August 7, 2015 Newsletter

Dear Friends,

Tangents:

On this day in 1959, the first photo of Earth from space was transmitted  by the US satellite Explorer VI.  However, it would take years for the general public to see the pictures of Earth from space.  Stewart Brand, founder of Whole Earth Catalogue:  “In 1966, I conceived and sold buttons which read, ‘Why Haven’t We Seen A Photograph of the Whole Earth Yet?’   Legend has it that this accelerated NASA’s making good color photos from distant space….We saw the photograph of the Earth from space that we got from the Apollo program in 1969.  The first Earth Day was in 1970.  This is not an accident.  The ecology movement really took off once we had those photographs from space.”

So, it was amazing to pick up the Globe & Mail this morning and see the photo and headline “LOOKING ON THE DARK SIDE.”  A camera on a NASA satellite captured this rare image of the far side of the moon, illuminated by the Sun as it crossed between the spacecraft and Earth, from a  distance of 1.6 million kilometers.

Dark side of the moon revealed by Nasa camera a million miles from Earth – video

PHOTOS OF THE DAY

Crowds watch during a mass launch at the Bristol International Balloon Fiesta in south west England on Friday. The largest hot air balloon festival in Europe takes place over four days and is in it’s 37th year. Toby Melville/Reuters

Volunteers carry milk churns as they help land artist Gerard Benoit a la Guillaume to form an art installation at the Chenau de Mayen in the resort of Leysin, Switzerland on Friday. More than 80 milk churns were placed between the Tour d’Ai and the Tour de Mayen summits at an altitude of 6,561 feet above sea level under the direction of the artist, to be photographed for his ongoing art project entitled ‘Milk churns without borders’. Denis Balibouse/Reuters

Market Closes for August 7th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell for a second day despite better-than-forecast job gains, as energy producers tumbled with crude for a sixth weekly drop and financial shares retreated.

     Energy companies sank 1.8 percent as a group, while crude futures fell 1.8 percent in New York, pushing the weekly loss to 6.9 percent on speculation the global supply glut will be prolonged. Royal Bank of Canada and Toronto-Dominion Bank declined at least 0.7 percent after also slipping Thursday.

     The Standard & Poor’s/TSX Composite Index fell 103.21 points, or 0.7 percent, to 14,302.70 at 4 p.m. in Toronto. The gauge has lost 1.2 percent this week and fallen 2.3 percent in 2015, one of only three developed markets in negative territory for the year among the 24 tracked by Bloomberg.

     The Bloomberg Commodity Index, which tracks a basket of prices for raw materials including gold, natural gas and crude, was little changed near 13-year lows after a two-day slide. Energy and materials are the worst-performing industries in Canada this year and account for almost 30 percent of the benchmark Canadian equity gauge.

     The resource-dominated S&P/TSX had added 3.6 percent during a six-day rally that was the longest since April. The advance follows a seven-day rout of 5 percent that was the longest since 2011.

     Valeant Pharmaceuticals International Inc. slipped 0.1 percent, falling for a second day. The drug maker tracked back- to-back declines among U.S.-listed biotechnology and health-care shares.

     Canada gained 6,600 jobs during the month, leaving the nation’s unemployment rate unchanged at 6.8 percent, helped by increases in part-time and self-employed work. U.S. payrolls added 215,000 jobs in July, keeping the Federal Reserve on the path toward raising interest rates as soon as next month.

     Pengrowth Energy Corp. tumbled 15 percent to an all-time low, and Crescent Point Energy Corp. retreated 4.3 percent to lead energy shares lower. Great-West Lifeco Inc. and Manulife Financial Corp. lost at least 1.2 percent to help pace declines among financial-services companies.

US

By Joseph Ciolli and Lu Wang

     (Bloomberg) — U.S. stocks fell, with the Dow Jones Industrial Average posting its longest slide since 2011, amid declines in commodity producers while data showed continued progress in the labor market.

     Energy companies dropped as oil sank to a four-month low, while raw-materials fell the most in two weeks. Hershey Co. slid 2.7 percent after quarterly revenue missed estimates. American Express Co. rallied 6.3 percent as an activist fund was said to have amassed a stake in the company. Nvidia Corp. jumped 12 percent after predicting sales that may exceed some estimates.

     The Dow slipped 46.37 points, or 0.3 percent, to 17,373.38 at 4 p.m. in New York, falling for a seventh day to a six-month low. The Standard & Poor’s 500 Index fell 0.3 percent to 2,077.57, above its average price during the past 200 days. The Nasdaq Composite Index sank 0.3 percent, while the Russell 2000 Index lost 0.7 percent, and briefly erased its gain for the year.

