July 14, 2016 Newsletter

Dear Friends,

Tangents:

Today is Bastille Day in France, celebrating the beginning of the French Revolution.   

Interestingly, the 250^th anniversary of  Marie Antoinette’s birth which occurred  just over 11 years ago (she was born November 2, 1755),  inspired something of a renaissance.  Since then, the Chateau de Versailles – Marie Antoinette’s home from her arrival from Vienna at age 14 to marry the future Louis XVI until four years before her death, has opened the Marie Antoinette estate.  It is a tour of the queen’s fantasy playhouses including the  Petit Trianon, pavilions, grottoes, the thatched-roof cottage where she played at being poor, and the mock farm complete with sheep, goats and geese where she liked to pretend to be a milkmaid.

Queen at 18, Marie Antoinette was an Austrian outsider, a frivolous big spender who ordered two pairs of shoes a week.   She was imprisoned and tried on charges that included incest and beheaded for treason, but the myths about her abound. 

Lady Antonia Fraser is the author of the biography  Marie Antoinette, which in turn, was the basis for Sofia Coppola’s script for the anachronistic punk-rock film, Marie Antoinette.  She attributes the interest in Marie Antoinette to a general malaise in France.  “I hesitate to pronounce on this, but France is in  a period of introspection. They have looked again at Marie Antoinette.  Once they looked, they liked what they saw and prepared to revise the view of  [the wicked queen] that they maybe had been taught as children.” 

The formula for her last perfume has been researched from original records of the historic perfume house of Lubin and re-released as the perfume, Black Jade.  Black Jade by Lubin can be found at Min New York, NYC or you can ask at contact@lubinparis.com for other locations near you.

Ladurée patisserie on the rue Bonaparte on Paris’s left bank, supplied the cakes for Coppola’s film, and offers a Marie Antoinette Collection of pastel macaroons inspired by the ball gowns of the “unappreciated heroine.”    A Ladurée patisserie opened this year on Robson Street in Vancouver; from my experience, you can expect to queue in a long line-up at both locations.

PHOTOS OF THE DAY

Four Mirage 2000C and one Alpha jet flight over Paris on their way to participate in the Bastille Day military parade on Thursday. Philippe Wojazer/Reuters

Alpha jets from the Patrouille de France fly in an ‘Eiffel Tower’ formation over the Champs Elysees at the start of the traditional Bastille Day military parade in Paris, France on Thursday. Benoit Tessier/Reuters

Market Closes for July 14^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Bailey Lipschultz

     (Bloomberg) — Canadian stocks rose for a fifth day, extending gains to the highest level in a year, as gains by the nation’s largest lenders offset a decline in miners.

     The S&P/TSX Composite Index eked out a 0.1 percent advance to 14,514.52 at 4 p.m. in Toronto, as six of 10 main industries in the benchmark climbed. The index is in its longest rally since March, joining a rebound in equities worldwide amid signs central banks will continue to take unprecedented measures to limit any fallout from the U.K.’s vote to exit the European Union.

     Volume on the Canadian benchmark was 19 percent below the 30-day average. The index has gained 1.8 percent this week, on pace for its best advance since April.

     Financial companies jumped amid data showing that average prices for new homes in rose in May, the largest monthly increase since 2007. Mortgage insurer Genworth MI Canada Inc. rose 3.3 percent, while Industrial Alliance Insurance and Financial Services Inc. jumped 1.8 percent.

     Banks also got a boost after JPMorgan Chase & Co.’s second- quarter results topped estimates. Canadian Western Bank rose a third day, jumping 1.6 percent.

     Health-care providers led the benchmark as Valeant Pharmaceuticals International Inc. rebounded from a 7 percent rout Wednesday sparked by comments from a short seller. Concordia International Corp. and Chartwell Retirement Residences also gained.

     The industrial sector climbed for a fifth day with Canadian Pacific Railway Ltd. posting its longest winning streak since April.

     Utilities fell the most in the S&P/TSX with Capital Power Corp. leading losses, while gold miners in the gauge sank 0.8 percent.

US

By Joseph Ciolli and Bailey Lipschultz

     (Bloomberg) — U.S. stocks rose to extend all-time highs, with the S&P 500 Index marking its longest winning streak in four months, as speculation grew for looser global monetary policies while a better-than-forecast profit from JPMorgan Chase & Co. boosted optimism for bank earnings.

     JPMorgan climbed 1.5 percent to pace gains in banks, adding fresh momentum to a post-Brexit-vote rally that vaulted equities to records for the first time in more than 13 months. Citigroup Inc. increased 2.6 percent before its quarterly report Friday. Yum! Brands Inc. advanced 3 percent after its earnings beat estimates and the restaurant-chain operator raised its outlook. Industrial companies extended their longest stretch of gains since 2014.

     The S&P 500added 0.5 percent to 2,163.75 at 4 p.m. in New York, closing at a record for a fourth straight day, the longest such stretch since 2014. The gains today pushed the benchmark to 20 times reported earnings, the first time the valuation has crossed that threshold since 2009. The Dow Jones Industrial Average rose 134.29 points, or 0.7 percent, to 18,506.41. The Nasdaq Composite Index gained 0.6 percent to a more than six- month high.

     “Second quarter earnings have been widely advertised as weak, so any positive results will help boost the stock market,” said Bruce Bittles, chief investment strategist at Milwaukee- based Robert W. Baird, which oversees $110 billion. “We’re seeing a worldwide phenomenon of negative interest rates, which is driving money into the equity markets. The path of least resistance at this point is to the upside.”

