August 31, 2016 Newsletter

Dear Friends,


Growing Older, and Happier

  Older people tend to be happier than younger people, and their happiness increases with age, a study in the Journal of Clinical Psychiatry reports.
  Researchers contacted 1,546 people ages 21 to 99 via random telephone calls and found that older age was, not surprisingly, tied to declines in physical and cognitive function. But it was also associated with higher levels of overall satisfaction, happiness and well­being, and lower levels of anxiety, depression and stress. The older the person, the study found, the better his or her mental health tended to be.
  Other studies have found similar results linking advancing age and higher levels of happiness. The reasons for the effect remain unclear, but the senior author, Dr. Dilip V. Jeste, a professor of psychiatry at the University of California, San Diego, had some suggestions.
  “Brain studies show that the amygdala in older people responds less to stressful or negative images than in a younger person,” he said. “We become wise. Peer pressure loses its sting. Better decision­ making, more control of emotions, doing things that are not just for yourself, knowing oneself better, being more studious and yet more decisive.
   “This is good news for young people, too,” he added. “You have something to look forward to.”  -New York Times, August, 2016.

On August 31, 1997, Britain’s Princess Diana died in a car crash in Paris at age 36.
August 31, 1896, gold discovered in the Klondike.

Waterfowls land in a quarry pond during sunrise in Isernhagen, Hannover region, northern Germany, on Wednesday. Holger Hollemann/dpa/AP

Malaysian students wave the Malaysian flag during the 59th National Day celebrations at Independence Square in Kuala Lumpur on Wednesday. Malaysia gained independence on August 31, 1957. Joshua Paul/AP

Market Closes for August 31st, 2016



Close Change


18400.88 -53.42



S&P 500 2170.95 -5.17



NASDAQ 5213.219 -9.771



TSX 14597.15 -87.70



International Markets



Close Change
NIKKEI 16887.40 +162.04






22976.88 -39.23




SENSEX 28452.17 +109.16




FTSE 100 6781.51 -39.28





Bonds % Yield Previous  % Yield

10 Year Bond

1.022 1.022

30 Year


1.626 1.630

10 Year Bond

1.5766 1.5680

30 Year Bond

2.2292 2.2320


BOC Close Today Previous  
Canadian $ 0.76334 0.76350


1.31003 1.30975
Euro Rate

1 Euro=

Canadian $ 1.46154 0.68421




1.11564 0.89635


Gold Close Previous
London Gold


1309.25 1318.15
Oil Close Previous
WTI Crude Future 44.70 46.98


Market Commentary:
By Eric Lam

     (Bloomberg) — Canadian stocks fell for the first time in five sessions, all but wiping out a monthly advance, as energy producers slipped with the price of crude and lenders dropped amid data showing the nation’s economy contracted in the second quarter by the most since 2009.
     The S&P/TSX Composite Index fell 0.6 percent to 14,597.15 at 4 p.m. in Toronto, the lowest close in almost four weeks. The equity gauge capped a 0.1 percent climb in August, the narrowest one-month gain since June 2009. Trading volume Wednesday was 32 percent higher than the 30-day average.
     The yearlong rally in Canadian equities has lost steam in August as surging commodities producers have faltered. The raw- materials group has been the worst performer among 10 industries this month, slumping 9.9 percent on a decline in gold. The drop cut the group’s rally this year to 45 percent, an increase that would halt the longest yearly losing streak since 1988. Energy producers have gained 19 percent in 2016, on pace for the strongest in seven years.
     Meanwhile, health-care stocks surged 14 percent in August, led by Valeant Pharmaceuticals International Inc.’s 31 percent rally. The drugmaker affirmed its 2016 outlook earlier this month, restoring some confidence in analysts and investors in its turnaround strategy.
     The rally in the commodity sector has 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. Canadian stocks are more expensive than their U.S. peers, with a price-earnings ratio of 23.1 for the S&P/TSX, opening up a 14 percent premium over the S&P 500 Index.
     A rout in crude prices and data showing that Canada’s economy contracted by a 1.6 percent annualized pace in the second quarter set the tone on the month’s final day. Suncor Energy Inc. and Canadian Natural Resources Ltd. lost at least 1.9 percent, with losses growing after data showed an increase in U.S. oil inventories. 
    Energy producers slipped 1.1 percent as a group to lead declines across seven of 10 industries in the S&P/TSX. Raw- materials producers lost 0.7 percent for a second straight decline. Gold capped a monthly decline in August for the first time in seven years, with futures down more than 3 percent this month as the Federal Reserve inches closer to raising interest rates. A U.S. private jobs report showed firms added workers in August in line with estimates.
     Financial shares fell 0.5 percent, paring a loss as investors found a glimmer of hope in the economy data. Gross domestic product grew 0.6 percent in June, exceeding expectations of a 0.4 percent expansion. Economists often put more weight on the last month of a quarter as a sign of future growth.
     National Bank of Canada dropped 3.1 percent today, the biggest slide in more than two months even after reporting third-quarter results that exceeded expectations. National Bank is the sixth major Canadian lender to beat analysts’ estimates in the current reporting period, joining Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Toronto-Dominion Bank, Royal Bank of Canada and Bank of Montreal.