     “I’m not surprised to see the market down given the downward bias we’ve seen the last couple of days,” said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “If anything, the report slants the bias towards a September rate hike, given the strength of the jobs numbers.”

     Data today showed employers added 215,000 jobs in July and the unemployment rate held at a seven-year low of 5.3 percent. The gain in payrolls followed a 231,000 advance in June that was bigger than previously estimated. While the report also showed a pickup in hours worked, average hourly earnings climbed a less- than-forecast 2.1 percent from a year earlier.     The Federal Reserve is assessing the strength of the U.S. recovery from an early year slowdown as policy makers debate whether the world’s largest economy can withstand the first rate rise since 2006. Traders were pricing in a 54 percent probability of the first increase next month.

     “There are probably still a fair number of investors that don’t quite believe the Fed is really going to raise rates,” said Bob Baur, chief global economist at Principal Global Investors in Des Moines, Iowa. The firm oversees $346.2 billion. “This report does nothing to deter the Fed from doing that in September.”

     Investors are also watching corporate earnings to gauge the economy’s health. Some 88 percent of S&P 500 members have released results this season, with three-quarters beating profit estimates and half topping sales projections. Analysts now forecast a more modest drop in second-quarter earnings, calling for a 2.1 percent fall instead of a 6.4 percent decline a month earlier.

     The S&P 500 dropped 1.3 percent this week amid declines among media and biotechnology shares. Commodity producers have also slumped and Apple Inc. fell into a correction. The benchmark measure is up 0.9 percent this year, trailing most developed-market gauges. The Dow fell 1.8 percent in the week, with Walt Disney Co. leading declines.

     While data showed the labor market chugged along at a pace policy makers want to see in order to raise rates, tepid gains in hourly earnings indicate little momentum in wage growth. A rout in commodities from industrial metals to oil continued on signs of a slowdown in China, while selling accelerated in shares of some of the bull market’s biggest winners from biotechnology to media.

     The Chicago Board Options Exchange Volatility Index fell 2.8 percent Friday to 13.39, after a 10 percent jump yesterday. The gauge, known as the VIX, was up 10 percent this week, after posting its biggest monthly drop since February. About 6.8 billion shares traded hands on U.S. exchanges, 5 percent above the three-month average.

     Seven of the S&P 500’s 10 main groups fell today, with energy, materials and consumer staples sliding the most. Utilities rose for the 10th time in 11 sessions to a more than two-month high.

     Energy shares in the benchmark index lost 1.9 percent, with crude oil posting a sixth weekly decline as West Texas Intermediate hit its lowest since March. Consol Energy Inc. tumbled 8 percent to an 11-year low. EOG Resources Inc. and Marathon Oil Corp. dropped more than 5 percent.

     CF Industries Holdings Inc. decreased 6.4 percent, the most in more than three years, to lead raw-materials shares lower. CF yesterday agreed to acquire European and North American assets from OCI NV for about $8 billion. The company said the deal will create the world’s largest publicly traded producer of nitrogen fertilizer.

     Miner Freeport-McMoRan Inc. slid for the sixth time in seven sessions, down 6.1 percent to its lowest since December 2008. Alcoa Inc. and DuPont Co. retreated more than 1.9 percent.

     Hershey weighed on the consumer-staples group amid its biggest decline in seven weeks. Supermarket chain Kroger Co. and Mondelez International Inc. fell at least 1.5 percent. Wal-Mart Stores Inc. slipped 2.1 percent, the most in more than two months.

     The Nasdaq Biotechnology Index sank 0.7 percent to a one- month low, after losing 4 percent Thursday. Biogen Inc. and Vertex Pharmaceuticals Inc. slid more than 1.2 percent. The index trimmed an earlier drop of as much as 2.5 percent as Amgen Inc. erased a 1.9 percent slide to rally 1.7 percent, and Endo International Plc added 2.8 percent after falling 2.3 percent.

     Twitter Inc. dropped for a third day, down 1.8 percent to an all-time low. The shares are down 26 percent after the social-media company reported financial results last month.

     American Express jumped the most in four years after people with knowledge of the matter said ValueAct Capital Management has amassed a stake in the credit-card issuer and is considering pursuing shareholder-friendly changes. The Dow member’s gain helped offset some of the index’s slide to the lowest since February, with AmEx contributing 32 points in a positive direction.

Have  a wonderful weekend everyone.

Be magnificent!

In the song of the rushing torrent,

hold onto the joyful assurance:

I will become the sea.

And this is not a vain supposition;

it is absolute humility, because it is the truth.

Rabindranath Tagore

As ever,

Carolann

Keep your fears to yourself, but share your courage with others.

                                    -Robert Louis Stevenson, 1850-1894

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