May 13, 2016 Newsletter

Dear Friends,

Tangents:

Friday the 13^th:

Thirteen was regarded as an unlucky number even among the Romans, who held it as a sign of death and destruction.  The origin of the idea that sitting down 13 at a table is unlucky is said to be that, at a banquet in Valhalla, Loki (the god of strife and spirit of evil in Norse mythology) once intruded, making 13 guests, and Balder (the Scandinavian god of light, noted for his handsomeness and gentle nature) was slain.  The superstition was confirmed in Christian countries by the Last Supper of Christ and the 12 Apostles.  In the Middle Ages, witch covens were believed always to have 13 members.

On May 13^th, 1940, Winston Churchill made his first speech to the House of Commons after becoming Prime Minister.

I say to the House as I said to Ministers who have joined this government, I have nothing to offer but blood, toil, tears  and sweat.   We have before us an ordeal of the most grievous kind.  We have before us many, many months of struggle and suffering.

  You ask, what is our policy?  I say it is to wage war by land, sea and air.  War with all our might and with all the strength God has given us, and to wage war against a monstrous tyranny never surpassed in the dark and lamentable catalogue of human crime.  That is our policy.

  You ask, what is our aim?  I can answer in one word.  It is victory.  Victory at all costs – victory in spite of all terrors – victory,  however long and hard the road may be, for without victory there is no survival.

  Let that be realized.  No survival for the British Empire, no survival for all that the British Empire has stood for, no survival for the urge, the impulse of the ages, that mankind shall move forward toward his goal.

  I take up my task in buoyancy and hope.  I feel sure that our cause will not be suffered to fail among men.

  I feel entitled at this juncture, at this time, to claim the aid of all and to say, “Come then, let us go forward together with our united strength.”

PHOTOS OF THE DAY

Participants attend the ‘Victorian Picnic’ in fancy costumes during the Wave Gothic Festival (WGT) in Leipzig, Germany on Friday. Approximately 20,000 goths and other dark subculture fans are expected to attend the world’s largest gothic and ‘dark’ culture festival. Jens Meyer/AP

Surrounded by relatives and neighbors in Verbania, Italy on Friday, Emma Morano celebrated becoming the oldest person in the world at age 115. Not only that, but she is believed to be the last surviving person in the world who was born in the 1800s, coming into the world on Nov. 29, 1899.Antonino Di Marco/ANSA/AP

Market Closes for May 13^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
NUMBER OF THE DAY
$1 billion 

Apple’s investment in Didi Chuxing, China’s $25 billion homegrown competitor to Uber. In China’s fast-growing market for ride-sharing,     

Didi and UberChina are locked in a fierce battle to attract riders and investors.

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, clawing back a weekly gain, as financial shares and energy producers declined with the price of crude, after U.S. retail data jumped the most in a year and spurred bets on higher interest rates.

     The benchmark S&P/TSX Composite Index lost 0.3 percent to 13,748.58 at 4 p.m. in Toronto, paring a weekly gain to 0.3 percent. Volume today in the benchmark was 9.9 percent lower than the 30-day average. The gauge now trades at 20.8 times earnings, about 9.5 percent higher than the 19 times valuation of the S&P 500, data compiled by Bloomberg show.

     U.S. consumer purchases jumped 1.3 percent in April, the most since March 2015, providing the Federal Reserve with more confidence that higher interest rates won’t disrupt growth. The U.S. is Canada’s largest trading partner.

     Crude futures dropped 1.1 percent in New York to $46.21. Investors weighed the return of output from Canadian oil-sands producers after the Alberta wildfires against supply reductions from the U.S. to Nigeria. Militant attacks have cut output in Nigeria to the lowest in 20 years.

     Investors also weighed disappointing earnings results. Financial services stocks slipped 0.5 percent, led by a 0.9 percent decrease in Manulife Financial Corp. Onex Corp., Canada’s largest buyout firm, tumbled 5.4 percent, the most since 2011, after reporting a wider first-quarter loss than analysts had forecast.

     Hudson’s Bay Co. sank 7 percent to a record low after reporting same-store sales results for its first quarter, ahead of full financial results on June 9. Eliminating foreign exchange swings, same-store sales decreased 1 percent, including a 5.7 percent drop at its Saks Fifth Avenue unit.

     Meanwhile Kinross Gold Corp. and Eldorado Gold Corp. maintained gains as raw-materials producers advanced.

     Concordia Healthcare Corp. surged 15 percent after the drugmaker confirmed it is working with Greenhill & Co. considering strategic options for the company. Concordia earlier reported first-quarter earnings short of estimates. The stock has slumped 40 percent this year, among the worst-performing in the S&P/TSX this year.

     Canadian Tire Corp. lost 2.9 percent after analysts at Credit Suisse Group AG lowered their rating for the stock to the equivalent of a sell, as the stock has become expensive. The retailer has jumped 19 percent this year, trading at a record Thursday after posting first-quarter earnings ahead of expectations.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks fell, with the S&P 500 marking the longest weekly losing streak in four months, amid lackluster results from large retailers while data signaling consumers remain healthy added to the case for higher interest rates.

     Despite signs of vitality among consumers, companies that rely on their willingness to spend were among the biggest losers Friday as Nordstrom Inc. and J.C. Penney Co. added to a list of disappointing results and outlooks from department stores this week. Losses among banks accelerated in afternoon trading while energy producers retreated as crude prices fell for the first time in four days.

