August 12, 2016 Newsletter

Dear Friends,

Tangents:

On this day,
in 1898, Hawaii was formally annexed to the United States.
in 1981, IBM introduces the model 5150, its first PC.

Hallelujah, there’s a new Leonard Cohen album on the way.
The songwriter today announced his 14th studio album, “You Want It Darker,” will arrive this fall. The nine-song set was produced by his son Adam Cohen and features original songs with titles such as “Traveling Light,” “Treaty” and “Leaving the Table.”
Cohen, 82, has continued to be a productive force in his later years; “You Want It Darker” his third album in the last six years.

The World’s Most Magical Places:  a short video by National Geographic introduces four natural wonders in different locations on Earth.  It gives a glimpse into their history, explains the science behind their beauty, and features some awe-inspiring pictures.  Whether you are looking for an exciting travel destination or just want to see something extraordinary from where you are right now, this video will fascinate.  Find it athttp://bit.ly/natgeoplaces.

PHOTOS OF THE DAY

Sailors compete under the Christ the Redeemer statue in the men’s two-person dinghy preliminary event on Thursday. Brian Snyder/Reuters

Anna Kasprzak of Denmark hugs her horse, Donnperignon, after their ride in the dressage team grand prix event on Friday. Tony Gentile/Reuters

Heather Miller-Koch of the US competes in the women’s heptathlon high jump on Friday. Phil Noble/Reuters

Market Closes for August 12^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Number of the Day
6,069
The number of days since all three major U.S. indexes closed at record highs on the same day.

Canada

By Bailey Lipschultz
     (Bloomberg) — Canadian stocks pared a weekly gain as Concordia International Corp. tumbled to the lowest in more than two years on disappointing results and miners led a gauge of resource producers lower.
     The S&P/TSX Composite Index lost 0.3 percent to 14,747.45 at 4 p.m. in Toronto, with nine of 10 main industries falling. Trading volume was in line with the 30-day average. The benchmark gauge advanced 0.7 percent in the past five days and remains the second-best performing developed market in the world, behind New Zealand.
     Concordia International plummeted 39 percent for its biggest slide since July 2013. The drugmaker unexpectedly cut its 2016 forecast, suspended its dividend, and announced that Chief Financial Officer Adrian de Saldanha was leaving. The sector has provided the biggest drag on the index, dropping 70 percent so far in 2016.
     Financial services companies dropped for a third session, led by losses in Brookfield Asset Management Inc. after its net income fell 51 percent in the second quarter. Royal Bank of Canada and Toronto-Dominion Bank fell at least 0.2 percent.
     Raw-materials producers drifted to a loss as nickel suffered its worst two-day slump since May to lead industrial metals lower. Diversified mining company Teck Resources Ltd. lost 4 percent. Gold futures posted the first back-to-back weekly losses in more than two months.
     Energy producers were the lone industry to advance, up 0.3 percent as crude posted its biggest weekly advance since April. 
     The raw-material sector remains the biggest gainer in the benchmark for Canadian equities in 2016, up 63 percent, while energy stocks are second, up 22 percent.

