August 16, 2016 Newsletter

Dear Friends,

Tangents:
On Aug. 16, 1977, singer Elvis Presley died at Graceland Mansion in Memphis, Tenn., at age 42.

I found an old Newsletter from Friday, August 16^th, 2002, and many of you reading this tonight would have read it back then –though like me, never remembering having done so.  It’s hard to grasp that the little children and teenagers of many of you are all grown up now, and are adult clients of mine.  Time passes much too quickly.
Here is what I wrote all those years ago:

Today is the silver anniversary of the death of Elvis Presley.  “The appeal of Elvis Presley is universal, or at least solar systemic.  We know this because of a headline that once appeared on the front page of The Weekly World News:   Statue of Elvis Found on Mars – Beaming Back Don’t Be Cruel,”  so writes Franz Lidz in The New York Times.  This morning on CNN, a tape kept running of people’s recollection of where they were when they first heard that Elvis had passed away.  Remarkably, most people who were alive at the time can remember exactly what they were doing when they heard the news (similarly with the assassination of President Kennedy).  It brought back some fond memories for me.  I was back-packing around Europe (as a lot of my generation were doing at the time) in the summer of 1977.
I was travelling by myself and decided to go to Crete to see where Zeus was born.  I went to Brindisi, Italy, to catch a ferry whereupon I started chatting with a British woman who persuaded me to travel to the Greek Island, Ios, with her where she was meeting some friends from London who had a place there.  After spending a few weeks on Ios, I headed back to Athens to catch the train back to Paris, and head home to get sorted out for my final undergraduate year at university.  I remember hanging around the train station in Athens waiting for my train, when this young American came up to me with a grave look on her face, thinking I was American and asking “Is it true?  Is Elvis dead?”  It’s really hard to believe that was 25 years ago…it’s a blink, this ol’ life isn’t it?
PHOTOS OF THE DAY

Marit Bouwmeester of The Netherlands is congratulated by Anne-Marie Rindom of Denmark following the women’s one person dinghy race at Marina de Gloria in Rio de Janeiro, Brazil, on Tuesday. Benoit Tessier/Reuters

Samuel Mikulak of the United States competes in the final event for the men’s horizontal bars at the Olympic Arena in Rio de Janeiro, Brazil, on Tuesday. Ruben Sprich/Reuters

Jarrod Poort of Australia competes during the first leg of the men’s 10km marathon swimming event at Fort Copacabana, Rio de Janeiro, Brazil, on Tuesday. Carlos Barria/Reuters
Market Closes for August 16^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks fell, joining losses in the U.S. after comments from a Federal Reserve official increased speculation the central bank will raise interest rates by the end of the year, overshadowing a rally in commodities prices.
     The S&P/TSX Composite Index lost 0.5 percent to 14,703.44 at 4 p.m. in Toronto. The index has swung between gains and losses for the past five days after closing at the highest level since July 2015. Trading volume was 19 percent lower than the 30-day average. The Canadian benchmark is the second-best performing developed market in the world this year, just behind New Zealand.
     Canadian equities joined a retreat in global markets Tuesday as U.S. stocks pulled back from records. The U.S. dollar trimmed a drop of as much as 1.2 percent after New York Fed President William Dudley said policy makers could potentially raise interest rates as soon as next month. Traders have priced in a 24 percent chance of a rate move at the next meeting in September, according to data compiled by Bloomberg. The Canadian dollar has strengthened against the greenback for seven sessions, the longest winning streak since 2012.
     Crude rallied to the highest in five weeks while gold posted its biggest gain in two weeks amid the dollar’s weakness, though it wasn’t enough to drive commodities producers higher.
     Financial shares contributed the most to declines on Tuesday, as nine of benchmark’s 10 main groups retreated. Sun Life Financial Inc. lost 1.4 percent. Raw-materials producers fell 0.8 percent, while technology shares lost 0.7 percent.
     Video-surveillance company Avigilon Corp. sank a record 25 percent after posting second-quarter earnings well short of expectations.
     Canadian Natural Resources Ltd. and Birchcliff Energy Ltd. retreated at least 1 percent as energy producers fell 0.4 percent as a group. Barrick Gold Corp. fell 1.5 percent after billionaire investor George Soros’ Soros Fund Management LLC cut its holdings in the world’s largest producer of the metal by 94 percent after only taking a stake in the first quarter.
     Alimentation Couche-Tard Inc. added 3.1 percent to lead consumer staples stocks higher, the only group in the S&P/TSX to advance. The gas station and convenience store chain operator is said to be near a deal to buy CST Brands Inc. as the likely winner of an auction for the company, according to the Wall Street Journal.
     In Canada, the rebound this year continues to be led by mining and materials companies, the top gainers this year among 10 industries in the S&P/TSX with a 62 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 13 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 23.5 for the S&P/TSX, about 15 percent higher than the S&P 500 Index.

