September 16, 2016 Newsletter

Dear Friends,

Tangents:

Watch for the beautiful Harvest Moon tonight!
September 16^th, 1620: Mayflower Day: Pilgrims deported from England.

Just back from the DELIVERING ALPHA Investment Conference in NYC, hosted by CNBC & Institutional Investor.   As usual, it was terrific.  Lots of different opinions shared by leading portfolio managers and a few politicians.  Jacob Lew, the US Secretary of the Treasury  gave the opening keynote address.  Tim Geithner, former US Secretary of the Treasury, was also a presenter.  Joseph Tsai, Executive Vice Chairman of Alibaba Group gave inspirational insight on the future strategic direction for the company.  Perhaps one of the most amusing addresses was given by Carl Icahn (who supports Donald Trump for president) on how dysfunctional and bureaucratic the existing government system is in the US.  Jim Cramer from Mad Money, David Faber, Kelly Evans, Kate Kelly, Sara Eisen, Andrew Ross Sorkin, Becky Quick, Michelle Caruso Cabrera – just some of the terrific moderators during the day.   Several money managers shared their “best ideas” for the year ahead and the one that intrigued most was Bill Miller’s (Founder, Chairman and Chief Investment Officer of LMM) – his is Valeant.

Mostly tied up with business but I did manage to get an hour in at MOMA (it pays to have an annual membership) to see the Bruce Conner (1933-2008) exhibit 
IT’S ALL TRUE.  It is an amazing exhibit – a must see.
PHOTOS OF THE DAY

People attend Diner En Blanc, the French-inspired secret pop-up dinner, in Robert F. Wagner Jr. Park in New York on Thursday evening.Alex Wroblewski/Reuters

An Apple employee (l.) offers customers pastries and coffee while they wait in line for the release of the Apple iPhone 7 and the latest Apple Watches at the Apple Store at the Grove in Los Angeles on Friday. Richard Vogel/AP
Market Closes for September 16^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks fell, capping a second straight weekly loss, as raw-materials producers tumbled with metals prices while energy producers retreated as crude slumped to the lowest in five weeks.
     The S&P/TSX Composite Index lost 0.4 percent to 14,450.84 at 4 p.m. in Toronto, halting a two-day rally and sending it to the fourth weekly drop in the last five. The index has advanced 2.8 percent this quarter. That’s made Canadian stocks more expensive than U.S. peers, with a price-to-earnings ratio of 22.9 maintaining a 14 percent premium over the S&P 500 Index.
     Financials and raw-materials producers fell at least 0.5 percent, the biggest contributors to losses as seven of 10 industries in the S&P/TSX retreated. Barrick Gold Corp. and Alamos Gold Inc. lost more than 1.6 percent as gold posted a weekly decline.
     The S&P/TSX Materials Index remains the top performer in Canada this year, fueling a rebound in the wider gauge after slumping the most since the 2008 financial crisis last year. The group is still up 47 percent and set to halt the longest yearly losing streak since 1988.
     Oil fell 2 percent in New York to a one-month low, extending a weekly decline to 6.2 percent. OPEC members Libya and Nigeria are preparing to boost exports within weeks, after supplies had been reduced in those countries due to domestic conflicts.
     Concordia International Corp. plunged 19 percent to the lowest level since 2013. In a statement commenting on a new bill introduced in the U.K. on Thursday to manage the cost of medicines, the company reaffirmed its 2016 forecast and noted it believes it has access to sufficient financial resources to manage its liabilities.
     Concordia will also be removed from the S&P/TSX benchmark, according to a statement from S&P Dow Jones Indices. The struggling drugmaker in August unexpectedly cut its 2016 forecast, suspended its dividend and announced its chief financial officer was leaving.
     Global markets resumed their decline, with a gauge of world developed and developing markets capping a second week of losses, amid fresh concern central banks are rethinking their stimulus policies even as global growth remains tepid. 
     The S&P 500 and Dow Jones Industrial Average lost at least 0.4 percent in New York, weighed by European stocks retreating after lender Deutsche Bank AG said the U.S. Justice Department is seeking $14 billion to settle a probe into mortgage-backed securities.
     Canadian lenders reversed their strongest rally in more than two months Thursday. Royal Bank of Canada and Bank of Montreal slipped at least 0.5 percent.

