May 26, 2020 Newsletter

Dear Friends,

Tangents:
1328 – William of Ockham forced to flee from Avignon by Pope John XXII.
1815 – Napoleon crowned king of Italy.
1805 – Lewis & Clark see Rocky Mountains.

1896 – The Dow Jones Industrial Average was first published. The average price of the 11 initial stocks was 40.94. Go to article »

“Once upon a time, there was a tiny country called Cornucopia.”  So starts “The Ickabog,” a new fairy tale from J.K. Rowling. The author of the Harry Potter series is releasing the story for free online in 34 daily installments until July 10. While details of the plot were scant, it won’t have anything to do with her original young wizard. Read the first two chapters here.
Ms. Rowling said she had started working on the book more than a decade ago, and decided to publish it now so children could have it “during these strange, unsettling times.” And reader participation is encouraged: The best submissions from an illustration competition will end up in the book’s final edition when it is published in the fall. -from The New York Times.
PHOTOS OF THE DAY

Colourful rice fields create a mesmerising landscape as they stretch across the slopes of a green valley. Silt mixes with the brown dirt to form different hues while the sun reflects off the shallow water.
CREDIT: KHANH PHAN/ SOLENT NEWS

Warehouse fire burning at San Francisco’s Fisherman’s Wharf in San Francisco
CREDIT: DAN WHALET. @DWWHLY VIA AP

Aerial view of Saudi Arabia’s holy city of Mecca, with the Abraj al-Bait Mecca Royal Clock Tower overlooking the Grand Mosque and Kaaba in the centre.
CREDIT: STR/AFP VIA GETTY IMAGES
Market Closes for May 26th, 2020 

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1896, the Dow Jones Industrial Average was first published. Its 12 initial members were the great industrial giants of the time: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal & Iron, U.S. Leather, and U.S. Rubber. The index’s value that day: 40.94.
Canada
By Michael Bellusci
(Bloomberg) — Canadian equities gained Tuesday for a third-straight session with a strong outing from financials and as investors poured back into risk assets on speculation the worst of the economic hit from the pandemic has passed.
The S&P/TSX Composite Index advanced 0.5%, lead by the financials sector, which jumped 5.2%, its most since March 25 after Bank of Nova Scotia’s quarterly earnings and a rise in U.S. financial equities.
The head of Canada Pension Plan Investment Board says office towers won’t stay out of favor forever. “There’s probably going to be still robust demand for great office space in central locations,” Chief Executive Officer Mark Machin said.
Meanwhile, Quebec’s government said it agreed to provide as much as $200 million to help prop up debt-laden Cirque du Soleil Entertainment Group. Oil’s recovery from its historic crash last month is barreling ahead, with some OPEC producers displaying signs of confidence that the market is stabilizing.
Commodities
* Western Canada Select crude oil traded at a $8.00 discount to West Texas Intermediate
* Spot gold fell 1.1% to $1,712.20 an ounce
FX/Bonds
* The Canadian dollar gained 1.4% C$1.3791 per U.S. dollar
* The 10-year government bond yield rose 5.5 basis points to 0.544%

