August 18, 2015 Newsletter

Dear Friends,

Tangents:

In case you missed it, the following article appeared in The New York Times last Sunday, August 16^th, 2015:

The Closing of the Canadian Mind

  The prime minister of Canada, Stephen Harper, has called an election for Oct. 19, but he doesn’t want anyone to talk about it.

  He has chosen not to participate in the traditional series of debates on national television, confronting his opponents in quieter, less public venues, like the scholarly Munk Debates and CPAC, Canada’s equivalent of CSPAN. His own campaign events were subject to gag orders until a public outcry forced him to rescind the forced silence of his supporters.

  Mr. Harper’s campaign for re-election has so far been utterly consistent with the personality trait that has defined his tenure as prime minister: his peculiar hatred for sharing information.

  Americans have traditionally looked to Canada as a liberal haven, with gun control, universal health care and good public education.

  But the nine and half years of Mr. Harper’s tenure have seen the slow-motion erosion of that reputation for open, responsible government. His stance has been a know-nothing conservatism, applied broadly and effectively. He has consistently limited the capacity of the public to understand what its government is doing, cloaking himself and his Conservative Party in an entitled secrecy, and the country in ignorance.

  His relationship to the press is one of outright hostility. At his notoriously brief news conferences, his handlers vet every journalist, picking and choosing who can ask questions. In the usual give-and-take between press and politicians, the hurly-burly of any healthy democracy, he has simply removed the give.

  Mr. Harper’s war against science has been even more damaging to the capacity of Canadians to know what their government is doing. The prime minister’s base of support is Alberta, a western province financially dependent on the oil industry, and he has been dedicated to protecting petrochemical companies from having their feelings hurt by any inconvenient research.

  In 2012, he tried to defund government research centers in the High Arctic, and placed Canadian environmental scientists under gag orders. That year, National Research Council members were barred from discussing their work on snowfall with the media. Scientists for the governmental agency Environment Canada, under threat of losing their jobs, have been banned from discussing their research without political approval. Mentions of federal climate change research in the Canadian press have dropped 80 percent. The union that represents federal scientists and other professionals has, for the first time in its history, abandoned neutrality to campaign against Mr. Harper.

  His active promotion of ignorance extends into the functions of government itself. Most shockingly, he ended the mandatory long-form census, a decision protested by nearly 500 organizations in Canada, including the Canadian Medical Association, the Canadian Chamber of Commerce and the Canadian Catholic Council of Bishops. In the age of information, he has stripped Canada of its capacity to gather information about itself. The Harper years have seen a subtle darkening of Canadian life.

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  The darkness has resulted, organically, in one of the most scandal-plagued administrations in Canadian history. Mr. Harper’s tenure coincided with the scandal of Rob Ford, the mayor of Toronto who admitted to smoking crack while in office and whose secret life came to light only when Gawker, an American website, broke the story. In a famous video at a Ford family barbecue, Mr. Harper praised the Fords as a “Conservative political dynasty.”

  Mr. Harper’s appointments to the Senate — which in Canada is a mercifully impotent body employed strictly for political payoffs — have proved greedier than the norm. Mr. Harper’s chief of staff was forced out for paying off a senator who fudged his expenses. The Mounties have pressed criminal charges.

  After the 2011 election, a Conservative staffer, Michael Sona, was convicted of using robocalls to send voters to the wrong polling places in Guelph, Ontario. In the words of the judge, he was guilty of “callous and blatant disregard for the right of people to vote.” In advance of this election, instead of such petty ploys, the Canadian Conservatives have passed the Fair Elections Act, a law with a classically Orwellian title, which not only needlessly tightens the requirements for voting but also has restricted the chief executive of Elections Canada from promoting the act of voting. Mr. Harper seems to think that his job is to prevent democracy.

  But the worst of the Harper years is that all this secrecy and informational control have been at the service of no larger vision for the country. The policies that he has undertaken have been negligible — more irritating distractions than substantial changes. He is “tough on crime,” and so he has built more prisons at great expense at the exact moment when even American conservatives have realized that over-incarceration causes more problems than it solves. Then there is a new law that allows the government to revoke citizenship for dual citizens convicted of terrorism or high treason — effectively creating levels of Canadianness and problems where none existed.

