September 21, 2016 Newsletter

Dear Friends,

Tangents:

On September 21^st, 1819, John Keats wrote to J.H. Reynolds:
The side streets here [Winchester] are excessively maiden-lady-like: the door steps always fresh from the flannel.  The knockers have a  staid serious, nay almost awful quietness about them.  I never saw so quiet a collection of lions’ and rams’ heads.  The doors most part black, with a little brass handle just above the keyhole, so that in Winchester a man may very quietly shut himself out of his own house.  How beautiful the season is now  – how fine the air.  A temperate sharpness about it.  Really, without joking, chaste weather – Dian skies.  I never liked stubble fields so much as now, aye, better than the chilly green of the spring.  Somehow a stubble plain looks warm – in the same way that some pictures look warm.  This struck me so much in my Sunday’s walk that I composed upon it To Autumn.

To Autumn

John Keats, 1795-1821

Season of mists and mellow fruitfulness,
Close bosom-friend of the maturing sun;
Conspiring with him how to load and bless
With fruit the vines that round the thatch-eaves run;
To bend with apples the moss’d cottage-trees,
And fill all fruit with ripeness to the core;
To swell the gourd, and plump the hazel shells
With a sweet kernel; to set budding more,
And still more, later flowers for the bees,
Until they think warm days will never cease,
For Summer has o’er-brimm’d their clammy cells.

Who hath not seen thee oft amid thy store?
Sometimes whoever seeks abroad may find
Thee sitting careless on a granary floor,
Thy hair soft-lifted by the winnowing wind;
Or on a half-reap’d furrow sound asleep,
Drows’d with the fume of poppies, while thy hook
Spares the next swath and all its twinéd flowers:
And sometimes like a gleaner thou dost keep
Steady thy laden head across a brook;
Or by a cyder-press, with patient look,
Thou watchest the last oozings hours by hours.

Where are the songs of Spring? Ay, where are they?
Think not of them, thou hast thy music too,—
While barréd clouds bloom the soft-dying day,
And touch the stubble-plains with rosy hue;
Then in a wailful choir the small gnats mourn
Among the river sallows, borne aloft
Or sinking as the light wind lives or dies;
And full-grown lambs loud bleat from hilly bourn;
Hedge-crickets sing; and now with treble soft
The red-breast whistles from a garden-croft;
And gathering swallows twitter in the skies.

Birthdays:
Bill Murray, b. 1950
Leonard Cohen, b. 1934
Stephen King, b. 1947
H.G. Wells, b. 1866
PHOTOS OF THE DAY

Aerialist Sally Miller takes part in a stunt in London on Wednesday to promote the upcoming release of the film ‘Miss Peregrine’s Home for Peculiar Children.’ Vianney Le Caer/Invision/AP

A guide is reflected in the installation Mirror Maze, by artist Es Devlin, at Copeland Park in Peckham, south London, on Wednesday. Stefan Wermuth/Reuters
Market Closes for September 21^st, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By John Hyland and Eric Lam
     (Bloomberg) — Canadian stocks surged the most in more than two months as gold miners got a boost after the Federal Reserve left stimulative interest rates unchanged while signaling the world’s largest economy is showing signs of improving.
     The S&P/TSX Composite Index added 1.3 percent to 14,710.82 at 4 p.m. in Toronto, extending gains after the Fed decision from Washington. It was the biggest rally in two months, driven by materials producers in the equity benchmark, which jumped 4.6 percent as a group, the most June 3.
     “Gold and gold stocks are taking off here, it underscores the low-rate environment,” said Scott Colbourne, co-Chief Investment Officer at Sprott Asset Management in a phone interview from Toronto. His firm manages almost C$9 billion. “Materials, energy as well as base metals will continue to have a bit of a lift here. Broadly speaking I don’t see a real reason to break away from broad themes of support for the Canadian stock market and base metals.”
     In a decision to leave interest rates unchanged that saw three officials dissent in favor of a quarter-point hike, Fed policy makers said near-term risks to the economic outlook were “roughly balanced.” While the case for an increase in borrowing costs has strengthened the central bank is awaiting more evidence of progress towards its goals. Traders now see a 60 percent likelihood for a rate increase by the end of the year.
     Raw-materials producers led gains in the S&P/TSX as Barrick Gold Corp. and Goldcorp Inc. jumped at least 6.2 percent. Gold, seen as a store of value against other assets in a low-inflation environment, extended gains after the Fed decision. Tighter monetary policy is typically negative for gold because the metal doesn’t pay interest.
     The Bank of Japan earlier shifted the focus of stimulus from expanding the money supply to controlling interest rates, which some economists deemed as further evidence that BOJ policy had reached the limits of its effectiveness.
     Energy companies climbed 1.4 percent, tracking a rally in oil after Algeria said OPEC may turn its informal talks next week into a formal session. OPEC members are focused on either boosting output or defending their market share, and will have difficulty reaching a deal, according to a Bloomberg survey. Crude extended gains after weekly data showed U.S. stockpiles unexpectedly dropped. TransCanada Corp. added 0.8 percent, closing at a record.
     Encana Corp. advanced 1.7 percent, after yesterday’s slump of 7.6 percent. The drop stemmed from selling about $1 billion of shares to fund drilling in Texas next year and repay debt.
     Financial services stocks rose 0.6 percent. TMX Group gained 1.8 percent, the most in a month, after eliminating 95 full-time positions in the third quarter and targeting further cost reductions. Manulife Financial Corp. increased 0.9 percent, to the highest in almost three months.
     D-Box Technologies Inc. jumped 14 percent, the biggest one- day rally in more than a year. The company will install its special cinema seats designed to move in time with the action in a 143-seat auditorium in China.

