Category: Events

Dear Friends,

Tangents:

I read Elie Wiesel’s obituary in the most recent edition of the Economist last night; I imagine you’ve read his works, especially Night.  The obituary ends with this reflection on his life, which I find very poignant:

“Nor did the questions ever stop.  His Talmud-studying childhood had been devoted to God, but where  had God been in the camps?  Why had He allowed Tzipora, the little golden-haired sister, to die for nothing?  Why had he caused old men to fall down from dysentery on forced marches, when they might have died peacefully in their beds?  Why had God created man, if only to abandon him?  What exactly did God need man for?

  Against the melancholy that never really lifted – for how could it ever do so? – he clung to the words “and yet”.  The sun set, and yet it rose again.  Delirium struck, and yet it passed.  He railed at God, and yet still strapped on his tefillin and recited his prayers as fervently as he had done on the day of his bar mitzvah.  For ritual, too, was part of memory.  And besides, how could he ever get closer to the mystery of God, unless he battered Him with his doubts?”

PHOTOS OF THE DAY

A man paints Olympic rings at Copacabana beach ahead of the 2016 Rio Olympics in Brazil on Thursday. Ueslei Marcelino/Reuters

Trampolinist Rosie MacLennan (l.) waves the Canadian flag next to Prime Minister Justin Trudeau after being named Canada’s flag-bearer for the opening ceremony of the 2016 Rio Olympics, following a ceremony on Parliament Hill in Ottawa, Ontario, Canada, on Thursday. Chris Wattie/Reuters

Market Closes for July 21^st, 2016

Market Index	Close	Change
Dow Jones	18517.23	-77.80   -0.42%
S&P 500	2165.17	-7.85   -0.36%
NASDAQ	5073.902	-16.031   -0.31%
TSX	14565.83	+32.26
		+0.22%

International Markets

Market Index	Close	Change
NIKKEI	16810.22	+128.33
		+0.77%
HANG SENG	22000.49	+118.01
		+0.54%
SENSEX	27710.52	-205.37
		-0.74%
FTSE 100	6699.89	-29.10
		-0.43%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.106	1.124
CND. 30 Year Bond	1.746	1.749
U.S.    10 Year Bond	1.5526	1.5801
U.S. 30 Year Bond	2.2873	2.3007

Currencies

BOC Close	Today	Previous
Canadian $	0.76417	0.76486
US $	1.30861	1.30744
Euro Rate 1 Euro=		Inverse
Canadian $	1.44297	0.69302
US $	1.10268	0.90688

Commodities

Gold	Close	Previous
London Gold Fix	1321.15	1315.90
Oil	Close	Previous
WTI Crude Future	43.95	45.05

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Telecommunications operator Rogers Communications Inc. rallied to a record, and gold producers rebounded to send Canadian stocks higher for a second day.

     The S&P/TSX Composite Index rose 0.2 percent to 14,565.83 at 4 p.m. in Toronto, in trading volume 26 percent lower than the 30-day average. Canadian stocks are more expensive than their U.S. peers, with a price-earnings ratio of 22.4 for the S&P/TSX, about 11 percent higher than the S&P 500 Index.

     Rogers added 3.9 percent, the most since October, after second-quarter earnings topped analysts’ estimates. Wireless customers jumped 171 percent. Rogers is the second-largest media and telecommunications company in Canada.

     Raw-materials producers increased 2.1 percent, rebounding after slumping the most since May yesterday. Barrick Gold Corp. and Kinross Gold Corp. added at least 2.7 percent as gold prices advanced from the lowest level in three weeks. The S&P/TSX Global Gold Index increased 2.9 percent, for its biggest gain since July 4.

     Mining stocks have fueled Canada to the second-best performance among developed markets this year with a 12 percent advance, trailing only New Zealand. The group has rallied 56 percent increase amid a rebound in gold prices, the best such performance for the group in at least 30 years, according to data compiled by Bloomberg.

     BlackBerry Ltd. added 1.6 percent for a second day of gains. The Waterloo, Ontario-based technology company is hosting a live event July 26, and is expected to unveil a new smartphone. Chief Executive Officer John Chen has said he’ll unveil two phones between now and March 2017.

     Encana Corp. climbed 3.6 percent, paring an earlier gain after touching the highest level since October, as the oil and gas producer posted an unexpected second-quarter operating profit and boosted its production outlook. Oilfield services company Mullen Group Ltd. jumped the most in more than a decade on earnings. The broader gauge of oil producers however slipped 0.1 percent as a group as crude prices fell in New York.

US

By Oliver Renick and Bailey Lipschultz

     (Bloomberg) — U.S. stocks declined as results from companies including Intel Corp. and Southwest Airlines Co. disappointed, casting doubt on whether corporate earnings will be healthy enough to sustain equities at all-time highs.

     Intelslipped 4 percent after reporting slower growth in its server-chip division. American Express Co. lost 1.6 percent as its revenue was short of predictions. Southwest Airlines tumbled 11 percent, weighing on shares of other carriers. Qualcomm Inc. gained 7.4 percent after it gave a forecast that beat analysts’ estimates, and EBay Inc. surged 11 percent after also raising its outlook.

     The S&P 500 fell 0.4 percent to 2,165.17 at 4 p.m. in New York, the most in two weeks after closing Wednesday at its sixth record in eight days. The Dow Jones Industrial Average declined 77.80 points, or 0.4 percent, to 18,517.23, halting its longest winning streak in more than three years. The Nasdaq Composite Index slipped 0.3 percent, and a gauge of volatility had its biggest gain in four weeks.

     “A lot of the rally has been post-Brexit relief, and I don’t really see anything out there, other than some decent earnings that’ve beaten, to validate the rally so far,” said Tom Siomades, head of Hartford Funds Investment Consulting Group in Radnor, Pennsylvania, whose firm oversees $76 billion. “The other thing is it’s summertime and it’s quiet. There’s really not much moving things other than earnings.”

     Since the earnings season started, profits and sales have mostly topped analysts’ estimates, fueling optimism that they’ll help support further stock gains. The S&P 500 has rebounded 18 percent from a 22-month low in February, and the Dow reached seven straight records in nine days of advances before ending its streak on Thursday.

     Among companies that reported results since yesterday’s close, General Motors Co. added 1.7 percent, rising to a two- month high after raising its profit outlook. United Rentals Inc. soared 9.2 percent, the most since October, as its earnings and sales exceeded predictions. Paint maker Sherwin-Williams Co. tumbled 6.9 percent after its earnings trailed estimates, and ad agency Interpublic Group of Cos. sank 5.9 percent, the worst in almost four years, after revenue missed forecasts.

     The CBOE Volatility Index rose 8.2 percent today to 12.74, snapping six days of declines, the longest streak in three months. The measure of market turbulence known as the VIX capped its biggest increase since the results of the Brexit vote, after closing yesterday at the lowest since August 2014. About 6.5 billion shares traded hands on U.S. exchanges, 10 percent below the three-month average.

     Speculation that the Federal Reserve will push back its timeline for interest-rate increases and signs of economic strength have propelled stocks higher, with the S&P 500 erasing its losses following the U.K.’s vote to leave the European Union. The European Central Bank left its interest rates unchanged at today’s meeting, while President Mario Draghi signaled policy makers will consider adding fresh stimulus later this year when it has a clearer picture of the Brexit impact.

     The U.S. looks insulated from the fallout so far. A Citigroup gauge that tracks the degree to which data are exceeding economist projections is at an 18-month high, helping to boost wagers on a Fed rate move this year. Traders are pricing in 45 percent odds of higher borrowing costs by this December, from just 12 percent two weeks ago.

     With policy makers and investors scrutinizing data, a report today showed the number of applications for unemployment benefits unexpectedly fell last week, reaching a three-month low. Another reading showed sales of previously owned homes climbed in June to the highest in more than nine years, while a separate measure of leading economic indicators rose last month more than economists forecast.

     Almost 80 percent of the S&P 500 companies that have reported results this earnings season have beaten profit forecasts, while 57 percent exceeded sales expectations. Analysts expect net income at the gauge’s members will slide 5.8 percent in the second quarter for a fifth straight decline, the longest streak since 2009. They project they’ll be little changed for the year.                

    “At these levels there’s some trepidation with investors with valuations extended,” Jim Davis, regional investment manager for The Private Client Group of U.S. Bank, said by phone. “The earnings season has been pretty friendly to the market so far, against the backdrop of economic data that has been positive which has helped the market take its mind off some of the other risks out there, mainly geopolitical ones.”

     Intel was the biggest drag on the S&P 500 amid concern its server-chip division — the company’s most profitable business – – won’t be able to make up for weakness in the PC market. Before Thursday, the stock had rallied 16 percent since the Brexit selloff to the highest since January.

     Technology shares in the benchmark slid amid Intel’s selloff, even as EBay countered with its strongest advance since October to a record, and Qualcomm jumped the most in four years. Its results were in contrast to Intel, showing the chipmaker is overcoming hurdles in China, while its rival Intel faces fresh headwinds.

     Southwest Airlines dragged down industrial stocks, retreating 11 percent, after saying heightened competition is driving down airfares more than in previous quarters as the industry’s capacity expansion outstrips demand. It was Southwest’s worst slide in more than seven years, and weighed on other carriers as Delta Air Lines Inc. and United Continental Holdings Inc. fell at least 3.4 percent. The Bloomberg U.S. Airlines Index dropped 4.8 percent, the steepest since June 27.

     The health-care group extended 11-month highs, led by Biogen Inc. as the drugmaker rallied 7.6 percent, the biggest climb in 16 months. Its profit beat estimates and the company announced a $5 billion share buyback program. Also, Chief Executive George Scangos said he’ll leave the company after a series of top managers were replaced and sales of its biggest product stalled.

     The Nasdaq Biotechnology Index climbed 1.3 percent, bolstered by deal activity. Relypsa Inc. jumped 59 percent after agreeing to be bought by Galenica AG, the owner of Switzerland’s biggest pharmacy network, for about $1.53 billion. Celgene Corp. rose 2.7 percent after a 2.3 percent rally yesterday.

     Joy Global Inc. added 20 percent after Komatsu Ltd., the second-biggest mining and construction equipment maker, agreed to buy the largest independent maker of underground-mining equipment for $2.89 billion. Joy’s share price fell 73 percent last year amid declines in commodity prices.

 

Have a wonderful evening everyone.

 

Be magnificent!

Your reactions are shared by all humanity.

Your brain is not yours,

it has evolved through centuries of time.

So we are questioning deeply whether there is an

individual at all.  We are the whole of humanity,

we are the rest of mankind.

Krishnamurti

As ever,

 

Carolann

 

Good luck is what happens when preparation meets opportunity, bad luck

is what happens when lack of preparation meets a challenge.

                                                                  -Paul Krugman, b. 1953

 

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

Dear Friends,

Tangents:

Today is Moon Day: on this day in 1969 the first human landed on the Moon.  Edwin E. (Buzz) Aldrin, the second man to set foot on the Moon in the Apollo ll mission, wrote this on June 20^th, 1969:

The blue colour of my boot has completely disappeared now into this – still don’t know exactly what colour to describe this other than grayish cocoa colour.  It appears to be covering most of the lighter part of my boot….very fine particles…

  [Later] The Moon was a very natural and pleasant environment in which to work.  It had many of the advantages of zero gravity, but it was in a sense less lonesome than Zero G, where you always have to pay attention to securing attachment points to give you some means of leverage.  In one-sixth gravity, in the Moon, you had a distinct feeling of being somewhere….As we deployed our experiments on the surface we had to jettison things like lanyards, retaining fasteners, etc., and some of these we tossed away.  The objects would go away with a slow, lazy motion.  If anyone tried to throw a baseball  back and forth in that atmosphere he would have difficulty, at first, acclimatizing himself to that slow, lazy trajectory; but  I believe he could adapt to it quite readily…

  Odour is very subjective, but to me there was a distinct smell to the lunar material – pungent, like gunpowder or spent cap-pistol caps.  We carted a fair amount of lunar dust back inside the vehicle with us, either on our suits and boots or on the conveyor system we used to get boxes and equipment inside.  We did notice the odour right away.

PHOTOS OF THE DAY

A tractor harvests a row of lavender at Lordington Lavender farm in West Sussex, southeast England, on Wednesday. Andrew Matthews/PA/AP

A Widow Skimmer dragonfly rests on a stick in Hart Park in Bakersfield, Calif., on Tuesday. Casey Christie/The Bakersfield Californian/AP

Market Closes for July 20^th, 2016

Market Index	Close	Change
Dow Jones	18595.03	+36.02   +0.19%
S&P 500	2174.61	+10.83   +0.50%
NASDAQ	5089.934	+53.561   +1.06%
TSX	14531.58	+6.97
		+0.05%

International Markets

Market Index	Close	Change
NIKKEI	16681.89	-41.42
		-0.25%
HANG SENG	21882.48	+209.28
		+0.97%
SENSEX	27915.89	+128.27
		+0.46%
FTSE 100	6728.99	+31.62
		+0.47%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.124	1.075
CND. 30 Year Bond	1.749	1.708
U.S.    10 Year Bond	1.5801	1.5526
U.S. 30 Year Bond	2.3007	2.2669

Currencies

BOC Close	Today	Previous
Canadian $	0.76486	0.76822
US $	1.30744	1.30172
Euro Rate 1 Euro=		Inverse
Canadian $	1.43937	0.69475
US $	1.10091	0.90834

Commodities

Gold	Close	Previous
London Gold Fix	1315.90	1330.90
Oil	Close	Previous
WTI Crude Future	45.05	44.65

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian Pacific Railway Ltd. climbed to the highest level in eight months on earnings and a rebound in crude lifted energy producers to offset a slump in gold, as Canadian equities ended the day near the highest in a year.

