August 13, 2015 Newsletter

Dear Friends,

Tangents:

Some good news from around the World:

Norway: “Oslo built a “bee superhighway.”  To support the crop-critical pollinators, the capital city created feeding stations of marigolds and other flowers along an east-west pathway.  An online map shows where residents can participate by planting bee-appropriate flowers in gardens and on rooftops.   (In the US, meanwhile, more retailers are unilaterally dropping insecticides that use bee-killing neonicotinoids.) – from theSmithsonian.

Mauritius, Ghana and ZamBia:  Significant gains in education were made, putting these three nations atop the list of sub-Saharan countries on that score.  Mauritius has eliminated its gender gap in secondary education.   Ghana graduated 72,000 students last year – half in business, law, or social science.  Zambia, one of the world’s poorest countries, enacted free basic primary education in 2002, and has increased its number of universities.  –from World Economic Forum, Government of the United Kingdom.

The Netherlands: A court ruled on government greenhouse gas emissions, a global first.  The Hague District Court ordered the Dutch government to cut emissions at least 25 percent by 2020, calling current government policies inadequate.  Because much of the Netherlands is below sea level, rising seas due to climate change present a considerable incentive for action. –Mashable, Urgenda Foundation.

Peru: Greenhouses are boosting nutrition.  Harsh climate and poor soil make malnutrition a consistent problem for high-altitude Andean communities.  Now a number of nongovernmental organizations have partnered to help these communities build small greenhouses operated by community members trained to grow produce adhering to biointensive standards, including using natural pesticides and organic fertilizers. –Andean Alliance for Sustainable Development.

Worldwide: Spam e-mail is at a 12-year low.  In June, 49.7 percent of the messages scanned by security firm Symantec – there are billions – were considered junk e-mails.  People still get a lot, clearly, but this is the first time the number has dipped below half in more than a decade.  Action against “botnets” (networks of hijacked computers) is credited.  It also means cyber criminals are now seeking other avenues, allowed the firm.  The production of malware, for example, has increased. –Symantec, BBC.

Germany: The Berlin wall that was erected on this day, August 13^th, in 1961, no longer exists!

PHOTOS OF THE DAY

Youth filling out job applications at Opportunity Fair and Forum at McCormick Place in Chicago, Ill., on Thursday, as part of the 100,000 Opportunities Initiative. The Initiative creates pathways for youth with untapped talent and potential to build skills, gain credentials and employment, and reclaim the American Dream. Peter Wynn Thompson/100,000 Opportunities Initiative/AP

A Cambodian woman binds rice seedlings as she collects them at a nursery on the outskirts of Phnom Penh, Cambodia, Thursday. Farmers transplant the seedlings in other rice paddies to grow rice. Heng Sinith/AP

Baker Eulogio Pillco bakes traditional bread using an oven made of clay in the town of Pisac, Cusco, Peru, Thursday. Mr. Pillco, who wears traditional Andean clothes, has been baking for 30 years, following in the footsteps of his father who taught him the craft. Pilar Olivares/Reuters

Market Closes for August 13^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Crude’s slump to a six-year low sent Canadian stocks lower for a third day, with oil producers resuming a rout and gold miners tumbling.

     The slide in energy stocks overshadowed an easing of anxiety in global financial markets caused by China’s shock devaluing of its currency. An ebb in demand for haven assets such as gold sent the metal lower after a five-day rally and dropped shares of Canadian miners.

     Energy and raw-materials producers renewed slides that have made the two the worst-performing industries in the Standard & Poor’s/TSX Composite Index this year.

     The S&P/TSX fell 101.13 points, or 0.7 percent, to 14,238.40 at 4 p.m. The benchmark Canadian equity gauge has fallen 2.7 percent this year and is at a two-week low.

     West Texas Intermediate crude dropped 2.5 percent to $42.23, the lowest since March 2009, as U.S. crude inventories remained above the five-year average. Oil moved into a bear market in July.

     Encana Corp. lost 6.2 percent and Pacific Rubiales Energy Corp. tumbled 10 percent to lead energy stocks lower. Trican Well Service Ltd. plunged 14 percent to a November 2000 low.

     The Bloomberg Commodity Index, which tracks a basket of prices for raw materials including gold, natural gas and crude, slipped 0.4 percent, for a third straight drop. 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.

     Goldcorp Inc. fell 4.5 percent and Barrick Gold Corp. decreased 4 percent as gold producers tumbled. Gold for December delivery lost 0.7 percent in New York. The S&P/TSX Gold Index had soared 20 percent in a five-day rally through Wednesday, the biggest gain since December 2008.

US

By Oliver Renick and Annelise Alexander

     (Bloomberg) — U.S. stocks closed lower, after fluctuating throughout the day, as anxiety over China eased while investors focused on economic data and the pace of any Federal Reserve interest-rate increases.

     The Standard & Poor’s 500 Index ran out of steam after yesterday staging its biggest intraday recovery in three years. Stocks held in the tightest trading range since 1927, after China earlier this week roiled global markets with a shock currency devaluation. Labor and sales data today bolstered the case for higher interest rates as soon as next month.

