August 25, 2016 Newsletter

Dear Friends,

Tangents:
On Aug. 25, 1944, Paris was liberated by Allied forces after four years of Nazi occupation.
August 25^TH, 1939: The Wizard of Oz released.

From Summer with Monika
            -Roger McGough

Away from you
i feel a great emptiness
a gnawing loneliness

with you
i get that reassuring feeling
of wanting to escape
 

If you want to change the world, go home and love your family. – Mother Teresa.

PHOTOS OF THE DAY

Auction house employee Lindsay Hoadley prepares an almost complete Dodo skeleton as it is displayed at Summers Place Auctions in Billingshurst, southern England on Thursday, where It will be the first of its kind to come up for sale in nearly 100 years.Gareth Fuller/PA/AP

Devotees form a human pyramid to celebrate the festival of Janmashtami, marking the birth anniversary of Hindu Lord Krishna, in Mumbai, India on Thursday. Shailesh Andrade/Reuters
Market Closes for August 25^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Gold miners rebounded after their steepest selloff in more than a year, while energy producers slipped, leaving Canadian stocks little changed before a hotly anticipated speech from Federal Reserve Chair Janet Yellen.
     The S&P/TSX Composite Index rose less than 0.1 percent to 14,630.72 at 4 p.m. in Toronto, after the benchmark fell Wednesday by the most in almost two months. Trading volume today was about 4 percent lower than the 30-day average.
     Energy producers lost 0.4 percent, despite crude futures in New York bouncing 1.2 percent from a one-week low. Enbridge Inc and Imperial Oil Ltd. declined at least 1.7 percent.
     Canadian Imperial Bank of Commerce climbed 1.3 percent to the highest in two months. CIBC’s quarterly profit surged 47 percent, lifted by the sale of its minority stake in a U.S. money manager. Toronto-Dominion Bank, the nation’s second- largest lender, slipped 0.1 percent despite higher profit from its U.S. retail operations and wholesale banking.
     Toronto-Dominion and CIBC join Royal Bank of Canada and Bank of Montreal in besting analysts’ expectations so far this week, weathering concerns about over-indebted consumers, a sluggish economy and rising impaired loans in the oil and gas industry. Bank of Nova Scotia, the nation’s third-largest lender, is on deck to report on Aug. 30.
     Raw-materials producers, meanwhile, rebounded as Kinross Gold Corp. and B2Gold Corp. gained more than 2.7 percent. The group posted a fourth-straight decline and the biggest drop in more than three months Wednesday.
     Gold futures in New York slipped 0.4 percent as investors await more clarity from the Federal Reserve on its intentions for interest-rate moves this year. Fed Chair Janet Yellen is set to speak Friday at an annual symposium in Jackson Hole, Wyoming. Traders have priced in 59 percent odds of a U.S. rate increase in December.
     Valeant Pharmaceuticals International Inc. added 2 percent, closing near the highest in three months to lift health-care companies. The shares recovered after losing 2.1 percent yesterday amid a selloff in U.S. drugmakers sparked by criticism from lawmakers and Democratic presidential candidate Hillary Clinton over drug prices.
     Raw-materials have trimmed their climb this year to 48 percent as the first-half surge in gold prices has stalled amid the uncertainty over central-bank policy. Gold is headed for a monthly drop that would cut gains this year to 25 percent. The materials group remains on track for the first annual advance in six years, an increase that would halt the longest yearly losing streak since 1988. Energy producers have gained 21 percent in the same period, on pace for the strongest in seven years.
     That’s boosted the Canadian equity benchmark to a more than 12 percent jump 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 23.3 for the S&P/TSX, opening up a 14 percent premium over the S&P 500 Index.

