September 8, 2016 Newsletter

Dear Friends,

Tangents:
On this day in 1966, Star Trek premieres on NBC.

Today is International Literacy Day:

“These are not books, lumps of lifeless paper, but minds alive on the shelves.  From each of them goes out its own voice….and just as the touch of a button on our set will fill the room with music, so by taking down one of these volumes and opening it, one can call into range the voice of a man far distant in time and space, and hear him speaking to us, mind to mind, heart to heart.”  –Gilbert Highet.
PHOTOS OF THE DAY

Samuel Volery, a Swiss professional mountaineer, walks on the 585 meter line during the Highline Extreme event on top of Moléson peak, 2000 meters above sea level, in the Swiss Alps near Fribourg on Thursday. Twenty five of the best European slackliners will compete until September 11 on 8 different lines, that range from 45 meters to 495 meters. To avoid the danger of falling, the athlete is secured with a rope. Laurent Gillieron/Keystone/AP

The sun rises behind stand-up paddlers on the river Alster in Hamburg, northern Germany, on Thursday. Christian Charisius/dpa/AP
Market Closes for September 8^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Energy producers dragged Canadian shares to a slight gain after a rally in crude oil sent the group surging by the most since June.
     The S&P/TSX Composite Index rose less than 0.1 percent to 14,803.26 at 4 p.m. in Toronto, with nine of 10 groups retreating. Energy shares jumped 2.3 percent to close at the highest level in more than a year.
     The rally in oil producers helped Canadian shares rebound after yesterday halting a three-day rally of 1.5 percent as the Bank of Canada warned of weaker inflation and economic growth prospects. The group has carried gains in the past week, with the industry rising a fifth straight day on Thursday as crude in New York topped $47.62 a barrel for a 4.7 percent rally.
     Cenovus Energy Inc. and Encana Corp. jumped at least 4.3 percent. Enbridge Inc. climbed 4.7 percent for a fifth day of gains, after the company said this week it’s agreed to acquire a U.S. pipeline company in a $28-billion deal.
     Raw-materials producers and banks paced declines Thursday, as Royal Bank of Canada and Toronto-Dominion Bank retreated more than 0.4 percent. The group rallied in August to the highest level since November 2014, helping the broader gauge of Canadian equity to the second-best performance this year among developed nation markets.
     Gold producers slumped as the price of gold settled 0.6 percent lower with expectations for a U.S. interest-rate increase scaling back after data hinted at a weaker economy. ECB President Mario Draghi said officials will look at redesigning the bank’s quantitative-easing program. Potash Corp of Saskatchewan Inc. lost 1.6 percent.
     The group remains the top-performing industry in Canada this year, fueling a rebound in the S&P/TSX after slumping the most since the 2008 Financial Crisis last year. The group, led by surging gold producers with gold on track for its best annual rally since 2010, is still up 53 percent and set to halt the longest yearly losing streak since 1988.
     Holiday tour operator Transat AT Inc. sank 8.1 percent, its biggest drop since March 2015, after third-quarter revenue fell short of the lowest analyst estimate. Transat also postponed a decision on a share buyback and sees fourth-quarter results will be down from year-ago levels.