     Global equities climbed Thursday as speculation grew that Japan’s Prime Minister Shinzo Abe is contemplating so-called helicopter money, which involves the central bank directly funding government spending. The Bank of England left its key rate at a record low and signaled it’s readying stimulus for August as the economy reels from Britain’s vote to leave the European Union.

     U.S. share prices have added almost $2 trillion since June 27, an amount that ranks among the biggest increases in equity value, as easing concern about economic growth and optimism over earnings combines with speculation the Federal Reserve will hold off raising rates. The S&P 500 has climbed in 10 of the last 12 days, rising 8.2 percent to erase a 5.3 percent plunge following the Brexit referendum.

     Injecting a cautionary note into the run-up today, the chief executive of the world’s largest asset manager said the current rally may not be justified and won’t last unless earnings pick up. “If we don’t see better-than-anticipated corporate earnings I think the rally will be short lived,”  BlackRock Inc.’s Laurence D. Fink said in an interview.

     While JPMorgan’s results exceeded predictions, its quarterly profit fell 1.4 percent in a period where banks are expected to be among the weaker links. Analysts project a 5.7 percent earnings decline at S&P 500 firms in the second quarter, which would make it a fifth straight drop, the longest streak since 2009. Wells Fargo & Co. and Citigroup are among firms posting results on Friday.

     Also on the minds of investors and Fed officials is the vitality of U.S. growth. A Citigroup gauge that tracks the degree to which data are exceeding economist projections has jumped to the highest level since January 2015. A report today showed wholesale prices rose more than forecast in June, while a separate measure indicated the number of applications for unemployment benefits last week held at the lowest level since mid-April.

     Meanwhile, odds of a 2016 Fed rate increase have risen after better-than-estimated June payrolls and as equities reached all-time highs. Traders are pricing in a 35 percent chance for a move by December, up from 12 percent a week ago when minutes from the central bank’s last meeting signaled policy makers saw less need to tighten.

     “There’s hope and anticipation of central bank support globally and earnings are improving,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva, which oversees 34 billion Swiss francs ($35 billion). “The consensus now is no Fed hike and that keeps the dollar from going higher, which in turn helps equities. Earnings so far have been good.”

     The CBOE Volatility Index fell 1.7 percent today to 12.82, the lowest in 11 months. The measure of market turbulence known as the VIX has slipped 50 percent since reaching a four-month high on June 24. About 6.5 billion shares traded hands on U.S. exchanges, 10 percent below the three-month average.

     In Thursday’s trading, nine of the S&P 500’s 10 main industries rose, with banks boosting financials, while raw- materials climbed to their highest in a year. Surging airline and railroad stocks lifted industrials to a record amid the group’s longest rally in 18 months. Utilities slipped for the third time in four days, after reaching the highest level ever last week.

     While banks were adding the most to the rally in financials, insurers were also contributing, rising to their highest in five weeks. MetLife Inc. rallied 4.7 percent, the most in three months, while Prudential Financial Inc. rose 2.6 percent. The gains coincided with U.S. Treasury yields rising for the third time in four days to the highest since June 24.                   

     Raw material producers rallied for a seventh session, their longest streak since October. CF Industries Holdings Inc. led the group with a 3.5 percent increase. Monsanto Co. climbed as much as 6.5 percent after Bayer AG raised its offer for the world’s biggest supplier of farm chemicals and seeds in a bid that values shares of the company at $54.7 billion. People familiar with the matter earlier said Monsanto revived talks with BASF SE about a possible combination of their agrochemicals businesses.

     The S&P 500 Industrials Index was lifted by transportation stocks as American Airlines Group Inc., United Continental Holdings Inc. and CSX Corp. climbed at least 2.9 percent. Delta Air Lines Inc. rose 3.6 percent after reporting quarterly earnings that exceeded analyst estimates. The Dow Jones Transportation Average gained for a sixth straight day to reach its highest since April, and a Bloomberg gauge of U.S. airline stocks increased 3.1 percent to a two-month high, bringing its climb in six sessions to 16 percent.

     Technology companies in benchmark increased 0.8 percent, boosted by Apple Inc.’s 2 percent gain to the highest in a month. Qorvo Inc. rose 4.7 percent to a seven-month high, while Skyworks Solutions Inc. and Broadcom Ltd. added more than 2.1 percent to boost semiconductor companies. The Philadelphia Stock Exchange Semiconductor Index climbed 0.7 percent to the highest in more than a year. EBay Inc. gained 3.8 percent to its best level since January.

     Line Corp. rose 27 percent, and as much as 35 percent, in its U.S. trading debut after the Japanese messaging company raised more than $1 billion in the biggest technology initial public offering of the year. The stock, which was sold to investors in the IPO for $32.84 per share, traded as high as $44.49.

     Williams Cos. increased 6.2 percent, the most since May 16, after Reuters reported the pipeline owner may snag as much as $2 billion in a sale of its Canadian unit, citing people familiar with the situation.

Have a wonderful evening everyone.

Be magnificent!

Humanity is not divided into airtight compartments

that inhibit going from one to the other.

And when one counts them in the thousands,

they will not be less linked one to the other.

Mahatma Gandhi

As ever,
 

Carolann

Whenever and wherever human beings endure suffering and humiliation,

take sides.  Neutrality helps the oppressor, never the victim.  Silence

encourages the tormentor, never the tormented.

                                                           -Elie Wiesel, 1928-2016       

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