  For a man who insists on such intense control, the prime minister has not managed to control much that matters. The argument for all this secrecy was a technocratic impulse — he imagined Canada as a kind of Singapore, only more polite and rule abiding.

  The major foreign policy goal of his tenure was the Keystone Pipeline, which Mr. Harper ultimately failed to deliver. The Canadian dollar has returned to the low levels that once earned it the title of the northern peso. Despite being left in a luxurious position of strength after the global recession, he coasted on what he knew: oil. In the run-up to the election, the Bank of Canada has announced that Canada just had two straight quarters of contraction — the technical definition of a recession. He has been a poor manager by any metric.

  The early polls show Mr. Harper trailing, but he’s beaten bad polls before. He has been prime minister for nearly a decade for a reason: He promised a steady and quiet life, undisturbed by painful facts. The Harper years have not been terrible; they’ve just been bland and purposeless. Mr. Harper represents the politics of willful ignorance. It has its attractions.

  Whether or not he loses, he will leave Canada more ignorant than he found it. The real question for the coming election is a simple but grand one: Do Canadians like their country like that?

                                      -by Stephen Marche, A novelist and a columnist at Esquire Magazine who lives in Toronto.

PHOTOS OF THE DAY

Dancers from the ‘Legend Lin Dance Theatre’ perform the artistic director and choreographer Li-chen Lin’s classic works ‘Hymne aux Fleurs qui Passent, Anthem to the Fading Flowers’ during a rehearsal at the National Theater Concert Hall in Taipei, Taiwan, Tuesday. The piece pays tribute to the cycle of the year and the complementary principles of Yin and Yang whose eternal struggle provides the driving force behind the changing of the seasons. Chiang Ying-ying/AP 

Ants carry a leaf with a slogan reading ‘Forest = Future’ at the zoo in Cologne, Germany, Tuesday. Some of the zoo’s 500,000 leaf-cutting ants carry laser-cut leaves with slogans during a campaign to protect the Amazon rain forest organized by the German branch of World Wide Fund for Nature (WWF) and the Cologne Zoo. Ina Fassbender/Reuters

Market Closes for August 18^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — The deepening rout in commodities from copper to silver sent Canadian stocks to a three-week low.

     The miners and energy producers that make up about one- third of Canada’s benchmark stock index led losses as metals prices plunged to levels last seen in 2009 amid signs China’s economy is weakening further. China is the world’s biggest consumer of commodities and Canada’s second-largest trading partner.

     The Standard & Poor’s/TSX Composite Index fell 57.66 points, or 0.4 percent, to 14,193.87 at 4 p.m. in Toronto, the lowest level since July 28. The benchmark Canadian equity gauge has fallen 3 percent this year.

     The Bloomberg Commodity Index, a basket of 22 raw materials including crude and gold, tumbled 0.6 percent for a sixth straight decline. The gauge is trading at a 2002 low and has slumped 14 percent this year.

     Materials producers sank 1.7 percent, as Teck Resources Ltd., the biggest diversified miner in Canada, dropped 8 percent and First Quantum Minerals Ltd. sank 9.7 percent.

     Commodities producers are the worst-performing industries in the S&P/TSX this year as crude has slumped more than 30 percent from this year’s June peak into a bear market and metals from copper to gold have declined amid concern global growth is slowing.

     Commodities selling resumed today after shares in Shanghai sank 6.2 percent, the most in three weeks, as investors lowered expectations for further monetary stimulus. China is growing more slowly than official data suggests and below potential, a Bloomberg survey indicates.

     Bombardier Inc. slumped 6.2 percent for a fourth day of losses, extending a 1993 low. The stock has plunged 71 percent this year and is the second-worst performing stock in the S&P/TSX ahead of Trican Well Service Ltd.

US

By Callie Bost

     (Bloomberg) — U.S. stocks fell as concern over slowing growth in China and other developing nations amid a deepening commodities selloff overshadowed improvements in America’s housing market.

     Freeport McMoRan Inc. dropped 3.1 percent as copper prices tumbled. Wal-Mart Stores Inc. fell 3.4 percent after cutting its annual earnings forecast, while Home Depot Inc. added 2.6 percent after boosting its outlook. Homebuilders extended yesterday’s rally, with Lennar Corp. and Toll Brothers Inc. pacing gains.