US
By Joseph Ciolli
     (Bloomberg) — More evidence the world is kicking its dividend addiction has surfaced in the options market.
     Relative to the biggest S&P 500 Index tracker, investors are paying close to the most in four years to protect against losses in the $16 billion iShares Select Dividend ETF, according data compiled by Bloomberg. The ETF, which has climbed 16 percent in 2016, fell in August for its first monthly drop since January, losing 1 percent. The S&P 500 slipped 0.2 percent to 2,181.30 at 4 p.m. in New York on Thursday.
     Any evidence that investor ardor for defensive companies is waning should be viewed bullishly, according to Michael Antonelli of Robert W. Baird & Co. This rotation can be seen with technology shares at a 16-year high, and the biggest energy ETF absorbing the most cash in 16 months.
     “For the longest time, one of the most crowded trades was this dividend play, and you’re seeing some unwinding of that,” said Antonelli, an institutional equity sales trader and managing director at Robert W. Baird in Milwaukee. “That should be viewed as a good thing. Sectors like tech are what you like to see lead if the market is going to make another leg up.”
     The six-month implied volatility spread between the iShares dividend ETF and the SPDR S&P 500 ETF sits just half a point from a more than four-year high reached in May, according to data compiled by Bloomberg. The two biggest components of the dividend fund, which tracks the stock market’s highest-yielding companies, are Lockheed Martin Corp. and CME Group Inc.
     While the iShares dividend ETF has taken in more than $1 billion this year, the pace of inflows has slowed. It’s absorbed just $17 million since the start of August, including $22 million of outflows over the past five trading days, Bloomberg data show.
     Very little is working in the stock market right now. The S&P 500 has wandered in a 1.5 percent range for 40 days, the narrowest ever for such a period. The elite dividend group has lagged the benchmark gauge by a full percentage point over the period.
     U.S. stocks slipped from near-record levels Thursday after European Central Bank President Mario Draghi downplayed the need for more stimulus measures to bolster growth. Apple Inc. was the biggest drag, falling the most in two months, a day after the introduction of its latest iPhone. Tractor Supply Co. tumbled 17 percent, the biggest drop in 16 years after cutting its profit outlook. Energy producers rallied for a fourth day as the price of crude surged on an inventories report.
     A Goldman Sachs Group Inc. basket of most-shorted shares also rose for a fourth session, the longest winning streak in a month. The S&P 500’s drop left it 0.4 percent from an all-time high reached Aug. 15. The Dow Jones Industrial Average lost 46.23 points, or 0.3 percent, to 18,479.91, 0.8 percent from a record. The Nasdaq Composite Index slipped 0.5 percent after closing at a high Wednesday. About 6.7 billion shares traded hands on U.S. exchanges, in line with the three-month average.
     “The decision to not extend QE and some of Draghi’s other commentary is being taken as hawkish,” said Antonelli. “To leave policy unchanged was a little surprising. At the high end of this range, there’s no catalyst for a breakout, so we’re selling on this news.”
     The S&P 500 has hovered near a record since mid-August amid mixed economic data and speculation about Federal Reserve interest-rate policy. The stock market has been one of the calmest ever as traders pushed back bets for a September hike to 28 percent, from as high as 42 percent in late August. December is the first month with at least even odds of a raise.
     A report today showed filings for unemployment benefits dropped to the lowest level in seven weeks, showing employers have little appetite to fire workers. Yesterday, the Fed’s Beige Book survey of regional conditions indicated the economy grew at a modest pace in July and August. That followed recent weaker- than-expected gauges on services-sector activity, manufacturing and hiring.
     In Thursday’s trading, energy shares in the S&P 500 surged 1.7 percent to the highest since November. Chesapeake Energy Corp. rallied almost 14 percent to the highest since October, while Apache Corp. added 7.1 percent. Crude jumped 4.7 percent after the biggest drawdown in U.S. inventories in 17 years, as Tropical Storm Hermine last week disrupted shipping and output in the Gulf of Mexico.
     Apple’s drop weighed on technology companies after the group closed yesterday at the highest since September 2000. International Business Machines Corp. lost 1.6 percent, the most in two months, and Oracle Corp. decreased 1.3 percent.

Have a wonderful evening everyone.

Be magnificent!

He is fire and the sun, he is the moon and the stars, he is the air and the sea.
He is this boy, and that girl.  He appears in countless different forms.
He has no beginning, and he has no end.  He is the source of all things.
Each type of living being is distinct and different.  But when we pierce the veil of difference,
we see the unity of all beings.
Svetasvatara Upanishad

As ever,

Carolann

The mind is not a vessel to be filled but a fire to be kindled.
                                                -Plutarch, 45 AD-120 AD

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