June 7, 2016 Newsletter

Dear Friends,

Tangents:

On June 7, 1840, Edward FitzGerald wrote this letter to Frederick Tennyson:

I read [Bishop Gilbert, d. 1715] Burnet’s History [of his Own Times] – Expede Herculem [We recognize Hercules from his own foot].  Well, say as you will, there is not, and never was, such a country as Old England – never were there such a gentry as the English.  They will be the distinguishing mark and glory of England in history, as the arts were of Greece, and war  of Rome.  I am sure no travel would carry me to any land so beautiful, as the good sense, justice, and liberality of my good countrymen make this.  And I cling the closer to it, because I feel that we are going down the hill, and shall perhaps live ourselves to talk of all this independence as a thing that has been.  To none of which you assent perhaps.  At all events, my paper is done, and it is time to have done with this solemn letter.  I can see you sitting at a window that looks out on the Bay of Naples, and Vesuvius with a faint smoke in the distance: a half-naked man under you cutting up watermelons, etc.

PHOTOS OF THE DAY

A bumblebee lands on a flower in Erfurt, central Germany, on Tuesday. Jens Meyer/AP

An employee of Germany’s biggest retailer, Metro AG, reacts to HI-4, a life-size, humanoid robot, at Metro’s headquarters in Duesseldorf, Germany, on Tuesday. The android, modelled after its Japanese inventor Hiroshi Ishiguro, a professor at Osaka University, is made of a metal skeleton, plastic skull and silicon skin. It can be used as a human substitute for interaction via a tele-operated control system. Wolfgang Rattay/Reuters

Market Closes for June 7^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose a fourth day, extending a rally to near 10-month highs, as energy producers advanced with crude to offset a slump in Valeant Pharmaceuticals International Inc.

     The S&P/TSX Composite Index added 0.6 percent to 14,365.61 at 4 p.m. in Toronto, its highest close since Aug. 11. The index is up 21 percent from its Jan. 20 low, after climbing out of a bear market on Friday, amid its longest winning streak in almost eight weeks. Trading volume today was about 2.6 percent higher than the 30-day average.

     The recent rally has added to Canadian shares’ more expensive valuation relative to their U.S. peers. The S&P/TSX now trades at 21.9 times earnings, about 12 percent higher than the 19.6 times valuation of the S&P 500 Index.

     Canadian equities have been one of the top-performing markets this year, second only to New Zealand among developed nations with a 10 percent advance, a sharp rebound after falling the most in 2015 since the 2008 financial crisis. Raw-materials producers have led the broader rally, soaring 43 percent this year for the best year-to-date performance since 1993.

     Global stocks advanced for a fourth session, with the S&P 500 rising to a 10-month high. The dollar weakened to the lowest in a month after Federal Reserve Chair Janet Yellen said Monday she expects to raise interest rates gradually and held off from specifying any timeframe. Traders are pricing in a 20 percent chance for an increase in July, down from better than 50 percent odds before the U.S. jobs report last week, according to data compiled by Bloomberg.

     In Canada, Baytex Energy Corp. and MEG Energy Corp. climbed more than 12 percent to lead a 2.1 percent gain in energy producers. Crude extended a climb with futures settling above $50 a barrel in New York for the first time in more than 10 months. U.S. government data Wednesday is forecast to show stockpiles dropped for a third week, helping to ease the oil supply glut that’s roiled prices for the past year.

     Penn West Petroleum Ltd. soared 13 percent for a third day of gains. The oil and gas producer has jumped 41 percent in that time, after Bloomberg first reported on Friday Penn West hired Royal Bank of Canada to sell its Dodsland Viking light oil assets in Saskatchewan, according to people familiar with the deal.

     Cott Corp. added 10 percent, to the highest level in more than 10 years, after the water and pop beverage bottler agreed to buy European home and office services business Eden Springs in a 470 million euro ($534 million) deal.

     Valeant sank 15 percent to the lowest level since January 2011, after the drugmaker’s delayed first-quarter earnings were short of analysts’ expectations, and the company slashed forecasts. Earnings for 2016 are now expected to be $6.60 to $7 a share, excluding some items, down from March estimates of $8.50 to $9.50. Revenue in two key categories, dermatology and prescription ophthalmology, slumped by 43 percent and 30 percent, respectively.

