June 9, 2016 Newsletter

Dear Friends,

Tangents:

ARE YOU BALANCED?

A growing number of doctors, physical therapist and health experts contend that balance is an essential element of fitness – every bit as important as aerobic activity and strength training,  Carolyn Butler writes in Diabetes Forecast magazine.  She cites a simple test of balance suggested by Dr. Marilyn Moffat of New York University:  Placing yourself next to a stable piece of furniture (just in case), stand straight, wearing flat shoes, with your arms folded across your chest.  Raise and bend one leg, start a stopwatch and close your eyes.  Stop timing if your arms uncross, or you tilt sideways or move the leg you are standing on.  The average times:

20 to 49 years old: 24 to 28 seconds on each leg.
50 to 59: 21 seconds.
60 to 69: 10 seconds.
70 to 79: four seconds.
80 and older: most cannot do it (but some can).

The cartoon, Donald Duck, was born on this day in 1934.

Also on this day in…

1534 – Jacques Cartier sails into the river he names the St. Lawrence, on the Saint’s feast day.

1775 – Guy Carleton proclaims martial law; calls out troops to meet American invasion.

1973 – Ron Turcotte rides Secretariat to victory in 105th Belmont Stakes in record time.

PHOTOS OF THE DAY

An aerial performance featuring 100 illuminated drones lands on a barge in front the Sydney Harbor Bridge and Opera House during the Vivid Sydney light festival in Australia on Thursday. Jason Reed/Reuters

A surfer rides on an artificial wave in front of the French embassy (l.) in downtown Vienna on Thursday. The so-called City Wave is open until the end of September. Ronald Zak/AP

Poppies bloom in front of steep vineyards near Escherndorf, southern Germany, on Thursday. Karl-Josef Hildenbrand/dpa/AP

Market Closes for June 9^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell a second day, as energy producers retreated with the price of oil amid uncertainty over the course of central bank policy and global growth.

     The S&P/TSX Composite Index fell 0.5 percent to 14,240.02 at 4 p.m. in Toronto, after touching the highest level in 10 months earlier this week. The index is up 20 percent from its Jan. 20 low, after climbing out of a bear market on Friday. Trading volume today was about 13 percent below the 30-day average.

     Global stocks declined on Thursday, with the MSCI All- Country World Index retreating for the first time in six days. U.S. jobless claims unexpectedly fell last week, while the outlook for global growth remains clouded with uncertainty over when exactly the Federal Reserve will raise rates, the coming Brexit vote and potential volatility stemming from the U.S. election.

     Energy producers led declines, as eight of 10 industries in the Canadian equity benchmark retreated. Crescent Point Energy Corp. and Encana Corp. lost at least 1.5 percent. Crude futures dipped below $51 a barrel in New York. Oil has recovered more than 90 percent from a 12-year low in February, driving a resurgence in energy stocks this year.

     Performance Sports Group Ltd. dropped 8.8 percent, for the steepest decline in almost two months. The sports equipment maker is now forecasting an adjusted earnings loss for fiscal 2016, after previously predicting profit of 12 to 14 cents a share.

     BRP Inc. jumped 7.4 percent to the highest level this year. The Ski-Doo snowmobile maker boosted its profit forecast for the year to a range from C$1.79 to C$1.89, after previously seeing between C$1.75 and C$1.85.

     Canadian equities are up 9.5 percent this year, within striking distance of beating New Zealand’s S&P/NZX 50 Index as the top performer in 2016 among 24 developed nations. It’s a stark contrast to 2015 when the S&P/TSX tumbled by 11 percent as one of the world’s worst equity markets. Raw-materials producers have boosted the broader rally this year, soaring 46 percent for the best year-to-date performance in three decades.

    Canadian shares remain more expensive relative to their U.S. peers. The S&P/TSX now trades at 21.8 times earnings, about 11 percent higher than the 19.6 times valuation of the S&P 500 Index.

US

By Anna-Louise Jackson

     (Bloomberg) — U.S. stocks edged lower, with the S&P 500 Index slipping from a 10-month high, as investors evaluated the gauge’s run toward a record amid lingering concerns about the impact of lackluster global growth.

     Equities staged an afternoon rebound as raw-material producers and banks trimmed losses, while defensive shares including utilities and phone companies rallied to offset those declines. Lenders and commodity shares closed above their worst levels, even as Treasury yields fell to the lowest since February and the dollar rebounded. Gains in Apple Inc. and Johnson & Johnson’s 1 percent climb to a record also contributed to the late-day recovery.

     The S&P 500 retreated 0.2 percent to 2,115.48 at 4 p.m. in New York, after losing as much as 0.5 percent. The gauge closed closed 0.7 percent from a record. The Dow Jones Industrial Average lost 19.86 points, or 0.1 percent, to 17,985.19. The Nasdaq Composite Index declined 0.3 percent. About 6.1 billion shares traded hands on U.S. exchanges, 13 percent below the three-month average.