US

By Oliver Renick
     (Bloomberg) — U.S. stocks edged lower as lackluster data offered little incentive for investors to push equities higher after the three main benchmarks reached records on Thursday.
     Banks were among the bigger drags Friday as Treasury yields fell, damping optimism for better earnings on speculation the Federal Reserve will be in no rush to raise interest rates.
     Drugmakers weighed on the health-care group, while raw-materials fell the most in five weeks. Energy producers rose with crude oil for a second day, and Nordstrom Inc. jumped 8 percent to buoy retailers after its quarterly profit beat projections.
     The S&P 500 Index fell 0.1 percent to 2,184.05 at 4 p.m. in New York, after yesterday closing at an all-time high for the ninth time in a month. The Nasdaq Composite Index eked out a 0.1 percent climb to its fourth record in six days, while the Dow Jones Industrial Average lost 37.05 points, or 0.2 percent, to 18,576.47. About 5.5 billion shares traded hands on U.S. exchanges Friday, the lowest in four months and 21 percent below the three-month average. 
     “The market has really been complacent all summer,”said Tom Siomades, head of Hartford Funds Investment Consulting Group in Radnor, Pennsylvania, whose firm oversees $76 billion. “What we’ve seen is not a preponderance of good news, it’s just been a lack of any real bad news. Today’s numbers missed across the board but where’s the reaction? People have been lulled to sleep here.”
     A report today showed sales at U.S. retailers were little changed in July as Americans flocked to auto dealers at the expense of other merchants. The stalling of purchases followed a gain in June that was stronger than initially estimated.
     Excluding cars, sales retreated the most since the start of the year. Separate data showed wholesale prices unexpectedly fell in July by the most in almost a year, a sign inflation is likely to stay muted.
     Better-than-projected corporate results, improving economic data and optimism central banks will stay supportive of growth have sent equities to a succession of fresh peaks in the past month while also extending valuations. The S&P 500’s price relative to future earnings has climbed to 18.6, the highest since 2002.
     The gains are also getting harder for strategists to ignore. Wells Fargo & Co. became the second of 21 firms tracked by Bloomberg to raise its target for the S&P 500 since the measure surged past the group’s average year-end prediction a month ago. The benchmark rose less than 0.1 percent for the week.
     The advance to records has ushered in a deepening level of calm. The CBOE Volatility Index slipped 1.1 percent Friday to 11.55, after briefly touching a two-year low. The measure of market turbulence known as the VIX snapped the longest stretch of weekly declines in eight years. Meanwhile, bets against the rally have been punished as a Goldman Sachs Group Inc. basket of most-shorted shares capped a seventh consecutive weekly climb, its longest since 2009.                     
     With the earnings season approaching its end, investors are turning their focus to economic data to gauge the vitality of U.S. growth and the Federal Reserve’s next policy steps. In addition to July retail sales and producer prices, a report showed consumer confidence rose less than forecast in August, reflecting a pullback in views on personal finances among younger Americans.
     After Friday’s data, traders’ bets on the timing of an interest-rate increase have fluctuated, with the first month showing at least even odds of higher borrowing costs volleying between March and May 2017.
     With most S&P 500 members through with reporting quarterly results, 78 percent exceeded profit forecasts while 56 percent beat on sales. Analysts predict earnings for the group fell 2.5 percent, and estimates for the current quarter recently went negative, expected to now fall 0.8 percent in the period ending in September, compared with a 1.8 percent gain forecast before the earnings season began four weeks ago, according data compiled by Bloomberg.
      “We have reasonably good news from the earnings season and the economy recently,” said Otto Waser, head of investment research at R&A Group Research and Asset Management AG in Zurich. “There are no large investor worries, and this has kept markets relatively stable. When the S&P managed to reach a fresh all-time high in July, we thought that was important, and now we’re getting some confirmation.”                      Among the S&P 500’s main industries today, energy producers climbed 0.7 percent as crude rallied to its best week since April on optimism OPEC members will act to stabilize the oil market. Consumer staples added 0.3 percent. Raw-materials dropped 1.2 percent while industrial and financial stocks lost at least 0.2 percent.
     Dow Chemical Inc. fell 2.4 percent merger partner DuPont Co. lost 1.9 percent to lead raw-materials lower, as their deal comes under greater scrutiny, facing months of haggling with European Union antitrust regulators. Steelmaker Nucor Corp. and Alcoa Inc. sank more than 2.4 percent.
     Banks weighed most on the financial group, with regional lenders the weakest performers. Huntington Bancshares Inc. and KeyCorp losing more than 0.9 percent, trimming declines in the final hour of trading. Weyerhaeuser Co. fell 1.9 percent to the lowest in a month after Dundee Securities Corp. downgraded the shares to sell from neutral.
     Exxon Mobil Corp. rose 1.3 percent, climbing for the fifth time in six days as West Texas Intermediate crude futures rallied more than 2 percent. Marathon Oil Corp. and Southwestern Energy Co. added more than 1.8 percent.
     Yahoo! Inc. helped lift the Nasdaq Composite, climbing 4.1 percent to a 14-month high. The shares posted their best back- to-back increase in almost six months, following Alibaba Group Holding Ltd. higher for a second day as China’s biggest e- commerce company gained 7.1 percent.
     Among shares moving on corporate news, Nvidia Corp. rose 5.6 percent to a record after the biggest maker of graphics chips forecast sales that topped analyst estimates. Cigna Corp. surged 5.3 percent and Anthem Inc. advanced 1.6 percent after the U.S. government said it’s open to settlement offers in its antitrust case against the companies’ merger. J.C. Penney Co. gained 6.1 percent after posting a smaller quarterly loss as it shows progress in efforts to rebuild its business.
 

Have a wonderful weekend everyone.

Be magnificent!

To reach cosmic understanding,

it is necessary to unite our feeling with that infinite felling that penetrates everything.

In fact, for man, true progress coincides with the breadth of the base of our feelings.

All our poetry, philosophy, science, art, and religion

serve to embrace with our understanding

the spheres too vast and high.

Rabindranath Tagore

As ever,

Carolann

Do the one thing you think you cannot do.  Fail at it.  Try again.

Do better the second time. The only people who never tumble are those

who never mount the high wire.  This is your moment. Own it.

                                                   -Oprah Winfrey,  b. 1954

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