August 11, 2016 Newsletter

Dear Friends,

Tangents:

August 11, 1965:  Watts riots, Los Angeles.

Tonight begins the annual Perseid meteor shower!

How to best enjoy this year’s Perseid meteor shower, which could see as many 200 shooting stars an hour
                                                                                            -by Marcia Dunn, The Associated Press

CAPE CANAVERAL, Fla. — The heavens will be bursting with shooting stars this week.
Thursday night into early Friday, the annual Perseid meteor shower is expected to peak with double the normal number of meteors. Scientists call this an outburst, and they say it could reach up to 200 meteors per hour.
Prime viewing should be in the pre-dawn hours of Friday, after the moon sets.
 \
Blaine McCartney / The Wyoming Tribune Eagle via Associated PressA meteor streaks past the faint band of the Milky Way galaxy

The last Perseids outburst was in 2009. Thanks to a gravity nudge from Jupiter, debris from comet Swift-Tuttle could stray closer to Earth again. These scattered specks of dust — a trail in the comet’s wake — are what flash as they enter the atmosphere at a mind-blowing 132,000 mph and burn up.
“Here’s something to think about. The meteors you’ll see this year are from comet flybys that occurred hundreds if not thousands of years ago,” NASA meteor expert Bill Cooke said in a statement. “And they’ve travelled billions of miles before their kamikaze run into Earth’s atmosphere.”
Scientists hope to capture the action with a new instrument at the International Space Station. The U.S.-Japanese experiment’s name is appropriately named Meteor.
An August tradition, the Perseids are so named because the meteors appear to emanate from the constellation Perseus, the Medusa-killing hero of Greek mythology.

PHOTOS OF THE DAY

Luuka Jones of New Zealand competes in the semifinal of women’s kayak canoe slalom on Thursday. Ivan Alvarado/Reuters

Brazil’s Joao Victor Marcari Oliva, riding Xama Dos Pinhais, competes in the equestrian dressage competition on Thursday. John Locher/AP

Market Closes for August 11^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks resumed their climb after snapping a five-day rally, as energy producers rose with crude oil to overshadow a selloff in Valeant Pharmaceuticals International Inc. sparked by reports it is facing a criminal probe from U.S. prosecutors.
     The S&P/TSX Composite Index added 0.1 percent to 14,796.06 at 4 p.m. in Toronto, paring a gain of as much as 0.6 percent. Trading volume was 8.1 percent higher than the 30-day average. The S&P/TSX is the second-best performing developed market in the world this year, just behind New Zealand.
     Energy producers added 0.9 percent for the highest close in a year, the biggest contributor to gains as six of 10 industries in the S&P/TSX advanced. Crude futures rose 4.3 percent in New York to reach the highest level in three weeks.
     Gibson Energy Inc. surged 6.8 percent, the most since January, after the midstream energy facilities and infrastructure company reportedly rejected a C$2.8 billion offer from Asia Pacific Private Equity, according to the Financial Post. The takeout talk is seen as positive for the shares, according to RBC Dominion Securities analyst Robert Kwan. 
     Health-care stocks slumped to the biggest drop in the S&P/TSX. Valeant Pharmaceuticals lost 11 percent, the most in two months. U.S. federal prosecutors are investigating whether the drugmaker defrauded insurers by hiding its ties to mail-order pharmacy Philidor Rx Services LLC, the Wall Street Journal reported Wednesday. Valeant is cooperating with the probe, according to a statement.
     Raw-materials producers ended the day down as well, retreating 0.5 percent as gold prices drifted negative. Kinross Gold Corp. and Agnico Eagle Mines Ltd. lost as much as 1.5 percent to pace declines in the group.
     There were some pockets of gains in the group, as metals companies reported earnings. Silver Standard Resources Inc. soared 11 percent to the highest close in almost five years on second-quarter earnings triple that of analysts’ estimates. Torex Gold Resources Inc. jumped 8.7 percent to a record following its quarterly results, which showed production more than doubled from the previous quarter.
     Mining and materials companies remain the top gainers this year among 10 industries in the S&P/TSX with a 64 percent advance, the best year-to-date performance for the category in at least 30 years according to data compiled by Bloomberg.
     That’s boosted the Canadian equity benchmark to a 14 percent jump in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. The rally has made Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 24 for the S&P/TSX, about 17 percent higher than the S&P 500 Index.

US

By Lu Wang

     (Bloomberg) —  The benchmark measure did it again Thursday, rising 0.5 percent to 2,185.79 at 4 p.m. in New York, its ninth closing record in the past month.    
     Thursday’s gain pushed the S&P 500’s price relative to future earnings to 18.6, the highest since 2002. Retailers paced stock advances, with Macy’s Inc. and Kohl’s Corp. climbing at least 16 percent after reporting quarterly earnings. Energy producers rebounded as crude rallied amid forecasts for growing demand from refiners.
     The Dow Jones Industrial Average rose 117.86 points, or 0.6 percent, to 18,613.52, joining the S&P 500 at an all-time high, while the Nasdaq Composite Index gained 0.5 percent for a third record in five days. It was the first time since 1999 the three major indexes simultaneously closed at records. About 6 billion shares traded hands on U.S. exchanges, 14 percent below the three-month average.
     Stocks have surged to highs in recent sessions, boosted by better-than-estimated earnings, improving economic data and optimism central banks will stay supportive of growth. After topping its previous record in mid-July, the S&P 500 has inched higher in a range, not moving more than 1 percent in either direction for 24 straight days, the longest streak since 2014. That has the CBOE Volatility Index holding near a two-year low, with the measure of market turbulence down 3.1 percent today to 11.68.
     With equities setting records, insider purchases are dwindling, with two buying for every nine that sold. At 0.23, the buy/sell ratio is about one-third of what it was in February and last August, and compares with an average of 0.69 over almost three decades.
     Echoing rising equity pessimism among executives, earnings sentiment is souring. After predicting at the end of June that profit would expand 2.3 percent in the current quarter, analysts now see S&P 500 income contracting 0.6 percent. That would put U.S. companies on track for a sixth consecutive period of falling profits, the longest since the financial crisis.
     As earnings fail to rebound, companies looking to charge up their stock returns with repurchases are turning to debt markets like no time since the Internet bubble. The proportion of buybacks funded by debt rose above 30 percent in June for the first time since 2001, data compiled by JPMorgan Chase & Co. and Bloomberg show.
     Among other shares moving Thursday on corporate news, Alibaba Group Holding Ltd. rose to a two-month high after its earnings surpassed projections. Yahoo! Inc., an Alibaba stakeholder, added 3.4 percent. The reports from Macy’s and Kohl’s sparked their strongest one-day gains in at least seven years. Apparel companies in the S&P 500 rose to the highest since March, while retailers reached a record. Nordstrom Inc. marked the steepest climb in two years before its quarterly report.
     Mall owners sank as Macy’s plans to close 14 percent of its stores, with General Growth Properties Inc. and Simon Property Group Inc. losing more than 2 percent. Shake Shack Inc. tumbled 6.2 percent after quarterly same-store sales at the fast-food chain missed analyst projections.

Have a wonderful evening everyone.

Be magnificent!

In his essence, man is not a slave to himself, nor to the world; he is a lover.

His freedom and accomplishments are in love,

which is another name for perfect understanding.

In this ability to understand, in this impregnation of everything that is,

he is one with the Spirit that penetrates everything,

and that is also the breath of the soul.

Rabindranath Tagore

As ever,

Carolann

Ah, but I was so much older then,

I’m younger than that now.

                 -Bob Dylan, 1941-

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