     The S&P/TSX Composite Index rose 0.1 percent to 14,533.57 at 4 p.m. in Toronto. Trading volume was 5.9 percent lower than the 30-day average. Canadian stocks remain more expensive than their U.S. peers, with a price-earnings ratio of 22.4 for the S&P/TSX about 11 percent higher than the S&P 500.

     Canadian Pacific added 1.2 percent, closing at the highest level since December. The railroad operator reported second- quarter earnings that topped analysts’ estimates after reducing costs by cutting jobs and running longer trains.

     The railway stock drove a 1.9 percent gain in industrial shares as eight of the 10 main groups advanced. Energy producers rebounded as the price of crude erased losses to close 29 cents higher at $44.94 a barrel in New York. U.S. government data showed inventories dropped 2.34 million barrels last week, a record ninth straight decline.

     Canada is the second-best performing developed market in the world this year with a 12 percent advance, trailing only New Zealand. Mining stocks have fueled the resurgence, with a 53 percent increase amid a rebound in gold prices, the best such performance for the group in at least 30 years, according to data compiled by Bloomberg.

     The group slumped 3.9 percent Wednesday, the most since May, as copper led a drop among industrial metals. An advance in the dollar affects consumption as it reduces demand from other countries. Barrick Gold Corp. slumped 7.4 percent for the biggest drop among miners.

     Valeant Pharmaceuticals International Inc. added 4.6 percent for a third straight day of gains. The drugmaker got regulatory backing from the Food and Drug Administration for two new drugs.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks advanced, pushing to fresh records, as quarterly results from Microsoft Corp. and Morgan Stanley spurred optimism that corporate earnings can support further gains.

     Microsoft rallied to a three-month high after posting a better-than-predicted profit, boosting technology shares to the highest in almost 16 years. Morgan Stanley rose 2.1 percent as its earnings beat estimates, bolstered by a surprise gain in fixed-income trading revenue. Abbott Laboratories and Intuitive Surgical Inc. also gained on results that exceeded forecasts. Walt Disney Co. lost 1.3 percent after an analyst downgraded the shares.

     The S&P 500 Indexrose 0.4 percent to 2,173.02 at 4 p.m. in New York, its sixth all-time high in eight days. The Dow Jones Industrial Average gained 36.02 points, or 0.2 percent, to 18,595.03. The gauge advanced for a ninth session, the longest since 2013, to post a seventh consecutive record. The Nasdaq Composite Index increased 1 percent. About 6.2 billion shares traded hands on U.S. exchanges, 14 percent below the three-month average.

     “Markets have been resilient,” Quincy Krosby, a market strategist at Prudential Financial Inc. in Newark, New Jersey, said by phone. “Much of the data coming in and earnings announcements have been better than expected. The market is looking for clarity that companies are more positive about the second half of the year. We’ve been in earnings recession for so many quarters we’re now thinking about earnings as whether they’re ‘less bad.”’

     U.S. shares have recovered their losses following the U.K.’s decision to leave the European Union amid signs of strength in the economy and speculation that the Federal Reserve will take its time raising interest rates. Traders are pricing in less than even odds of a hike until March 2017, though bets on a move by this December have climbed to 48 percent from just 12 percent two weeks ago.

     The S&P 500 is up 6.3 percent in 2016 after a rebound from the worst-ever start to a year sparked by worries that slowing growth in China would spread and oil’s plunge to a 12-year low. Anxiety over the U.K.’s Brexit vote briefly derailed stocks last month before assurances that major central banks would act to counter ill effects from Britain’s secession helped usher equities to all-time highs.

     With stocks continuing to climb, investor nervousness has cooled. The CBOE Volatility Index, a measure of market turbulence known as the VIX, fell 1.7 percent today to 11.77, the lowest since August 2014.                        

     Of the S&P 500 firms that have released results so far this season, 78 percent beat earnings estimates and 61 percent topped sales projections. Still, analysts forecast profit at its members will drop 5.8 percent in the second quarter, which would make it a fifth straight decline, the longest streak since 2009. General Motors Co. and AT&T Inc. are among 34 companies set to release results on Thursday.

     “Microsoft has for a long time has been one of the bellwether stocks for the U.S. — it is reflective to some extent of the whole economy and can feed through,” said Frances Hudson, an Edinburgh-based global thematic strategist at Standard Life Investments. “I am seeing more greens than reds in terms of earnings beats, which seems relatively positive. Earnings season is definitely the main event right now.”

     In Wednesday’s trading, technology shares were the strongest performers among the S&P 500’s 10 main industries, led by Microsoft’s best rally since January. The tech group rose to the highest since September 2000. Health-care stocks climbed to their loftiest level in 11 months, bolstered by Intuitive Surgical’s rise to a record. Stocks perceived as defensive lagged, with utilities, consumer staples and phone companies declining.

     Joining Microsoft to support the rally in tech, Cisco Systems Inc. added 2.4 percent to take the network-equipment maker’s shares to the highest in more than eight years. Visa Inc. rose 0.8 percent to a five-week high before its earnings report scheduled for tomorrow, and Facebook Inc. advanced 1.1 percent to a record.

     Chipmakers climbed to their best levels in 15 years. Intel rallied 1.5 percent before its earnings report, while Micron Technology Inc. and Skyworks Solutions Inc. gained at least 1.7 percent. Marvell Technology Group Ltd. jumped 14 percent, the strongest in seven years, after its profit beat estimates. All 30 members of the Philadelphia Stock Exchange Semiconductor Index advanced more than 0.2 percent.

     Managed-care companies recovered from declines yesterday after Aetna Inc. said it’s ready to go to court if necessary to proceed with its $37 billion takeover of Humana Inc. Humana rose 3.3 percent, mostly reversing a slide Tuesday prompted by a report that regulators were poised to file lawsuits to block the deal. Aetna increased 1.2 percent, and Anthem Inc., which plans to merge with Cigna Corp., added 2.6 percent.

     Earnings news also helped industrials extend all-time highs, amid the sector’s 10th gain in 11 days. Cintas Corp. surged 9.7 percent to a record, its biggest climb in five years. The uniform company raised its profit outlook after quarterly results were better than predicted. Illinois Tool Works Inc. added 2.8 percent after also lifting its earnings forecast on better-than-estimated results.

     Weighing on the consumer-staples group, Kellogg Co. sank 5.4 percent, the worst drop in almost two years, amid diminished speculation over a potential takeover offer. Campbell Soup Co. slid 3.1 percent after lowering its 2016 sales forecast.

     Energy producers slipped 0.2 percent, even as crude rebounded after a government report showed stockpiles fell a ninth week, marking the longest stretch of declines on record. Halliburton Co. fell 1.6 percent after reporting quarterly sales that slid 43 percent compared to a year earlier. Chesapeake Energy Corp. and Anadarko Petroleum Corp. added at least 1.2 percent.

 

Have a wonderful evening everyone.

 

Be magnificent!

The world in its essence is the reconciliation of opposite forces.

These forces, like the right hand and left hand of the creator, act in perfect harmony,

and yet in opposite directions.

Rabindranath Tagore

 

As ever,
 

Carolann

 

We have perhaps a natural fear of ends.  We would rather be always on the way than arrive. 

Given the means, we hang on to them and often forget the ends.

                                                                                         -Eric Hoffer, 1902-1983

 

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

Dear Friends,

Tangents:

On this day in 1969, Apollo 11, with Neil Armstrong, Edwin “Buzz” Aldrin and Michael Collins on board, went into orbit around the moon.

Don’t You Wonder, Sometimes?
By Tracy K. Smith

1.
After dark, stars glisten like ice, and the distance they span
Hides something elemental.  Not God, exactly.  More like
Some thin-hipped glittering Bowie-being – a Starman
Or cosmic ace hovering swaying, aching to make us see
And what would we do, you and I, if we could know for sure

That someone was there squinting through the dust,
Saying nothing is lost, that everything lives on waiting only
To be wanted back badly enough?  Would you go on then,
Even for a few nights, into that other life where you
And that first she loved, blind to the future once, and happy?

Would I put on my coat and return to the kitchen where my
Mother and father sit waiting, dinner keeping warm on the stove?
Bowie will never die.  Nothing will come for him in his sleep
Or charging through his veins.  And he’ll never grow old.
Just like the woman you lost, who will always be dark-haired

And flush-faced, running toward an electronic screen
That clocks the minutes, the miles left to go.  Just like the life
In which I’m forever a child looking out my window at the night sky
Thinking one day I’ll touch the world with bare hands
Even if it burns.

Extract of a poem taken from the collection “Life on Mars.” Tracy K. Smith, Graywolf Press.

PHOTOS OF THE DAY

A man rides a tricycle past an advertising poster for luxury apartments in Beijing, on Tuesday. Thomas Peter/Reuters

The sun rises behind the Christ the Redeemer statue above Guanabara Bay in Rio de Janeiro, Brazil, on Tuesday. Ahead of the Olympics set to start on Aug. 5, the event and the city have been overshadowed by security threats, violence, the Zika virus and a national political corruption scandal.Felipe Dana/AP

Market Closes for July 19^th, 2016

Market Index	Close	Change
Dow Jones	18559.01	+25.96   +0.14%
S&P 500	2163.78	-3.11   -0.14%
NASDAQ	5036.375	-19.408   -0.38%
TSX	14524.61	-7.79
		-0.05%

International Markets

Market Index	Close	Change
NIKKEI	16723.31	+225.46
		+1.37%
HANG SENG	21673.20	-129.98
		-0.60%
SENSEX	27787.62	+40.96
		+0.15%
FTSE 100	6697.37	+1.95
		+0.03%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.075	1.099
CND. 30 Year Bond	1.708	1.733
U.S.    10 Year Bond	1.5526	1.5818
U.S. 30 Year Bond	2.2669	2.2944

Currencies

BOC Close	Today	Previous
Canadian $	0.76822	0.77263
US $	1.30172	1.29429
Euro Rate 1 Euro=		Inverse
Canadian $	1.43440	0.69716
US $	1.10193	0.90750

Commodities

Gold	Close	Previous
London Gold Fix	1330.90	1334.70
Oil	Close	Previous
WTI Crude Future	44.65	45.24

Market Commentary:

Number of the Day

0.6%
The amount that the largest U.S. public pension, California Public Employees’ Retirement System, said it earned on its investments for the fiscal year ended June 30.  That was its lowest annual gain since the financial crisis.

Canada

By Eric Lam

     (Bloomberg) — Metals producers Teck Resources Ltd. and First Quantum Minerals Ltd. dropped to lead a decline in commodities companies as Canada’s broader equity benchmark retreated.

     The Canadian equity benchmark S&P/TSX Composite Index slipped 0.1 percent to 14,524.61 at 4 p.m. in Toronto, pulling back after Monday when it reached the highest level in a year. Trading volume was 28 percent lower than the 30-day average.

     Raw-materials producers dropped 0.8 percent as a group, as First Quantum and Teck retreated at least 4.1 percent. Barclays Plc said in a report that the global supply of copper will likely exceed demand every year through 2020. As a result, no new mines will be needed this decade, the bank concluded.

     Suncor Energy Inc. and Imperial Oil Ltd. retreated more than 1.1 percent as energy producers declined 0.4 percent as a group for the fourth decline in five days. Crude closed at the lowest level in more than two months in New York as the dollar rose against its peers and global oil markets were deemed comfortably supplied despite threats to output. U.S. crude supplies remain ample even as government data is projected to show that nationwide stockpiles slipped for a ninth week.

     Even with today’s decline, Canada remains the second-best performing developed market in the world this year with a 12 percent advance, trailing only New Zealand. Mining stocks have fueled the resurgence in Canadian equities with a 59 percent increase amid a rebound in gold prices, the best such performance for the group in at least 30 years, according to data compiled by Bloomberg.

     Consumer staples and technology shares offset some of the losses by commodity companies today, rising at least 0.8 percent. Alimentation Couche-Tard Inc., a convenience-store operator, capped a two-day gain of 1.6 percent. Open Text Corp. rose the most out of technology stocks to the highest since at least 1998.

     Canadian stocks remain more expensive than their U.S. peers, with a price-earnings ratio of 22.4 for the S&P/TSX about 11 percent higher than the S&P 500.

     Ballard Power Systems Inc. tumbled 20 percent, the most in more than two years, a day after rallying 44 percent, the most since February 2015, after signing an agreement to build a factory in China to make fuel-cell stacks in a deal worth at least $168 million over five years. The fuel cells would be used in low-pollution buses in China.

US

By Oliver Renick and Bailey Lipschultz

     (Bloomberg) — The S&P 500 Indexslipped from a record, with the gauge trading in the narrowest range since 2014, as investors were circumspect on the prospects for further gains following a mix of corporate earnings reports.

     The recent record run for equities hit some headwinds as Netflix Inc. tumbled 13 percent after subscriber growth disappointed, and Philip Morris International Inc. dropped 3 percent after its earnings missed forecasts as the strong dollar hurt sales outside of the U.S. Johnson & Johnson provided some offset, climbing 1.7 percent after its quarterly profit beat estimates. After the market closed, Microsoft Corp. rose on better-than-predicted earnings.

