August 12, 2015

Dear Friends,

Tangents:

Tonight is the Night of the Shooting Stars!  Perseid meteor shower peaks tonight and early tomorrow morning.  Ivan Semenius writes in The Globe & Mail today, ”Meteors are small particles of space dust that burn up when they plunge through Earth’s atmosphere at high speeds.  To the eye, they appear as fleeting streaks of light that dart across the sky.  During the Perseid shower, Earth passes through an entire stream of such particles all moving in the same direction….the shower’s official name stems from the fact that the meteors appear to emanate from the constellation Perseus, which happens to lie in the direction of the approaching stream.” 

Supposedly we will have a great view tonight because of a favourable weather forecast and the absence of moonlight.

On this day 25 years ago, parts of the largest-ever Tyrannosaurus rex skeleton were discovered jutting out of a cliff near Faith, South Dakota.  It can be viewed at the Field museum in Chicago.

PHOTOS OF THE DAY

Stars seen as streaks from a long camera exposure are seen behind a Stations of The Cross, in Ujue, northern Spain, Wednesday. The meteor shower is expected to peak Wednesday night into Thursday morning. Alvaro Barrientos/AP

A couple play in foam during the Sziget music festival on an island in the Danube River in Budapest, Hungary on Wednesday. Laszlo Balogh/Reuters

Market Closes for August 12^th, 2015

International Markets

Bonds

Currencies

Commodities

Number of the day:  800 Billion

Capital (in US dollars) that has left China in the past year.  The large exodus is coupled with a steep drop in China’s stock markets that began mid-June and a continuing economic slowdown.

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell a second day amid continued concern that increased volatility from China will constrain global growth.

     Selling eased in afternoon trading as equities in the U.S. staged a rebound. Industrials and consumer shares slumped with banks in Toronto. Royal Bank of Canada, the nation’s largest lender, dropped 1 percent. Gold producers rallied for the biggest five-day gain since 2008 as the price of gold jumped.

     The Standard & Poor’s/TSX Composite Index fell 75.14 points, or 0.5 percent, to 14,339.53 at 4 p.m., paring an earlier decline of as much as 1.6 percent. The benchmark Canadian equity gauge has fallen 2 percent this year, making one of the worst-performing developed-nation markets.

     The S&P 500 erased a 1.5 percent decline, ending the session little-changed. Markets in Europe and developing nations tumbled amid concern that China’s economy is faltering and will hurt growth around the world. The nation is Canada’s second- largest trading partner after the U.S. and the world’s biggest commodities consumer.

     The MSCI All-Country World Index tracking both developed and developing markets declined 0.6 percent to a two-week low. The Stoxx Europe 600 Index sank 2.7 percent, the biggest decline since October.

     The Bloomberg Commodity Index, which tracks a basket of prices for raw materials including gold, natural gas and crude, slipped 0.3 percent. The index had fallen to a 13-year low last week, dragging down companies that comprise about one-third of Canada’s stock market. Prices have tumbled 13 percent this year.

     Commodities provided a haven for investors Wednesday, as Yamana Gold Inc. increased 9.1 percent and Barrick Gold Corp. rallied 4.9 percent as investors traded into the safety of gold. The metal is seen as a safe-haven investment in times of increased volatility.

     The S&P/TSX Gold Index surged 5.5 percent. The gauge has soared 20 percent in a five-day rally, the biggest gain since December 2008.

     Air Canada tumbled 6.4 percent after second-quarter revenue fell short of analysts’ estimates. The carrier predicted average fares will decline amid increased capacity. Industrials stocks dropped 1.4 percent as a group.

US

By Oliver Renick

     (Bloomberg) — The Standard & Poor’s 500 Index erased a 1.5 percent loss sparked by concerns on China’s economy, as the gauge rose back above its average price during the past 200 days.

     Energy companies led the comeback as some of the market’s more beaten-down shares rallied. Exxon Mobil Corp. and Chevron Corp. advanced more than 1.1 percent. Apple Inc. climbed 1.5 percent, reversing an earlier 3.4 percent drop, and Intel Corp. rose 1.7 percent to pace gains among technology companies. Financials fell, with Bank of America Corp. and JPMorgan Chase & Co. losing more than 1.4 percent.

     The S&P 500 advanced 0.1 percent to 2,086.05 at 4 p.m. in New York, erasing losses as it climbed back above its 200-day moving average. The Dow Jones Industrial Average slipped less than 1 point to 17,402.51, after dropping as much as 1.6 percent. The Nasdaq Composite Index rose 0.2 percent, erasing a 1.8 percent slide. About 8.3 billion shares traded hands today, 27 percent above the three-month average.