     The Standard & Poor’s 500 Index fell 0.3 percent to 2,096.92 at 4 p.m. in New York. The Dow Jones Industrial Average lost 33.84 points, or 0.2 percent, to 17,511.34. About 5.5 billion shares changed hands on U.S. exchanges, 16 percent below the three-month average.

     “We’re seeing China dominating headlines and concern the consumer is not all in right now,” said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. “Until this economic environment and earnings stabilize, we’re going to continue to see the back-and-forth in stocks.”

     Copper led a slide in commodities on speculation the global fuel glut will persist and China’s economy will face further headwinds. The declines come a week after China’s first major currency devaluation since 1994 surprised global investors and fueled concern authorities are struggling to combat a slowdown in the world’s second-largest economy.                        

     Concern over the impact on global growth comes as the Federal Reserve is signaling it will raise interest rates this year. The central bank releases minutes from its July meeting on Wednesday, with market expectations of a September rate hike falling to about 48 percent from about 50 percent last week.

     The S&P 500 continues to trade in the tightest range in nine decades, and is hovering around its average price for the past 100 days. The index is about 1.6 percent below its all-time high reached May 21.

     “You can’t get any definitive traction in the market one way or another,” said Mark Luschini, chief investment strategist in Philadelphia at Janney Capital Management LLC, which oversees about $68 billion. “You don’t feel the impetus to invest money because it looks like the market will run away from you, but at the same time it doesn’t cause enough selling pressure because investors feel economic strength is decent and profit growth is OK.”

     The S&P 500 rose 0.5 percent on Monday as data showing strong confidence among U.S. homebuilders helped reverse earlier losses spurred by weak manufacturing in the New York region.                        

     Futures pared losses early today after data showed new-home construction in the U.S. climbed in July to the highest level in almost eight years. A drop in permits, a proxy for future construction, signals additional gains will take time to develop.

     Homebuilder stocks in the S&P 500 added 2.1 percent, posting their best two-day rally since January. Lennar and Toll Brothers surged more than 2.7 percent.

     Up 19 percent in 2015 to the highest level since 2006, the S&P Supercomposite Homebuilding Index has climbed in seven of the last eight days. The group’s 13 members rose yesterday as the National Association of Home Builders/Wells Fargo said its builder sentiment gauge advanced to the highest since November 2005.

     Home Depot climbed 2.6 percent to a record. The world’s largest home-improvement retailer is benefiting from 40 straight months of rising U.S. housing prices, which make homeowners more confident about investing in their dwellings. Americans also may be betting on future gains, since home prices still haven’t returned to their 2006 peak.

     Wal-Mart dropped the most since May. Chief Executive Officer Doug McMillon is coping with a strong dollar overseas, which has cut into revenue. He’s also raised wages in the U.S., aiming to retain more employees and improve customer service.

     About three-quarters of S&P 500 members that have reported so far this earnings season beat profit estimates, while almost half topped sales projections. Analysts expect a 2.1 percent drop in second-quarter earnings, according to an August 14 Bloomberg survey.

     The Chicago Board Options Exchange Volatility Index rose 5.9 percent to 13.79 for its second day of gains.

     Eight of 10 main S&P 500 industries declined, with technology and raw-materials shares dropping more than 0.5 percent.

     Semiconductor stocks slid 1.9 percent as Micron Technology Inc. slumped 4.9 percent, SanDisk Corp. lost 2.2 percent and Skyworks Solutions Inc. tumbled 5.8 percent. Bank of America Merrill Lynch analyst Simon Woo wrote in a note today that he is cautious on the memory chip sector given high capital expenditure targets.

     Energy shares pared a steeper loss of as much as 0.9 percent after oil rebounded on speculation that a government report will show that U.S. crude inventories declined for a fourth week.
 

Have a wonderful evening everyone.

Be magnificent!

To go from opinion to perception,

from imagination to fact, from illusion to reality,

from something that is not there,

to something that is;

that is the way forward.

Swami Prajnanpad

As ever,

Carolann

One can acquire everything in solitude except character.

                                               -Stendhal, 1783-1842

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