August 17, 2016 Newsletter

Dear Friends,

Tangents:
Someone gave me a book of poetry last Sunday  which I have been enjoying every night since.  It is compiled by Caroline Kennedy and is entitled  She Walks In Beauty – A Woman’s Journey Through Poems.

In her introduction to the last chapter, How To Live, she writes, “…Fundamentally, poetry celebrates our individuality and the creative effort of living.  The next to last poem in this book was one of my mother’s favorites.  She loved the ancient Greek attitude toward life – the closeness to nature, the relationship of men and gods, and the reverence for the heroic.  Constantine Cavafy, a modern Greek poet who lived a short and tragic life in Alexandria, drew heavily on the ancient myths and history in his work.  “Ithaka” is his masterpiece, and it is one of those poems that I carry with me always in my mind.”

Ithaka
Constantine P. Cavafy

As you set out for Ithaka
hope the voyage is a long one,
full of adventure, full of discovery.
Laistrygonians and Cyclops,
angry Poseidon—don’t be afraid of them:
you’ll never find things like that on your way
as long as you keep your thoughts raised high,
as long as a rare excitement
stirs your spirit and your body.
Laistrygonians and Cyclops,
wild Poseidon—you won’t encounter them
unless you bring them along inside your soul,
unless your soul sets them up in front of you.

Hope the voyage is a long one.
May there be many a summer morning when,
with what pleasure, what joy,
you come into harbors seen for the first time;
may you stop at Phoenician trading stations
to buy fine things,
mother of pearl and coral, amber and ebony,
sensual perfume of every kind—
as many sensual perfumes as you can;
and may you visit many Egyptian cities
to gather stores of knowledge from their scholars.
 
Keep Ithaka always in your mind.
Arriving there is what you are destined for.
But do not hurry the journey at all.
Better if it lasts for years,
so you are old by the time you reach the island,
wealthy with all you have gained on the way,
not expecting Ithaka to make you rich.
 
Ithaka gave you the marvelous journey.
Without her you would not have set out.
She has nothing left to give you now.
 
And if you find her poor, Ithaka won’t have fooled you.
Wise as you will have become, so full of experience,
you will have understood by then what these Ithakas mean. 

PHOTOS OF THE DAY

The Italian team celebrates its victory over Russia in the women’s water polo semifinal at the Olympic Aquatic Stadium in Rio de Janeiro, Brazil, Wednesday. Laszlo Balogh/Reuters

Yoshitaku Nagasako of Japan competes in the men’s BMX preliminary round at the Olympic BMX course in Rio de Janeiro, Brazil, Wednesday.Eric Gaillard/Reuters
Market Closes for August 17^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks ended little changed after all but erasing earlier losses following Federal Reserve meeting minutes that signaled the U.S. central bank won’t rush to raise interest rates amid uneven economic growth. Valeant Pharmaceuticals International Inc. surged.
     The S&P/TSX Composite Index lost less than 0.1 percent to 14,697.60 at 4 p.m. in Toronto, rebounding from an earlier decline of as much as 0.6 percent. Commodities producers led declines as the dollar’s advance weighed on prices for natural resources. Trading volume was 3.6 percent lower than the 30-day average.
     U.S. equities ended higher while the dollar rebounded from a more than three-month low against major peers. Traders priced in a less than 50 percent chance of a rate move this year, according to data compiled by Bloomberg, down from earlier in the week after Fed officials from New York and Atlanta surprised markets with comments suggesting the central bank may raise borrowing costs as soon as next month.
     Minutes of the central bank’s July meeting issued Wednesday showed some officials preferred to wait on a rate hike because inflation remained benign, while others wanted to raise soon as the labor market nears full employment. The Canadian dollar recovered losses against the greenback after the release, extending an eight-day rally that’s now the longest in five years.
     In Canada, commodities producers led declines as four of 10 industries in the S&P/TSX retreated. Raw-materials producers slumped 1.2 percent for a fifth day of losses, the longest losing streak since October, as gold and copper fell in tandem.
     Yamana Gold Inc. and Barrick Gold Corp. retreated at least 2.2 percent. Energy stocks dropped 0.5 percent.
     The declines have pared gains for raw-materials producers to 60 percent, still the top gainers this year among 10 industries in the S&P/TSX, 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 23.4 for the S&P/TSX, about 14 percent higher than the S&P 500 Index.    
     Valeant Pharmaceuticals jumped 13 percent, to the highest in two months, after Morgan Stanley analyst David Risinger raised his rating for the drugmaker to overweight from equal weight and boosted his price target on a “clearer vision” for the company under new CEO Joe Papa. It’s the second analyst rating increase this week for Valeant, which now has seven buys, 11 holds and four sells according to data compiled by Bloomberg.