     The S&P 500declined 0.1 percent to 2,163.78 at 4 p.m. in New York, after posting all-time highs in five of the previous six days. The Dow Jones Industrial Average rose 25.96 points, or 0.1 percent, to 18,559.01. The index capped a sixth-straight record and extended a rally to an eighth day, the longest in more than three years, led by gains in Johnson & Johnson, UnitedHealth Group Inc. and McDonald’s Corp. The Nasdaq Composite Index lost 0.4 percent.

     “We hit records and now it’s kind of cautiously moving forward,” Larry Peruzzi, managing director of international equities at Mischler Financial Group Inc. in Boston, said by phone. “The economic numbers and earnings continue to come in but it’s definitely a slow trading environment. It’s a combination of Brexit, July and August always being a little light, and whenever the indexes are at higher levels people look for that next driver.”

     U.S. stocks recovered losses after the British vote to leave the European Union, with the S&P 500 taking its annual gain to as high as 6 percent at Monday’s close, amid signs of strength in the economy and speculation the Federal Reserve will push back the timing on interest-rate increases. As worries calm over global growth, the CBOE Volatility Index has retreated to a one-year low. The measure of market turbulence known as the VIX fell 3.8 percent today to 11.97, erasing a gain in the final hour of trading.

     Bets for a Fed rate move have crept up amid improving economic data, though traders are still pricing in less than even odds of an increase until mid-2017. With policy makers scrutinizing data to determine when to boost borrowing costs, a Citigroup gauge that tracks the degree to which data are exceeding economist projections is at an 18-month high. A report today showed new-home construction rose more than forecast in June.

     Even as concerns over the fallout from the U.K. vote to leave the EU have subsided, the International Monetary Fund today scrapped its forecast for a pickup in global growth this year, citing Brexit, and warned the damage could worsen if confidence falters among investors and companies.

     Meanwhile, the earnings season has delivered more positive surprises than negative ones so far. Analysts estimate net income at S&P 500 companies will drop 5.8 percent in the second quarter, which would make it a fifth straight decline, the longest streak since 2009. Microsoft climbed 3.5 percent as of 4:42 p.m. after reporting profit and sales that topped analysts’ estimates, buoyed by an aggressive push into Internet-based software and services for businesses.

     “If the U.S. market is at an all-time high and you have a day of waiting for news, investors trim exposure,” said Ben Kumar, investment manager at Seven Investment Management LLP, which oversees 10 billion pounds ($13 billion). Still, “the simple reason that the S&P 500 is at its all-time high is that the fear of a U.S. recession has now vanished, markets are no longer predicting a long period of deflation, they are no longer worried that the jobs recovery is mythical, masking underlying weakness.”

     In Tuesday’s trading, eight of the S&P 500’s 10 main industries fell, led by raw-materials and energy companies which lost more than 0.5 percent. Industrial and financial shares rose 0.1 percent. About 5.6 billion shares traded hands on U.S. exchanges, 22 percent below the three-month average.

     Energy producers slipped as crude slid to a two-month low, falling below $45 a barrel. ConocoPhillips lost 1.9 percent. Diamond Offshore Drilling Inc. dropped 3.8 percent, the most in the group, while Murphy Oil Corp. and Hess Corp. sank at least 2.6 percent.

     Raw-materials shares fell for the first time in nine days, halting the group’s longest winning streak in 2 1/2 years after it tacked on nearly 8 percent during the rally. CF Industries Holdings Inc. dropped 4.1 percent, while Freeport-McMoRan Inc. sank 5.3 percent and Alcoa Inc. declined 2.7 percent.

     Health-care retreated for a third session, the longest in a month, as Humana Inc. led losses, falling 3.9 percent toward its lowest since February 2015. A report said the U.S. is poised to block Humana’s merger with Aetna Inc., as well as Anthem Inc.’s takeover of Cigna Corp. Anthem, Aetna and Cigna sank more than 2.1 percent.

     Netflix’s biggest plunge since October 2014, and Philip Morris International’s drop dragged on consumer stocks. Retailers slipped after briefly touching an all-time high yesterday. Signet Jewelers Ltd. lost 2 percent, and Nordstrom Inc. fell 1.6 percent to erase a 1.2 percent gain yesterday. McDonald’s countered some of the declines, rising 2.2 percent the most this year. The company’s unit in Japan started giving away figurines based on Pokemon characters with sales of Happy Meals on Friday.

     Among other share moving on corporate news, Comerica Inc. added 2.4 percent. The Dallas-based bank facing investor pressure to sell itself will cut about 9 percent of its workforce over the next year to reduce costs.

     F5 Networks Inc. rallied 4.1 percent after the New York Post reported private equity firm Thoma Bravo LLC was interested in buying the company, citing a person familiar with the matter.

 

Have a wonderful evening everyone.

 

Be magnificent!

A civilization must be judged and assessed, not by the level of power it has reached,

but by how it develops and expresses a love of humanity

through its laws and its institutions.

The firs t and last criterion one must submit to is:

Is it recognizable, and to what level, that man is more a spirit than a machine?

Rabindranath Tagore

As ever,

 

Carolann

 

Regret for the things we did can be tempered by time; it is regret

for the things we did not do that is inconsolable.

                                                  -Sydney J. Harris, 1917-1986

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

Dear Friends,

Tangents:

July 18, 1976 – Montréal Olympics events begin; Nadia Comaneci, age 14, scores a Perfect 10 in gymnastics.

On July 18, 1936, the Spanish Civil War began as Gen. Francisco Franco led an uprising of army troops based in North Africa.

On this day in 1969, a car driven by Sen. Ted Kennedy plunged off a bridge on Chappaquiddick Island near Martha’s Vineyard. His passenger, 28-year-old Mary Jo Kopechne, died.

NUMBERS:

385
Record-setting wingspan (in feet) of what will be the world’s largest airplane.  The Strato-launch, built by Microsoft cofounder Paul Allen, is to lift rockets to 35,000 feet, where they will be drop-launched into space.

93
Speed (in petaflops) of the world’s fastest supercomputer, China’s Sunway TailhutLight, based in Wuxi.  It can perform 93,000 trillion calculations per second.

65.3
Million refugees and internally displaced people worldwide in 2015, more than there were after World War ll.

38,000
Approximate cost per day (in US dollars) for a US Secret Service detail to protect a presidential candidate.

1 in 7
Americans living in poverty, according to the International Monetary Fund, which said that the problem needs urgent attention.

8
Estimated percentage of students in the California State University system who are homeless.  It may be as high as 12 percent.

PHOTOS OF THE DAY

David Barber, The Queen’s Swan Marker, prepares to set off for Swan Upping, the annual census of the swan population on the River Thames, in a weeklong exercise where unmarked mute swans are now counted, rather than eaten, in a tradition exercised by the British Crown for nearly 900 years, at Sunbury, Southern England on Monday. Toby Melville/Reuters

A general view shows the crowd gathering on the Promenade des Anglais during a minute of silence on the third day of national mourning to pay tribute to victims of the Bastille Day truck attack in Nice, France. Eric Gaillard/Reuters

Members of the group Bikers for Trump head to a rally for Republican Presidential candidate Donald Trump at Settlers Landing Park in Cleveland, Ohio on Monday. John Minchillo/AP

Market Closes for July 18^th, 2016

Market Index	Close	Change
Dow Jones	18533.05	+16.50   +0.09%
S&P 500	2166.89	+5.15   +0.24%
NASDAQ	5055.785	+26.197   +0.52%
TSX	14532.40	+49.98
		+0.35%

International Markets

Market Index	Close	Change
NIKKEI	16497.85	+111.96
		+0.68%
HANG SENG	21803.18	+143.93
		+0.66%
SENSEX	27746.66	-89.84
		-0.32%
FTSE 100	6695.42	+26.18
		+0.39%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.099	1.093
CND. 30 Year Bond	1.733	1.721
U.S.    10 Year Bond	1.5818	1.5595
U.S. 30 Year Bond	2.2944	2.2704

Currencies

BOC Close	Today	Previous
Canadian $	0.77263	0.77237
US $	1.29429	1.29471
Euro Rate 1 Euro=		Inverse
Canadian $	1.43342	0.69763
US $	1.10750	0.90293

Commodities

Gold	Close	Previous
London Gold Fix	1334.70	1327.00
Oil	Close	Previous
WTI Crude Future	45.24	45.95

Market Commentary:

Number of the Day

$43 billion and $37 billion

The amounts foreign investors hold in lira-denominated bonds and in Turkish equities, respectively.

Canada

By Eric Lam

     (Bloomberg) — Canada’s largest insurance companies rose, helping boosting the nation’s benchmark equity gauge, as Ballard Power Systems Inc. jumped to the highest level in a year after agreeing to a $168-million deal to produce fuel cells in China.

     The Canadian equity benchmark S&P/TSX Composite Index added 0.4 percent to 14,532.4 at 4 p.m. in Toronto, following three weeks of gains. Trading volume was 40 percent lower than the 30- day average.

     Ballard Power soared 44 percent, the biggest gain since February 2015, after agreeing to a deal with Guangdong Nation Synergy Hydrogen Power Technology Co. to manufacture fuel cell stacks in China. The stacks will be built into buses and commercial vehicles in China in the agreement valued at about $168 million over five years. The gains today helped the stock wipe out declines for the year, with Ballard now up 20 percent.

     Barrick Gold Corp. and Silver Wheaton Corp. climbed at least 1 percent as raw-materials producers advanced as a group, leading gains among nine of 10 industries in the S&P/TSX. Gold futures for August delivery rose 0.1 percent to settle at $1,329.30 an ounce.

     Financial companies Manulife Financial Corp. and Sun Life Financial Inc. also each added 0.6 percent.

     Restaurant Brands International Inc., owner of Tim Hortons and Burger King, increased 4.1 percent, to the highest since August. OTR Global has raised its view on Burger King to positive amid strong consumer response to the fast-food chain’s two for $10 whopper meal.

     Energy producers ended the day with a 0.2 percent advance, reversing an earlier loss even as crude for August delivery fell 1.6 percent in New York, trading just above $45 a barrel after a failed coup in Turkey as shipments continued through the country. Telecommunications stocks were the only laggards in the S&P/TSX.

     North American markets are showing some resilience, shrugging off the conflict in Turkey with the U.S. benchmark S&P 500 Index trading at a record high after three straight weeks of gains. Global equities have rallied after a brief selloff in the wake of the U.K. Brexit vote, with the S&P/TSX trading at the highest level in a year.

     Raw-materials producers remain the top-performing industry in Canada this year with a 60 percent increase, the best such performance for the group in at least 30 years, according to data compiled by Bloomberg. Energy stocks have rallied 19 percent on a resurgence in commodities prices from crude to gold.

     Amid the volatility Canadian stocks remain more expensive than their U.S. peers, with a price-earnings ratio of 22.4 for the S&P/TSX about 11 percent higher than the S&P 500.

US

By Oliver Renick

     (Bloomberg) — The S&P 500 Index closed at a record for the fifth time in six days, as technology shares rallied amid deal activity while corporate earnings spurred optimism that results this season will be sturdy enough to help sustain equities at record levels.

     The Dow Jones Industrial Average closed at a record for a fifth straight session. SoftBank Group Corp.’s agreement to buy ARM Holdings Plc for $32 billion pushed semiconductor shares to a 15-year high, and Bank of America Corp. advanced 3.3 percent after posting higher profit in each of its four main businesses. Hasbro Inc. dropped 6.6 percent as sales in its boy-oriented toys disappointed. After the bell, Netflix Inc. tumbled as its quarterly results disappointed.

     The S&P 500added 0.2 percent to 2,166.89 at 4 p.m. in New York amid light trading, following three consecutive weekly gains. The Dow climbed 16.50 points, or 0.1 percent, to 18,533.05 to extend its longest winning streak in four months. The Nasdaq Composite Index surged 0.5 percent, bolstered by chip companies and Apple Inc.’s climb to a seven-week high. About 5.6 billion shares traded hands on U.S. exchanges, 22 percent below the three-month average and the lowest since March 28.

     “The focus for the market is on earnings, and more importantly guidance, focusing on the impact of the economy, elections, and how the dollar is influencing business conditions,” said Kevin Kelly, the chief investment officer at Recon Capital Partners in New York. “It’s hard for a market that is preoccupied on management’s every word to be influenced by Turkey.”

     Equity futures extended a drop on Friday after news that factions of Turkey’s army tried to overthrow the government of President Recep Tayyip Erdogan, but rebounded after the premier’s supporters put an end to the coup by Saturday.

     More than 90 S&P 500 companies report earnings this week. Analysts project a profit decline of 5.8 percent for the index in the second quarter, which would make it a fifth straight drop, the longest streak since 2009. Firms including JPMorgan Chase & Co. and Alcoa Inc. beat earnings estimates last week, sending shares higher.

     After Monday’s close, Netflix reported fewer new subscribers than predicted, as higher prices for some older customers spurred an increase in cancellations. The shares dropped 16 percent as of 4:39 p.m. International Business Machines Corp. rose 3.1 percent in after-hours trading as its revenue beat analysts’ estimates.

     The S&P 500 recovered all its losses following the U.K.’s vote to leave the European Union and rallied to four consecutive records through Thursday. Signs of strength in the economy combined with speculation the Federal Reserve will hold rates steady this year have helped boost equities from a three-month low on June 27. The main U.S. equity benchmark is up 6 percent this year and on pace for a fifth straight monthly gain, which would be the longest in two years.                       

