June 23, 2015 Newsletter

Dear Friends,

Tangents:

On June 23^rd, 1929, Virginia Woolf wrote in her diary:

“What a born melancholiac I am!  The only way I keep afloat is by working.  Directly I stop working I feel that I am sinking down, down.  And as usual, I feel that if I sink further I shall reach the truth.  That is the only mitigation; a kind of nobility.  Solemnity.  I shall make myself face the fact that there is nothing – nothing for any of us.  Work, reading, writing, are all disguises;  and relations with other people.  Yes, even having children would be useless.”

I was watching an interview with Bill Gross, fixed income portfolio manager with Janus (formerly the star at PIMCO Asset Management), and the interviewer asked him if he was happy.   He said that in order to be happy, a person needs three things:  something to do, someone to love, and something to hope for. 

PHOTOS OF THE DAY

People are reflected in a soap bubble lying on a road Tuesday evening in New Delhi. Anindito Mukherjee/Reuters

Swiss pilot Andre Borschberg sits in the cockpit of the Solar Impulse 2, a solar powered plane, before its planned departure from Nagoya airport in Japan, Tuesday. The plane’s attempted round-the-world flight was cut short on the seventh leg of its 35,000-km (22,000-mi) global journey earlier this month, landing in Nagoya, western Japan, due to bad weather. Thomas Peter/Reuters

Market Closes for June 23^rd, 2015

International Markets

Bonds

Currencies

Commodities

The greatest safety lies in putting all your eggs in one basket and watching the basket. –Gerald M. Loeb  1900-1974 (E.F. Hutton, The Battle for Investment Survival).     

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks capped the biggest two-day rally since February as commodities producers surged and optimism increased over Greece debt negotiations.

     Teck Resources Ltd. increased 3.6 percent as copper rose the most in seven weeks on signs manufacturing is stabilizing in China. Energy producers jumped 1.6 percent as crude advanced. Valeant Pharmaceuticals International Inc. rose a second day after submitting a new drug application to the U.S. Food and Drug Administration. BlackBerry Ltd. lost 3.9 percent after the company reported a first-quarter loss wider than analysts’ estimates.

     The Standard & Poor’s/TSX Composite Index rose 114.43 points, or 0.8 percent, to 14,904.91 at 4 p.m. in Toronto. The gauge has rallied 1.7 percent in the past two days after almost erasing its 2015 advance on Friday.

     Greece’s Prime Minister now has to muster support from his coalition for a plan that aims to stave off the country’s default amid signs of progress on debt talks. Equities rallied in Europe, and American benchmark gauges climbed toward records.

     Nine of 10 industries in the S&P/TSX advanced on trading volume 6.3 percent below the 30-day average. Toronto-Dominion Bank and Bank of Nova Scotia increased more than 0.9 percent as financial stocks climbed 0.8 percent as a group.

     Teck Resources gained 3.6 percent and HudBay Minerals Inc. increased 2.7 percent as raw-materials producers advanced 0.7 percent.

     Copper climbed 1.7 percent in New York and aluminum, zinc, nickel, lead and tin advanced in London. A preliminary Purchasing Managers’ Index for China from HSBC Holdings Plc and Markit Economics edged closer in June to the level that signifies expansion. China is Canada’s second-largest trading partner after the U.S.

     UrtheCast Corp. dropped 3.5 percent, following a three-day advance, after selling subscription receipts for shares to help fund its acquisition of Elecnor SA’s Deimos Imaging unit. UrtheCast, which transmits images of the Earth from cameras on the International Space Station, had surged 37 percent in the previous three days.

US

By Callie Bost

     (Bloomberg) — U.S. stocks rose, with the Standard & Poor’s 500 Index near a record, as investors weighed economic data for clues on the timing of higher interest rates amid optimism that a deal on Greek aid is within reach.

     AT&T Inc. rose 2.5 percent after two analyst upgrades. Green Dot Corp. jumped 40 percent after authorizing a stock buyback plan and reaching a new, five-year deal with Wal-Mart Stores Inc. Semiconductors reversed Monday’s gains as Nvidia Corp. and Qorvo Inc. fell more than 2.5 percent. Consumer staples slumped as the dollar rallied.

     The S&P 500 Index climbed 0.1 percent to 2,124.20 at 4 p.m. in New York, a one-month high and 0.3 percent from its record close. The Dow Jones Industrial Average added 24.29 points, or 0.1 percent, to 18,144.07. The Nasdaq Composite Index increased 0.1 percent to an all-time high for a second day. About 5.7 billion shares traded hands on U.S. exchanges, 8.6 percent below the three-month average.

     “There are quite a few cross-currents,” said Jim Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management Inc. His firm oversees $351 billion. “You’ve still got Greece in the background. There are a lot of people wondering if the S&P 500 can establish a record high and build more strength to the upside. That’s lurking more immediately, and that’s the thing most at work today.”

