August 24, 2016 Newsletter

Dear Friends,

Tangents:
On this day in 2011, Steve Jobs resigns as CEO of Apple.

Recent Numbers of Note:
129.2
Temperature (in degrees F.) in Mitribah, Kuwait, July 22, a record high for the Eastern Hemisphere and perhaps the world.

4.8
Billion (in dollars) paid by  Verizon to acquire Yahoo, one  of the pioneer internet portals.  In 2008, Yahoo turned down an offer of $44.6 billion from Microsoft.

20.2
Height gain (in centimeters; 7.95 inches) by South Korean women, on average, over the past 100 years, the most of any global group.

0
Videocassette recorders to be made worldwide this month, since Japanese company Sanyo ceased production in July.  At the peak of the company’s production, Sanyo made 15 million VCRs per month.

98
Billion packets of instant ramen noodles consumed globally in 2015.  In a lighthearted 2000 poll, Japanese ranked instant ramen as their nation’s most important 20^th century innovation.
PHOTOS OF THE DAY

A bee feeds on a lavender plant in Dublin, Ireland, on Wednesday. Clodagh Kilcoyne/Reuters

Swimmers take part in the annual Lake Zurich swimming event in Zurich, Switzerland, on Wednesday. Participants swim across the lake, a distance of 1,500 meters (4,921 ft.) Arnd Wiegmann/Reuters

People cool off in a fountain in a park as hot summer temperatures hit Paris on Wednesday. Pascal Rossignol/Reuters
Market Closes for August 24^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
    (Bloomberg) — Canadian stocks tumbled the most in almost two months, as commodities producers sold off with metals prices and crude oil.
    The S&P/TSX Composite Index fell 0.9 percent to 14,626.24 at 4 p.m. in Toronto, its first decline in three days. Trading volume was 4.6 percent higher than the 30-day average. The S&P/TSX remains the second-best performing developed market in the world behind New Zealand.
     Barrick Gold Corp. and Goldcorp Inc. tumbled more than 9.3 percent as raw-materials producers fell 5.8 percent, a fourth- straight decline and the biggest drop in more than three months. Kinross Gold Corp. sank 11 percent, to the lowest close since April.
     Gold futures in New York lost 1.2 percent for the biggest drop in two weeks as investors await more clarity from the Federal Reserve on its intentions for interest-rate moves this year. Fed Chair Janet Yellen is set to speak Friday at an annual symposium in Jackson Hole, Wyoming. Traders have priced in 54 percent odds of a U.S. rate increase in December.
     Canadian Imperial Bank of Commerce and Toronto-Dominion Bank added at least 0.6 percent to lead financial services stocks higher. The two are set to report results on Thursday. Bank of Nova Scotia, which is on deck for Aug. 30, rose 1.8 percent.
     Royal Bank of Canada slipped 0.5 percent, even after third quarter profit jumped 7.5 percent from a year ago. Its City National purchase in the U.S. bolstered wealth management and capital markets earnings surged.
     Raw-materials producers have trimmed their climb this year to 47 percent during the current slide, still the top gainers among 10 industries in the S&P/TSX. The group is on track for the first annual advance in six years, an increase that would halt the longest yearly losing streak since 1988. Energy producers have gained 21 percent in the same period, on pace for the strongest in seven years.
     That’s boosted the Canadian equity benchmark to a 12 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 23.3 for the S&P/TSX, opening up a 14 percent premium over the S&P 500 Index.
     Energy producers tumbled 1.1 percent Wednesday as oil dropped to the lowest in a week after government data showed U.S. crude inventories unexpectedly rose last week. Enbridge Inc. and TransCanada Corp. fell more than 1.3 percent.
     Valeant Pharmaceuticals International Inc. lost 2.1 percent, joining a late-day selloff among U.S. drugmakers, spurred by criticism over drug prices, that dragged the S&P 500 Index to its biggest decline in more than two weeks.