     While bets for a Fed rate increase crept up amid improving economic reports, traders are still pricing in less than even odds of a move until mid-2017. Meanwhile, a Citigroup gauge that tracks the degree to which data are exceeding economist projections is at an 18-month high. Investors will scrutinize reports on housing starts, existing home sales, manufacturing and jobless claims this week for cues on the vitality of growth. A reading today showed confidence among homebuilders declined in July from a five-month high.

     “The markets look pretty resilient to the events in Turkey and the key is expectations about monetary policies,” said Christian Gattiker, head of research at Julius Baer Group Ltd. in Zurich. “There’s widespread expectation that central banks will stay supportive. Earnings are following the usual ritual in the United States, guiding down and then surprising to the upside.”

     In Monday’s trading, the CBOE Volatility Index fell 1.8 percent to 12.44, to an 11-month low. The measure of market turmoil known as the VIX is down about 52 percent from a four- month high on June 24.                         

     Technology shares led gains among the S&P 500’s 10 main industries, rising to the highest since December 4, while consumer-staples and industrial companies slipped less the 0.2 percent as the worst performers. Retailers paced a climb in consumer-discretionary stocks, and financials rebounded from a decline on Friday, paced by lenders after Bank of America’s results.

     Qorvo Inc. and Skyworks Solutions Inc. rose at least 1.9 percent as semiconductor and equipment stocks extended a climb to the highest since February 2001. Hard-drive maker Seagate Technology Plc increased 4.3 percent to a three-month high. Facebook Inc. added 2.2 percent for its best level since May 27.

     Coach Inc. gained 2.5 percent, among the strongest in consumer discretionary, after Robert W. Baird & Co. upgraded the shares to the equivalent of buy from hold. Amazon.com Inc. eked out a gain to snap its longest losing streak since March, while Dollar Tree Inc. and Macy’s Inc. increased more than 1.4 percent as retailers in the S&P 500 briefly flirted with an all-time high.

     Energy producers nearly wiped out a 0.9 percent dropping, slipping with oil as shipments continued through the vital conduit for oil from Russia and Iraq to the Mediterranean Sea following the failed coup attempt in Turkey. West Texas Intermediate crude futures sank 1.5 percent, after falling as much as 2.4 percent. Apache Corp. and Diamond Offshore Drilling Inc. lost at least 1.3 percent.

     Monster Beverage Corp. fell 3.8 percent, the most since February, to weigh on the consumer-staples group. Wells Fargo & Co. analyst Bonnie Herzog downgraded the stock, saying she expects softer results in the near term and a lack of new products.

     Merck & Co. declined 1 percent, among the most in the Dow, after BMO Capital Markets Corp. cut the shares to the equivalent of neutral from buy, citing continued pricing pressure.

     Among other shares moving on corporate news, GameStop Corp. had its biggest rally since January 2015, rising 7.9 percent, after Chief Executive Officer Paul Raines told CNBC that sales were up 100 percent in 462 stores that are “gyms” in the Pokemon Go app. The retailer is the largest distributor of Pokemon video games and collectibles, he said.

 

Have a wonderful evening everyone.

 

Be magnificent!

True civilization does not mean congregating in cities and living a foolish life,

but going Godward, controlling the senses, and thus becoming the ruler in this house of the Self.

Swami Vivekananda

As ever,
 

Carolann

 

 

I only want people around me who can do the impossible.

                                      -Elizabeth Arden, 1878-1966

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

Dear Friends,

Tangents:

On this day in 1903, the newly formed Ford Motor Co. takes its first order. It’s from a Chicago dentist named Ernst Pfenning, and his $850 two-cylinder Model A was delivered just over a week later.

On July 15, 1918, the Second Battle of the Marne began during World War I.

SUMMER DAYS

      – Wathen Marks Wilks Call

In summer, when the days were long,
we pluck’d wild strawberries, ripe red,
Or feasted, with no grace but song,
on golden nectar, snow-white bread,
In summer, when the days were long.
We lov’d, and yet we knew it not,
for loving seem’d like breathing then;
We found a heaven in every spot;
saw angels, too, in all good men.
And dream’d of gods in grove and grot.

PHOTOS OF THE DAY

A man take a picture of Rome’s city hall, ‘Campidoglio’ (Capitoline Hill) as it is lit up in blue, white and red, the colors of the French flag, in tribute to the attack victims of Nice, in Rome, Italy on Friday. Tony Gentile/Reuters

Retired NBA basketball player Kobe Bryant reacts after he was ‘slimed’ after accepting the ‘Legend’ award at the Kids Choice Sport 2016 awards in Los Angeles on Thursday. Mario Anzuoni/Reuters

Market Closes for July 15^th, 2016

Market Index	Close	Change
Dow Jones	18516.55	+10.14   +0.05%
S&P 500	2161.74	-2.01   -0.09%
NASDAQ	5029.590	-4.468   -0.09%
TSX	14482.42	-32.10
		-0.22%

International Markets

Market Index	Close	Change
NIKKEI	16497.85	+111.96
		+0.68%
HANG SENG	21659.25	+98.19
		+0.46%
SENSEX	27836.50	-105.61
		-0.38%
FTSE 100	6669.24	+14.77
		+0.22%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.093	1.059
CND. 30 Year Bond	1.721	1.678
U.S.    10 Year Bond	1.5595	1.5356
U.S. 30 Year Bond	2.2704	2.2530

Currencies

BOC Close	Today	Previous
Canadian $	0.77237	0.77574
US $	1.29471	1.28910
Euro Rate 1 Euro=		Inverse
Canadian $	1.42897	0.69981
US $	1.10369	0.90605

Commodities

Gold	Close	Previous
London Gold Fix	1327.00	1323.60
Oil	Close	Previous
WTI Crude Future	45.95	45.68

Market Commentary:

China’s second-quarter GDP came in at 6.7%, flat with the first quarter, amid massive stimulus spending; some analysts questioned the report’s veracity.

Canada

By Bailey Lipschultz

     (Bloomberg) — Canadian stocks slipped, snapping a five-day rally that extended gains to the highest level in a year, as declines in technology and consumer-staples companies offset gains by financial shares.

     The S&P/TSX Composite Index fell 0.2 percent to 14,482.42 at 4 p.m. in Toronto as nine of 10 main industries dropped, ending its longest rally since March.

     Bank of Nova Scotia and Canadian Western Bank increased more than 0.6 percent as financial stocks extended a rally to a sixth session, its longest since October. Fairfax Financial Holdings Ltd. and FirstService Corp. jumped at least 0.6 percent.

     Volume on the Canadian index was 29 percent below the 30- day average. The benchmark capped its best week since April, up 1.6 percent.

     Technology companies fell the most in the S&P/TSX with Sierra Wireless Inc. leading losses. Kinaxis Inc. and Computer Modelling Group Ltd. slid at least 2.4 percent.

     Consumer staples stocks dropped as Alimentation Couche-Tard Inc. had its worst two-day selloff in a month. Jean Coutu Group Inc. and George Weston Ltd. slid 0.7 percent.

     Health-care providers tumbled as Chartwell Retirement Residences fell as much as 1.9 percent.

US

By Oliver Renick and Bailey Lipschultz

     (Bloomberg) — U.S. stocks were little changed Friday as the S&P 500 Index halted its longest rally in four months, while investors weighed the potential for further gains with equities near records and corporate earnings projected to drop for a fifth quarter.

     The benchmark index ended a succession of fresh highs this week as Wells Fargo & Co. dragged on the gauge, losing 2.5 percent after its quarterly results disappointed. Also weighing, Amazon.com Inc. sank for a fourth day, the longest in four months. Raw-materials rose for an eighth session, the most since October.

     The S&P 500fell 0.1 percent to 2,161.74 at 4 p.m. in New York, after setting fresh all-time highs in the prior four days, the longest such streak since 2014. The Dow Jones Industrial Average rose 10.14 points to 18,516.55, notching a record for a fourth day. The Nasdaq Composite Index slipped 0.1 percent. About 6.1 billion shares traded hands on U.S. exchanges, 15 percent below the three-month average.

     “If we can come out of today even flat, then it’s been a fantastic week,” Mark Kepner, a managing director and equity trader at Themis Trading LLC in Chatham, New Jersey, said by phone. “We’re starting to focus on economic numbers and earnings which is what we were doing before Brexit, and that’s good.”

     The benchmark index capped a third week of gains, up 1.5 percent, as investors overcome concerns about the U.K.’s vote to leave the European Union amid speculation the Federal Reserve will refrain from raising interest rates this year while other central banks take steps to limit the Brexit fallout. Still, money managers including BlackRock Inc.’s chief Laurence D. Fink say the rally may not be justified and won’t last unless earnings pick up.

     Analysts project a 5.8 percent earnings decline at S&P 500 firms in the second quarter, which would make it a fifth- straight drop, the longest streak since 2009. Netflix Inc., Goldman Sachs Group Inc., Microsoft Corp. and Intel Corp. are among those scheduled to report results next week.

     “Markets have gone beyond their expected altitude,” said Peter Dixon, global equities economist at Commerzbank AG in London. “If we do get some decent earnings from banks, that might drive the markets a bit higher, but I suspect it could be a good trigger for people to think about taking some profit.”                       

     The S&P 500 yesterday capped its longest winning streak since March, but fell short today of extending it to the lengthiest in two years. The recent advance has pushed the U.S. benchmark to 20 times reported earnings, the first time its valuation has crossed that threshold since 2009, data compiled by Bloomberg show. U.S. shares have added almost $2 trillion since June 27 as the S&P 500 climbed 8.1 percent.

     Better-than-forecast data have helped to buttress the rally, with the Bloomberg U.S. Economic Surprise Index turning positive this week for the first time since the end of May. A report today showed sales at retailers rose more than predicted last month, while manufacturing in June posted the strongest advance since January, according to another measure. A separate gauge indicated consumer confidence dropped in July as the U.K.’s vote to leave the European Union flustered high-income earners.

     Amid signs of a strengthening economy and stocks rising to all-time highs, traders have been pricing in higher probabilities for a Fed rate increase this year. Odds for a move by December have climbed to 44 percent from less than 21 percent a week ago, and just 12 percent before June’s stronger-than- estimated jobs report released last Friday.

     In today’s trading, the CBOE Volatility Index fell 1.2 percent to 12.67, extending an 11-month low. The measure of market turbulence known as the VIX posted a third weekly decline, the longest since March.                      

     Six of the S&P 500’s 10 main groups fell today, with consumer discretionary shares losing 0.5 percent, while financial and technology companies declined at least 0.1 percent. Raw-materials producers rose 0.4 percent to extend gains to an eighth day, and utilities added 0.3 percent.

     Financials halted their longest rally since November 2014 amid declines in Wells Fargo and Citigroup Inc. Citi erased a 1.3 percent gain to slip 0.3 percent, after its quarterly profit dropped 17 percent on lower revenue from consumer banking. Still, its earnings exceeded estimates. Wells Fargo fell the most since the U.K.’s Brexit vote, after its profit slipped as more energy loans soured, expenses rose and revenue from mortgage lending declined.

     The terror attack in Nice, France weighed on travel-related shares. A truck plowed into a late-night crowd, killing at least 80 people and injuring scores of others. Cruise operators Royal Caribbean Cruises Ltd. and Carnival Corp. fell at least 2.1 percent. Delta Air Lines Inc. slid 2.4 percent, while Priceline Group Inc. declined 1.2 percent.

     Also dragging on the consumer discretionary group, CBS Corp. sank 3.6 percent after UBS Group AG cut the stock to sell from neutral, citing the risk of slower national TV advertising in the second half of this year. Chipotle Mexican Grill Inc. dropped 3.1 percent after Morgan Stanley downgraded the shares to the equivalent of neutral from buy, saying it could take years for sales to fully recover after an outbreak last year of food-borne illnesses.

     Intel and International Business Machines Corp. were among the biggest contributors to the technology group’s decline before their earnings reports next week. Both ended seven-day rallies, with IBM’s the longest in almost four months. Cognizant Technology Solutions Corp. lost 2 percent, after falling as much as 4.1 percent, as peer Infosys Ltd. cut its revenue outlook. Infosys dropped 8.8 percent, the worst since April.

     Raw material producers were the benchmark’s best performers, with WestRock Co. climbing 5.7 percent to its highest since December. Analysts at Jefferies LLC said in a note that favorable June containerboard data should lift container and packaging stocks. International Paper Co. rose 3.2 percent near an 11-month high, while Sealed Air Corp. gained 1.6 percent.

     Among other shares moving on corporate news, Herbalife Ltd. rallied as much as 22 percent before finishing 9.9 percent higher. It agreed to pay $200 million to settle U.S. claims that the nutrition company deceived consumers with get-rich-quick promises, though the government stopped short of hedge fund manager Bill Ackman’s call to shut it down.

 

Have a wonderful weekend everyone.

 

Be magnificent!

We think as our ancestors did, away back in pre-historic ages.

Where even tradition cannot pierce the gloom of that past,

there our glorious ancestors have taken up their side of the problem

and have thrown the challenge to the world.

Our solution is renunciation, giving up, fearlessness, and love;

these are the fittest to survive.  Giving up the senses makes a nation survive.

Swami Vivekananda

As ever,
 

Carolann

 

Our doubts are traitors, and make us lose the good

the we oft might win by fearing to attempt.

                      -William Shakespeare, 1564-1616

 

 

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

Dear Friends,

Tangents:

Today is Bastille Day in France, celebrating the beginning of the French Revolution.   