By Anna-Louise Jackson

     (Bloomberg) — Never mind the tepid move in U.S. equity benchmarks this month, there’s been plenty going on below the surface.
     At first glance it’s been a month of anemic trading, marked by the lowest daily volume in almost two years, while the S&P 500 Index failed to budge more than 1 percent in either direction for a 38th day. But that tranquility belies a more significant shift in sentiment, where investors are once again embracing stocks that benefit from a stronger economy even as they prepare for a interest-rate increase as soon as next month.
     The S&P 500 wiped out gains for August on Wednesday as energy producers dropped with crude oil. The gauge fell 0.2 percent to 2,170.95 as of 4 p.m. in New York, halting the longest monthly winning streak in two years. The Dow Jones Industrial Average lost 53.42 points, or 0.3 percent, to 18,400.88. About 6.8 billion shares traded hands on U.S. exchanges, in line with the three-month average.
     Be it a second-straight jump in hiring, a spike in consumer confidence or signs of promise at U.S. factories, August signaled “a little bit of an improvement in the U.S. economy,” said Eric Green, director of research and senior managing partner at Penn Capital, which has more than $6 billion under management in Philadelphia. “It makes a lot of sense the rotation we’re seeing. It’s long overdue.”
     As confidence in the economy built, comments from Federal Reserve policy makers at last week’s symposium in Jackson Hole, Wyoming helped solidify a risk-on mentality, Green said. That’s because an increased probability of rising rates makes high- dividend defensive industries less attractive. Prices for Fed funds futures imply a 61 percent chance of a rate hike by year- end, up from 36 percent at the start of the month, according to data compiled by Bloomberg.
     Utilities stocks tumbled 6.1 percent in August, the biggest monthly decline in more than a year, while phone companies slipped 5.7 percent, their worst since 2014. Technology and financial shares both rose for a second month, adding at least 1.8 percent, with banks capping their best performance since February.
     Compared with a wild August in 2015 when the main U.S. benchmark tumbled 6.3 percent, this year’s late-summer season was calm. The lightest day of the year, this past Monday, saw less than 5 billion shares traded, while daily average volume fell 8 percent this month from July.
     Meanwhile, subdued price swings typify a market that lacks commitment either way, Green said. “People are sitting and waiting to get a little more clarity,” he added. The CBOE Volatility Index waited until August’s final week to surge to it biggest monthly jump in a year, though it remains more than 30 percent below its 10-year average.
     After reaching a record on Aug. 15, the S&P 500 has failed to maintain its momentum amid lukewarm economic reports and speculation over the timing of the next Fed rate increase. Equities have wobbled this week, with investors sharpening their focus on the August employment report as its outcome has the potential to cement policy makers’ decisions on borrowing costs at the central bank’s meeting in three weeks.
     “There is some amount of optimism that the statements from the Fed imply that the economy is in much better shape, and if the economy is in much better shape, they should move out of the defensive sector and move on to the risk-on sectors,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies Inc. in Santa Monica, California. “It is a very short-term phenomenon and it is not likely to last, and in that case it is going to be reversed.”
     Sri-Kumar points to second-quarter gross domestic product that grew less than previously estimated, along with the five- quarter recession in corporate profits as evidence the economy isn’t strong enough to sustain another rate increase. Rather, he says the next move by the Fed could be a rate cut or another round of quantitative easing. 
     Commodity shares led a retreat Wednesday amid a report showing crude stockpiles rose more than predicted. Energy companies trimmed their August advance to 0.6 percent from 4 percent two weeks ago. Chevron Corp. sank 1.1 percent, while copper miner Freeport-McMoRan Inc. posted its worst month since May.
     Among shares moving on corporate news, H&R Block Inc. tumbled the most since April after reporting a wider-than- estimated quarterly loss. Apparel retailer Chico’s FAS Inc. jumped 12 percent near a four-month high on better-than-forecast quarterly results. 
     “I think the market is coming to grips with a higher probability that the Fed may move in September,” said Robert Pavlik, who helps oversee $9.1 billion as chief market strategist at Boston Private Wealth. “A possible Fed rate hike creates some near-term worries — that’s what you’re seeing play out today.”


Have a wonderful evening everyone.


Be magnificent!

Silence is a great benediction, it cleanses the brain, gives vitality to it,
and this silence builds up great energy, not the energy of thought or the energy of machines,
but unpolluted energy, untouched by thought.
It is the energy that has incalculable capacity, skills.
And this is a place where the brain, being very active, can be silent.
That very intense activity of the brain has the quality and the depth
and the beauty of silence.

As ever,




Good people are good because they’ve come
to wisdom through failure.
                      -William Saroyan,  1908-1981


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