August 26, 2015 Newsletter

Dear Friends,

Tangents:

On this day in 1944 DeGaulle enters a free Paris.

If you’ve got less than a day to explore a city, check out the ideas at 12hrs.net.  Founded by in-the-know Europeans (Soren Jepsen is a  contributor to GQ and Anna Peuckert wrote National Geographic’s Copenhagen guide-book), the site maps out routes that squeeze a lot of fashion-forward discovery into half a day.  A dozen cities in Europe and North America are covered, including Berlin, Barcelona, Paris, and Vancouver.  Photos of cool locals and shop windows give a sense of place before you get there, with useful tips included. –by Mercedeh Sanati, Globe & Mail.

PHOTOS OF THE DAY

People walk near sculptures of fiberglass horses in downtown Ciudad Juarez, Mexico, Tuesday. Twenty fiberglass horses, designed and painted by local artists, were displayed to the public by the local government to attract tourism and to improve their urban image. Jose Luis Gonzalez/Reuters

Two woman lie in a puddle of squashed tomatoes during the annual ‘tomatina’ tomato fight fiesta in the village of Bunol, Spain, Wednesday. The streets are awash with red pulp as thousands of people pelt each other with tomatoes. Trucks dumped 150 tons of ripe tomatoes for some 22,000 participants, many from abroad, to throw during the hour-long morning festivities. Alberto Saiz/AP

Market Closes for August 26^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rallied the most since January, rebounding from an early slump to follow the Standard & Poor’s 500 Index as it halted a six-day selloff.

     Equities were whipsawed as volatility continued throughout global markets. The Standard & Poor’s/TSX Composite Index rallied in the opening moments, only to wipe out those gains in the first half hour. The gauge remained little changed until U.S. stocks took off after 2:30 p.m. in New York.

     Stocks fluctuated early in the day as the price of raw goods from oil to copper and gold resumed their decline following a reprieve Tuesday, overshadowing banks as they advanced amid earnings reports.

     National Bank of Canada surged 4.8 percent after posting third-quarter results ahead of estimates. Valeant Pharmaceuticals International Inc., the second-best performing stock in the S&P/TSX this year, climbed 3 percent.

     The S&P/TSX jumped 230.66 points, or 1.8 percent, to 13,381.59 at 4 a.m. in Toronto, for the biggest gain since Jan. 21. The rally cut the benchmark Canadian equity gauge’s loss for the month to 7.5 percent. The index is headed for a fourth straight monthly decline, the longest such streak since September 2011.

     The MSCI All-Country World Index of developed and developing markets rose 1.9 percent as U.S. equities rallied the most since 2011 to offset losses in Europe and China.

     A volatility gauge for 60 of the largest, most liquid Canadian stocks dropped 16 percent. Nine of 10 industry groups in the S&P/TSX advanced on trading volume 12 percent higher than the 30-day average today, paced by a 2.5 percent gain in financial shares.

     Raw-materials producers slumped 2.1 percent to a November 2008 low. The Bloomberg Commodity Index, which tracks a basket of 22 resources, declined 1.3 percent. Gold fell for a third day, the longest stretch in a month, while copper led industrial metals lower and crude traded below $40 a barrel.

     The resource-rich Canadian benchmark equity gauge has been one of the worst-performing developed markets in the world this year amid a collapse in crude prices. China unexpectedly devalued the yuan on Aug. 11, further fueling concerns about global growth and the demand for commodities from oil to copper.

     Teck Resources Ltd., the largest diversified miner in Canada, dropped 3.7 percent. Gold stocks sank 5.5 percent for a fourth straight day of declines as Yamana Gold Inc. slumped 6.8 percent and Goldcorp Inc. lost 5.3 percent.

     Raw-materials and energy producers, which account for about 30 percent of the broader equity gauge, are the worst-performing industries in the S&P/TSX this year. Crude has slumped more than 35 percent from this year’s June peak amid concern global growth is slowing.

US

By Joseph Ciolli and Anna-Louise Jackson

     (Bloomberg) — Two things that have supported U.S. stocks in the past, dovish words from the Federal Reserve and improving economic data, triggered the biggest rally since 2011 and halted a plunge that erased $2.2 trillion from share values.

     Technology companies led the gains with Apple Inc., Google Inc. and Intel Inc. rising at least 5.5 percent. Amazon.com Inc. surged 7.4 percent, and Netflix Inc. posted a two-day gain of 14 percent. JPMorgan Chase & Co. and Citigroup Inc. increased more than 4.8 percent. Cameron International Corp. soared 41 percent after agreeing to be bought by Schlumberger Ltd. in a $14.8 billion deal.