     The S&P 500 slipped 0.1 percent to 2,083.46 at 4 p.m. in New York, after ranging between a 0.3 percent gain and falling as much as 0.4 percent. The Dow Jones Industrial Average rose 5.74 points to 17,408.25, and the Nasdaq Composite Index added 0.4 percent. About 6.2 billion shares traded hands on U.S. exchanges today, 5 percent below the three-month average.

     “The markets overreacted, we saw the turnaround yesterday, and that’s all nice but the S&P is in a well-worn range and the range may continue to prevail,” said Julian Emanuel, executive director of U.S. equity and derivatives strategy at UBS Securities LLC in New York.

     The S&P 500 yesterday erased a 1.5 percent loss sparked by concerns China’s economy is faltering, reversing after it fell below 2,050. That’s toward the bottom end of a range its been stuck in all year, with the top being its May 21 record of 2,130. The gauge has advanced 1.2 percent in 2015, never closing more than 3.5 percent above or below where it started the year.                        

     Global markets have been jolted since Chinese policy makers on Tuesday unexpectedly devalued the yuan. The currency’s tumble slowed today after the People’s Bank of China said that there’s no basis for depreciation to persist and policy makers will step in to control large fluctuations.

     “The statement out of the Chinese authorities calmed fears regarding the prospect of these awful phrases like ‘currency wars,’” said Daniel Murray, London-based head of research at EFG Asset Management. “With concerns about China and Greece fading, the market can focus on fundamentals underlying the U.S. economy.”

     Data today showed sales at U.S. retailers rose in July on growing demand for everything from cars to clothing, and a decline the previous month was wiped away, signaling consumers are propelling growth in the world’s largest economy. The 0.6 percent advance matched the median forecast of economists surveyed by Bloomberg.

     “I don’t think it’s a market mover and I don’t think it will influence the Fed’s upcoming decision on raising interest rates, but I do think it’s a good number given that it shows some stability,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees $110 billion.                           

     A separate report showed applications for unemployment benefits in the U.S. are hovering close to a four-decade low, a sign of muted firings and steady progress in the labor market.

     Traders have raised their expectations for a September rate move by the Fed, amid the data and as concerns about the impact of China’s currency devaluation ease. The probability of a rate increase in September rose to 48 percent from 40 percent Tuesday, according to futures trading data compiled by Bloomberg. Odds were at 54 percent after the July jobs report last Friday.

     The Chicago Board Options Exchange Volatility Index fell 1 percent Thursday to 13.49. The gauge, known as the VIX, is up about 11 percent so far in August, recovering a third of July’s biggest monthly drop since February.

     Eight of the S&P 500’s 10 major groups declined today, led by a 1.4 percent drop in energy shares that followed a nearly 2 percent jump in the sector Wednesday. Consumer discretionary and financial companies rose.

     Consol Energy Inc. and Transocean Ltd. paced declines among the benchmark’s energy stocks, falling more than 6.5 percent. Crude oil slumped to a six-year low as a global glut and a rising dollar curbed investor demand for commodities. Energy shares led yesterday’s rebound, with Consol and Transocean rising more than 3.8 percent.

     Kohl’s Corp. dropped 8.8 percent to the lowest level since November after the retailer reported second-quarter sales that fell short of analysts’ estimates and said profits this year will be at the low end of its forecast.                     

     Shake Shack Inc. fell 16 percent, the most since its January trading debut, after pricing a secondary stock offering at $60 a share, below Wednesday’s close.

     Retailers were among the best performers in the equity benchmark following the report showing broad-based sales gains in July, and as Advance Auto Parts Inc. rallied 9.2 percent to a record on better-than-estimated quarterly profits. O’Reilly Automotive Inc. and AutoZone Inc. rose more than 2.4 percent. Home Depot Inc. and Lowe’s Cos Inc. added at least 1.8 percent.

     An S&P index of homebuilders rose 1.8 percent to a two- month high. PulteGroup Inc. gained 2.3 percent, and D.R. Horton Inc. reached its highest since February 2007, up 2.4 percent.

     Cisco Systems Inc. rose 2.9 percent, the most since February, as quarterly revenue beat estimates. News Corp. gained 7.6 percent, its biggest rise in more than a year, after saying it is nearing the conclusion of talks to sell its Amplify Inc. education unit, even as sales missed forecasts.

     Netflix Inc. climbed 2.7 percent. Pay-TV services recorded their biggest-ever quarterly drop in subscribers, losing 625,000 TV customers, according to a report from the research firm SNL Kagan. So-called cord cutters are dropping pay-TV packages that cost an average $87 a month in favor of online services from Netflix and Amazon.com Inc. priced at under $10.

     As the earnings season winds down, 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.

Have  a wonderful evening everyone.

Be magnificent!

Never under any circumstances ask “how.”

When you use the word “how” you really want someone to tell you what to do,

some guide, some system, someone to lead you by the hand so that you lose your freedom,

your capacity to observe, your own activities, your own thoughts, your own way of life.

Krishnamurti

As ever,

Carolann

Once you learn to quit, it becomes a habit.

                 -Vince Lombardi, 1913-1970

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