US
By Rita Nazareth, Oliver Renick and Eliza Ronalds-Hannon
     (Bloomberg) — U.S. stocks fell with Treasuries, while the dollar pared its decline, after Federal Reserve officials stoked speculation over interest-rate increases despite evidence of uneven growth in the world’s largest economy.
     The S&P 500 Index retreated from a record high after New York Fed President William Dudley said borrowing costs could be boosted as soon as next month, while Atlanta Fed chief Dennis Lockhart said he’s confident growth is accelerating, setting the stage for at least one hike this year. Yields on two-year Treasury notes, the coupon maturity most sensitive to policy expectations, climbed as the greenback trimmed a drop of more than 1 percent versus major peers. Oil rose above $46 a barrel on optimism over a potential output freeze.
     Equities have found favor over the past month, while the dollar has lost ground, as conflicting signals over the U.S. labor market and growth cast doubt over the Fed’s plans to tighten monetary policy. Odds on the next U.S. rate rise have been pushed out as central banks elsewhere inject unprecedented stimulus, with investors pricing in about one hike between now and the end of next year – estimates Dudley says are “too low.” The policy maker said in an interview Tuesday that markets are “too complacent” about the need for a gradual increase in short- term interest rates over the next year or so.
     “Dudley wants to keep expectations grounded,” said Yousef Abbasi, a global market strategist at JonesTrading Institutional Services LLC. in New York. “You have seen some stronger employment data, but other pieces of data are showing a struggle still – retail sales, inflation reads have been among recent disappointments. It’s just reality – rates might move higher by December if jobs data continue to come in better.”
     With traders sifting through U.S. economic reports to gauge prospects for growth, figures Tuesday showed home construction unexpectedly accelerated in July to the fastest pace in five months as factory production increased more than forecast. The cost of living in the U.S. was little changed, however, a sign subdued inflationary pressures would still give policy makers reason to keep interest rates low.
     The probability of a rate increase by the end of 2016 edged up to 52 percent on the Fed officials’ comments, from 45 percent a week ago, according to Fed funds futures tracked by Bloomberg.
     The S&P 500 fell 0.6 percent to 2,178.15 as of 4 p.m. in New York, after recent gains pushed its valuation the highest level since 2002.
     Phone and utilities shares led declines Tuesday, falling at least 1.2 percent. Praxair Inc. surged on merger talks with Germany’s Linde AG, and Morgan Stanley climbed to a seven-month high after activist Jeff Ubben’s ValueAct Capital Management disclosed a 2 percent stake. Cintas Corp. jumped to a record after agreeing to buy G&K Services Inc. in a $2.2 billion tie-up of providers of workplace uniforms and corporate apparel.
     The MSCI Emerging Markets Index halted an eight-day rally, dropping less than 0.1 percent. Stocks in Qatar climbed after FTSE Russell said it would relax the criteria to decide which of the nation’s shares will join its developing-nations index next month.
     The Stoxx Europe 600 Index dropped 0.8 percent as gains in the euro weighed on exporters. Volkswagen AG slipped after a report that the U.S. Department of Justice was said to find evidence of criminal acts in a diesel-emissions cheating probe.
     Futures on Asian equities were mixed following a Japan-led drop on Tuesday. Contracts on the Nikkei 225 Stock Average slipped at 1.8 percent in Chicago, while those on Hong Kong’s Hang Seng Index advanced 0.1 percent. FTSE China A50 Index futures gained 0.3 percent in most recent trade.