 US
By Anna-Louise Jackson
     (Bloomberg) — Sentiment is turning against defensive companies in the U.S. stock market alarmingly quickly.
     Shares of soapmakers, utility providers and phone companies are falling out of favor and fast, marking one of the S&P 500 Index’s biggest reversals of the year. The latest to fade are consumer-staples stocks, which just slumped below the 50-day moving average monitored by chart watchers. A selloff in drugmakers Wednesday also sent health-care shares below that level. The only other industries within the benchmark that have breached deeper short-term technical thresholds? Utilities and telecom stocks.
     It’s an about-face for investors who spent the 10 months after last August’s market meltdown clinging to those industries’ high-dividend, low-volatility shares as bond yields plunged and the outlook for economic growth dimmed. That appetite has evaporated since the selloff that followed the U.K. secession vote, with leadership in the S&P 500 shifting to technology, financial and industrial shares.
     “As the market broke out, the defensives have been underperforming and it’s just a continuation of that,” said Jonathan Krinsky, chief market technician at MKM Partners LLC in New York, who last month recommended investors begin selling the shares. “These sectors should continue to underperform the market as their relative trends have been rolling over and continue to be in medium-term downtrends.”
     Krinsky’s bearish take isn’t unique. Bets are piling up against the industries, particularly in an ETF that tracks consumer-staples companies in the S&P 500. Short interest as a percentage of shares outstanding — now at 9.6 percent — is the highest since June 2015, data compiled by IHS Markit Ltd. show, and has nearly tripled since mid-June.
     U.S. stocks slipped for a second day while investors awaited a speech by Federal Reserve Chair Janet Yellen Friday for clues on the trajectory of borrowing costs. The S&P 500 fell 0.1 percent to 2,172.47 at 4 p.m. in New York, to a three-week low. The Dow Jones Industrial Average lost 33.07 points to 18,448.41, and the Nasdaq Composite Index declined 0.1 percent.
     Consumer-staples shares slipped for a third-straight session, the longest stretch in four weeks, while utilities were little changed and phone companies edged higher for the second time in six days. About 5.5 billion shares traded hands on U.S. exchanges, 19 percent below the three-month average.
     “You know that Janet Yellen is going to come out and say something, and you have no idea what,” said Ben Kumar, an investment manager at Seven Investment Management LLP in London. His firm manages 10 billion pounds ($13 billion). “Your sensible move would be to be a bit nervous. So there seems to be some sensible profit taking, or moving to cash, or just sitting on the sidelines.”
     The rally that drove the S&P 500 to a series of fresh records since early July has lost momentum amid hawkish remarks from Fed officials and uneven economic data. Pharmaceutical companies slumped for a second session, after leading declines yesterday as comments by lawmakers and Democratic presidential candidate Hillary Clinton renewed concern about potential changes in drug pricing. CVS Health Corp. and Express Scripts Holding Co. dropped at least 3.4 percent.
     The main U.S. equity benchmark has held within a roughly 30-point range for three weeks, while a two-day slide interrupted a period of tranquility that had the CBOE Volatility Index on track for its calmest August since 1994. The measure of market turbulence known as the VIX rose to a seven-week high after back-to-back gains, sending it toward the biggest monthly increase in a year.
     Investors are watching for signs of strengthening U.S. growth. A report today showed orders for business equipment in July climbed the most since January, while the number of Americans filing applications for unemployment benefits fell to the lowest level in five weeks, according to another measure.
     “The durable goods number came in better than expected, so that’s a positive,” Quincy Krosby, a market strategist at Prudential Financial Inc. in Newark, New Jersey, said by phone.“Whether or not the market takes every positive data point as a chance for Janet Yellen to be more hawkish, I can’t say. The market, especially in a deep part of the summer with low volume, is absolutely focused on that speech and rightly so.”
     Following the data, traders further pushed forward their expectations for a rate increase, pricing in a 30 percent probability of a move next month. They’re betting on a 57 percent chance the Fed will act by December, up from 36 percent at the end of July.
     Among shares moving on corporate news, Dollar General Corp. and Dollar Tree Inc. tumbled the most since 2009 after the discount retailers posted disappointing sales. Tiffany & Co. rallied 6.4 percent to a four-month high, as the luxury jewelry retailer’s quarterly profit topped analysts’ estimates. A clampdown on costs helped it weather sluggish demand from its affluent customers.

Have a wonderful evening everyone.

Be magnificent!

But if you are not connected with all living beings on earth,
you risk losing your relationship with humanity, with human beings.
We never truly look at a tree’s qualities; we never touch it to feel how solid it is, how rough its bark is,
to listen to the sound it makes.  Not the sound of the wind in the leaves,
nor the morning breeze that makes them rustle, but its own sound, the sound of the trunk,
the silent sound of the roots.  You have to be extremely sensitive to hear this sound.
It is not the noise people make, the chattering of thoughts, nor that of human quarrels and wars,
but the very sound of the universe.
Krishnamurti

As ever,

Carolann

Reading is to the mind what exercise is to the body.
                           -Sir Richard Steele, 1672-1729

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