US
By Anna-Louise Jackson and Oliver Renick
     (Bloomberg) — U.S. stocks rallied after the Federal Reserve kept interest rates steady even as the economy showed signs of improving, removing at least for six weeks an obstacle for equities that rekindled volatility this month.
     Shares surged as the central bank opted to wait for further evidence of stronger inflation before boosting borrowing costs, while officials signaled growth remains on track to achieve their goals. Utilities, energy and raw-materials producers — among the year’s best performers — jumped the most in two months. Boeing Co. and Caterpillar Inc. increased 2.2 percent to lead industrials.
     The S&P 500 Index gained 1.1 percent to 2,163.12 at 4 p.m. in New York, the most on a Fed day since December, when it raised rates for the first time in a decade and the market ended 1.5 percent higher. The Dow Jones Industrial Average added 163.74 points, or 0.9 percent, to 18,293.70, and the Nasdaq Composite Index rose 1 percent. About 7.6 billion shares traded hands on U.S. exchanges, 12 percent above the three-month average.
     “You’ve got one sort of near-term risk factor off the table for investors, and markets like certainty,” Mike Bailey, director of research at FBB Capital Partners, which manages about $900 million, said by phone. “The market overall was pretty confident you wouldn’t see a rate increase today and we saw that achieved. The question now is what are the major catalysts. Earnings season is number one. You’ve got minor global catalysts like a referendum in Italy, the Brexit situation and the rate hike.”
     Policy makers said the case for higher interest rates has strengthened, but they decided “to wait for further evidence of continued progress” toward the central bank’s objectives. Three officials voted against the decision, up from one at the last meeting, and the Fed signaled it’s still prepared to raise rates in December. At the same time, the outlook for the path of rates indicated they expect fewer hikes in 2017 and over the long run.
     Stocks extended gains as Fed Chair Janet Yellen said that asset valuations are “not out of line with historical norms.” The S&P 500 trades at more than 18.4 times projected earnings, the highest since 2002. Yellen also reiterated that the Fed can tighten quickly if inflation were to increase toward the long- term goal of 2 percent, while raising rates too soon could damp growth.
      “Our decision does not reflect a lack of confidence in the economy,” Yellen said at the start of her press conference. “Since monetary policy is only modestly accommodative, there appears little risk of falling behind the curve in the near future.”
     The latest from the Fed came after the BOJ’s tweaks on Wednesday that give it scope to keep loosening policy to revive the economy and inflation, while limiting the negative impact on bank earnings. Based on fed funds futures trading, odds for rate increase in December were 59 percent, unchanged from levels before the FOMC’s statement today.
     “This is probably more hawkish than I would’ve expected — three dissenters in and of itself is more hawkish,” said Krishna Memani, New York-based chief investment officer at Oppenheimer Funds Inc., which oversees $223 billion. “Data would have to weaken for them not to do anything in December, that’s the nuance more than anything. This is more affirmation of what we are thinking as opposed to, ‘We need data to figure out what we are thinking.’ The likelihood is still that they’ll hike in December.”
     Optimism over policy adjustments made by the Bank of Japan earlier faded, with a morning surge in equities evaporating for a third-straight session before equities rebounded following the Fed statement and Yellen press conference.
     Stocks have struggled for direction since Sept. 9, when worries that central bankers may be losing their appetite for further stimulus efforts spurred the biggest slump since the U.K. secession vote in June, ending the summer’s calm. The S&P 500 on Wednesday posted only its second back-to-back advances this month. The CBOE Volatility Index tumbled more than 16 percent, the most since June, to erase a monthly gain that had reached 35 percent just a week ago.
     Wednesday’s rally was a departure from the prior two Fed days that left stocks lower after erasing gains. At the June meeting, policy makers signaled more caution on the growth outlook, while Britain’s vote on European Union membership still loomed. After a two-day plunge following the U.K. vote, U.S. shares surged to all-time highs on improving economic data and as global central banks indicated their willingness to act to offset Brexit damage.
     The Fed also emphasized a gradual pace of rate increases after its July meeting amid uneven data and the possible fallout from Brexit. The S&P 500 then remained in one of its tightest trading ranges ever, lingering near records until a selloff earlier this month.
     Among shares moving Wednesday on corporate news, Adobe Systems Inc. jumped the most since December 2014, rising 7.1 percent after forecasting a better-than-estimated quarterly profit. FedEx Corp. surged 6.9 percent to a three-month high after raising its full-year earnings outlook.

Have a wonderful evening everyone.

Be magnificent!

The universe is the energy of the soul; and from this energy comes life, consciousness, and the elements.
The universe is the will of the soul; and from this will comes the law of cause and effect.
From the soul one became many; but in the soul many are one.
Mundaka Upanishad

As ever,

Carolann

Life is to be fortified by many friendships.  To love and be loved
is the greatest happiness of existence.
                                            -Sydney Smith, 1771-1845

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