September 15, 2015 Newsletter

Dear Friends, 

Tangents:

PHOTOS OF THE DAY

 Mira Saville spins in her petticoat during the Nashuva Spiritual Community Jewish New Year celebration on Venice Beach in Los Angeles Monday. As Jews take part in the Tashlich prayer, a Rosh Hashanah ritual, bread crumbs are tossed into the waters to symbolically cast away sins. Lucy Nicholson/Reuters

 Women decorate gingerbread Oktoberfest hearts with icing at the Fesey company factory in Munich, Germany, Tuesday. Fesey will produce about 1000 gingerbread hearts with the word ‘tolerance.’ The proceeds will go toward the Caritas charity. Michaela Rehle/Reuters

Market Closes for September 15, 2015

International Markets

Bonds

Currencies

Commodities

 Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canada stocks rose, after a two-day drop, as utilities and financial services companies rallied before a key meeting of U.S. central bank policy makers.

     Financial stocks climbed 0.7 percent as all 10 industries in the benchmark equity gauge advanced. Fortis Inc. increased 3.4 percent to pace a 2.6 percent advance in utilities stocks.

     Energy producers advanced as oil prices in New York rose. Metals mining companies climbed as copper rose. The gold market has gone quiet ahead of U.S. Federal Reserve meetings, with volume about 47 percent below the 100-day average.

     The Standard & Poor’s/TSX Composite Index rose 109.37 points, or 0.8 percent, to 13,462.71 at 4 p.m. in Toronto.

     Canadian stocks have slid 2.9 percent this month after slumping 4.2 percent in August for the worst performance in a year, amid a rout among global financial markets following China’s shock currency devaluation. China is Canada’s second- largest trading partner after the U.S.

     Pessimism remains acute over the outlook for Canada’s largest stocks, with derivatives traders raising their bets that the turmoil in global equity markets will continue.

     Short positions have more than quadrupled since the beginning of 2015 and the ratio of put to call options remains elevated in the C$9.5 billion ($7.2 billion) iShares Standard & Poor’s/TSX 60 exchange-traded fund, according to data compiled by Bloomberg.

     The resource-rich S&P/TSX has been one of the worst- performing developed markets in the world this year as crude plunged. Energy and raw-materials producers have the biggest declines among 10 industries in the S&P/TSX this year.

     Penn West Petroleum Ltd. surged 6.1 percent after agreeing to sell its properties in the Mitsue area of central Alberta for C$192.5 million in cash. The company plans to use the proceeds to pay down debt. Energy producers added 0.1 percent, paring an earlier gain, led by a 3 percent rally in Tourmaline Energy Corp.

     Silver Wheaton Corp. jumped 3.1 percent and HudBay Minerals Inc. increased 4.7 percent as raw-materials producers advanced 0.5 percent as a group. Copper futures for December delivery rose 0.9 percent in New York.

     The U.S. Federal Reserve begins two days of meetings in Washington Wednesday, with traders predicting about a 28 percent chance the central bank will raise interest rates.

US 

By Anna-Louise Jackson

     (Bloomberg) — U.S. stocks rallied, with the Standard & Poor’s 500 Index closing at its highest level in more than two weeks, as retail sales data showed a resilient consumer before the Federal Reserve decides on Thursday whether to raise interest rates.

     United Parcel Service Inc. and FedEx Corp. added more than 2.5 percent to pace industrials. Citigroup Inc. and U.S. Bancorp gained at least 2 percent as lenders rose for the first time in three days. Microsoft Corp. and Google Inc. paced a climb among technology companies, rising more than 1.9 percent. Energy shares rebounded, with Chevron Corp. up 1.9 percent as oil gained.

     The S&P 500 gained 1.3 percent to 1,978.09 at 4 p.m. in New York, its highest since Aug. 28. The Dow Jones Industrial Average added 228.89 points, or 1.4 percent, to 16,599.85. The Nasdaq Composite Index climbed 1.1 percent. About 5.9 billion shares traded hands on U.S. exchanges, about 18 percent below the three-month average.

     “Everybody’s waiting on the Fed,” said John Canally, chief economic strategist at LPL Financial Corp. in Boston. “We saw a pretty solid gain in retail sales in August and an upward revision to July. People have been worried about a possible spillover from China and that’s just not happening.”

     A report today showed retail sales climbed for a second straight month, a sign consumers may be looking past recent volatility in financial markets. Although confidence has taken a hit from stock-market turmoil and global-growth concerns, the data show households are still putting their savings from cheap energy to work.