     Gains in equities accelerated in the final hour as the Standard & Poor’s 500 Index climbed 3.9 percent to 1,940.51 at 4 p.m. in New York, halting a six-day slide that was its steepest in four years. The Dow Jones Industrial Average added 619.07 points, or 4 percent, to 16,285.51. The Nasdaq Composite Index rose 4.2 percent for its strongest increase since August 2011. About 10.7 billion shares traded hands on U.S. exchanges, 55 percent above the three-month average.

     “This type of short-term rally shouldn’t be much surprise given recent weakness,” said Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey, which oversees about $170 billion. “Eventually the reality that valuations have come off so much will come into play.”

     The recent turmoil in global stock markets sparked by growth concerns has reduced expectations for the Federal Reserve to increase interest rates as soon as next month. New York Fed Bank President William Dudley said Wednesday the upheaval has reduced the case for raising rates in September, while cautioning it’s important not to overreact to short-term developments.

     Traders are pricing in a one-in-four chance the central bank will act at its next meeting, down from almost even odds before China’s surprise currency devaluation earlier this month.

     Fed policy makers remain focused on economic data, which financial markets can influence, Dudley said, through the wealth effect on U.S. households. A report today showed orders for capital goods increased in July by the most in more than a year, indicating corporate spending was finding its footing prior to the turmoil in financial markets. Orders for all durable goods – – items meant to last at least three years — rose 2 percent, exceeding all forecasts of economists surveyed by Bloomberg.

     More than $2 trillion had been erased from American equity values since the S&P 500 started its losing streak, breaking a calm in a stock market that had gone almost four years without a 10 percent correction. The measure plunged 11 percent in the six days through Tuesday, the most since the U.S. was stripped of its AAA credit rating by S&P in August 2011, and was 1 percent away from erasing its gains since the end of 2013.

     “It’s definitely a positive to see markets move higher,” said Tom Manning, chief investment officer from Boston Private Wealth, which oversees about $9 billion in assets. “I don’t know that we found the bottom. I’m not convinced we don’t have more negative days to follow. We’re not likely to go from extreme volatility to extreme calm overnight.”

     A rally in the first few minutes of trading Wednesday eroded by more than half throughout the morning, before an afternoon rebound took over. That was the opposite of Tuesday’s action when more than 440 points on the Dow disappeared by the final hour of trading, with investors giving in to trepidation over what would happen overnight in China. The Shanghai Composite Index closed down 1.3 percent, erasing an advance of as much as 4.3 percent.

     The Chicago Board Options Exchange Volatility Index slipped 16 percent Wednesday to 30.32. The measure of market turbulence known as the VIX declined for a second day after a record six- day jump sent the gauge to its highest level since October 2011.

     All of the S&P 500’s 10 main industries advanced at least 1.6 percent, with financial, health-care and consumer discretionary companies joining technology shares as the top performers. Tech had its strongest day since March 2009, while the health-care group rose the most in four years.                      

     Semiconductors spearheaded the gains within the tech group, as Skyworks Solutions Inc., Nvidia Corp. and Avago Technologies Ltd. advanced more than 6.9 percent. Nvidia halted a seven-day losing streak that clipped 14 percent off its share price. Software maker Intuit Inc. added 4.3 percent to stop a four-day, 25 percent skid.

     Biotechnology shares hard hit in the market’s downdraft staged a recovery, with Amgen Inc. and Biogen Inc. rising at least 5.8 percent. Amgen had lost 13 percent in the previous six sessions. The Nasdaq Biotechnology Index climbed 5.1 percent, its largest jump since August 2011. Merck & Co. rose 6.4 percent, the most in 19 months, to pace gains among health-care companies.

     Banks in the S&P 500 had their strongest increase in more than three years, with rising Treasury yields helping to lift sentiment on the prospects for earnings. Wells Fargo & Co. and Bank of America Corp. gained at least 4.5 percent. KeyCorp, Regions Financial Corp. and Fifth Third Bancorp led the group, up more than 5.2 percent after losing more than 9 percent in the prior three sessions.

     Energy shares rebounded despite further declines in oil prices, with Cameron leading the group amid its deal with Schlumberger. Exxon Mobil Corp. jumped 5.5 percent, the most in more than six years. Chevron Corp. rose 4.4 percent, while Chesapeake Energy Corp. gained 5.1 percent.

     Monsanto Co. helped power gains in the materials group, rising 8.6 percent, the most since January 2009. The company abandoned its effort to acquire Syngenta AG, the world’s top maker of pesticides, after a sweetened bid valuing the Swiss company at $46.2 billion was rejected.

Have  a wonderful evening everyone.

Be magnificent!

To be truly united with all in knowledge, love, and service, and thus to realize the Self…

is the essence of good.  This is the keystone of the Upanishad teaching:  Life is immense.

Rabindranath Tagore

As ever,

Carolann

Everything should be made as simple as possible, but not simpler.

                                                    -Albert Einstein, 1879-1955

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