     Yields on 10-year Treasuries rose two basis points, or 0.02 percentage point, to 1.57 percent, after climbing four basis points last session. Rates on two-year notes increased two basis points to 0.75 percent, the highest closing yield this month.
     After liftoff from near zero in December, The Fed has twice cut its projections for the number of rate hikes this year, from four to two and then one. Investors will be scouring minutes of the Federal Open Market Committee’s July meeting out Wednesday for further insight into officials’ latest thinking.
     “Dudley definitely had an impact on the market,” said Justin Lederer, an interest-rate strategist at Cantor Fitzgerald LP, one of the 23 primary dealers that trade with the Fed.  “The market’s still not pricing it in,” Lederer said of a 2016 Fed hike, “but the truth is a lot of people are expecting it,” he said.
     The odds of a rate increase at the Sept. 20-21 meeting of the FOMC are about 22 percent, according to pricing in federal funds futures, compared with 24 percent a week ago.
     Long-dated U.K. government bonds fell after investors lined up to sell them to the Bank of England in the first successful purchase operation of that debt segment since the bank expanded its quantitative-easing program this month.
     The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, fell 0.7 percent, declining for a third straight session.
     The yen briefly strengthened past 100 per dollar for the first time since the aftermath of the U.K.’s vote to leave the European Union, before ending Tuesday up 0.9 percent to 100.31.
     The pound rose 1.3 percent to $1.3046, after dropping to its weakest closing level since June 1985 on Monday. The Canadian dollar climbed for a seventh day, the currency’s longest winning streak since December 2012.
     The MSCI Emerging Markets Currency Index rose to its highest point since June 2015. South Korea’s won led gains among 24 developing-nation currencies, while Mongolia’s tugrik, the world’s worst-performing currency in August, weakened for a 22nd day to the lowest level in data compiled by Bloomberg going back to 1993.
     Oil closed at its highest price in five weeks, bolstered by the weakening dollar and speculation that OPEC talks next month could result in a deal to stabilize prices via a freeze on output. West Texas Intermediate crude gained 1.8 percent to $46.58 a barrel, rising for a fourth straight day.
     Russian Energy Minister Alexander Novak told Arabic- language newspaper Asharq Al-Awsat that the nation was open to cooperating to stabilize markets after Saudi Energy Minister Khalid Al-Falih said talks in Algiers may result in action.
     “The longer they can put that story out there that there’s going to be a potential production cap, the better they’ll be able to support prices,” said Bob Yawger, director of the futures division of Mizuho Securities USA Inc. in New York. “There is no coincidence that this is happening.”
     Nickel dropped after posting the biggest advance in more than two weeks on Monday, while gold and copper advanced. Oil’s bounce helped drive the Bloomberg Commodity Index up 0.6 percent to its highest level in almost a month.
     –With assistance from Ramsey Al-Rikabi, Narayanan Somasundaram, Emma O’Brien, Jonathan Burgos, Marianna Aragao, Stephen Kirkland, Alan Soughley, James Herron, Jeff Sutherland, Sarah McDonald, James Regan, Lukanyo Mnyanda, Grant Smith, Rachel Adams-Heard, Matthew Boesler, Scott Lanman and Steve Matthews.

Have a wonderful evening everyone.

Be magnificent!

This is a good point to understand that the sum and substance of this lecture

is that there is but One Existence, and that One Existence seen through different constitutions

appears either as the earth, or heaven, or hell or gods, or ghosts, or men, or  demons, or world,

or all these things.

Swami Vivekananda

As ever,

Carolann

Never let the fear of striking out get in your way.

                                 -Babe Ruth, 1895-1948

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