September 19, 2016 Newsletter

Dear Friends,

Tangents:

On September 19^th, 1586, Chideock Tichborne, a young Catholic involved in the Babington Plot to kill Queen Elizabeth and replace her with Mary, Queen of Scots, wrote the poem below in the Tower of London, on the eve of his execution by hanging, drawing and quartering.

My prime of youth is but a frost of cares,
My feast of joy is but a dish of pain,
My crop of corn is but a field of tares,
And all my goods is but vain hope of gain.
The day is fled, and yet I saw no sun,
And now I live, and now my life is done!

My spring is past, and yet it has not sprung,
The fruit is dead, and yet the leaves are green,
My youth is past, and yet I am but young,
I saw the world, and yet I was not seen;
My thread is cut, and yet it is not spun,
And now I live, and now my life is done!

I sought for death, and found it in the womb,
I looked for life, and yet it was a shade,
I trod the ground, and knew it was my tomb,
And now I die, and now I am but made,
The glass is full, and yet my glass is run;
And now I live, and now my life is done!

PHOTOS OF THE DAY

A full moon rises over the Lincoln Memorial, Washington Monument, and the US Capitol, at the National Mall in Washington, as seen from Arlington, Va., on Sunday night. Jose Luis

A model presents a creation at the Fyodor Golan show during London Fashion Week Spring/Summer 2017 in London on Monday. Neil Hall/Reutersa/AP
Market Closes for September 19^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By John Hyland and Eric Lam
     (Bloomberg) — Canadian stocks rose with global equities as financial shares advanced and a slide in the U.S. dollar boosted shares in raw-materials producers amid higher prices for resources from oil to gold.
     The S&P/TSX Composite Index added 0.3 percent to 14,496.23 at 4 p.m. in Toronto, halting losses from last week. The measure is on track for a 3.1 percent gain in the third quarter, pushing its advance this year to 11 percent.
     Financial services stocks rallied 0.3 percent to pace gains in the S&P/TSX. Manulife Financial Corp. and Sun Life Financial Inc., among the nation’s largest insurers, added at least 0.9 percent. Traders now see a 20 percent chance of a rate increase when Fed policy makers meet this week, and a 56 percent likelihood by the end of the year.
     Raw-materials producers added 0.6 percent. Gold and silver rebounded from their lowest close this month ahead of key interest rate meetings of the Fed and Bank of Japan this week. Silver Wheaton Corp. and Franco-Nevada Corp. increased more than 1.1 percent.
     Crude futures rose as much as 0.6 percent in New York, rebounding from the lowest close in more than a month as fighting in Libya has thwarted what would’ve been the first crude shipment from Libya’s Ras Lanuf export terminal since 2014. OPEC may call an extraordinary meeting if ministers reach consensus at an informal gathering next week, said Secretary General Mohammed Barkindo, according to the Algerian Press Service.
     Commodity producers have led the resurgence in the S&P/TSX this year, rebounding after a disastrous 2015 when the benchmark posted its worst annual loss since the 2008 financial crisis. The S&P/TSX is up 11 percent in 2016, good for the second-best performance among developed markets in the world behind New Zealand. That’s made Canadian stocks more expensive than the S&P 500, with a price-to-earnings ratio of 23.1 opening up a 15 percent premium.
     Bombardier Inc. fell 4.9 percent to the lowest level in five months. The Montreal based aerospace manufacturer is suffering, along with business-jet competitors, from an oversupply in production with slowing growth, according to a report from Bloomberg Intelligence analyst George Ferguson.
     CGI Group and Constellation Software added at least 0.9 percent to lead to technology stocks higher. The group gained 0.8 percent, to the highest close in almost two weeks.
     Torstar Corp., owner of the Toronto Star newspaper, added 3 percent for a second day of gains. The company has agreed to sell the land and buildings in Vaughan, Ontario previously used to operate the Toronto Star’s printing facility in a deal for C$54.3 million. Torstar expects the deal to close in the third or early fourth quarter.