     The S&P 500 had its biggest weekly gain since April in the period ended Friday after the Federal Reserve signaled it won’t be raising rates quickly as officials hold out for more decisive evidence of an economic rebound. Three rounds of Fed bond purchases and near-zero interest rates helped the benchmark more than triple during the six-year bull market.

     Fed Governor Jerome Powell said today the chances are about 50-50 that the U.S. economy will improve enough for the central bank to raise interest rates in September, as the job market strengthens and signs of wage growth emerge.

     A report Tuesday showed purchases of new homes increased more than forecast in May to the highest level in seven years. That added to data yesterday showing sales of previously owned homes climbed to their highest level since 2009, boosted by more first-time buyers.

     A separate report today said orders for business equipment gained in May for just the second time this year. Orders for all durable goods declined 1.8 percent, reflecting a drop in the volatile aircraft category.

     After talks on Monday, Greece now has 48 hours to bring a deal with its creditors to the finish line and end a five-month standoff over aid that risks default and possible exit from the euro. Greek Prime Minister Alexis Tsipras needs to shore up support at home for his plan, while euro-area finance ministers meet Wednesday to prepare the ground for a second, scheduled summit of European Union leaders Thursday.                      

     The Chicago Board Options Exchange Volatility Index slipped 5 percent today to 12.11, closing for a second day at its lowest level in a month. The gauge, known as the VIX, rose 1.3 percent last week.

     Five of the S&P 500’s 10 main groups increased, led by phone companies, consumer discretionary and energy shares.  Utilities and consumer staples fell the most.

     Retailers in the benchmark index reached an all-time high.  Amazon.com Inc. gained 2.2 percent to a record, while Staples Inc. rose 1.8 percent, the most since April. TJX Companies Inc. increased 1.5 percent to the highest in a month, and Urban Outfitters Inc. advanced 1.1 percent.

     Financial shares climbed for a second day as the yield on 10-year Treasuries rose to a two-week high after the biggest advance in six weeks Monday. KeyCorp and JPMorgan Chase & Co. added at least 1.1 percent to pace the group. Lincoln National Corp. climbed 1.1 percent.

     Energy shares erased an earlier decline, rising as West Texas Intermediate crude prices climbed above $61 a barrel. Apache Corp., Valero Energy Corp. and Tesoro  Corp. gained more than 1.9 percent.

     AT&T jumped 2.5 percent to its highest in almost 11 months after Barclays Plc upgraded the shares to overweight, and UBS AG raised to buy from neutral.

     Green Dot soared 41 percent, the most ever, after the issuer of reloadable prepaid debit cards reached a new five-year deal with Wal-Mart and authorizing a $150 million stock buyback. Shares had fallen 25 percent this year through Monday.

     Miner Freeport-McMoRan Inc. rallied 3.7 percent as copper prices rose the most in almost two months on optimism that stabilizing economies will buoy demand from Europe to China, the world’s top metals consumer.

     Consumer staples slumped as a Bloomberg gauge on the dollar had its best gain in more than two weeks. Philip Morris International Inc. and Altria Group Inc. lost more than 0.9 percent. Molson Coors Brewing Co. declined 2.2 percent. A stronger U.S. currency makes their products less competitive abroad, and can dent revenue when overseas sales are converted back into dollars.

     Semiconductors weighed on the technology group, with Texas Instruments Inc. and KLA-Tencor Corp. down more than 1.2 percent. Hard-drive maker Western Digital Corp. retreated 3.3 percent to its lowest since October after JPMorgan Chase & Co. downgraded the shares to neutral from overweight, citing little evidence of improvement in PC demand. JPMorgan also trimmed estimates on Seagate Technology Plc, which slipped 2.9 percent.

     BlackBerry Ltd. lost 4.2 percent, its biggest drop since March. The smartphone maker posted a wider-than-anticipated quarterly loss and handsets shipments at the lowest since 2007 even as the new keyboard-equipped Classic phone went on sale.                         

     Utilities slid for a third day, losing 1.4 percent. CenterPoint Energy Inc., NiSource Inc. and PPL Corp. fell more than 1.8 percent.

     Security services company ADT Corp. retreated 4.9 percent to a four-month low. Research firm Off Wall Street Consulting Group Inc. initiated coverage on the shares with a long-term sell and a $25 price target, 29 percent below the current price.

     Drive-in burger chain Sonic Corp. dropped 10 percent, the most in three months, after saying it will open fewer franchised restaurants this year than it had planned.
 

Have a wonderful evening everyone.

Be magnificent!

The Hindu believes that he is a spirit.

He believes that the sword cannot pierce him, that fire cannot burn him,

that water cannot dissolve him, that air cannot dry him out.

He believes that the soul is a circle whose circumference has no limits, but whose center is situated in the body.

Death signifies the transference of this center of a body to another.

We are the children of God.

Matter is our servant.

Swami Vivekananda

As ever,

Carolann

It isn’t working that’s so hard, it’s getting ready to work.

                                        -Andy Rooney, 1919-2011

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM

Senior Portfolio Manager &

Senior Vice-President

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7