August 4, 2016 Newsletter

Dear Friends,

Tangents:

BIRTHDAY: Percy Bysshe Shelley, August 4, 1792

Percy Bysshe Shelley was a radical, championing the likes of Tom Paine and getting expelled from Oxford in 1811 for The Necessity of Atheism, his tract against compulsory Christianity.  His short life seemed like a mad dash against the conventions of the day – both political and social – as he took up the causes of working class education, free  love, non-violent protest, vegetarianism, and electoral reform.  Among his most well known works are To the West Wind, Queen Mab, To a Skylark, and Adonais, an elegy for Keats.  In 1822, Shelley was lost at sea in Italy, where he had moved with his family and his friends, Leigh Hunt and Lord Byron,  His body washed ashore and was burned on the beach in the presence of his companions.  His remains were later buried in Rome.

OZYMANDIAS
    BY Percy Bysshe Shelley
I met a traveler from an antique land, 
Who said—“Two vast and trunkless legs of stone 
Stand in the desert. . . . Near them, on the sand, 
Half sunk a shattered visage lies, whose frown, 
And wrinkled lip, and sneer of cold command, 
Tell that its sculptor well those passions read 
Which yet survive, stamped on these lifeless things, 
The hand that mocked them, and the heart that fed; 
And on the pedestal, these words appear: 
My name is Ozymandias, King of Kings; 
Look on my Works, ye Mighty, and despair! 
Nothing beside remains. Round the decay 
Of that colossal Wreck, boundless and bare 
The lone and level sands stretch far away.”

BIRTHDAY: Louis Armstrong, August 4, 1900

Jazz musician extraordinaire; asked to define jazz, Armstrong reportedly replied, “Man, if you gotta ask, you’ll never know.”
WHAT A WONDERFUL WORLD
…I see friends shakin’ hands, sayin’
“How do you do?”
They’re really saying “I love you”…

                      -by Louis Armstrong

On Aug. 4, 1914, Britain declared war on Germany while the United States proclaimed its neutrality.= Go to article »

August 4, 1960 – Commons passes John Diefenbaker’s Canadian Bill of Rights.

PHOTOS OF THE DAY

A woman carries a sack outside a market during heavy rains in Chandigarh, India, Thursday. Ajay Verma/Reuters

People are looking at a fresco painted on grass with biodegradable paint, representing a Swiss shepherd on 30,000 square feet by French artist Saype, Thursday in Leysin, Switzerland. Jean-Christophe Bott/Keystone/AP

Market Closes for August 4^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks edged higher, as energy producers climbed with crude oil to offset declines paced by Manulife Financial Corp. after its earnings disappointed.

     The S&P/TSX Composite Index rose 0.1 percent to 14,528.78 at 4 p.m. in Toronto, after falling as much as 0.3 percent. The benchmark is less than 1 percent from a one-year high reached two weeks ago. Trading volume today was 3.2 percent lower than the 30-day average at the close. 

     Manulife fell 5.4 percent for the seventh drop in eight sessions, as investors weighed earnings from more than a dozen companies today. The nation’s largest life insurer reported second-quarter earnings short of analysts’ estimates as hedging costs and lower investment gains hampered growth. Financial shares in the benchmark lost 0.5 percent.

     Energy companies in the benchmark surged 1 percent, as crude futures in New York rallied 2.7 percent to climb above $41 a barrel. Veresen Inc. jumped 11 percent, to the highest level since October, after the energy infrastructure company said it was pursuing a sale of its power generation business. Enbridge Inc. added 1.5 percent.

     BCE Inc., Canada’s largest phone company, rose 0.9 percent after profit topped predictions as it increased spending to fuel subscriber growth. TMX Group Ltd., owner of the Toronto Stock Exchange, jumped the most since March to a record close after posting record quarterly sales. Cott Corp. surged 9.6 percent as the beverage maker agreed to buy S&D Coffee Inc. while earnings fell just short of expectations.

     Canadian Pacific Railway Ltd. tumbled 3.1 percent, the most in almost six weeks, after Bill Ackman’s Pershing Square Capital Management LP announced it is unloading its entire stake in the railway. The move comes almost five years after Ackman sparked a turnaround at the company and becoming its biggest shareholder.

     The Canadian equity benchmark is hanging onto a 12 percent gain in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. The rally has made Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 23 for the S&P/TSX, about 13 percent higher than the S&P 500 Index.

     Mining and energy stocks have propelled Canada to the second-best performance among developed markets this year, trailing only New Zealand fueled by a rally in commodities prices from gold and crude to base metals.

     The S&P/TSX Gold Index added 0.6 percent as gold prices rose to near the highest in three weeks after the Bank of England unveiled an “exceptional” stimulus package including the first rate cut in seven years as policy makers slashed growth forecasts after Britain’s decision to leave the European Union.

US

By Anna-Louise Jackson

     (Bloomberg) — U.S. stocks closed little changed Thursday, as investors looked past increased stimulus by the Bank of England to Friday’s jobs report for clues on the strength of the economy and the Federal Reserve’s next moves.