US
By Oliver Renick and Joseph Ciolli
     (Bloomberg) — U.S. stocks edged higher as Federal Reserve meeting minutes quelled speculation that borrowing costs could rise as soon as next month.
     The minutes showed officials were divided in July over the urgency to raise interest rates again, but they generally agreed to wait for more data before another move. Equities rebounded in afternoon trading, as utilities’ strongest rally in seven weeks helped overcome disappointing results from Target Corp. and Lowe’s Cos. that threatened to send stocks to their first back- to-back drop in two weeks.
     The S&P 500 Index rose 0.2 percent to 2,182.22 at 4 p.m. in New York, after the gauge wiped out a 0.4 percent slide. The Dow Jones Industrial Average rose 21.92 points, or 0.1 percent, to 18,573.94, erasing an early 83-point drop. The Nasdaq Composite Index increased less than 0.1 percent. About 6.4 billion shares traded hands on U.S. exchanges, 7 percent below the three-month average.
      “The knee-jerk reaction is still lower-for-longer,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “There were a couple innuendos that a few members thought we should be acting. But other language offered enough excuses for things taking place both domestically and globally to justify doing nothing for the time being. It seems like the Fed is finding reasons not to hike interest rates, and therefore it was a market-friendly release.”
     Officials said they needed more data “in order to gauge the underlying momentum in the labor market and economic activity,” the minutes released in Washington said. Since the meeting, data has been mixed with hiring showing a sharp increase while retail sales stagnated in July. Producer prices contracted last month and consumer prices were flat, bolstering the argument that inflation remains subdued.
     Equities rebounded as utilities, financial and consumer- staples stocks shook off earlier declines. Power company Dominion Resources Inc. gained 2.6 percent, the most in five months. Target and Lowe’s each lost more than 5.6 percent, while Staples Inc. dropped 7.1 percent after its profit outlook was short of estimates. Cisco Systems Inc. sank 1.3 percent before its earnings release, after a report said it will cut as many as 14,000 jobs. Urban Outfitters Inc. soared 16 percent after its results exceeded analysts’ forecasts.
     Shares fell from all-time highs Tuesday after New York Fed President William Dudley said the central bank could potentially raise interest rates as soon as next month. His warning that investors are underestimating the likelihood of higher borrowing costs took some momentum out of a six-week rally for stocks.
     Traders’ bets for a rate increase were pushed back today, with February 2017 now the first month with at least even odds of such a move, versus December before the meeting minutes were released.
     Equities climbed to fresh peaks in the month through Monday, boosted by better-than-estimated corporate results, an improving labor market and optimism central banks will stay supportive of growth. The gains have pushed the S&P 500’s valuation relative to future earnings to the highest in more than a decade. The benchmark closed Wednesday up 6.8 percent in 2016, after rallying more than 19 percent from a 22-month low in February.
     The earnings season is drawing to a close, with fewer than 40 of the S&P 500’s companies yet to report. So far, 78 percent of the firms have beaten profit projections and 56 percent topped on sales. While results have exceeded predictions, analysts forecast index members will still post a 2.5 percent drop in net income, and estimate a 0.8 percent decline for the quarter ending in September. That would extend the slide in earnings to a sixth period, the longest since the financial crisis. In Wednesday’s trading, seven of the S&P 500’s 10 main industries rose, with utilities surging 1.5 percent, the most since June 30, after erasing a 0.9 percent selloff. Financials, consumer staples and industrial stocks added at least 0.3 percent. Phone companies rose 0.2 percent after wiping out a 1 percent drop. Raw-materials, consumer discretionary and technology shares slipped. The CBOE Volatility Index fell 3.6 percent to 12.19, after reversing an 8.5 percent jump at midday.
     Retailers fell for a third day, their longest losing streak in two months. Stronger-than-forecast earnings last week from Macy’s Inc., Kohl’s Corp. and Nordstrom Inc. had helped send the group to a record on Friday, before being dragged lower today as Target and Lowe’s suffered their worst declines since at least May.
     Target said sales of Apple Inc.’s iPods, iPhones and other devices fell 20 percent at its stores during the second quarter. Apple slipped as much as 1 percent before closing down 0.2 percent. Best Buy Co. dropped 2.9 percent, the most in six weeks. Joining Apple and Cisco Systems to weigh on technology shares, Nvidia Corp. fell 2.3 percent to stretch declines to a third session, the longest in five months.

Have  a wonderful evening everyone.

Be magnificent!

Truth is that which one wishes in its totality.  Have you reached it?

Krishnamurti

As ever,

Carolann

If I had eight hours to chop down a tree, I’d spend six sharpening my axe.

                                                              -Abraham Lincoln, 1809-1865

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