     The S&P 500 dropped 0.9 percent to 2,046.61 at 4 p.m. in New York, closing at a one-month low with a third straight weekly loss. Declines gathered pace in afternoon trading as the gauge slipped below its average price during the past 50 days. The Dow Jones Industrial Average lost 185.18 points, or 1.1 percent, to 17,535.32, a seven-week low. The Nasdaq Composite Index dropped 0.4 percent. About 6.6 billion shares traded hands on U.S. exchanges, 12 percent below the three-month average.

     “You’d think the retail numbers would prevent the market from going lower like in the last couple weeks,” Mark Kepner, an equity strategist at Chatham, New Jersey-based Themis Trading LLC, said by phone. “But there are some other issues with the market right now. Every time we get up to 2,100 there’s resistance, and overall the earnings aren’t great and that’s a factor as well.”

     A report today showed sales at retailers in April saw the biggest gain since March 2015, contrasting with weak quarterly results this week from major chains including Macy’s Inc. and Kohl’s Corp. Nordstrom tumbled 13 percent, the most in the S&P 500 Friday, after cutting its annual forecast. Wal-Mart Stores Inc. lost 2.9 percent to lead declines in the Dow. Amazon.com Inc. slipped 1.1 percent to fall for the first time in six days.

     A rally that sent the S&P 500 up as much as 15 percent has been struggling to regain momentum since reaching a four-month high on April 20, amid mixed earnings and lukewarm signs of an economic pickup. This week was marked by the benchmark surging the most in two months on Tuesday as commodities rebounded, only to slide by the most in a month Wednesday after disappointing results from Walt Disney Co. and Macy’s spurred a broader selloff.

     Weaker-than-forecast quarterly reports at tech giants including Apple Inc., Microsoft Corp. and Google parent Alphabet Inc. have been among the obstacles for equities. As the earnings season winds down, analysts estimate income at S&P 500 companies fell 7.4 percent in the first quarter compared with forecast for flat growth earlier this year. Of those that have announced results so far, about 74 percent beat profit forecasts, and 54 percent exceeded sales expectations.

     Along with the retail sales report, investors are scouring other data for clues on the economy’s health and possible trajectory of interest rates. A measure today showed consumer confidence jumped in May to the highest level in almost a year, while another report said wholesale prices rose in April for the first time in three months. A separate gauge showed growth in business inventories continues to outpace that of sales.

     Two Federal Reserve presidents, Boston’s Eric Rosengren and Kansas City’s Esther George, yesterday made separate but similar cases for a rate increase, arguing that the central bank risks stoking an asset bubble by delaying action for too long. Still, traders are pricing in only a 4 percent chance the Fed will act in June. December is the first month with at least even odds of higher borrowing costs.

     In Friday’s trading, all of the S&P 500’s 10 main industries fell, with six groups sinking more than 1 percent. Consumer staples, energy, financial and industrial companies lost at least 1.2 percent. The CBOE Volatility Index increased 4.4 percent to 15.04, a one-week high. The measure of market turbulence known as the VIX trimmed its May decline to 4.2 percent from more than 13 percent earlier this week.

     Transportation companies were among the worst performers in the industrial group, with the Dow Jones Transportation Average capping the biggest weekly slide since January. Ryder System Inc. fell the most in two months, while railroads Norfolk Southern Corp. and Kansas City Southern dropped at least 2.4 percent. Caterpillar Inc. lost 2.3 percent and extended a weekly losing streak to four, the most since September.

     Banks in the benchmark tumbled to the lowest level in month. Wells Fargo & Co. and Citigroup Inc. dropped at least 1.9 percent. The KBW Bank Index fell 1.6 percent. Among other financials, real-estate companies extended the steepest weekly decline since February, led by mall and shopping-center owners. Macerich Co. and Simon Property Group Inc. sank more than 2.7 percent.

     Among energy producers, Transocean Ltd. and Southwestern Energy Co. fell the most, down more than 4.4 percent. Chevron Corp. slumped 1.4 percent. Crude pared a weekly gain as investors weighed the return of output from Canadian producers against supply reductions from the U.S. to Nigeria.

     Wal-Mart was one of the heaviest drag on the staples group as it posted the worst week in seven months. PepsiCo Inc. slid 1.8 percent, the steepest in more than two months, after a regulatory filing showed Nelson Peltz’s Trian Fund Management LP eliminated its stake in the beverage-and-snack giant. Costco Wholesale Corp. fell for a third day, losing 1.5 percent. In the broader retailer group, Target Corp. and Dollar Tree Inc. sank at least 2.2 percent.

     In the consumer discretionary segment, Nordstrom fell the most, while Michael Kors Holdings Ltd. declined 4.3 percent amid its longest streak in almost 10 months. Tiffany & Co. and Urban Outfitters Inc. lost more than 2.9 percent.

     Nvidia Corp. rose 15 percent, the most in more than seven years, to an all-time high. The biggest maker of graphics chips used in high-end gaming computers, predicted sales that may top analysts’ estimates, signaling game players continue enthusiastically to seek the latest technology.
 

Have a wonderful weekend everyone.

Be magnificent!

Whenever I see an erring man, I say to myself I have also erred;

when I see a lustful man I say to myself, so was I once;

and in this way I feel kinship with everyone in the world

and feel that I cannot be happy without the humblest of us being happy.

Mahatma Gandhi

As ever,
 

Carolann

Laughter is an instant vacation.

     -Milton Berle, 1908-2002

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