Interestingly, the 250^th anniversary of  Marie Antoinette’s birth which occurred  just over 11 years ago (she was born November 2, 1755),  inspired something of a renaissance.  Since then, the Chateau de Versailles – Marie Antoinette’s home from her arrival from Vienna at age 14 to marry the future Louis XVI until four years before her death, has opened the Marie Antoinette estate.  It is a tour of the queen’s fantasy playhouses including the  Petit Trianon, pavilions, grottoes, the thatched-roof cottage where she played at being poor, and the mock farm complete with sheep, goats and geese where she liked to pretend to be a milkmaid.

Queen at 18, Marie Antoinette was an Austrian outsider, a frivolous big spender who ordered two pairs of shoes a week.   She was imprisoned and tried on charges that included incest and beheaded for treason, but the myths about her abound. 

Lady Antonia Fraser is the author of the biography  Marie Antoinette, which in turn, was the basis for Sofia Coppola’s script for the anachronistic punk-rock film, Marie Antoinette.  She attributes the interest in Marie Antoinette to a general malaise in France.  “I hesitate to pronounce on this, but France is in  a period of introspection. They have looked again at Marie Antoinette.  Once they looked, they liked what they saw and prepared to revise the view of  [the wicked queen] that they maybe had been taught as children.” 

The formula for her last perfume has been researched from original records of the historic perfume house of Lubin and re-released as the perfume, Black Jade.  Black Jade by Lubin can be found at Min New York, NYC or you can ask at contact@lubinparis.com for other locations near you.

Ladurée patisserie on the rue Bonaparte on Paris’s left bank, supplied the cakes for Coppola’s film, and offers a Marie Antoinette Collection of pastel macaroons inspired by the ball gowns of the “unappreciated heroine.”    A Ladurée patisserie opened this year on Robson Street in Vancouver; from my experience, you can expect to queue in a long line-up at both locations.

PHOTOS OF THE DAY

Four Mirage 2000C and one Alpha jet flight over Paris on their way to participate in the Bastille Day military parade on Thursday. Philippe Wojazer/Reuters

Alpha jets from the Patrouille de France fly in an ‘Eiffel Tower’ formation over the Champs Elysees at the start of the traditional Bastille Day military parade in Paris, France on Thursday. Benoit Tessier/Reuters

Market Closes for July 14^th, 2016

Market Index	Close	Change
Dow Jones	18506.41	+134.29   +0.73%
S&P 500	2163.75	+11.32   +0.53%
NASDAQ	5034.059	+28.332   +0.57%
TSX	14514.52	+20.72
		+0.14%

International Markets

Market Index	Close	Change
NIKKEI	16385.89	+154.46
		+0.95%
HANG SENG	21561.06	+238.69
		+1.12%
SENSEX	27942.11	+126.93
		+0.46%
FTSE 100	6654.47	-15.93
		-0.24%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.059	1.002
CND. 30 Year Bond	1.678	1.613
U.S.    10 Year Bond	1.5356	1.4692
U.S. 30 Year Bond	2.2530	2.1693

Currencies

BOC Close	Today	Previous
Canadian $	0.77574	0.77025
US $	1.28910	1.29828
Euro Rate 1 Euro=		Inverse
Canadian $	1.43313	0.69777
US $	1.11166	0.89955

Commodities

Gold	Close	Previous
London Gold Fix	1323.60	1342.75
Oil	Close	Previous
WTI Crude Future	45.68	44.75

Market Commentary:

Canada

By Bailey Lipschultz

     (Bloomberg) — Canadian stocks rose for a fifth day, extending gains to the highest level in a year, as gains by the nation’s largest lenders offset a decline in miners.

     The S&P/TSX Composite Index eked out a 0.1 percent advance to 14,514.52 at 4 p.m. in Toronto, as six of 10 main industries in the benchmark climbed. The index is in its longest rally since March, joining a rebound in equities worldwide amid signs central banks will continue to take unprecedented measures to limit any fallout from the U.K.’s vote to exit the European Union.

     Volume on the Canadian benchmark was 19 percent below the 30-day average. The index has gained 1.8 percent this week, on pace for its best advance since April.

     Financial companies jumped amid data showing that average prices for new homes in rose in May, the largest monthly increase since 2007. Mortgage insurer Genworth MI Canada Inc. rose 3.3 percent, while Industrial Alliance Insurance and Financial Services Inc. jumped 1.8 percent.

     Banks also got a boost after JPMorgan Chase & Co.’s second- quarter results topped estimates. Canadian Western Bank rose a third day, jumping 1.6 percent.

     Health-care providers led the benchmark as Valeant Pharmaceuticals International Inc. rebounded from a 7 percent rout Wednesday sparked by comments from a short seller. Concordia International Corp. and Chartwell Retirement Residences also gained.

     The industrial sector climbed for a fifth day with Canadian Pacific Railway Ltd. posting its longest winning streak since April.

     Utilities fell the most in the S&P/TSX with Capital Power Corp. leading losses, while gold miners in the gauge sank 0.8 percent.

US

By Joseph Ciolli and Bailey Lipschultz

     (Bloomberg) — U.S. stocks rose to extend all-time highs, with the S&P 500 Index marking its longest winning streak in four months, as speculation grew for looser global monetary policies while a better-than-forecast profit from JPMorgan Chase & Co. boosted optimism for bank earnings.

     JPMorgan climbed 1.5 percent to pace gains in banks, adding fresh momentum to a post-Brexit-vote rally that vaulted equities to records for the first time in more than 13 months. Citigroup Inc. increased 2.6 percent before its quarterly report Friday. Yum! Brands Inc. advanced 3 percent after its earnings beat estimates and the restaurant-chain operator raised its outlook. Industrial companies extended their longest stretch of gains since 2014.

     The S&P 500added 0.5 percent to 2,163.75 at 4 p.m. in New York, closing at a record for a fourth straight day, the longest such stretch since 2014. The gains today pushed the benchmark to 20 times reported earnings, the first time the valuation has crossed that threshold since 2009. The Dow Jones Industrial Average rose 134.29 points, or 0.7 percent, to 18,506.41. The Nasdaq Composite Index gained 0.6 percent to a more than six- month high.

     “Second quarter earnings have been widely advertised as weak, so any positive results will help boost the stock market,” said Bruce Bittles, chief investment strategist at Milwaukee- based Robert W. Baird, which oversees $110 billion. “We’re seeing a worldwide phenomenon of negative interest rates, which is driving money into the equity markets. The path of least resistance at this point is to the upside.”

     Global equities climbed Thursday as speculation grew that Japan’s Prime Minister Shinzo Abe is contemplating so-called helicopter money, which involves the central bank directly funding government spending. The Bank of England left its key rate at a record low and signaled it’s readying stimulus for August as the economy reels from Britain’s vote to leave the European Union.

     U.S. share prices have added almost $2 trillion since June 27, an amount that ranks among the biggest increases in equity value, as easing concern about economic growth and optimism over earnings combines with speculation the Federal Reserve will hold off raising rates. The S&P 500 has climbed in 10 of the last 12 days, rising 8.2 percent to erase a 5.3 percent plunge following the Brexit referendum.

     Injecting a cautionary note into the run-up today, the chief executive of the world’s largest asset manager said the current rally may not be justified and won’t last unless earnings pick up. “If we don’t see better-than-anticipated corporate earnings I think the rally will be short lived,”  BlackRock Inc.’s Laurence D. Fink said in an interview.

     While JPMorgan’s results exceeded predictions, its quarterly profit fell 1.4 percent in a period where banks are expected to be among the weaker links. Analysts project a 5.7 percent earnings decline at S&P 500 firms in the second quarter, which would make it a fifth straight drop, the longest streak since 2009. Wells Fargo & Co. and Citigroup are among firms posting results on Friday.

     Also on the minds of investors and Fed officials is the vitality of U.S. growth. A Citigroup gauge that tracks the degree to which data are exceeding economist projections has jumped to the highest level since January 2015. A report today showed wholesale prices rose more than forecast in June, while a separate measure indicated the number of applications for unemployment benefits last week held at the lowest level since mid-April.

     Meanwhile, odds of a 2016 Fed rate increase have risen after better-than-estimated June payrolls and as equities reached all-time highs. Traders are pricing in a 35 percent chance for a move by December, up from 12 percent a week ago when minutes from the central bank’s last meeting signaled policy makers saw less need to tighten.

     “There’s hope and anticipation of central bank support globally and earnings are improving,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva, which oversees 34 billion Swiss francs ($35 billion). “The consensus now is no Fed hike and that keeps the dollar from going higher, which in turn helps equities. Earnings so far have been good.”

     The CBOE Volatility Index fell 1.7 percent today to 12.82, the lowest in 11 months. The measure of market turbulence known as the VIX has slipped 50 percent since reaching a four-month high on June 24. About 6.5 billion shares traded hands on U.S. exchanges, 10 percent below the three-month average.

     In Thursday’s trading, nine of the S&P 500’s 10 main industries rose, with banks boosting financials, while raw- materials climbed to their highest in a year. Surging airline and railroad stocks lifted industrials to a record amid the group’s longest rally in 18 months. Utilities slipped for the third time in four days, after reaching the highest level ever last week.

     While banks were adding the most to the rally in financials, insurers were also contributing, rising to their highest in five weeks. MetLife Inc. rallied 4.7 percent, the most in three months, while Prudential Financial Inc. rose 2.6 percent. The gains coincided with U.S. Treasury yields rising for the third time in four days to the highest since June 24.                   

     Raw material producers rallied for a seventh session, their longest streak since October. CF Industries Holdings Inc. led the group with a 3.5 percent increase. Monsanto Co. climbed as much as 6.5 percent after Bayer AG raised its offer for the world’s biggest supplier of farm chemicals and seeds in a bid that values shares of the company at $54.7 billion. People familiar with the matter earlier said Monsanto revived talks with BASF SE about a possible combination of their agrochemicals businesses.

     The S&P 500 Industrials Index was lifted by transportation stocks as American Airlines Group Inc., United Continental Holdings Inc. and CSX Corp. climbed at least 2.9 percent. Delta Air Lines Inc. rose 3.6 percent after reporting quarterly earnings that exceeded analyst estimates. The Dow Jones Transportation Average gained for a sixth straight day to reach its highest since April, and a Bloomberg gauge of U.S. airline stocks increased 3.1 percent to a two-month high, bringing its climb in six sessions to 16 percent.

     Technology companies in benchmark increased 0.8 percent, boosted by Apple Inc.’s 2 percent gain to the highest in a month. Qorvo Inc. rose 4.7 percent to a seven-month high, while Skyworks Solutions Inc. and Broadcom Ltd. added more than 2.1 percent to boost semiconductor companies. The Philadelphia Stock Exchange Semiconductor Index climbed 0.7 percent to the highest in more than a year. EBay Inc. gained 3.8 percent to its best level since January.

     Line Corp. rose 27 percent, and as much as 35 percent, in its U.S. trading debut after the Japanese messaging company raised more than $1 billion in the biggest technology initial public offering of the year. The stock, which was sold to investors in the IPO for $32.84 per share, traded as high as $44.49.

     Williams Cos. increased 6.2 percent, the most since May 16, after Reuters reported the pipeline owner may snag as much as $2 billion in a sale of its Canadian unit, citing people familiar with the situation.

Have a wonderful evening everyone.

 

Be magnificent!

Humanity is not divided into airtight compartments

that inhibit going from one to the other.

And when one counts them in the thousands,

they will not be less linked one to the other.

Mahatma Gandhi

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

Dear Friends,

Tangents:

On this day in 1985, Prince Charles and Princess Diana officially open Live Aid, a global rock concert to raise money for famine-stricken Africans.

On July 13, 1977, a 25-hour blackout hit the New York City area after lightning struck upstate power lines.

1953 – Shakespeare’s Richard the Third opens the first season of the Stratford Festival, held in a tent. 63 Years ago.

1755 – Gen. Braddock Dies, George Washington Leads Retreat After Defeat in a French Ambush.

The Poem:

The Time You Chose
          By Michel Faber

It was a smallish space
and we lay close together.
No doubt, to some extent,
we breathed each other’s breath.
The angle of my chair
in tandem to your bed
meant that I couldn’t see your face,
although I was an arm’s length from your head.
I dozed.  The hour was late.
You were, I’m almost certain, unaware
that I was even there.
I dozed.  You were not dead.
The bedclothes rose and fell.
You were helpless and scary,
like a bear in labour,
like a newborn baby.
For twenty minutes, thirty maybe,
my eyes were closed.
That was the time you chose.

From Undying: A Love Story, by Michel Faber.

