September 28, 2016 Newsletter

Dear Friends,

Tangents:

THOUGHT FOR THE DAY:
 

PHOTOS OF THE DAY

A visitor views the work of artists Gonzalo Duran and Cheri Pann at their Mosaic Tile House in Venice, Calif. Mario Anzuoni/Reuters

A boy in traditional dress adjusts another’s headgear before a group photo following a ceremony to observe the 2567th birthday of Confucius in Beijing on Wednesday. Confucius was a famed thinker and philosopher in Chinese history. Mark Schiefelbein/AP
Market Closes for September 28^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks halted a three-day slide as energy producers jumped the most since February after OPEC agreed to cut production for the first time in eight years, while BlackBerry Ltd. rose to the highest in six months after saying it will stop making smartphones.
     The S&P/TSX Composite Index surged 1.2 percent to 14,731.43 at 4 p.m. in Toronto, extending gains in afternoon trading after sinking 1.6 percent in the past three sessions. The index has advanced 4.7 percent since the end of June, the most in two years.
     That’s made Canadian stocks more expensive than U.S. peers, with a price-to-earnings ratio of 23.5 maintaining a 15 percent premium over the S&P 500 Index. The current valuation of Canadian equities is near the highest levels in 14 years, according to data compiled by Bloomberg.
     Canadian Natural Resources Ltd. and Crescent Point Energy Corp. surged at least 5.9 percent to lead a 3.7 percent rally among energy producers as nine of 11 industries in the S&P/TSX advanced. Financial companies increased 0.8 percent, with Manulife Financial Corp. up 1.4 percent, while Bank of Nova Scotia rose 1 percent.
     Crude soared 5.3 percent in New York, settling at $47.05 a barrel for the biggest gain since April. Producers in the Organization of Petroleum Exporting Countries said they will drop production to 32.5 million barrels a day, nearly 750,000 barrels lower from what it pumped in August, according to a delegate briefed on the matter. The group had adopted a pump-at- will policy in 2014.
     Saudi Arabia and Iran had earlier signaled they wouldn’t come to any agreement on production cuts at the meeting in Algiers, while laying groundwork for a deal at the next official meeting in Vienna. Instead, this deal points to a new phase in relations for the two nations, which have clashed on oil policy in the past.
     Energy and raw-materials producers are the top-performing industries in Canada this year, fueling a rebound in the wider gauge after slumping the most since the 2008 financial crisis last year. The S&P/TSX Materials Index is up 51 percent and set to halt the longest yearly losing streak since 1988, while energy producers are second with a 22 percent gain.
     BlackBerry rallied 4.6 percent to the highest since March, as the Waterloo, Ontario-based company said it will hand over production of its once-iconic smartphones to overseas partners to focus on its more profitable software business. BlackBerry also reported second-quarter adjusted earnings at break-even, compared with expectations for a loss, while revenue fell short of analysts’ projections.
     DHX Media Ltd., the children’s TV programming company, lost 3.3 percent to close at the lowest in almost three months after reporting fourth-quarter adjusted earnings and sales that trailed analysts’ estimates. The company also boosted its dividend.

US
By Joseph Ciolli
     (Bloomberg) — U.S. stocks rose, with energy shares rallying the most in eight months, as OPEC agreed to a preliminary deal that will cut production for the first time in eight years.
     Oil and gas producers in the S&P 500 Index posted the biggest jump since January as crude futures surged more than 5 percent. Equities had earlier swung between gains and losses as oil prices whipsawed amid optimism for an agreement and mixed data on stockpiles. The afternoon rally in energy overshadowed a 3.8 percent drop in Nike Inc. and AT&T Inc.’s 1.5 percent retreat that dragged down phone companies.
     The S&P 500 rose 0.5 percent to 2,171.37 at 4 p.m. in New York, erasing a 0.4 percent slide and closing above its average price during the past 50 days for the first time in almost a week. The gauge also wiped out a monthly decline. The Dow Jones Industrial Average rose 110.94 points, or 0.6 percent, to 18,339.24, with two stocks — Exxon Mobil Corp. and Chevron Corp. — contributing more than 40 percent of the gain. The Nasdaq Composite Index added 0.2 percent.
     “While the correlation between oil and stocks has loosened, it’s still dictated some trading this week,” said Matt Maley, an equity strategist in New York at Miller Tabak & Co LLC. “We’re about to head back into earnings season, when we’ll see if stocks can get the pick-up the market’s been hoping for.”
     OPEC agreed to drop production to a range of 32.5 to 33 million barrels per day, said Iran’s Oil Minister Bijan Namdar Zanganeh, following a meeting in Algiers. While some members of the organization will have to cut output, Iran won’t have to freeze production, he said. Many of the details remain to be worked out and the group won’t decide on targets for each country until its next meeting at the end of November.
     Federal Reserve Chair Janet Yellen testified today on bank supervision and regulation while also including remarks on monetary policy. She told lawmakers the U.S. will continue to add jobs at a solid rate, though the recent average pace is probably higher than what’s sustainable over the long term and would eventually cause the economy to overheat. She also said the current course calls for a gradual increase in interest rates, something that doesn’t have a fixed timetable.
     Meanwhile, investors are looking for signs that the economy is strengthening and awaiting the next earnings season, which will kick off in about two weeks. A report today showed orders for durable goods were little changed in August, while shipments of capital equipment declined for a fourth month, indicating lingering weakness in manufacturing. A revised reading on second-quarter growth, pending home sales as well as measures of personal income and spending are due later this week.
     In addition to eking out a gain for the month, the S&P 500 is also now on pace for a third weekly increase, which would be the most since July. The CBOE Volatility Index fell 5.4 percent today to 12.39, extending its two-day decline to almost 15 percent after an 18 percent jump on Monday. The measure of market turbulence known as the VIX is now down almost 8 percent in September, erasing a climb that reached 35 percent two weeks ago.
     In Wednesday’s trading, energy companies jumped 4.3 percent as eight of the S&P 500’s 11 main industries advanced. Raw- materials and industrials added more than 0.6 percent. Phone companies dropped 1 percent, after losing as much as 1.6 percent. Utilities fell for a fourth day, while biotechnology shares slipped to weigh on the health-care group. About 7.1 billion shares changed hands on U.S. exchanges, 7.6 percent more than the three-month average.
     Leading energy, Exxon Mobil rallied 4.4 percent, the most since February, and Chevron added 3.2 percent. Murphy Oil Corp. and Devon Energy Corp. increased more than 8.3 percent. Nine of the S&P 500’s 10 strongest performers today were energy names. The lone outsider was copper miner Freeport-McMoRan Inc., which gained 6.9 percent.
     AT&T fell the most in two weeks after UBS Group AG downgraded the shares to neutral from buy, and lowered its price target to $43 from $46. The firm cited, in part, higher competition in the wireless business. Verizon lost 0.8 percent after declining as much as 1.3 percent.
     Nike had its worst session since March, after disappointing futures orders renewed concerns that competitors are crimping the sneaker maker’s growth.

Have a wonderful evening everyone.

Be magnificent!

There are thousands of lives in one single life.
Swami Prajnanpad

As ever,

Carolann

Fortune favors the bold.
      -Virgil, 70 BC-19 BC

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