US

By Anna-Louise Jackson

     (Bloomberg) — U.S. stocks advanced, even after the S&P 500 Index pared much of its gain in the final hour of trading, as rallies in energy producers and airline operators offset slumping health-care and bank shares.

     The benchmark reached a level that was 0.5 percent below its all-time high on Tuesday. Chevron Corp. and Exxon Mobil Corp. added at least 1.5 percent. The Bloomberg U.S. Airlines Index rose the most in two months after JPMorgan Chase & Co. said JetBlue Airways Corp. raised its domestic fares by $3 each way, spurring other flight operators to match in competing markets. Health-care shares led losses as Biogen Inc. slumped 13 percent after an experimental drug for multiple sclerosis failed in a mid-stage trial.

     The S&P 500 added 0.1 percent to 2,112.13 at 4 p.m. in New York, after climbing as much as 0.5 percent. It was still the highest close since July, while volume on U.S. exchanges was 11 percent below the three-month average. The Dow Jones Industrial Average added 17.95 points, or 0.1 percent, to 17,938.28 today, after briefly surpassing the 18,000 level for the first time since April.

     “If you look at U.S. stocks on a global perspective, to be touching or near that high is pretty phenomenal,” Gina Martin Adams, an equity strategist at Wells Fargo Securities LLC, said in a Bloomberg TV interview. “Yet when we look forward, we’re struggling to find that next source of growth. Maybe the drag has passed, but where is the growth going to come from? The result of that is this sideways trading market with very limited risk tolerance on the part of the broad investment community.”

     Stocks rose yesterday after Federal Reserve Chair Janet Yellen said the economy is making progress despite signs of slower jobs growth, making investors more comfortable with the prospects for gradual rate increases. That’s helped fuel gains in commodity prices. Traders have also cut back their bets for a Fed rate increase after last week’s disappointing jobs report. They are now pricing in almost no chance of a boost in June, and the probability for July has dropped to about 20 percent from 53 percent a week ago.

     Energy stocks posted the biggest gains, rising to the highest level since November, as oil advanced before U.S. government data forecast to show crude stockpiles dropped for a third week. All but three stocks in the S&P 500 Energy Index increased.

     The S&P Supercomposite Homebuilding Index also jumped after PulteGroup Inc. said Elliott Management Corp. has taken a stake in the homebuilder. PulteGroup climbed 4.1 percent, while Lennar Corp. and Toll Brothers Inc. also rose.

     LDR Holding Corp. surged 64 percent. Zimmer Biomet Holdings Inc. agreed to buy the medical device company for about $1 billion in cash to add surgical technologies for the treatment of patients with spine disorders. Zimmer slid 1.7 percent.

     Sarepta Therapeutics Inc. soared 23 percent on speculation its experimental muscular dystrophy treatment may have a chance of approval, after U.S. regulators asked the drugmaker for more data.

     United Natural Foods Inc. gained 14 percent after boosting its annual earnings and sales forecasts.

     Meanwhile, Alexion Pharmaceuticals Inc. tumbled 11 percent after its drug for a rare neuromuscular disease didn’t meet its primary goal in a final-stage trial.

     Bank stocks sank with Goldman Sachs Group Inc. posting among the biggest declines in the Dow.

     LendingClub Corp. slumped 7.4 percent after postponing its annual meeting, which was scheduled for Tuesday. The arranger of so-called peer-to-peer loans has been seeking to restore investor confidence after the surprise departure last month of its founder.

Have a wonderful evening everyone.

Be magnificent!

If the recognized leaders of mankind who have control over the engines of destructions

were wholly to renounce their use, with full knowledge of its implications, permanent peace can be obtained.

This is clearly impossible without the Great Powers of the earth renouncing their imperialistic design.

This again seems impossible without great nations ceasing to believe in soul-destroying competition

and to desire to multiply wants and, therefore, increase their material possessions.

Mahatma Gandhi

As ever,
 

Carolann

It is always the simple that produces the marvelous.

                                   -Amelia Barr, 1831-1919

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