PHOTOS OF THE DAY

Britain’s outgoing Prime Minister, David Cameron, accompanied by his wife Samantha, daughters Nancy and Florence (c.) and son Arthur, speaks in front of number 10 Downing Street on his last day in office as Prime Minister, in central London, on Wednesday. Peter Nicholls/Reuters

Shaolin monks who are part of a 20-member cast perform during a media preview of their new show “Shaolin” in Singapore, on Wednesday. The show combines traditional Shaolin Kung Fu and choreographed moves inspired by martial arts experts from the Shaolin Temple—said to be the birthplace of the art. Wong Maye-E/AP

Market Closes for July 13^th, 2016

Market Index	Close	Change
Dow Jones	18372.12	+24.45   +0.13%
S&P 500	2152.42	+0.28   +0.01%
NASDAQ	5005.727	-17.094   -0.34%
TSX	14493.34	+15.67
		+0.11%

International Markets

Market Index	Close	Change
NIKKEI	16231.43	+135.78
		+0.84%
HANG SENG	21322.37	+97.63
		+0.46%
SENSEX	27815.18	+7.04
		+0.03%
FTSE 100	6670.40	-10.29
		-0.15%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.002	1.059
CND. 30 Year Bond	1.613	1.650
U.S.    10 Year Bond	1.4692	1.5032
U.S. 30 Year Bond	2.1693	2.2237

Currencies

BOC Close	Today	Previous
Canadian $	0.77025	0.76672
US $	1.29828	1.30426
Euro Rate 1 Euro=		Inverse
Canadian $	1.44028	0.69431
US $	1.10937	0.90141

Commodities

Gold	Close	Previous
London Gold Fix	1342.75	1342.40
Oil	Close	Previous
WTI Crude Future	44.75	46.80

Market Commentary:

Number of the Day

-0.05%

The yield on August 2026 bonds sold by Germany’s finance agency Wednesday, as the country became the first in the eurozone to sell 10-year debt at a yield below zero.

Canada

By Bailey Lipschultz

     (Bloomberg) — Canadian stocks rose a fourth day to extend an 11-month high, as gains by gold and silver miners offset losses in oil producers and health-care companies, while the Bank of Canada kept the benchmark interest rate unchanged.

     The S&P/TSX Composite Index added 0.1 percent to 14,493.8 at 4:00 p.m. in Toronto, advancing for a fourth consecutive session. Volume was in line with the 30-day average as six out of 10 industries increased. Equities worldwide rose a fifth day, while the S&P 500 Index in the U.S. was little changed.

     The Bank of Canada lowered its growth estimate for the year to 1.3 percent, down from the bank’s April forecast of 1.7 percent, with the contribution from exports dropping to 0.3 percentage point from 1.1 points. The rate on overnight loans between commercial banks remained 0.5 percent in a decision published Wednesday from Ottawa. 

     “The fundamentals remain in place for a pickup in growth over the projection horizon, albeit in a climate of heightened uncertainty,” policy makers led by Governor Stephen Poloz said in a statement.

     Commodity producers contributed the most to gains in the S&P/TSX today. First Majestic Silver Corp. jumped 9.5 percent to its highest since 2012, while MAG Silver Corp. climbed 6.1 percent. Pan American Silver Corp. rallied 4.8 percent after being upgraded to the equivalent of a buy by Scotia Capital Inc. Precious metals rose today, with silver up 1.2 percent and gold rising 0.8 percent.

     Consumer staples companies rose with Alimentation Couche- Tard Inc. gaining 2.6 percent. Metro Inc. climbed a third day, jumping 1.7 percent.

     Health-care shares fell the most in the S&P/TSX with Valeant Pharmaceuticals International Inc. reversing gains to tumble 7.1 percent after investor Andrew Left said he’d taken a short position in the company.

     Energy producers dropped 1.1 percent, halting a three-day gain, with Precision Drilling Corp. leading losses. Ensign Energy Services Inc., Encana Corp., and Parex Resources Inc. each fell at least 3.7 percent as West Texas Intermediate crude in New York dipped below $45 a barrel.

US

By Dani Burger and Joseph Ciolli

     (Bloomberg) — The rebound in U.S. stocks from their post- Brexit selloff is starting to take on historic dimensions.

     The S&P 500 Index edged higher Wednesday to climb in nine of the last 11 days, shaking off a 5.3 percent plunge following the U.K. vote to add almost $2 trillion to U.S. share prices since June 27. It’s an expansion that while burnished by the market’s already-high level, also ranks among the biggest increases in equity value ever.

     Stars are aligning for investors as a strong string of economic data combines with optimism over earnings and speculation the Federal Reserve will hold off raising rates. Not everything is rosy — gains in 2016 are still being led by defensive stocks rather than those tied to economic growth — but the push has still been enough to shatter a 13-month-old record and push the S&P 500 past Wall Street predictions.

     Bears who say the rally reflects nothing but expectations for more stimulus face a nagging truth: the surge that lifted stocks 7.6 percent in 11 days has occurred as economic data mostly beat forecasts. A Citigroup Inc. gauge that tracks the degree to which reported numbers are exceeding economist projections has jumped to the highest level since January 2015.

     “It’s both. The economy is a little better than people thought, especially post-Brexit as we’re getting some early indicators,” Jeff Kleintop, chief global investment strategist at Charles Schwab & Co., said by phone. “At the same time, central banks remain completely committed to providing easy financial conditions.”

     The S&P 500 rose less than 0.1 percent Wednesday to 2,152.43 at 4 p.m. in New York, after holding in a narrow range to close at a record for a third day. The Dow Jones Industrial Average added 24.45 points, or 0.1 percent, to 18,372.12, following its first all-time closing high in more than 13 months. The Nasdaq Composite Index fell 0.3 percent from its best level this year. About 6.5 billion shares traded hands on U.S. exchanges, 10 percent below the three-month average.

     Energy shares retreated today from their highest level in eight months as crude fell 4.4 percent. Government data showed U.S. fuel inventories unexpectedly grew, adding to concerns about oversupply. Banks declined for the first time in six days to halt their longest winning streak in three months. Phone companies, utilities and consumer staples were the best performers among the S&P 500’s 10 main industries as investors gravitated back toward more defensive stocks.

     The CBOE Volatility Index fell 3.8 percent to 13.04, the lowest in almost 11 months. The measure of market turbulence known as the VIX is down nearly 17 percent in July after rising 10 percent in June.

     “You may see people profit-taking ahead of financial earnings, since we’ve had such a nice run over the last week and a half,” said Stephen Carl, principal and head equity trader at Williams Capital Group LP. “If any situation occurs, whether it’s corporate earnings or something political going awry, that could exacerbate a decline.”

     Last week, better-than-forecast reports on payrolls and service industries brightened the economic outlook. Odds of a 2016 Fed rate increase all but vanished after minutes of the central bank’s June meeting signaled policy makers saw less need to tighten any time soon. Since then wagers have crept back up after the jobs data and the fresh records for equities. Traders see a 32 percent chance of higher borrowing costs by December, compared to 12 percent a week ago.

     In its Beige Book survey of regional activity released today, the Fed said the economy expanded at a modest pace since mid-May amid “slight” price pressures and some softening in consumer spending.

     On Tuesday, investors looking to corporate America for the next leg higher got an encouraging sign. Alcoa Inc. surged 5.4 percent after posting late Monday a profit that beat analysts’ estimates, the aluminum company’s biggest post-earnings gain in two years. JPMorgan Chase & Co., Citigroup Inc. and BlackRock Inc. will also report results this week.

     For more than a year, investors have been unnerved by retreating quarterly profits in the S&P 500, a streak that is poised to match the longest earnings retreat on record. But measured by its depth, the retreat looks less dour. Net income in the gauge is down 18 percent from its 2014 high — a retreat that is less than half of the size of the last three drops and pales next to the 28 percent average in recessions since 1936.

     Receding concerns over a U.S. economic slowdown have also restored a more recognizable order to the rally. While defensive stocks remain the biggest gainers of the year, the last 10 days have seen companies most sensitive to moves in the economy take the market higher. Industrial, consumer-discretionary and financial companies posted the largest gains, while utilities and consumer-staples makers lagged.

     To be sure, much of the positive economic data has covered periods before the U.K. vote, and nobody is predicting a decisive turn in U.S. gross domestic product. Last month, the International Monetary Fund slashed its forecast for American growth. At the same time, valuations remain at the high end of the current bull market’s range, perhaps in a testament to investor faith that earnings will rebound.

     A scarcity of income generating assets and a collapse in bond yields has helped push U.S. equities higher. With Treasury yields low, investors don’t need a lot of encouragement to buy shares. That calculus, a concept known as the equity risk premium, might have accounted for 90 percent of the recent rally, Dominic Konstam, global head of rates research at Deutsche Bank AG, wrote in a note to clients Friday.

     “Traditionally risk comes out greater in equities, but with yields as low as they are today, we’d have to think that maybe the risk premium is reflecting a transitional period,” John Stoltzfus, chief market strategist at Oppenheimer & Co. in New York, said by phone. “Going forward, most of the increase in the price of the S&P will have to come from multiple expansion as earnings remain challenged.”

     Underpinning the bull case, stock valuations are still more attractive when viewed next to some of the lowest bond payouts ever. Plotting the index’s per-share earnings against the yield on the 10-year Treasury note, a technique sometimes referred to as the Fed Model, shows the S&P 500 is still significantly less expensive.

     “The attractiveness of the equity market is really enhanced here with low interest rates, improvements in the housing market and the job market,” Stoltzfus said. “It may not be rock and roll, but it’s good enough for the market to grind higher here.”

 

Have a wonderful evening everyone.

 

Be magnificent!

I have found that life persists in the midst of destruction

and therefore there must be a higher law than that of destruction.

Only under that law would a well-ordered society

be intelligible and live worth living.

And if that is the law of life,

we have to work it out in daily life.

Mahatma Gandhi

As ever,

 

Carolann

 

Tact is after all a kind of mind reading.

      -Sarah Orne Jewett, 1849-1909

 

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

Dear Friends,

Tangents:

On this day in 100 B.C., Julius Caesar is born in Rome.

On July 12, 1984, Democratic presidential candidate Walter F. Mondale named New York Congresswoman Geraldine A. Ferraro his running mate, making her the first woman to run on a major party ticket.

1759 – Battle for Quebec Begins as Wolfe’s Artillery Starts Siege.

1812 – General William Hull crosses Detroit River with 2,500 troops, occupies Sandwich; first American invasion in War of 1812.

1968 – Health Minister Allan MacEachen tables Medical Care Act in the Commons.

PHOTOS OF THE DAY

The balloon of Russian adventurer Fedor Konyukhov is seen after it lifted off from Perth, Australia on Tuesday. Konyukhov is attempting to break the world record for a solo hot-air balloon flight around the globe. Oscar Konyukhov/Reuters

A police car passes, telling people to leave the street as the sun sets over Manhattan aligned exactly with the street grid in a phenomenon known as “Manhattanhenge”, in New York City, on Monday evening. Mark Kauzlarich/Reuters

Market Closes for July 12^th, 2016

Market Index	Close	Change
Dow Jones	18347.67	+120.74   +0.66%
S&P 500	2152.08	+14.92   +0.70%
NASDAQ	5022.820	+34.181   +0.69%
TSX	14481.44	+119.56
		+0.83%

International Markets

Market Index	Close	Change
NIKKEI	16095.65	+386.83
		+2.46%
HANG SENG	21224.74	+344.24
		+1.65%
SENSEX	27808.14	+181.45
		+0.66%
FTSE 100	6680.69	-2.17
		-0.03%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.059	0.980
CND. 30 Year Bond	1.650	1.558
U.S.    10 Year Bond	1.5032	1.4303
U.S. 30 Year Bond	2.2237	2.1442

Currencies

BOC Close	Today	Previous
Canadian $	0.76672	0.76201
US $	1.30426	1.31232
Euro Rate 1 Euro=		Inverse
Canadian $	1.44265	0.69317
US $	1.10610	0.90408

Commodities

Gold	Close	Previous
London Gold Fix	1342.40	1357.10
Oil	Close	Previous
WTI Crude Future	46.80	44.89

Market Commentary:

Canada

By Bailey Lipschultz

     (Bloomberg) — Canadian stocks rose to the highest in 11 months, led by energy producers as crude surged amid prospects for more stimulus in major economies.

     The S&P/TSX Composite Index rose 0.8 percent to 14,477.67 at 4 p.m. in Toronto for a third consecutive rally, with nine of 10 main industries gaining. Trading volume for shares in the benchmark was 8 percent higher than the 30-day average.

     Global equities advanced for a fourth session after Japanese Prime Minister Shinzo Abe vowed to speed up efforts to defeat deflation, while a majority of economists expect the Bank of England to cut interest rates this week and traders are betting there will be further monetary easing in the euro area this year.

     Energy companies in Canada climbed 2.2 percent to the highest in a year, with MEG Energy Corp. and Ensign Energy Services Inc. each rising at least 6.4 percent. West Texas Intermediate crude futures in New York gained 4.6 percent, its best since April.

     Industrial shares advanced 1.4 percent to the highest since August. Bombardier Inc. increased 3.4 percent to its highest in a year, after Porter Airlines Inc. confirmed a $93 million order for three Bombardier Q400s. WestJet Airlines Ltd. provided the biggest move for the group, gaining 5 percent.

     Colliers International Group Inc. and Home Capital Group Inc. increased at least 3.8 percent to lead the nation’s financial sector higher. The sector extended a rally to three sessions, its best increase for that duration since April. Genworth MI Canada Inc. rose 3 percent, the most in four months.

     Northland Power Inc. surged 6.7 percent, the most since October 2008, to a record after the renewable energy producer said it hired bankers to undertake a strategic review to focus on enhancing growth, shareholder value and the ability to capitalize on opportunities in clean energy infrastructure.

     Raw-materials were the industry to retreat, falling 2.5 percent, as gold dropped. Endeavour Mining Corp. fell 9.4 percent after announcing a board change. SEMAFO Inc. and Barrick Gold Corp. lost at least 6.6 percent.