     “It’s been like a spectator sport today,” said Tim Dreiling, senior portfolio manager at the Private Client Reserve of US Bank in Kansas City. The firm oversees about $127 billion. “It may have been buyers coming off technical triggers, but anytime over the last few years we get a disruption or tiny catalyst to take risk off the table, we get a hiccup and once the concerns abate throughout the trading day, capital comes in and gives some support.”

     The S&P 500 has closed below its 200-day moving average only two times in 2015, as the level once again halted declines in the average. The gauge has advanced 1.3 percent this year as it remains stuck in the tightest trading range since 1927. The last time the index erased an intraday decline of at least 1.5 percent was on May 23, 2012.                       

     The U.S. equity benchmark dropped the most in more than two weeks Tuesday as China devalued its currency, sparking worries that the world’s second-largest economy is faltering. The S&P 500 had the biggest reversal since last October’s selloff, erasing three-quarters of Monday’s gain — an advance that itself had wiped out the previous week’s decline.

     Investors are watching as rallies and retreats alternate with uncommon speed in a market that has gone virtually nowhere in seven months, even as the average daily swing widened almost 20 percent from a year ago.

     China’s unexpected currency move has bolstered speculation the Federal Reserve may have to delay raising interest rates. The threat of a slowdown in China could harm global growth, while lower commodity prices damp inflation. The probability of a rate increase in September slipped to 42 percent from 54 percent Monday, according to futures trading data compiled by Bloomberg.

     “It could have positive implications for the market because the Fed may be inclined to postpone raising rates, but I’m not sure how surprised they are by it,” said Gene Peroni, a fund manager at Advisors Asset Management Inc. in Conshohocken, Pennsylvania. “Weakness in the Chinese economy didn’t come about over the weekend.”

     The Chicago Board Options Exchange Volatility Index fell 1 percent Wednesday to 13.61, erasing an earlier jump of almost 19 percent. The gauge, known as the VIX, rose 10 percent last week after posting its biggest monthly drop since February.

     Six of the S&P 500’s 10  main groups rose today, led by energy, utilities and technology companies. Financial, consumer discretionary and phone companies fell.

     Consol Energy Inc., Anadarko Petroleum Corp. and Transocean Ltd. added more than 3.4 percent to help lead the energy rally. The group gained 1.9 percent after falling as much as 0.8 percent intraday, and has had daily swings of more than 1.5 percent in four of the last five sessions.

     Qorvo Inc., Micron Technology Inc. and Intel rose at least 1.6 percent to bolster tech gains. Semiconductors in the S&P 500 climbed 1.1 percent. Fidelity National Information Services Inc. increased 8.7 percent, the most in five years, after the provider of banking technology agreed to buy software maker SunGard Data Systems Inc. in a deal valued at $9.1 billion, including debt.

     Banks in the benchmark gauge retreated as the yield on 10- Year U.S. Treasuries earlier dropped to a three-month low. Lenders had surged in recent months amid expectations that a Fed rate increase will expand lending margins and boost profits.

     Citigroup Inc., Bank of America and JPMorgan Chase lost more than 1.2 percent. Charles Schwab Corp. SunTrust Banks Inc. decreased at least 2.3 percent. The KBW Bank Index had its worst two-day slide in six months, down 3.1 percent.

     Luxury goods makers Tiffany & Co. and Coach Inc. declined at least 4.1 percent to pace a retreat in consumer discretionary companies, amid concerns that China’s weakening economy could dent sales. Michael Kors Holdings Ltd. fell for the first time in six sessions, down 2.1 percent.

     Macy’s Inc. tumbled 5.1 percent, the most in a year. The retailer posted second-quarter profit that missed analysts’ estimates after resorting to discounts to clear slow-selling inventory. Delays at West Coast ports caused a backlog of seasonal products in the second quarter, forcing Macy’s to cut prices to make way for new items.

     As the earnings season nears its end, about three-quarters of the S&P 500 companies that have reported so far beat profit estimates, while almost half topped sales projections. Analysts expect a 2.1 percent drop in second-quarter earnings, less than July 10 calls for a 6.4 percent decline.

     Investors will also watch economic reports this week, including U.S. retail sales and import-price data on Thursday, and industrial production and consumer sentiment on Friday. A report today from the Labor Department showed job openings decreased in June, while the pace of hiring increased to the strongest this year.
 

Have  a wonderful evening everyone.

Be magnificent!

To grow is to go beyond what you are today.

Stand up as yourself.  Do not imitate.

Do not pretend to have achieved your goal, and do not try to cut corners.

Just try to grow.

Swami Prajnanpad

As ever,

Carolann

Good luck needs no explanation.

 -Shirley Temple Black, 1928-2014

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