August 5, 2015 Newsletter

Dear Friends,

Tangents:

The Poem:

AIR MAIL

On a hunt for a mailbox

I carried the letter through town.

In the great forest of stone and concrete

this lost butterfly fluttered.

The stamp’s flying carpet

the address’s reeling letters

 plus my sealed-in truth

now winging over the ocean.

The Atlantic’s crawling silver.

The cloudbanks.  The fishing boat

like a spat-out olive pit.

And the wakes’ pale scars.

Down here work goes slowly.

I often sneak peeks at the clock.

The tree-shadows are black figures

in the greedy silence.

The truth is there on the ground

but no one dares to take it.

The truth is out  on the street.

No one makes it their own.

By Tomas Transtromer

(Translated by Patty Crane from Swedish)

PHOTOS OF THE DAY

A costumed participant arrives at the Gamescom computer game fair in Cologne, Germany, Wednesday. Hundreds of thousands visitors will enjoy one of the world’s largest computer and video game events which lasts until Sunday. Martin Meissner/AP

The sun rises over the skyline in Toronto, Tuesday. Mark Blinch/Reuters

Market Closes for August 5, 2015

International Markets

Bonds

Currencies

Commodities

 Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks capped the longest rally in four months as an unexpected rebound in exports boosted optimism in the economy.

     The Standard & Poor’s/TSX Composite Index eked out a sixth day of gains for the longest rally since April. While the gauge has added 3.6 percent during the recent run, the advance follows a seven-day rout of 5 percent that was the longest since 2011.

     Equities climbed as much as 0.9 percent Wednesday after data showed Canadian exports surged in June at the fastest pace in almost a decade, providing signs the economy may be rebounding from its downturn. Stocks pared gains as energy and materials producers continued a slump that has made them the worst-performing in Canada this year.

     “The export numbers caught a lot of people off-guard,” said Greg Taylor, a fund manager at Aurion Capital Management in Toronto. His firm manages about C$6.6 billion. “We will have to look for more of that. It’s hard to look at just one point in time.”

     The S&P/TSX added 11.94 points, or 0.1 percent, to 14,502.99 at 4 p.m. in Toronto. The gauge has fallen 0.9 percent in 2015, one of only three developed markets in negative territory for the year among the the 24 tracked by Bloomberg.

     Canadian exports surged 6.3 percent in June, the biggest gain since December 2006, snapping five straight months of declines, according to data from Statistics Canada.

     Lenders, which account for about one-third of the index, paced gains as Royal Bank of Canada climbed 0.9 percent and Bank of Nova Scotia added 0.5 percent.

     Materials producers fell the most, losing 1.4 percent. Tahoe Resources Inc. tumbled 6.1 percent after its chief executive officer stepped down for personal reasons. Barrick Gold Corp. sank 3.5 percent to a 1989 low. Semafo Inc. rose 2.9 percent after second-quarter earnings topped estimates.

     Energy producers slipped 0.8 percent, erasing earlier gains of as much as 1.9 percent. The Bloomberg Commodity Index declined 0.3 percent.

US

By Annelise Alexander and Oliver Renick

     (Bloomberg) — U.S. stocks rose for the first time in four days, amid better-than-estimated earnings from technology companies while services-industry data indicated the economy is on track for faster growth.

     Cognizant Technology Solutions Corp. and First Solar Inc. jumped at least 6.4 percent after their profits exceeded analysts’ forecasts. Priceline Group Inc. added 5.2 percent as its earnings topped estimates. Apple Inc. climbed for the first time in six sessions. Walt Disney Co. slid 9.2 percent after its quarterly sales missed projections, and energy companies erased earlier gains along with oil.

     The Standard & Poor’s 500 Index rose 0.3 percent to 2,099.84. at 4 p.m. in New York, after slipping 0.7 percent over the previous three sessions. The Dow Jones Industrial Average sank 10.22 points, or 0.1 percent, to 17,540.47, under Disney’s 75-point drag. The Nasdaq Composite Index rose 0.7 percent. About 7.2 billion shares traded hands on U.S. exchanges, 11 percent above the three-month average.

     “The market has been under a little bit of pressure looking for a reason to go back up,” said John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York. “The market’s moving in the right direction. A slow, steady recovery is probably a good thing. The single most important factor affecting stock markets is what the Fed is doing.”

     Investors are watching economic reports to gauge when the Federal Reserve will increase interest rates, a decision it has forecast for this year. Data today showed service providers from restaurants to real estate agencies expanded in July at the strongest pace in a decade, putting the U.S. economy on track for faster growth. The share of services companies boosting employment was the highest since records began in 1997.                          