US

By Joseph Ciolli

     (Bloomberg) — The Dow Jones Industrial Average joined the S&P 500 Index to close at a fresh record, with U.S. equities climbing a third day as crude rallied and Alcoa Inc.’s results bolstered optimism on corporate health amid the start of the earnings season.

     Alcoa jumped to a two-month high after the aluminum producer posted a profit that beat analysts’ estimates, kicking off the quarterly reporting period. BlackRock Inc., JPMorgan Chase & Co. and Citigroup Inc. are among firms releasing results this week.

     Commodity producers and and transportation stocks posted some of the biggest gains today, with American Airlines Inc. rallying 11 percent for its best day since at least December 2013. Oil and gas companies climbed to the highest since November as crude had its steepest gain in three months. Miner Freeport-McMoRan Inc. also increased 11 percent.

     The S&P 500 added 0.7 percent to 2,152.14 at 4 p.m. in New York, extending its all-time high after surpassing yesterday the previous record reached in May 2015 on bets of a brighter economic outlook after Friday’s jobs report. The Dow rose 120.74 points, or 0.7 percent, to 18,347.67 today. The index briefly eclipsed the intraday record it set last year. The Nasdaq Composite Index climbed 0.7 percent to the highest since Dec. 30.

     “People are coming back into stocks because they see central banks coming in very quickly to backstop markets. That’s what we’ve witnessed post-Brexit,” David Zervos, chief market strategist at Jefferies LLC, said in a television interview on Bloomberg Go.

     The S&P 500 climbed above 2,152, the average level at which strategists surveyed by Bloomberg see the equity benchmark ending 2016. It marks the first time since November 2014 that the gauge has caught up to their optimistic forecasts. About 7.6 billion shares traded hands on U.S. exchanges Tuesday, 5 percent above the three-month average.

     Stocks have climbed since Friday, erasing the losses triggered by the U.K.’s vote to leave the European Union, as a stronger-than-forecast payrolls report helped allay investor concerns. At the same time, traders are pricing in little chance of an interest-rate hike from the Federal Reserve anytime soon, with September 2017 being the first month that has even odds of a raise, implying a so-called “Goldilocks” scenario for equities in which the economy expands but at a lukewarm pace to hold off further monetary tightening.

     Meanwhile, investors have also sought the safety of Treasuries in the aftermath of the Brexit vote, sending bond yields to record lows last week. Fresh peaks for stocks coupled with all-time lows for bonds is unusual given that they are generally seen as risk-on/risk-off complements. Demand for U.S. bonds has also ramped up amid sub-zero yields in Europe and Japan.

     The CBOE Volatility Index edged higher for a second day, even as stocks advanced — a sign investors are still exercising caution. The measure of market turbulence known as the VIX added less than 0.1 percent to 13.55. A Goldman Sachs Group Inc. basket of most shorted shares rose for a fifth day, the longest in fourth months. It was the ninth increase in 10 days, with the gauge up 15 percent over the span.

     “I firmly believe in the efficacy of QE — I think it works great magic — but I’m a little concerned that we’ve now taken bonds to record low yields and stocks to record highs at the same time,” Zervos said. “Usually, bonds are supposed to hedge equities. What the Fed is doing is running this very hot, and the traditional outcome of that isn’t so hot.”

     Investors turn their focus to corporate results this week, with analysts projecting a profit decline of 5.7 percent at S&P 500 companies in the second quarter. That would make it the fifth straight quarterly drop, the longest streak since 2009. Bank earnings are forecast to slide 11 percent in the period.

     “We’ve been so overwhelmed with larger macro and political issues for the last couple of cycles that we now have the chance to focus on individual companies and see how they’re doing,” said Peter Jankovskis, who helps oversee $1.9 billion as co- chief investment officer of Lisle, Illinois-based OakBrook Investments. “That could be very positive for the market.”

     A Bloomberg gauge of U.S. airlines soared 6.5 percent for its strongest one-day gain since November 2014, hoisted in part by American Airlines. The carrier said it expects new credit- card deals with Citigroup Inc. and Barclays Plc to boost its pretax income by about $1.55 billion over the next two-and-a- half years. Deutsche Bank AG also recommended buying shares in the three largest airlines. United Continental Holdings Inc. and Delta Air Lines Inc. advanced more than 5.4 percent.

     Seagate Technology Plc surged 22 percent, the steepest since 2011, after saying it will eliminate about 14 percent of its workforce in an effort to reduce costs to weather a prolonged slump in demand.

     R.R. Donnelley & Sons Co. increased 2 percent, paring an earlier 7.5 percent climb, after people with knowledge of the matter said Xerox Corp. is in talks to acquire the Chicago-based printing company. Xerox Corp. added 1.8 percent.

     Fastenal Co. lost 3.5 percent after posting quarterly earnings and sales that missed estimates.

     The S&P 500’s main groups that have posted the biggest gains in 2016 — utility and phone companies — were among the weakest today. The industries, often considered defensive since they pay higher dividends and are less reliant on economic growth, lagged the broader index Tuesday along with consumer- staples companies.

 

Have a wonderful evening everyone.

 

Be magnificent!

A state of harmony with nature,

with all beings of creation,

itself leads to our harmony with humans.

If we lose our relationship with nature,

we lose inevitably

our relationship with humans.

Krishnamurti

As ever,

 

Carolann

You can’t fake listening.  It shows.

           -Raquel Welch,  b. 1940

 

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

Dear Friends,

Tangents:

Daily Factoid

On this day in 1804, Vice President Aaron Burr mortally wounds Alexander Hamilton in a duel near Weehawken, N.J.

THRILLING THEATRE

The cultural phenomenon Hamilton is, in the words of President Obama, “a civics lesson our kids can’t get enough of,” and the public got a peek at the musical about Alexander Hamilton at the recent Tony Awards.  Check out the cast in a stellar performance of the songs “History Has its Eyes on You” and “Yorktown (the World Turned Upside Down)” at http://bit.ly/hamiltontonys.

I was lucky enough to get to see the performance in NYC a couple of  months ago and I can attest first hand to its brilliance.  I probably get to the theatre in NYC six or more times a year, usually when I’m away at investment conferences (I try to go every night) and have been attending theatre there for a few decades.  Hamilton was by far the best show I’ve ever seen, hand down.  Lin Manuel Miranda is an amazing talent; he dazzled the audience and energized the whole cast.

PHOTOS OF THE DAY

A man stands during sunrise on Kreuzjoch mountain in the Zillertal Alps in Schwendau, Austria on Monday. Dominic Ebenbichler/Reuters

The plane carrying Portugal’s national soccer team and the Euro 2016 trophy arrives at the Humberto Delgado Airport in Lisbon, Portugal, Monday. Paulo Duarte/AP

Market Closes for July 11^th, 2016

Market Index	Close	Change
Dow Jones	18226.93	+80.19   +0.44%
S&P 500	2137.68	+7.78   +0.37%
NASDAQ	4988.641	+31.884   +0.64%
TSX	14374.09	+114.25
		+0.80%

International Markets

Market Index	Close	Change
NIKKEI	15708.82	+601.84
		+3.98%
HANG SENG	20880.50	+316.33
		+1.54%
SENSEX	27626.69	+499.79
		+1.84%
FTSE 100	6682.86	+92.22
		+1.40%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	0.980	0.960
CND. 30 Year Bond	1.558	1.548
U.S.    10 Year Bond	1.4303	1.3579
U.S. 30 Year Bond	2.1442	2.0963

Currencies

BOC Close	Today	Previous
Canadian $	0.76201	0.76693
US $	1.31232	1.30390
Euro Rate 1 Euro=		Inverse
Canadian $	1.45135	0.68901
US $	1.10595	0.90420

Commodities

Gold	Close	Previous
London Gold Fix	1357.10	1354.25
Oil	Close	Previous
WTI Crude Future	44.89	45.41

Market Commentary:

Canada

By Bailey Lipschultz and Eric Lam

     (Bloomberg) — Canadian stocks rose to the highest since June, joining a rally in global equities sparked by speculation economic growth will persist amid additional central-bank stimulus from Japan to Europe.

     The S&P/TSX Composite Index rose 0.9 percent to 14,357.97 at 4 p.m. in Toronto, after earlier touching the highest level in almost a year. The Canadian equity benchmark extended a rally from June 27, erasing losses from the two days following the U.K.’s vote to leave the European Union. Volume was 6.8 percent lower the 30-day average.

     Royal Bank of Canada and Bank of Nova Scotia increased more than 0.9 percent to lead the nation’s largest lenders higher. Canada’s housing market remains red-hot, with the surge in existing home prices in Toronto and Vancouver driving new construction in the two cities. Housing starts jumped to the highest since September, according to the Canada Mortgage & Housing Corp.

     The U.S. benchmark S&P 500 closed at an all-time high, while the dollar strengthened with industrial metals extending a rally sparked by Friday’s robust jobs report. Shares are getting support from the prospect of fresh fiscal and monetary stimulus in the U.K. to contain any fallout. Japan’s prime minister vowed to take “bold” action on the economy after winning elections, while traders still don’t expect higher U.S. rates this year even as the economy shows signs of strength.

     Canadian equities are neck-and-neck with New Zealand as the best-performing developed market in the world this year, led by a rally in raw-materials and energy producers. The advance has pushed valuations for the S&P/TSX to 22.1 times earnings, 12 percent higher than the S&P 500 according to data compiled by Bloomberg.

     Nine of 10 main S&P/TSX groups climbed on Monday, led by consumer shares. Producers of discretionary items advanced 1.6 percent, with car-parts makers Magna International Inc. and Linamar Corp. rising at least 2.5 percent after Cormark analyst David Tyerman initiated coverage of the industry rating both companies buys. Department-store operator Hudson’s Bay Co. rose 2.9 percent for a third day of gains, after announcing it will add seven new locations in the Netherlands.

     Materials shares rallied 1.1 percent, pushing gains in 2016 to 62 percent for the best year-to-date performance in at least 30 years, according to data compiled by Bloomberg. The group benefited from gains in industrial metals including nickel and copper. First Quantum Minerals Ltd. and Hudbay Minerals Inc. jumped more than 5 percent.

     Bombardier Inc. climbed 4.5 percent, to the highest close in a year. Bombardier commercial chief Fred Cromer said at the Farnborough airshow he expects the company’s long-delayed C Series jet to receive approval from the Federal Aviation Administration in the next 40 days. The planemaker plans to deliver 15 C Series jets this year, and has 370 orders for the family.

US

By Joseph Ciolli

     (Bloomberg) — U.S. stocks climbed, pushing the benchmark S&P 500 Index to an all-time high, extending a rally from Friday when a better-than-forecast jobs report brightened the economic outlook without fueling expectations that the Federal Reserve will raise interest rates sooner.

     The S&P 500 added 0.3 percent to 2,137.16 at 4 p.m. in New York, surpassing the prior intraday record set in May 2015. The index had spent 285 days trading without making a fresh record, the longest stretch outside a bear market since a 323-day drought in 1985. The Dow Jones Industrial Average rose 80 points, or 0.4 percent, to 18,226.93 today, less than half a percent away from the all-time high it set last year. 

     The June payrolls data calmed concern brought about by the previous month’s report that showed hiring had slowed to the weakest pace since 2010. The latest figures may convince investors that the economy will continue to expand in the face of weaker profits and Britain’s vote to leave the European Union. Further reassuring investors, the Bank of England and the European Central Bank have said they’ll act to arrest any fallout of Brexit, and a victory for the ruling party in Japan cleared the way for stimulus.

     “Momentum is in play here, so as we look to break above new highs, that’ll get people to jump on the bandwagon,” said Matt Maley, an equity strategist in New York at Miller Tabak & Co LLC. “Investors are thinking they have to jump on board before the train leaves the station. The huge amount of uncertainty brought by the Brexit vote will keep the Fed from acting this year, which is helping stocks avoid some selling.”

     The S&P 500 advanced 1.5 percent on Friday. The gains restored $1.4 trillion of market value that was erased after the U.K. voted to leave the EU on June 23. Before the payrolls figures, a report Wednesday showed service providers expanded in June at the fastest pace in seven months and Fed minutes indicated less urgency in the need to raise interest rates.

     Even as the latest bout of global anxiety eased, the CBOE Volatility Index edged higher by 2.6 percent to 13.54. The measure of market turbulence known as the VIX sank 11 percent on Friday, capping the first back-to-back weekly declines since April. 

     Investors also turn their focus on earnings with Alcoa Inc.’s quarterly release. The 128-year-old aluminum producer reported earnings after the close on Monday that exceeded analysts’ estimates after profit from its car and jet parts businesses offset declines in prices for the metal. Profit excluding one-time items was 15 cents a share, beating the 9- cent average of projections. Shares rose 4 percent in late trading.

     For the broader S&P 500, company analysts currently predict combined profits will drop 5.7 percent, which would make it the fifth straight quarterly decline, the longest streak since 2009.

     The rally in 2016 has been led by industries often considered “defensive.” Utility and phone companies are up the most this year, posting advances of at least 20 percent, with utilities reaching a record last week. Trading on Monday didn’t fit that trend, as seven of the S&P 500’s 10 main industries rose with cyclical groups like technology, financial and industrial companies leading gains.

     Technology shares rose for a fourth day to the highest in a month. The group was boosted by semiconductor companies, including Qorvo Inc. and Skyworks Solutions Inc., which added more than 2.7 percent.

     Meanwhile, Twitter Inc. slipped 2.1 percent after its rating was lowered to neutral from buy at SunTrust Robinson Humphrey. The firm said Twitter is “highly unlikely” to be bought this year.