     Other data showed that while consumers are holding up, factories are struggling. U.S. factory production declined in August by the most since January 2014 as automakers scaled back after a surge the month before and a stronger dollar weighed on demand from overseas customers.

     Meanwhile, a quarterly survey said chief executive officers of large U.S. companies are becoming less optimistic about the prospects for the world’s largest economy, with more leaders planning to cut capital spending and employment in the next six months. The Business Roundtable CEO Economic Outlook Index fell to the lowest level since 2012, according to results compiled by Bloomberg.

     Speculation has increased that the Fed will delay raising rates as China ignited concern that its slowdown could weigh on global growth. While investors remain confident the central bank will increase borrowing costs this year, traders are pricing in just a 30 percent chance of action on Thursday, down from 48 percent before China’s currency devaluation last month. Odds of a move at the December gathering are 63 percent, according to data compiled by Bloomberg.

     Equities have been particularly volatile recently, with the Chicago Board Options Exchange Volatility Index jumping a record 135 percent in August amid the first 10 percent correction in U.S. equities in four years. Since 1990, the measure of market turbulence known as the VIX has averaged 16.9 when U.S. policy makers started raising rates. It fell 7.1 percent Tuesday to 22.54. If the Fed increases rates this week, it would be the first time since 1946 it has done so within a month of a correction.

     The bull market that began in March 2009 is the third longest in history, but it’s the longest ever to go without an increase by the Fed, eclipsing the nearest competitor by more than eight months. Economists are evenly split on whether there will be a hike, with about half the 81 surveyed by Bloomberg predicting a rate increase.

     After sliding into a correction, the S&P 500 has rallied 5.9 percent since Aug. 25, though the benchmark is still down 7.2 percent from its all-time high set in May. The gauge has lost 3.9 percent this year. All of the S&P 500’s 10 main groups advanced Tuesday, with industrial, financial and health-care companies rising the most. Eight groups rose more than 1 percent. Semiconductors climbed for a fourth day, their longest streak in almost three months. Avago Technologies Ltd. and Skyworks Solutions Inc. increased 2.4 percent.

     UPS rallied 3.6 percent, the most in seven weeks. The delivery company plans to hire about the same number of holiday season workers this year as in 2014 as the company recalibrates its response to the annual shipping surge from Christmas-gift shipping. FedEx reached a three-week high, up 2.5 percent. The Dow Jones Transportation Average gained 1.9 percent. Among other industrials, mining equipment maker Joy Global Inc. jumped 5.6 percent.

     Ford Motor Co. and General Motors Co. climbed more than 1.2 percent, while Fiat Chrysler Automobiles NV rose 3.3 percent. GM CEO Mary Barra said the U.S. carmaker will continue to resist Fiat Chrysler CEO Sergio Marchionne’s call to combine with his company. Fiat Chrysler and the United Auto Workers union agreed to extend their current four-year contract, that was set to expire at midnight Monday, while they keep negotiating toward a new accord.

     Financial companies rallied with rising bond yields, as investors speculated that higher interest rates would help lift profitability. The 10-Year U.S. Treasury yield reached the highest since July. E*Trade Financial Corp., Morgan Stanley and Bank of America Corp. each gained at least 2.1 percent.

     Drugmakers led the advance among health-care shares. Allergan Plc and Merck & Co. climbed more than 2.3 percent. Gilead Sciences Inc. and Pfizer Inc. added at least 1.4 percent. The Nasdaq Biotechnology Index increased 1.1 percent to regain the 0.5 percent lost on Monday.

     Ensco Plc and Transocean Ltd. led the energy group higher, climbing more than 4.6 percent. West Texas Intermediate crude advanced 1.3 percent for just its second increase in seven sessions. Cheniere Energy Inc. added 1.2 percent, trimming an earlier 4.2 percent climb, after Carl Icahn increased his stake in the natural-gas exporter this month to 9.6 percent from 8.2 percent.

     Host Hotels & Resorts Inc. lost 2.3 percent and Marriott International Inc. slid 1 percent amid concerns about a gauge of revenue after Pebblebrook Hotel Trust cited weaker-than- anticipated hotel demand in August and September. Pebblebrook fell 1 percent, paring an earlier 9.3 percent drop.

Have a wonderful evening everyone.

Be magnificent!

The secret of getting ahead is getting started.

Mark Twain

As ever,

Leyla

Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.

Helen Keller

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