US
By Rita Nazareth, Joseph Ciolli and Anna-Louise Jackson
     (Bloomberg) — Stocks fell as heightened political and security risks rattled emerging markets, oil tumbled and U.S. biotechnology stocks had their biggest drop in two months as politicians decried drug price hikes.
     Developing-nation shares slid after Turkey launched a military operation in Syria, while North Korea conducted a missile test. South Africa’s rand sank as the nation’s finance minister refused to report to police amid a probe. Drugmakers dragged the S&P 500 Index lower as Mylan NV drew the ire of lawmakers over a price increase of a life-saving allergy shot, which Democratic presidential candidate Hillary Clinton dubbed “outrageous.” Oil sank on data showing U.S. stockpiles rose. Investors including foreign central banks and mutual funds bought a record amount at a Treasury debt sale.
     Market sentiment has seesawed in recent weeks amid wagers on how aggressive the Federal Reserve will be in its approach to monetary tightening as traders awaited Chair Janet Yellen’s speech on Friday. The angst was amplified by the recent flare- ups in emerging markets, which exposed the frailty of a rally spurred in part by investors seeking refuge from low or negative rates in developed economies. The late-session slide disrupted a recent period of tranquility that has seen the U.S. stock volatility gauge on track this month for its lowest mean level for any August since 1994.
     “You have the news about drug pricing, and you had oil come down a bit,” said Matt Maley, an equity strategist in New York at Miller Tabak & Co LLC. “I don’t know why we reacted to them later in the day, other than we’re getting close to Yellen’s speech on Friday.”
     The probability of a U.S. rate hike next month rose to 28 percent from 24 percent at the start of this week, and the chances by the end of the year increased to 54 percent, according to data compiled by Bloomberg from fed fund futures.
     In another sign of mixed U.S. economic data, the National Association of Realtors said sales of previously owned homes dropped more than forecast in July from a nine-year high. The report came a day after the Commerce Department said purchases of new homes unexpectedly jumped.
     MSCI’s global stock index dropped 0.5 percent at 4 p.m. in New York, erasing this week’s gains. A measure of emerging- market shares lost 1.1 percent. Turkish equities slumped 1.6 percent as the nation aims to force Islamic State militants away from its border and deter further advances by Syrian Kurds allied with separatists.
     The S&P 500 fell 0.5 percent, with losses accelerating in afternoon trading, led by Mylan NV’s 5.4 percent slide. Investors were spooked by Clinton’s comments, a reminder of critical remarks she made last year on drug prices which helped spur a 20 percent selloff in the Nasdaq Biotechnology Index.
     “The healthcare and biotech selloff was pretty significant — the comments from Hillary slapped these stocks all the way down,” said Dave Lutz, the head of ETF trading for JonesTrading Institutional Services. “Biotech is what took the wind out of the sails; nobody saw that coming. It reminds investors of the headline risk going into the election in this sector.”
     Teva Pharmaceutical Industries Ltd. also slumped after a U.S. agency invalidated two of the patents protecting Copaxone, a multiple sclerosis drug that generates 20 percent of its revenue.
     European equities climbed for a third day as a gauge of banks reached its highest level since the U.K. referendum on European Union membership. Italy’s UniCredit SpA surged 8 percent, while Commerzbank AG and UBS Group AG added at least 2.9 percent. At the same time, a measure of volatility is recording its lowest monthly average since March 2015.
     Strong demand at Wednesday’s Treasury five-year note auction added to evidence that markets aren’t yet wholly convinced that the Fed is poised to tighten policy this year.
     The lack of clarity on the timing of the Fed’s next move has confined Treasuries to tight trading ranges this month. Officials project the policy rate will rise this year, even as some have expressed longer-term concern that it may not climb to levels seen in previous economic cycles. Chair Yellen speaks Friday at a symposium in Jackson Hole, Wyoming.
      “The conditions for the Fed to hike rates again — above- trend growth, improved financial conditions, and rising inflation expectations — have not been met,” John Bellows, a money manager at Pasadena, California-based Western Asset Management Co., which oversees $460 billion of fixed-income assets, wrote Wednesday. “Yellen is likely to avoid the question of the timing of the next hike and focus instead on the bigger picture considerations.”
     Treasury five-year note yields were little changed at 1.14 percent, according to Bloomberg Bond Trader data. The yield on two-year securities was 0.76 percent, while the benchmark 10- year note yield was 1.56 percent.
     South Africa’s benchmark government bond yields due December 2026 surged 53 basis points to 9.05 percent. Finance Minister Pravin Gordhan said that he had done nothing wrong by authorizing the establishment of a special investigative unit when he headed the national tax agency and he wouldn’t obey a police instruction to present himself for questioning.
     The JPMorgan Chase & Co. gauge of currency price swings rose to 10.31, the highest since July 25.
     The Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, rose 0.2 percent. The U.S. currency strengthened 0.4 percent to $1.1264 per euro, and 0.2 percent to 100.45 yen. The pound rose to a three-week high as data continued to suggest the U.K. economy is proving resilient to the secession vote.
     Most emerging-market currencies fell as South Africa’s rand sank to the lowest level in a month. South Korea’s won led losses in Asia after North Korea’s missile launch added to the mounting geopolitical tension in the region. Both Mexico’s peso and Brazil’s real rose.
     West Texas Intermediate for October delivery dropped 2.8 percent to close at $46.77 a barrel on the New York Mercantile Exchange.
     Crude inventories climbed by 2.5 million barrels in the week ended Aug. 19, according to an Energy Information Administration report. A Bloomberg survey ahead of the data had forecast inventories would fall by 850,000 barrels. Iran’s oil ministry said the country hasn’t yet decided whether to join informal OPEC talks next month in Algiers following a Reuters report that the nation had confirmed its attendance at the gathering.
     “We’re still in a fundamentally oversupplied market,” said Adam Wise, who helps run a $7 billion oil and natural gas bond and private equity portfolio at John Hancock in Boston. “The build was unexpected and comes amid a lot of OPEC chatter making for a sloppy, if range-bound market.”
     Copper fell for a fourth day, erasing its gains for the year, on surging inventories and signs of weak demand in China, the biggest consumer. Gold and silver also retreated.

Have a wonderful evening everyone.

Be magnificent!

We encounter this surprising paradox between us:
he Whole appears as a multitude,
the appearance is opposite to the truth,
and yet it is inseparably linked.
Rabindranath Tagore

As ever,

Carolann

Whenever and wherever human beings endure suffering and humiliation,
take sides.  Neutrality helps the oppressor, never the victim.  Silence
encourages the tormentor, never the tormented.
                                                  -Elie Wiesel, 1928-2016

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