     Energy companies in the S&P 500 advanced. Gas-pipeline owner Kinder Morgan Inc. increased 3.7 percent after selling a 50 percent stake in a 7,600-mile network to utility owner Southern Co. for about $1.5 billion. Southern slid 0.7 percent.

     Thomson Reuters Corp. rose 1.4 percent after agreeing to sell its Intellectual Property & Science division to Onex Corp. and Baring Private Equity Asia for $3.55 billion in cash, shedding the unit to focus on its core financial products.

     C&J Energy Services Ltd. dropped 11 percent after the company said late Friday it has entered into a restructuring agreement with key creditors.
 

Have a wonderful evening everyone.

 

Be magnificent!

How can you regard yourself as subject and other beings as objects,

when you know that all are one?

Brihadaranyaka Upanishad

As ever,
 

Carolann

 

Over time, you weed out luck.

             -Billy Beane, 1962-

 

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

Dear Friends, 

Tangents:

Prime Numbers:

100,000

Estimated number of people who have fled Crimea since Russia captured it from Ukraine in March 2014.  Many are ethnic Tatars, who settled there centuries ago. 

91

Percentage of people, who, even though they were on the US terrorist watchlist, passed a government background check to purchase a firearm last year.

26.2

Billion : Price (in US dollars) that Microsoft will pay to acquire Linkedin, the business career-oriented social platform.

31,500

Average gunshot deaths in the United States annually from 1968 to 2015.  More Americans died from domestic gun violence during this period than in all the wars America has fought. 

5.5

Billion: Cost (in US dollars) of Shanghai Disney, a new theme part in China that just opened.  This is the fourth Disney theme park outside the US, joining Paris, Tokyo, and Hong Kong.

-0.28

Return on 10-year bonds issued by the German government.  The bonds fell into negative territory for the first time. 

1.366

The 10-year Treasury yield closed at a new low today, yielding just 1.336%/annum – history being made. 

TODAY IN HISTORYOn July 8, 1950, Gen. Douglas MacArthur was named commander-in-chief of United Nations forces in Korea.Go to article » 1792 – John Graves Simcoe takes office as first Lieutenant-Governor of Upper Canada. 1892 – Start of two day fire that destroys most of St. John’s, Newfoundland. 1917 – Tom Thomson drowns in Canoe Lake in his beloved Algonquin Park.

PHOTOS OF THE DAY

Ni, created by La Machine production company, during its presentation in Nantes, France on Friday. Stephane Mahe/Reuters

Prince George wears ear defenders against the roar of aircraft as he and his mother Kate, the Duchess of Cambridge, visit the Royal International Air Tattoo at RAF Fairford in Gloucestershire, England, on Friday. Edward Low/ Crown Copyright/AP

Market Closes for July 8, 2016

MarketIndex	Close	Change
DowJones	18146.74	+250.86+1.40%
S&P 500	2129.84	+31.94+1.52%
NASDAQ	4956.758	+79.951+1.64%
TSX	14266.48	+132.02
		+0.93%

International Markets

MarketIndex	Close	Change
NIKKEI	15106.98	-169.26
		-1.11%
HANGSENG	20564.17	-142.75
		-0.69%
SENSEX	27126.90	-74.59
		-0.27%
FTSE 100	6590.64	+56.85
		+0.87%

Bonds

Bonds	% Yield	Previous  % Yield
CND.10 Year Bond	0.960	0.978
CND.30 YearBond	1.548	1.556
U.S.   10 Year Bond	1.3579	1.3850
U.S.30 Year Bond	2.0963	2.1348

Currencies

BOC Close	Today	Previous
Canadian $	0.76693	0.76882
US$	1.30390	1.30069
Euro Rate1 Euro=		Inverse
Canadian $	1.44081	0.69406
US$	1.10500	0.90498

Commodities

Gold	Close	Previous
London GoldFix	1354.25	1356.70
Oil	Close	Previous
WTI Crude Future	45.41	45.14

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks climbed to the highest level in a month, as a resurgence in U.S. job creation in June showed resilience in the economy of Canada’s largest trading partner, offsetting a decline in the domestic payroll.

     The S&P/TSX Composite Index rose 0.9 percent to 14,259.84 at 4 p.m. in Toronto. The benchmark capped a second week of gains, as health-care shares led gains across all 10 industries during the period. Trading volume was 5 percent lower than the 30-day average.

     Canada’s job market weakened in June, completing the worst quarter for payrolls in two years. Employment fell by about 700 in June, short of economists’ forecasts for a 5,000 gain, while the jobless rate unexpectedly dropped to 6.8 percent from 6.9 percent as Canadians left the job market.

     Traders are now pricing in 26 percent odds Canada’s central bank will cut interest rates in December, a little more than half where the probability was on Thursday, according to data compiled by Bloomberg.

     By contrast U.S. payrolls surged by 287,000 last month, topping the highest estimate in a Bloomberg survey and accelerating the most since October. The unemployment rate rose to 4.9 percent as more people entered the workforce. The U.S. is Canada’s largest trading partner by a wide margin, accounting for more than $540 billion in trade last year, according to data compiled by Bloomberg.

     “The weak details reinforce the view that Canada’s job market is struggling to stay above the waterline,” said Douglas Porter, chief economist at Bank of Montreal, in a note to clients. “The consolation prize for the Bank of Canada was the nice, solid comeback in U.S. jobs last month, which suggests our biggest trading partner is still rolling along.”

     Royal Bank of Canada and Bank of Nova Scotia added at least 0.7 percent as financial services rose. Raw-materials producers jumped 2.1 percent for the biggest contribution to gains in the S&P/TSX led by metals producers. Energy producers increased 0.9 percent as a group as crude futures rose in New York to trim a weekly drop.

     Mitel Networks Corp. soared 20 percent, the most in three years, after acquisition target Polycom Inc. agreed to end its merger pact with Mitel in favor of a $2 billion offer from private equity firm Siris Capital Group. Mitel declined to match the offer.

     Empire Co. added 5.1 percent for the biggest increase since June 2013, after the parent of grocery chain Sobeys announced the departure of Chief Executive Officer Marc Poulin. Shares of Empire have sagged 22 percent this year, the worst among its peers in the S&P/TSX Consumer Staples Index.

     Canadian equities have swung between gains and losses since the Brexit vote two weeks ago as investors sought havens from the market volatility. Raw-materials producers remain the top- performing industry in Canada this year with a 60 percent increase, the best such performance for the group in at least 30 years, according to data compiled by Bloomberg. Energy stocks have rallied 18 percent.

     Amid the volatility Canadian stocks remain more expensive than their U.S. peers, with a price-earnings ratio of 21.9 for the S&P/TSX about 11 percent higher than the S&P 500.

US

By Joseph Ciolli

     (Bloomberg) — A week’s evidence that the U.S. economy’s ill health has been overstated and dovish talk from the Federal Reserve combined to briefly catapult the S&P 500 Index above its May 2015 record close, leaving stocks on the brink of ending their longest drought of the bull market.

     Gains on Friday capped an eight-day rebound of 6.5 percent that restored $1.4 trillion of market capitalization to U.S. shares, value that was erased in the aftermath of the U.K. vote to leave the European Union. The S&P 500 advanced more than 1 percent for the fourth time in two weeks, after stronger June payroll growth calmed concerns sown by May’s anemic number. Banks, technology and retailer shares were among the biggest contributors to the rally.

     The benchmark gauge surged as much as 1.6 percent before closing less than a point below the all-time high. It has spent 286 days trading without making a fresh record, the longest stretch outside a bear market since a 361-day drought in 1960 and ’61. The pause came amid concern over rising interest rates and falling profits, after the index more than tripled from its 2009 bottom.

     Starting with a report Wednesday showing service providers expanded in June at the fastest pace in seven months, and continuing with Fed minutes that indicated less urgency in the need to raise interest rates, investors have been treated to enough good news to put the Brexit trauma behind them.

     “We always felt that the Brexit selloff was overstated, so we’re not surprised at the speed of the recovery as we approach all-time highs,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110 billion. “Stocks have no competition from the bond market. We had 16 straight weeks of outflows, and now the higher price is going to pull people back into the market.”

     The S&P 500 added 1.5 percent to 2,129.90 at 4 p.m. in New York, closing at its highest since May 21, 2015, after briefly exceeding the record of 2,130.82. The Dow Jones Industrial Average rose 250.86 points, or 1.4 percent, to 18,146.74, a 13- month high. The Nasdaq Composite Index advanced 1.6 percent to the highest in four weeks. About 7.1 billion shares traded hands on U.S. exchanges, in line with the three-month average.

     A report today showed America’s job market stirred to life after a two-month lull, as payrolls climbed by the most since October, exceeding the highest estimate in a Bloomberg survey. The jobless rate rose to 4.9 percent as more people entered the labor force, while wages advanced less than projected. Revisions to prior reports subtracted a total of 6,000 jobs to overall payrolls in the previous two months.

     The valuations edge held by stocks over bonds has gotten extreme of late as government debt rallied, with the S&P 500’s earnings yield — profits as a proportion of share price — climbing above 5 percent, or about 3.7 percentage points above the 10-year Treasury rate. The gap is wider than any point during the 2002-2007 rally.

     The jobs data will help reassure policy makers that companies are staying the course on hiring in the face of weaker profits and overseas developments such as Britain’s vote to leave the EU. Federal Reserve officials flagged concern over job creation at their last meeting, signaling fading urgency for the need to increase interest rates.

     “The strength you’re seeing in U.S. equities is a knee-jerk reaction to any kind of big number that comes out,” said Stephen Carl, principal and head equity trader at Williams Capital Group LP. “This will only add to the Fed’s indecision over what to do. The conviction for a Fed rate hike won’t quite be there yet, which could explain why we’re reacting positively.”

     The one-two punch from May’s weak employment report and the U.K.’s vote to secede had all but erased any wagers on a Fed rate increase this month, after probabilities for a move were 55 percent at the beginning of June. Despite the rebound in job gains last month, traders are still pricing in less than even odds of a boost to borrowing costs until December 2017.                         

     As latest bout of global anxiety ebbs, the CBOE Volatility Index sank 11 percent Friday to 13.20, a six-week low. The measure of market turbulence known as the VIX marked the first back-to-back weekly declines since April while slipping 15 percent in the last three days. A Goldman Sachs basket of most shorted shares in the Russell 3000 Index rallied for the seventh time in eight days, rising 12 percent in the period.

     Investors are also waiting for cues on the health of corporate America, with Alcoa Inc. unofficially kicking off the second-quarter earnings season next week. Analysts predict profits will drop 5.7 percent at S&P 500 firms, which would make it the fifth straight quarterly decline, the longest streak since 2009.

     The rally in 2016 has been led by double-digit gains in industries often considered by investors as “defensive” groups. Utility and phone companies are up the most on the year, posting advances of at least 20 percent, with utilities this week reaching a record. In Friday’s trading, all of the S&P 500’s 10 main industries rose, with raw-materials, industrial, financial and consumer discretionary companies adding more than 1.7 percent.

     Raw-materials posted their biggest one-day gain in four months, rising 2.5 percent. Dow Chemical Co. and Monsanto Co. rose at least 2 percent. Alcoa advanced 5.1 percent, the most in two months before its earnings report scheduled for Monday, while Freeport-McMoRan Inc. gained 5 percent.                   

     Financial stocks in the benchmark climbed 1.8 percent, paced by CBRE Group Inc.’s 6.4 percent increase and the biggest gain since January for Synchrony Financial. The private label credit-card issuer’s stock rose 5 percent after its inaugural dividend exceeded analyst estimates. Wells Fargo & Co. and the KBW Bank Index increased at least 1.8 percent.

     All 68 companies in the S&P 500 Industrials Index rose at least 0.4 percent on Friday, sending the group to the highest level since Feb. 20. Acuity Brands Inc. and United Rentals Inc. gained at least 4.3 percent. Delta Air Lines Inc. and United Continental Holdings Inc. climbed more than 2.7 percent as U.S. carriers rebounded for a second day. Caterpillar Inc. gained 3.1 percent, its best since April and strongest in the Dow.

     The stronger job gains resonated in consumer discretionary stocks, with a group of retailers rising to a record. Gap Inc. jumped 5 percent, the most in almost five months. The biggest U.S. apparel-focused retailer posted June sales that topped analysts’ estimates, a sign its long-promised turnaround could be taking hold. Car dealers AutoNation Inc. and CarMax Inc. added more than 4.2 percent, while Home Depot In. advanced 2.4 percent to a seven-week high.

     Among shares moving on corporate news, Juno Therapeutics Inc. plunged 32 percent, the most since going public in 2014, after after three patients died in a trial for its lead cancer therapy and U.S. regulators put the study on hold.

 

Have  a wonderful weekend everyone.

 

Be magnificent!

I often ask myself at what point can a man and a beast that cannot talk recognize each other.

From the early paradise, at the dawn of creation, runs the path where their hearts meet.

Although their connection has long been forgotten, traces of their continuing association has not been erased.

And suddenly, in  a wordless harmony,

a dim memory awakens and the beast looks on the face of the man with tender trust

and the man casts his eyes upon the beast with an amused tenderness.

It is as if two friends, both wearing masks, meet

and vaguely recognize each other through their disguises.

Rabindranath Tagore

As ever,

 

Carolann

 

Only those who will risk going too far can possibly

find out how far one can go.

                                     -T.S. Eliot, 1888-1965

 

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