July 28, 2016 Newsletter

Dear Friends,

Tangents:

Carolann is out of the office, I will be writing the newsletter on her behalf.

PHOTOS OF THE DAY

A woman looks at the painting ‘Wave’ by Ivan Aivazovsky in the Tretyakov Picture Gallery in Moscow on Thursday. Russian romantic painter Aivazovsky is considered one of the greatest marine artists in history. The exhibition, which collected paintings from several museums, marks the 200-year anniversary of his birth. Pavel Golovkin/AP

A child climbs onto a giant laptop keyboard during a promotional event at a shopping center in Beijing on Thursday. Thomas Peter/Reuterss

Market Closes for July 28^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

     July 28, 2016 (Xinhua) — Canada’s main stock market in Toronto inched higher slightly Thursday as investors responded positively to a string of company profit reports and energy stocks mostly gained although crude oil prices extended losses.

     The Toronto Stock Exchange’s benchmark Standard & Poor’s/TSX Composite Index gained 5.10 point, or 0.04 percent, to close at 14,551.64 points. Five of the TSX index’s eight main sub-sectors were higher.

     Oil prices continued to fall on Thursday after data showed U.S. crude stockpiles gained unexpectedly, deepening market concerns on oversupply.

     U.S. Texas light sweet crude for September delivery lost 0.78 U.S. dollars to settle at 41.14 U.S. dollars a barrel, while Brent crude for September delivery erased 0.77 U.S. dollars to close at 42.70 U.S. dollars a barrel.

     TSX energy group climbed 1.11 percent despite a fall in crude oil, while the metal & mining group, which includes precious and base metals miners and fertilizer companies, rebounded 4.85 percent.

     The most notable gainers included Cenovus Energy Inc., hiking 6.69 percent to 18.67 Canadian dollars (14.19 U.S. dollars) after posting a smaller-than-expected quarterly loss, and First Quantum Minerals Ltd., which jumped 9.13 percent to 11.35 Canadian dollars.

     Teck Resources Limited, the largest producer of steelmaking coal in North America, gained 6.60 percent to 20.19 Canadian dollars after reporting a surprise quarterly profit as its costs declined.

     TransCanada Corporation rose 1.51 percent to 60.35 Canadian dollars after reporting a slightly higher-than-expected quarterly profit.

     The biggest drags included Potash Corporation of Saskatchewan Inc., the world’s biggest fertilizer company by capacity, down 7.18 percent to 20.95 Canadian dollars after cutting its full-year profit forecast and dividend for a second time this year.

     In financial sector, Royal Bank of Canada has taken the top spot among the big banks in an influential annual survey of customer satisfaction, knocking off Toronto-Dominion Bank, which had held the honor for 10 consecutive years.

     According to the J.D. Power 2016 Canadian Retail Banking Satisfaction Study, RBC ranked highest in overall customer satisfaction among the five biggest Canadian banks, with a score of 765 on a 1,000-point scale.

     On the economic beat, Statistics Canada reported that average weekly earnings were 956 Canadian dollars in May, up 0.2 percent from the previous month. Compared with 12 months earlier, average weekly earnings increased 0.9 percent.

     The Canadian dollar traded higher at 0.7598 U.S. dollar, compared with Wednsday’s closing rate of 0.7581 U.S. dollar.

US

By Dani Burger

     (Bloomberg) — U.S. stocks rose, lifting the S&P 500 Index within striking distance of an all-time high, amid a mix of corporate results as investors await data Friday on the strength of the American economy. Stimulus bets influenced currency markets ahead of the Bank of Japan’s policy meeting.

     The S&P 500 staged an afternoon comeback to end five points below its record after falling as much as 0.4 percent. Earnings from Ford Motor Co. to Facebook Inc. tugged indexes in opposite directions. Google parent Alphabet Inc. surged almost 5 percent at 4:10 p.m. after its profit topped estimates. Amazon.com Inc. slipped 1 percent in late trading.

     The dollar weakened on the Federal Reserve’s assurance that it will raise rates gradually, while the yen erased gains before the BOJ stimulus decision. The pound slid on bets the Bank of England will lower rates next week. Oil slipped toward $41 a barrel, approaching a bear market.

     Traders have whipsawed currencies from the yen to the pound this week on speculation over additional stimulus. They’ll get more data in the next 24 hours, as the BOJ is expected to expand a record program, while Europe will announce results of the latest stress tests for banks before investors get their first glimpse of U.S. gross domestic product in the second quarter. Earnings from Alphabet Inc. to Amazon.com Inc. are due after U.S. trading closes.