     A separate report Wednesday from ADP Research Institute said companies added fewer workers than expected to payrolls in July, casting doubt on whether labor-market gains can accelerate beyond this year’s current pace. The government’s monthly job report on Friday is projected to show employers took on 225,000 workers last month, while the jobless rate held at a seven-year low of 5.3 percent.

     Fed Governor Jerome Powell said there is more labor-market slack in the economy than the jobless rate indicates, during an interview on CNBC. He also said financial assets aren’t in bubble territory, and reiterated that a shallow path for rate increases would be appropriate.

     “We’re in a summer lull, having to digest the Fed apparently getting close to making its own moves, and it’s going to be easy with short-term sentiment to move this market around,” said Steve Bombardiere, an equity trader at Conifer Securities LLC in New York. “What you’d really like to see is the Fed saying the economy is strong and we’re going to raise rates but you’re not seeing that.”                        

     Investors are also weighing corporate earnings for hints on the economy’s health. Four out of five S&P 500 members have reported results this season, with about three-quarters beating profit estimates and half topping sales projections. Analysts now call for a 2.8 percent drop in second-quarter earnings, shallower than July 10 estimates for a 6.4 percent fall.

     Equities pared earlier gains as energy companies declined and raw-material shares trimmed their advance. Chesapeake Energy Corp. tumbled 12 percent following a 4.5 percent jump today. Oil fell to a four-month low, after rallying 2 percent, amid signs of ample crude stockpiles. Miner Freeport-McMoRan Inc. lost 1 percent, reversing a 7.5 percent climb that came amid its plan to cut back on oil and gas investments.

     “Commodities, mostly oil, have turned around from being up earlier today,” said Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC. “The combination of some of the growth issues out of China and the strength of the dollar as we’re getting closer to a rate hike has been causing this overall weakness in commodities.”                          

     The Chicago Board Options Exchange Volatility Index fell 3.8 percent Wednesday to 12.51. The gauge, known as the VIX, in July posted its biggest monthly drop since February, down more than 33 percent.

     Seven of the S&P 500’s 10 main industries advanced today, with technology and consumer-staples shares rising the most, while energy and consumer-discretionary companies retreated.

     Gains in First Solar and Cognizant led the strongest rise in the tech group in almost three weeks. First Solar jumped the most since March 2014, while Cognizant had its best increase since November. Motorola Solutions Inc. advanced 6.3 percent to a four-month high after quarterly profit topped estimates, and the communications-equipment maker is receiving a $1 billion investment from private-equity firm Silver Lake.                       

     Activision Blizzard Inc. soared 12 percent to a record as sales and profit beat analysts’ estimates on the strength of video-game franchises such as Call of Duty and Skylanders.

     Fellow video-game maker Electronic Arts Inc. added 4.7 percent, also to an all-time high. Sony Corp., EA and Microsoft Corp. predict the releases of potential blockbusters such as Star Wars Battlefront, Halo 5 and FIFA 2016 will fuel holiday sales of games and consoles.

     H&R Block Inc. rose the most since March 2013 after receiving regulatory approval to sell its bank unit BofI Federal Bank, a deal that would end Federal Reserve oversight and capital restrictions. The shares surged 8.9 percent to a record.

     Wal-Mart Stores Inc.’s 2.4 percent increase, the biggest since January, paced a rise among consumer staples. Mondelez International Inc., Kellogg Co. and PepsiCo Inc. each gained at least 1.4 percent.

     Walt Disney weighed on the consumer discretionary group, as well as other media companies, falling the most in more than six years after posting quarterly sales that fell short of analysts’ estimates and cutting its forecast for cable-TV profit.

     Time-Warner Inc. slid 9 percent, the most in a year, as the media company kept its full-year profit forecast unchanged after earnings topped analysts’ estimates by a wide margin last quarter. The Bloomberg U.S. Media Index lost 5 percent, its biggest drop in four years.

     Genworth Financial Inc. tumbled after the insurer that has been selling units to rebuild capital said it will probably not get rid of its entire life and annuity operation. Shares dropped 20 percent, the most since November and extended the decline for the year to 34 percent.

Have a wonderful evening everyone.

Be magnificent!

Never say, o Lord, I am a miserable sinner.  Who will help you?

It is you who must help the universe.

Swami Vivekananda

As ever,

Carolann

Peace cannot be kept by force; it can only be achieved by understanding.

                                                             -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

Tel: 778.430.5808

(C): 250.881.0801

Toll Free: 1.877.430.5895

Fax: 778.430.5828