     Mixed corporate earnings offered little direction. Ball Corp. surged the most since 1987 as its profit beat estimates, and Kellogg Co. added 1.7 percent after lifting its outlook. Tempering gains, fertilizer maker CF Industries Holdings Inc. saw its steepest drop in seven years after its results missed analysts’ predictions. MetLife Inc. tumbled 8.7 percent after its quarterly profit disappointed.

     The S&P 500 Index rose less than a point to 2,164.25 at 4 p.m. in New York, after weaving narrowly between gains and losses throughout the session. The Dow Jones Industrial Average lost 2.95 points to 18,352.05, and the Nasdaq Composite Index increased 0.1 percent. About 6.4 billion shares traded hands on U.S. exchanges, 9 percent below the three-month average.

     “Tomorrow’s employment number is the catalyst for the market,” said Jim Davis, regional investment manager at the Private Client Reserve of US Bank, which oversees $128 billion. “We really need to see some economic growth in order to have more assurance that we’re going to have growing earnings in the second half of the year. The market has been driven by multiple expansion and that’s getting long in the tooth now.”

     The S&P 500 has hovered near a record in the past few weeks, and is trading at 18.4 times the projected earnings of its members, close to its highest in more than a decade. A batch of corporate earnings that exceeded expectations and speculation central banks will maintain loose monetary policies have helped underpin equities since the brief tumult that followed Britain’s vote to exit the European Union.

     The BOE cut interest rates for the first time since 2009 in a widely anticipated move to cushion the fallout from the Brexit decision. The central bank also plans to expand its balance sheet by $223 billion through the purchase of government and corporate bonds, as well as a lending program for banks. Following those moves, traders pushed out wagers on a Fed rate increase. The first month with at least even odds for a hike is September 2017, compared with June yesterday.

     Meanwhile, investors are looking for more tangible progress in the U.S. economy, with recent data including last week’s growth report damping optimism. A report today showed applications for unemployment benefits rose last week to a level that still underscores health in the job market. The Labor Department’s July payrolls data are due Friday, with economists surveyed by Bloomberg predicting 180,000 jobs were added, compared with 287,000 the month before.                      

     Quarterly earnings also remain an influence on sentiment. With more than three-quarters of S&P 500 companies having reported, 78 percent beat profit predictions and 57 percent topped sales forecasts. Analysts have tempered their estimatesfor a decline in second-quarter net income for index members to 3.2 percent from down 5.4 percent a month ago.

     In Thursday’s trading, raw-materials and technology companies were the strongest among the S&P 500’s 10 main groups, while financial and health-care shares lagged the most. The CBOE Volatility Index fell 3.4 percent to 12.42. The measure of market turbulence known as the VIX is near a two-year low and 28 percent below its five-year average.

     A Goldman Sachs Group Inc. basket of most shorted stocks rose for the fifth time in six days. The gauge is up 20 percent since the two-day selloff that followed the Brexit vote.

     MetLife weighed on the financial group and flipped insurers into the worst performers among 24 S&P 500 industries, after the group posted the best gain yesterday following American International Group Inc.’s earnings. MetLife plans to cut expenses by 11 percent, which will include job reductions, as low interest rates squeeze investment income. Prudential Financial Inc. and Lincoln National Corp. lost more than 4 percent.

     Joining Ball Corp. to boost raw-materials shares, WestRock Co. gained 4.2 percent after its profit exceeded analysts’ forecasts. Monsanto Co. rose 2 percent as people familiar with the matter said Bayer AG is examining its financial accounts, a crucial step that could pave the way for Bayer to raise its $55 billion takeover offer.

     Tech companies in the benchmark advanced 0.5 percent, with the group closing at the highest level since September 21, 2000. Today’s climb was paced by Facebook Inc.’s 1.5 percent gain, while Microsoft Corp., Intel Corp. and Visa Inc. all added more than 0.7 percent.

     Among shares moving on earnings news, TripAdvisor Inc. slumped the most in six months, dropping 8.5 percent. The company’s results missed estimates as its shift into mobile and instant bookings has yet to generate the expected sales uptick.

     First Solar Inc. slid 11 percent to a 10-month low as a strategic shift spurred concern about the biggest U.S. solar company’s revenue growth. Chief Executive Officer Mark Widmar has said he expects sales of panels to third parties to be a major source of growth, meaning more competition with Chinese manufacturers.

     Realogy Holdings Corp., owner of brokerage brands Coldwell Banker and Century 21, dropped nearly 15 percent to a record low as sluggish luxury home sales hurt the firm’s earnings. SeaWorld Entertainment Inc. tumbled 13 percent, the steepest in two years, after reporting lower theme-park attendance in Orlando, Florida, and cutting its earnings outlook for the year.

     Harman International Inc. rallied 7 percent to a three- month high, and Parker Hannifin Corp. gained 4.6 percent, the most since 2014, after the companies’ quarterly profits and sales beat estimates.

Have a wonderful evening everyone.

Be magnificent!

It is quite evident that our world is useful and that it provides for our needs,

but our connection to it does not end there.

We are united to it by a connection much larger and more truthful than that of necessity.

Our soul is drawn to it; our love of life is in reality a desire I us to seek our connection with this universe.

And this connection is love.

As ever,

Carolann

One of the greatest victories you can gain over someone

is to beat him at politeness.

                                        -Josh Billings, 1818-1885

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