July 10, 2015 Newsletter

Dear Friends, 

Tangents: 

Carolann is out of the office, I will be writing the newsletter on her behalf.

PHOTOS OF THE DAYAn Indian couple splashes water as it rains in New Delhi, Friday. India’s monsoon season, which runs from June to September, brings rains that are vital to agriculture. Altaf Qadri/AP

A Syrian refugee child, who has been living in Jordan with his family for two-and-a-half years after they fled violence in their Syrian hometown of Idlib, poses in his family’s tent at an informal settlement in Madaba city, near Amman, Jordan, Thursday. The number of Syrian refugees in neighboring countries has surpassed 4 million, the UN refugee agency said, adding that the total was on course to reach 4.27 million by the end of 2015.Muhammad Hamed/Reuters

Market Closes for July 7, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, rebounding from a January low, amid optimism China’s markets are stabilizing and Greece will secure a bailout.

     Sun Life Financial Inc. and Manulife Financial Corp. rallied at least 1.9 percent as a decline in Canadian jobs sustained the view additional stimulus will be needed from the central bank. Bombardier Inc. sank 2.5 percent to the lowest level since 1993. Encana Corp. and Crescent Point Energy Corp. declined more than 4 percent as crude oil capped a second straight weekly drop.

     The Standard & Poor’s/TSX Composite Index rose 132.58 points, or 0.9 percent, to 14,411.07 at 4 p.m. in Toronto. The benchmark equity gauge lost 1.9 percent this week, the biggest one-week decline since March.

     Royal Bank of Canada jumped 1.5 percent and Toronto- Dominion Bank rose 1.1 percent as financial-services stocks increased 1.2 percent as a group. Eight of 10 industries in the S&P/TSX advanced on trading volume 1 percent higher than the 30- day average today.

     The Shanghai Composite Index jumped 4.5 percent, capping an 11 percent gain in two days, the biggest two-day advance since 2008. China is Canada’s second-largest trading partner after the U.S. and the world’s largest consumer of commodities.

     Greece submitted a package of measures to creditors to access a bailout of at least 53.5 billion euros, hailed by France as credible. The proposed spending cuts, pension savings and tax increases were being studied on Friday by the European Commission, the International Monetary Fund and the European Central Bank.

     The Canadian economy lost 6,400 jobs in June as the jobless rate held steady at 6.8 percent. Part-time work fell by 71,200, the biggest decline in more than four years. The Bank of Canada will deliver its next interest rate decision July 15 amid speculation a faltering economy will lead Governor Stephen Poloz to cut rates a second time this year.

     “This report is simply not strong enough in our mind to make up for a lot of the economic weakness that has been realized through the first half of the year,” said David Tulk, chief Canada macro strategist at Toronto-Dominion Bank’s TD Securities unit, in a note to clients. “We do not believe that this report challenges our call for a 25 basis-points cut in the overnight rate next week.”

 US

By Sofia Horta e Costa and Annelise Alexander

     (Bloomberg) — Stock investors got jolted in a zigzag week, with plunges around the world giving way to the biggest rallies in at least three years for China and Europe.

     Spurred by optimism on Greece, the Stoxx Europe 600 Index climbed 4.3 percent on Thursday and Friday, erasing earlier losses with the biggest two-day advance since 2011. The Shanghai Stock Exchange Composite Index jumped 11 percent in two sessions, the most in almost seven years, while the Standard & Poor’s 500 Index added 1.2 percent Friday to wipe out a weekly decline.

     While investors have sometimes come to regret bouts of bullishness of late, the end-of-week gains defused global markets where turbulence has ruled for the last month. The Chicago Board Options Exchange Volatility Index decreased 16 percent on Friday, the biggest drop of the year.

     “We’re clearly ending the week with a loud sigh of relief,” said Daniel Murray, head of research at EFG Asset Management in London. “It’s been interesting, but I think we all look forward to moving on.”

     Stocks are advancing in a global economy that while not exactly surging, is still growing. Morgan Stanley predicts worldwide expansion of almost 4 percent in the second half of this year, up from 2.9 percent in the first six months. The International Monetary Fund sees 2015 growth of 3.3 percent.