     “People are waiting for a catalyst to get us moving again,” John Stoltzfus, chief market strategist at Oppenheimer & Co. in New York, said by phone. “People are waiting to see what’s next in line. The market is digesting all the activity it’s had to face from a geopolitical point of view, a macro economic point of view as well as digesting this current earnings season.”

     The S&P 500rose 0.2 percent to 2,170.01 at 4 p.m. in New York, 0.2 percent below the 2,175.03 all-time high set July 22. The index has added more than 3 percent in July, though it’s been in a rare holding pattern for the past two weeks. Since the S&P 500 Index hit the fourth straight all-time high on July 14, the benchmark gauge has alternated between gains and losses, finishing every day less than 0.5 percent from the previous close. The 10-day streak is the longest since data began in 1927.

     While the prospects for additional central-bank support bolstered equities, better-than-forecast economic data and corporate earnings that broadly beat projections have also helped lift the S&P 500 this month. The gauge posted seven records in 10 days in a midmonth stretch, and it’s rebounded 18 percent since its low in February. It’s up 6 percent this year – – one of the best gains in developed-world equities.

     Ford sank 8.2 percent after earnings missed estimates. General Motors Co. dropped 3.3 percent. Whole Foods Markets Inc. sank 9.5 percent on poor results. Facebook climbed to a record on sales that topped forecasts. MasterCard Inc., the second- largest U.S. payments network, advanced after saying profit rose 6.7 percent as customer card spending increased.

     The Stoxx Europe 600 slid 1 percent. The gauge is 2 percent from its June 23 level, the day of the U.K.’s EU referendum, while U.S. and Asian shares have already recovered from their losses. Banks fell the most among Stoxx 600 industry groups. Banca Popolare di Milano Scarl, Deutsche Bank AG and Banco Popular Espanol SA declined more than 3 percent, with the latest stress-test results to be released on Friday.

     The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, lost 0.1 percent. Against the euro, the U.S. currency was headed for its biggest two-day slide since June. The euro fell 0.2 percent to $1.1076. The yen was little changed at 105.42 per dollar after dropping 0.8. percent. majority of economists polled by Bloomberg predict the BOJ will boost asset purchases on Friday and lower the already negative key rate.

     The pound slipped against all of its 16 major counterparts with swaps trading indicating that the Bank of England is certain to cut its key interest rate rate next week. Sterling dropped 0.5 percent to $1.3156.

     Oil fell to a three-month low, edging closer to a bear market, after U.S. crude supplies unexpectedly rose from what was already the highest seasonal level in at least two decades. West Texas Intermediate crudedecreased 1.9 percent to settle at $41.14 a barrel and Brent slipped 1.8 percent to $42.70.

     Oil is near the 20 percent drop from early June that would characterize a bear market. The recovery driven by supply disruptions that saw prices almost double from a 12-year low reached in February has petered out amid renewed concerns about the strength of demand.

     “There is still a surplus and the oil price is going to have difficulty sustaining any rally because of that,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “We’re now heading toward the end of the drive season and the market is probably going to weaken further. The $40 a barrel level looks like the base at the moment.”

     Platinum is up 11 percent in July, putting prices on track for the best month since 2012. Palladium is even better, jumping 17 percent, the most since 2008. By comparison, gold added less than 2 percent in July as it lost momentum after gains in the first half.

     Platinum futures for October delivery rose 0.9 percent to settle at $1,138.90 an ounce, while gold futures climbed 0.5 percent to settle at $1,341.20 an ounce.

     Treasuries declined for the first time in three days, pushing the 10-year yield up one basis point to 1.50 percent. The yield slid on Wednesday by the most since July 5 after the Fed’s rate decision.

     U.S. government debt has rallied about 5 percent in 2016 as the Fed held off on raising interest rates after liftoff from near zero in December, while central banks in Japan and Europe maintained unprecedented stimulus.

     The default rate for leveraged loans in the energy sector could spike close to 18 percent if Templar Energy LLC and Stallion Oilfield Services Ltd. are unable to make interest payments on their debt, Fitch Ratings said.

Have a wonderful evening everyone.

Be magnificent!

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” John Quincy Adams

As ever,

Karen

“Tell me and I forget. Teach me and I remember. Involve me and I learn.” Benjamin Franklin

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