July 11, 2016 Newsletter

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

International Markets

Bonds

Currencies

Commodities

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