US
By Dani Burger
     (Bloomberg) — U.S. stocks retreated to trim a weekly gain as investors awaited next week’s Federal Reserve meeting, with economic indicators pointing to uneven growth in the world’s largest economy.
     Banks and energy producers carried the steepest losses Friday, with crude oil sinking to a one-month low. Sentiment soured on lenders as Deutsche Bank AG sparked a selloff in European banks after it rebuffed a Department of Justice offer to settle a financial crisis related probe for $14 billion. Oracle Corp. declined 4.8 percent after its quarterly revenue missed estimates. Intel Corp. climbed 3 percent after raising its sales forecast.
     The S&P 500 Index fell 0.4 percent to 2,139.16 at 4 p.m. in New York, in heavy trading amid a quarterly event known as quadruple witching, when futures and options contracts on indexes and individual stocks expire. The Dow Jones Industrial Average lost 88.68 points, or 0.5 percent, to 18,123.80. The Nasdaq Composite Index declined 0.1 percent. About 9.5 billion shares changed hands on U.S. exchanges, 38 percent above the three-month average.
     S&P Dow Jones Indices will also implement its quarterly index rebalancing after the close, including the first reboot of S&P 500 group weights in almost two decades. That will separate real estate investment trusts from the financial industry, creating 11 top-level groups.
     “Oil heading toward below the 40’s is waking everyone up that it’s probably not going to recover fully,” Brian Frank, portfolio manager at Key Biscayne, Florida-based Frank Capital Partners LLC, said by phone. “You’ve got Deutsche Bank, which is scaring everybody. People are getting fed up with central banks. There’s a lot going on today.”
     After the European Central Bank and the Bank of England kept monetary policies unchanged, attention is turning to the Fed’s meeting next week. The chances of a September rate increase are 20 percent, from 30 percent a week ago, with December the first month with more than even odds of a hike. Economists surveyed by Bloomberg expect the Fed to keep rates unchanged, while strengthening guidance about its intentions to raise borrowing costs soon.
     With policy makers watching data for signs of stronger growth, a report today showed the cost of living in the U.S. rose more than projected in August, indicating inflation continues to move closer to the Fed’s goal. Separate data showed consumer confidence in September held at the lowest level since April, with views of current economic conditions falling to an almost one-year low. A Bloomberg gauge tracking the degree to which data miss or exceed economists’ estimates held near a two- month low.
      “We had a couple of weaker economic numbers yesterday, so that heightens concerns about the macro picture in the U.S.,” said Patrick Spencer, the London-based vice chairman of equities at Robert W. Baird, which manages $151 billion. “The indexes are trading near all-time highs so some pullback isn’t surprising, but the longer-term trends remain robust so any correction is expected to be limited.”
     The S&P 500 last struck an all-time high on Aug. 15, following a 26-session run that brought 10 such records. The gauge has since lost 2.3 percent. Equities whipsawed investors this week after a rout last Friday jolted markets out of their summer languor on concern that central banks are less willing to boost stimulus despite a persistently fragile global economy.
     Even as stock slid today, the CBOE Volatility Index fell 5.7 percent to 15.37, extending its weekly decline to 12 percent. The measure of market turbulence known as the VIX surged last Friday by the most since Britain’s June vote to leave the European Union, and remains on pace for the biggest monthly jump since August 2015.  
     “The market is trading off of the Fed right now,” said Brent Schutte, who helps oversee $90 billion as chief investment strategist at Northwestern Mutual Wealth Management Company. “When the Fed starts pulling liquidity back, that increases volatility which will be heightened in the next six to nine months.”                        
     On the heels of its worst week since February, the main U.S. benchmark index rebounded in the latest five-day period, rising 0.5 percent. Apple Inc.’s 12 percent rally in the prior four days helped lift technology companies 3 percent. The group, which has a 21 percent weighting in the S&P 500, capped its best week since May.
     In Friday’s trading, eight of the S&P 500’s 10 main industries fell, with financial, energy and industrial companies losing at least 0.7 percent. Utilities rallied for a third day, the longest winning streak in two months, while health-care shares were little changed.
     Oil and gas companies sank as West Texas Intermediate crude futures fell 2 percent to barely hold above $43 a barrel. Chevron Corp. and Exxon Mobil Corp. slid more than 1.2 percent. Range Resources Corp. dropped 5.1 percent to an almost five- month low.
     Technology shares lost momentum as Apple fell for the first time in five days, and Oracle posted the biggest slide this year to weigh on the group. Still, Intel’s rally to the highest since December 2014 helped keep declines in check.
     Industrials in the benchmark fell to a 10-week low. United Technologies Corp. dropped 2.5 percent as Chief Executive Greg Hayes said the Pratt & Whitney unit will fall short of the 2016 target for deliveries of its new jet engine. W.W. Grainger Inc. slumped 4.3 percent amid concerns about competition from Amazon.com Inc.’s industrial distribution business.

Have a wonderful weekend everyone.

Be magnificent!

All humanity shares the sunlight; that sunlight is neither yours nor mine.
It is the life-giving energy, which we all share.
The beauty of a sunset, if you are watching it sensitively, is shared by all human beings.
Krishnamurti

As ever,

Carolann

As the girl said, “A kiss on the wrist feels good, but,
a diamond bracelet lasts forever.”
         -Adlai Stevenson, 1900-1965
          Address given to Chicago Council on Foreign Relations, 22 March 1946.

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