Commodities

Market Commentary:
NUMBER OF THE DAY
5.38% 

The drop in U.S. crude futures on the New York Mercantile Exchange on Wednesday. Oil prices suffered their biggest one-day plunge in more than a year after U.S. crude stockpiles hit record levels, raising concerns that even after recent production cuts, the world remains awash in oil. 

On this day in 2000, the NASDAQ Composite Index closes above 5000 for the first time, a mere 48 trading days after breaking through the 4000 barrier.  Today, the NASDAQ closed at 5838.809, (i.e., +17% in 17 years) a good indicator as to why active management beats ETF indexing.
Canada
By Kristine Owram
     (Bloomberg) — Canadian stocks closed virtually unchanged as gains spurred by an acquisition among energy companies helped the S&P/TSX Composite Index buck a week-long slide in oil prices.
     The benchmark gauge slipped just 0.1 point to 15,496.84. Canadian Natural Resources Ltd. was the biggest gainer, rising almost 10 percent after it agreed to buy Alberta oil sands assets from Royal Dutch Shell Plc and Marathon Oil Corp. for C$12.7 billion. That helped drive the energy index up 0.75 percent even as West Texas Intermediate crude lost 2 percent to $49.28, its lowest level since Nov. 29.
     Stocks in Canada are often closely correlated to the price of oil but that relationship has loosened in recent months as investors obsess over the policies of U.S. President Donald Trump and what they’ll mean for the economy, said Stephen Lingard, senior vice president and portfolio manager with Franklin Templeton Solutions, a unit of Franklin Templeton Investments.
     “That automatic relationship between higher oil prices and better Canadian pricing in exports is in limbo in light of Trump and his potential border-adjustment tax,” Lingard said. “The economics are a little clouded, and that may be what’s causing the correlation to break down.”
     Oil prices will probably stay stuck between $45 and $55 amid a supply glut that is unlikely to break until at least 2018, said John Stephenson, chief executive at Stephenson & Co. Capital Management in Toronto.
     “It’s time to stay out of the sector in general,”  Stephenson said. “Eventually we’re going to get into balance, but we’re not there now.”
     Shell’s decision to largely exit the Canadian oil sands with its sale to CNRL, adding to several other sales by international players in recent months, is another signal to investors to avoid the Canadian energy space, Stephenson added.
     “The strong will come out of this stronger, but in general it’s not a positive when everyone’s leaving the burning building,” he said.
     The health-care index declined 1.1 percent as Valeant Pharmaceuticals International Inc. planned to sell $3.25 billion of debt, according to a person familiar with the matter. Valeant shares lost 2.6 percent.
     Raw material stocks fell 0.4 percent on lower gold prices. Both Potash Corp. of Saskatchewan and Agrium Inc. rose about 3 percent amid reports that Belarus is ready to cooperate with Uralkali PJSC, the largest global miner of potash by volume, on production and sales.
US
By Jeremy Herron and Cecile Gutscher
     (Bloomberg) — Oil’s lowest settlement since November added to concern that commodity-fueled inflation will wane. The selloff in Treasuries continued, while U.S. stocks finished little changed as European Central Bank optimism on global growth bolstered the euro.
     The S&P 500 Index eked out a gain for the first time in four days, as health-care shares lifted the measure in late trading before Friday’s jobs report. Thursday marked the eighth anniversary of the bull market that’s seen the index more than triple since 2009. Real estate stocks tumbled, as the yield on 10-year Treasury notes approached 2.60 percent, a level Bill Gross suggested would usher in a bond bear market. The euro strengthened after ECB president Mario Draghi said risks to growth are more balanced. The crude selloff rippled through the junk-debt market with a gauge for the high-risk securities poised for the worst week since November. 
     Friday’s jobs report is the last major piece of economic data before the Fed meets next week with markets poised for a rate increase. Still, signs are mounting that the reflation trade sparked by Donald Trump’s election is fading, with the selloff in oil rekindling concern that energy inflation won’t persist. At the same time, the ECB meeting fueled speculation the central bank won’t add to stimulus as growth picks up.
     Read our Markets Live blog here.
     What’s ahead for the markets:
* Official U.S. jobs data for February are due Friday. Employers probably added around 200,000 workers to payrolls, in line with the average over the past six months and a sign of steady job growth, economists forecast.

     Here are the main moves in markets:
     Stocks
* The S&P 500 rose 0.1 percent to 2,364.94 at 4 p.m. in New York. The measure is down 1.3 percent since reaching a record on March 1.
* Real estate shares have retreated eight straight days, the longest rout since August 2013. The stocks are coveted for their high dividend yield, which becomes less attractive as Treasury rates rise.
* Financial shares benefit from higher rates. They added 0.3 percent Thursday.
* The Euro Stoxx 600 Index advanced 0.1 percent, for a second day of middling gains.
* Emerging-market equities sank 1.5 percent, the most since December.

     Commodities
* WTI crude dropped 2 percent to settle at $49.28 per barrel, the lowest close since Nov. 29.
* Concerns mounted that OPEC’s output cuts are failing to restrain record U.S. stockpiles, with the post-agreement oil rally evaporating.
* All London Metal Exchange metals declined as the dollar strengthened ahead of U.S. non-farm payrolls data Friday..
* Gold slid toward $1,200 an ounce in its longest losing run since October as positive U.S. economic figures reinforce expectations that yields on other investments will rise this year. Futures fell 0.7 percent to $1,201.10 an ounce, declining for a fourth day.

     Currencies
* The dollar was little changed as measured by the Bloomberg dollar index, holding in the middle of a narrow daily range as momentum stalled
after the greenback breached a key technical resistance level at the 55-day moving average.
* The euro rose 0.4 percent to $1.0583, paring a gain that took it above $1.06.
* The yen slipped to 114.943 per dollar.
* South Korea’s won paced losses in emerging-market currencies.

    Bonds
* The yield on the U.S. Treasury note due in a decade rose four basis points to 2.598 percent.
* They’re approaching the 2.6 percent mark that Gross, the bond- market veteran at Janus Capital Management, said will signal the start of a bear market, should it hold on a weekly basis.
* The yield on the 10-year German bund jumped six basis points to 0.426 percent.

Have a wonderful evening everyone.

Be magnificent!

Nature’s law dictates that, in order to survive, bees must work together.
As a result, they instinctively possess a sense of social responsibility.
They have no constitution, no law, no police, no religion or moral training but,
because of their nature, the whole colony survives.
We human beings have a constitution, laws and a police force.
We have religion, remarkable intelligence, and hearts with a great capacity to love.
We have many extraordinary qualities but, in actual practice,
I think we are behind those small insects.
In some ways, I feel that we are poorer than the bees.
His Holiness the XIVth Dalai Lama

As ever,

Carolann

Great acts are made up of small deeds.
                         -Lao Tzu, 604 BC-531 BC

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
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