     The Stoxx Europe 600 rose 1.4 percent for the week amid speculation that Greece may finally secure a bailout. Shares had earlier tumbled to the lowest level since February, flirting with a correction, as Greek voters rejected austerity.

     Equities in Europe’s so-called peripheral markets saw the biggest swings — first bearing the brunt of a two-day selloff following the Greek vote, then rebounding.

     Spain’s IBEX 35 Index has surged 6.7 percent since Tuesday’s close, the most since 2012, while Portugal’s PSI 20 jumped 8.7 percent, the biggest three-day advance since 2010. In Italy, the FTSE MIB added 9.4 percent.

     The Athens stock exchange will stay closed through July 13. A U.S.-listed exchange-traded fund tracking its stocks climbed 3.8 percent for the week, paring its loss since the bourse closed on June 29 to 4.4 percent.

     The prospect of a deal to end a standoff between creditors and Greece’s Syriza-led government brought relief to financial markets. After months of escalating tension and price swings, Greece offered to meet most of the demands made by creditors in exchange for a bailout of 53.5 billion euros ($60 billion). The proposal still faced a weekend of political wrangling.

     Aiding global sentiment was the rebound in China, where unprecedented government intervention helped curb a stock rout that erased $3.9 trillion in less than a month.

     The Shanghai Composite Index rallied 4.5 percent to3,877.80 at Friday’s close, adding to Thursday’s 5.8 percent surge. With more than 1,300 companies still halted on mainland exchanges, trading was limited to 53 percent of the market.

     Official measures to support shares became more extreme during the week as declines deepened. They included a ban on stockholders and executives from selling stakes in listed companies for six months, an order for companies to buy equities and an investigation into short-selling.

     The rebound pared losses by the Shanghai Composite since its June 12 high to 25 percent. While the median price-to- earnings ratio in China has dropped to 57 from 108 at the height of the rally, valuations are almost three times as high as those on the S&P 500.

     U.S. equity investors watched stocks slip below a support level untouched since October, only to climb back to enter the weekend with the strongest momentum in two months.

     The S&P 500 ended flat, masking a volatile week. Stocks had the fourth-biggest drop of the year Wednesday that sent the benchmark gauge below its average price for the past 200 days, a move that has sparked rebounds in the past. Equities rallied 1.2 percent Friday, the best showing since May 8.

     The VIX, which jumped 19 percent in the first four days of the week, erased nearly all of that on the last day as the gauge retreated the most since December.

     “It was a volatile week, that’s for sure,” said Dan Greenhaus, chief global strategist in New York at BTIG LLC. “Clearly investors are focused squarely on Greek negotiations and the Chinese stock market, but the ramifications of both appear to be limited, hence the end-of-the week rally.”

     China and Greece diverted attention from U.S. economic data and the path of the Federal Reserve’s monetary policy, as investors grow concerned about global growth.

     While the IMF on Thursday cut its forecast for global growth this year, citing a weaker first quarter in the U.S., it expressed confidence that market turbulence from China to Greece won’t cause widespread damage.

     Minutes of the Federal Reserve’s June meeting, published Wednesday, indicated officials thought tighter monetary policy was warranted, despite concern over risk from abroad. Federal Reserve Chair Janet Yellen said Friday she still expects to raise interest rates this year.

     Alcoa Inc. unofficially kicked off the earnings season Wednesday. JPMorgan Chase & Co. and Wells Fargo & Co. are among S&P 500 firms reporting results next week. Analysts project earnings for companies on the gauge dropped 6.4 percent in the second quarter.

     “We could end up with some positive surprises,” said John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York. “If we don’t, I’ll have to go back to the drawing board.”

Have a wonderful evening everyone.

Be magnificent!

 It’s a funny thing about life;

if you refuse to accept anything but the best, you very often get it.

W. Somerset Maugham

As ever,

Leyla

All things are subject to interpretation whichever interpretation prevails

at a given time is a function of power and not truth.

Friedrich Nietzsche

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