By Bloomberg Automation:
(Bloomberg) — The S&P/TSX Composite rose for the third day, climbing 0.5 percent, or 72.7 to 15,148.12 in Toronto. The index advanced to the highest closing level since April 29.
Today, financials stocks led the market higher, as 7 of 11 sectors gained; 156 of 229 shares rose, while 72 fell. Royal Bank of Canada contributed the most to the index gain, increasing 6.2 percent. BRP Inc. had the largest increase, rising 11.0 percent.
Insights
* This month, the index rose 2.5 percent
* The index declined 6.7 percent in the past 52 weeks. The MSCI AC Americas Index gained 4.8 percent in the same period
* The S&P/TSX Composite is 15.7 percent below its 52-week high on Feb. 20, 2020 and 35.6 percent above its low on March 23, 2020
* The S&P/TSX Composite is up 1.8 percent in the past 5 days and rose 5 percent in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 17.9 on a trailing basis and 24.2 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.5 percent on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$2.28t
* 30-day price volatility fell to 25.66 percent compared with 25.85 percent in the previous session and the average of 37.66 percent over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 215.9417| 5.2| 25/1
Energy | 15.7166| 0.8| 27/2
Industrials | 14.5330| 0.8| 25/6
Communication Services| 11.6668| 1.4| 6/2
Consumer Discretionary| 9.0818| 1.8| 11/3
Utilities | 7.9824| 1.0| 15/1
Real Estate | 7.2160| 1.6| 22/4
Consumer Staples | -1.0321| -0.2| 5/6
Health Care | -5.5790| -3.2| 3/7
Materials | -98.5037| -4.4| 15/32
Information Technology| -104.3300| -6.9| 2/8
US
By Claire Ballentine and Vildana Hajric
(Bloomberg) — U.S. stocks rose, but closed sharply off their highs after Bloomberg News reported that the Trump administration is considering sanctions on Chinese officials, threatening to escalate tensions between the world’s two largest economies.
The S&P 500 ended up 1.2% at an 11-week high, giving up in the final half hour of trading almost 50% of gains that topped 2%. Stocks had soared earlier as investors poured back into risk assets on speculation the worst of the economic hit from the pandemic has passed. Megacap tech shares in the Nasdaq 100 fell on the day, while chipmakers exposed to China tumbled at the end of the session.
Traders spent much of the day pouring into riskier pockets of the market as they played catch-up to a rally that pushed socks higher by as much as 35% from March lows, even as news over the long weekend brought signs of mounting tension with China. That bid faded after the report that the Treasury Department could impose controls on transactions and freeze assets of Chinese officials and businesses for implementing a new national security law that would curtail the rights and freedoms of Hong Kong citizens.
Fresh economic data had showed that the easing of lockdown restrictions is boosting economic activity. The contours of the gains, with small-caps and energy shares leading, suggest investors who doubted its staying power are now targeting areas that have lagged behind so far. Large-cap tech shares, the group that lifted stocks from pandemic lows, trailed Tuesday.
While economic data is still awful by virtually any historic comparison, a consensus among investors is building that the worst from the pandemic is over, easing fear that the rally was a bear trap destined to come undone. Now they will also contend with an increase in China tension that could threaten trade at a delicate time for the global recovery.
Elsewhere, the Stoxx Europe 600 Index advanced, with travel stocks surging on reports that Germany plans to lift travel warnings for 31 European countries. The U.K. also announced steps toward getting back to business, sending the pound up by the most in almost a month. Japan led the equity advance in Asia as the world’s third- largest economy reopened, and shares rose in Hong Kong, which showed signs of stabilizing after weekend unrest. Treasuries slid after the three-day U.S. weekend, alongside Germany’s government debt.
While investors’ spirits are being lifted by economic reopenings, there are also mounting signs that coronavirus infection rates are moderating. The Japanese government ended its nationwide state of emergency Monday, while Germany recorded a decline in the number of new virus cases. Signs that more euro area stimulus is on the way is also helping support the appetite for risk.
“The narrative for markets is shifting somewhat, with hopes associated with the easing of lockdown measures in many countries and still very exaggerated hopes of a vaccine being found short-term, needing to be balanced against escalating U.S./China tensions,” said Marc Ostwald, chief economist and global strategist at ADM Investor Services.
The euro strengthened ahead of negotiations this week on the form of a bloc-wide recovery fund. WTI crude oil advanced to around $34 a barrel on hopes the market may rebalance after historic output cuts.
Here are some key events coming up:
* Earnings continue with companies including British Land, Royal Bank of Canada and HP Inc.
* Thursday brings the U.S. jobless claims reading for the week ended May 23.
* Federal Reserve Chairman Jerome Powell participates in a virtual discussion on Friday.

These are the main moves in markets:
Stocks
* The S&P 500 Index added 1.2% at 4 p.m. New York time.
* The Russell 2000 rose 2.8% and the Dow Jones Industrial Average jumped 2.1%
* The Stoxx Europe 600 Index climbed 1.1%.
* The MSCI Asia Pacific Index surged 2.3%.
* The MSCI Emerging Market Index surged 1.8%.
Currencies
* The Bloomberg Dollar Spot Index sank 1%.
* The euro rose 0.97% to $1.0991.
* The British pound surged 1.2% to $1.234.
* The Japanese yen strengthened 0.2% to 107.54 per dollar.
Bonds
* The yield on 10-year Treasuries added three basis points to 0.69%.
* Germany’s 10-year yield climbed seven basis points to -0.43%.
* Britain’s 10-year yield rose four basis point to 0.21%.
* Japan’s 10-year yield rose one basis point to 0.008%.
Commodities
* West Texas Intermediate crude gained 2.1% to $33.93 a barrel.
* Gold futures weakened 1.6% to $1,725 an ounce.
–With assistance from Michael Hunter, Andreea Papuc and Anooja Debnath.

Have a great night.

Be magnificent!

As ever,

Carolann

Humility is not thinking less of yourself, its thinking of yourself less.
                                                        -C.S. Lewis, 1898-1963
Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Senior Investment Advisor

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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www.carolannsteinhoff.com