US
By Dani Burger
     (Bloomberg) — After months of waiting for the volatility trade to pay off, U.S. equity bears are finally cashing in.
     Individuals took a break from loading up on protective positions and sold exchange-traded notes and funds that track the CBOE Volatility Index at the fastest pace since the start of the year. It came as stocks were jolted from a slumber that persisted for almost two months, giving volatility-obsessed bears a rare payday. The S&P 500 Index wavered again Monday, closing little changed at 2,139.12 at 4 p.m. in New York, after wiping out a 0.7 percent rally.
     Take the iPath S&P 500 VIX Short-Term Futures ETN, the biggest security tracking the stock market’s fear gauge. Owning the VXX amounts to speculation that swings will grow more frenetic in U.S. equities, and outstanding shares increased nearly 11-fold this year. In the five days through Friday, outstanding shares fell 16 percent for the biggest drop since December, data compiled by Bloomberg show.
      “There have been very large inflows into the VXX in 2016, and being long VXX this year has been a very unprofitable trade,” said Pravit Chintawongvanich, head derivatives strategist at the New York-based Macro Risk Advisors. “So on any vol spike, people are trying to sell out.”
     Through last week, flows into the VXX had piled up to $2 billion, putting the security on pace for its biggest year since 2012. After the VIX climbed 40 percent in one day for its biggest daily advance since the Brexit vote, investors sold out of their VXX holdings at the fastest rate in a year.
     On futures exchanges, venues dominated by hedge funds, bulls have been taking the opposite bet, going all-in on the end of market turbulence. Their conviction showed signs of wavering last week as net short positions fell by nearly 16 percent. On the other side of the trade, long VIX, almost 50,000 contracts were sold, the biggest weekly contraction since June, according to data compiled by Macro Risk Advisors.
     The S&P 500 Index failed to hold gains Monday, with a rebound in banks offset by declines of at least 1.1 percent in Apple Inc., Verizon Communications Inc. and Intel Corp. Lenders trimmed gains by half as U.S. Treasuries swung between gains and losses. The Dow Jones Industrial Average lost 3.63 points to 18,120.07, erasing a climb of as much as 131 points. The Nasdaq 100 Index dropped 0.5 percent. About 6.1 billion shares traded hands on U.S. exchanges, 10 percent below the three-month average.
     “There’s a chance for volatility to remain, simply because I don’t think the Fed is going to clear up any uncertainty about the path of interest rates,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110 billion. “The Fed will not raise interest rates this week, but they will be pretty aggressive in saying a rate increase is coming.”
     Volatility has flared as central banks signaled they are rethinking the approach to the monetary stimulus. The S&P 500 wobbled Monday, after rising 0.5 percent in the five days through Friday to bounce from its worst week since February. The benchmark trades at about 18.2 times estimated earnings, the highest since 2009, and for stocks to hit forecasts for next year, they would have to increase profits by 13 percent, something that hasn’t happened since 2011.
     A report on August housing starts tomorrow is the last bit of significant data to offer an indication on the strength of U.S. growth before the Federal Reserve announces its interest- rate decision on Wednesday. A measure today showed confidence among homebuilders rose to an 11-month high in September.
     Reports last week offered contrasting evidence of the state of the economy: the cost of living rose more in August than projected, while consumer confidence this month held at the lowest level since April. A gauge tracking the degree to which data miss or exceed economists’ estimates is near a two-month low.
     The odds for a September rate increase have fallen to 20 percent from 30 percent less than two weeks 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. The Bank of Japan will also undertake a review of its monetary policy this week.
     In Monday’s trading, an index of homebuilders climbed 1.2 percent after the stronger confidence reading. Lennar Corp. and PulteGroup Inc. rose more than 1.5 percent.
     General Motors Co. rallied 2.4 percent, the most in two months, after Morgan Stanley upgraded the stock to the equivalent of buy from neutral. Utilities advanced for a fourth day, the longest streak since June 30. Merck & Co. lost 1.5 percent, slipping to a six-week low to weigh on the health-care group.

Have a wonderful evening everyone.

Be magnificent!

The energy in the world flows from God at the centre, and back to God.
The sages see life as a wheel, with each individual going round and round through birth and death.
Individuals remain on this wheel so long as they believe themselves to be separate; but once they realize their unity with God, then they break free.
Svetasvatara Upanishad

As ever,

Carolann

Normality is a paved road:
It’s comfortable to walk, but no flowers grow.
                     -Vincent van Gogh, 1853-1890

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