     “With the market being priced where it’s at, there’s not a lot of room for air because valuations are so high,” said Jim Davis, regional investment manager at the Private Client Reserve of US Bank, which oversees $128 billion. “I would not be surprised to see it back off a little more in the next week. The market has to navigate some choppy waters between now and mid- July, with the Fed next week and the Brexit vote the following.”

     Crude oil dropped for the first time in four days as the dollar bounced from a one-month low, weighing on energy producers. Raw-material and energy shares have paced equity gains this week amid the currency’s post-payrolls selloff, and the two groups have been pillars in a rebound that’s lifted the S&P 500 more than 15 percent from an almost two-year low in February.

     Optimism that low rates and modest growth are a perfect recipe for stock gains cooled before of a series of events that could set a less bullish tone in financial markets. The looming Federal Reserve meeting, followed by the Brexit vote and U.S. political conventions have the potential to roil markets, and with stocks at multimonth highs, there’s diminished incentive to push prices further.

     Word that billionaire investor George Soros recently oversaw a series of big, bearish investments is also contributing to the tempered mood. A person familiar with the matter said Soros has become more involved in trading at his family office, concerned about the outlook for the global economy and the risk that large market shifts may be at hand.

     A stock rally picked up pace in the past few weeks after losing momentum following a four-month high on April 20. The S&P 500 declined Thursday after three days of gains, the longest in a month, and had climbed in eight of the prior 11 sessions. Still, the index has struggled to hold onto advances beyond the 2,100 level in prior rallies during the past year.                         

     The benchmark has failed to move more than 0.5 percent up or down for 10 consecutive sessions, the longest such streak since September 2014. That’s come amid lighter-than-average volume. Through Thursday, the period of tepid gains and declines saw daily trading average 6.5 billion shares, 12 percent lower than the one-year average and almost 30 percent below the average during a six-week rout that started the year.

     While equities fell last Friday after a disappointing jobs report, support this week has come from Federal Reserve Chair Janet Yellen’s remarks that the U.S. economy is making progress and indications that policy makers won’t rush to raise interest rates. Traders have cut back their bets for a Fed rate increase, now pricing in no chance of a boost in June and only 20 percent probability in July. December is the first month with at least even odds of a rate increase.

     Bolstering Yellen’s belief that the economy will continue to improve, a report today showed first-time jobless claims unexpectedly fell last week and the number of Americans already receiving benefits tumbled to an almost 16-year low, consistent with a healthy labor market.

     “The S&P 500 has had a remarkably steady run over the last three weeks in particular,” said Michael Ingram, a market strategist at BGC Partners in London. “Still, the global economy is not in good shape. And while the last payroll report may be dismissed as an aberration, confidence in the U.S. recovery has clearly been shaken.”

     The CBOE Volatility Index rose 4 percent to 14.64, a two- week high. The measure of market turbulence known as the VIX is headed toward a second straight weekly climb and the fourth in the last five.

     In Thursday’s trading, seven of the S&P 500’s 10 main industries fell. Financial and raw-materials shares lost more than 0.6 percent, trimming early declines of at least 1.1 percent. Utilities rose the most, followed by phone companies and consumer staples, which were buoyed by J.M. Smucker Co.’s 7.9 percent rally to a record. The company’s quarterly results topped analysts’ estimates, helped by pet food and Dunkin’ Donuts-branded coffee pods.

     Banks in the benchmark were the biggest drag on financial stocks as the group alternated between daily gains and losses for the sixth session. Lenders fell to a two-week low, with KeyCorp and Comerica Inc. among the biggest decliners, losing more than 1.9 percent. Elsewhere in financials, asset managers Legg Mason Inc. and Affiliated Managers Group Inc. slid at least 2.5 percent.

     Raw-materials producers fell from an almost 11-month high, halting the group’s longest winning streak since October. Freeport-McMoRan Inc. slid 5.9 percent, while fertilizer makers CF Industries Holdings Inc. and Mosaic Co. dropped 4.2 percent and 1.8 percent, respectively.

     Utilities advanced 0.9 percent, extending an all-time high as falling Treasury yields made the group’s relatively generous dividend payout more attractive. Ameren Corporation added 2.4 percent while Consolidated Edison Inc. and PG&E Corp. gained 1.5 percent. Utilities have the best year-to-date performance among the S&P 500’s main industries, rising 16 percent.

     While most of the benchmark’s energy companies retreated, some natural gas producers rallied to help trim the group’s losses as the commodity surged to a nine-month high after a smaller-than-estimated supply gain signaled production declines. Cabot Oil & Gas Corp., Southwestern Energy Co. and Range Resources Corp. all gained at least 3.4 percent.

     Among shares moving on corporate news, Restoration Hardware Holdings Inc. tumbled 21 percent to an all-time low after the upscale furniture chain posted a surprise loss and cut its annual forecast.

Have a wonderful evening everyone.

Be magnificent!

Non-possession is allied to non-stealing.

Mahatma Gandhi

As ever,

Carolann

Say oh wise man how you have come to such knowledge?  Because I was never

ashamed to confess my ignorance and ask others.

                                                 -Johann Gottfried Von Herder, 1744-1803

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