July 12, 2017 Newsletter

Dear Friends,

Tangents:

July 12, 2007 – Mining – London-based Rio Tinto acquires Alcan Inc. of Montreal for US$38 billion; biggest foreign takeover in Canadian history. Montreal, Quebec.

Birthdays: July 12^th, 1817 Henry David Thoreau
In 1845, Henry David Thoreau wrote:  “I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.”
See www.mass.gov/dem/parks/wldn.htm

July 12, 1895, Buckminster Fuller:
Nature is trying very hard to make us succeed, but nature does not depend on us.  We are not the only experiment. –Buckminster Fuller.
PHOTOS OF THE DAY

A woman swims in Walden Pond in Concord, Mass., on what would have been the 200th birthday of Henry David Thoreau, author of the book ‘Walden.’ BRIAN SNYDER/REUTERS

Sam Querrey of the U.S. celebrates winning the quarterfinal match at Wimbledon against Great Britain’s Andy Murray in London. TOBY MELVILLE/REUTERS

Smoke from the Whittier fire is illuminated by the setting sun near Santa Barbara, Calif. SANTA BARBARA COUNTY FIRE/HANDOUT/REUTERS
Market Closes for July 12^th, 2017

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1943, the New York Stock Exchange allows women onto its floor for the first time in its 151-year history to work as pages and reporters, filling jobs once held by men who went off to serve in the military.

Number of the Day
$16,000
The per-dose price of  ACZ885, sold by Novartis to treat certain rare inflammatory disorders. A recent clinical trial suggests it could also reduce the risk of serious complications like strokes in people who have suffered a heart attack, so the drug company may soon need to decide if it wants to cut the price to compete with rival cardiovascular treatments.
Canada
By Linda Nguyen
     (Canadian Press) — TORONTO — The Canadian dollar soared to a level not seen in nearly a year Wednesday after the Bank of Canada announced it was hiking its key lending rate for the first time since 2010.
     The loonie was trading at an average price of 78.16 cents US, up 0.76 of a U.S. cent. The last time the currency closed above 78 cents US was in August 2016.
     Eric Theoret, a currency strategist and director at Scotiabank (TSX:BNS), says although the markets had been anticipating a rate increase from the central bank, it was not expecting Bank of Canada governor Stephen Poloz to express so much confidence about the move.
     “The expectations were for a dovish hike, which would’ve been seen as the consensus heading into this,” he said. “And really what we had was a very confident, almost hawkish hike in that sense.”
     Theoret says the markets were largely forecasting that the bank would reverse rate cuts it put in place in 2015 to help the Canadian economy deal with a plunge in oil prices, and then enter a wait-and-see mode before making any more moves.
     But what it’s now reading from the central bank is that any future decisions will be data-dependent.
     The dollar has strengthened in recent weeks, buoyed by positive economic data, and growing anticipation of the interest rate decision. The Bank of Canada raised the rate by a quarter of a percentage point to 0.75 per cent, still low by historical standards.
     Kash Pashootan, a senior vice-president at First Avenue Advisory, a Raymond James company, says the loonie’s rapid appreciation is being led by fresh expectations that the bank will raise rates again at its next announcement in October.
     “On a day like today, it’s nice to see the Canadian dollar stronger and it’s easy to start to build the case for a couple more rate hikes. But it’s crucial that we do not underestimate how detrimental premature interest rate hikes can be to the Canadian economy and to the overall confidence of the equity markets,” he cautioned.
     “I don’t believe the Canadian economy can bear another interest rate hike in 2017.”
     In equities, the Toronto Stock Exchange’s S&P/TSX composite index was flat, dipping 5.15 points at 15,143.99 after climbing more than 100 points earlier in the session. The index was led by gains in Canada’s real estate and consumer staples sectors.
     In New York, the Dow Jones industrial average was up 123.07 points at 21,532.14, a record high. The S&P 500 index was ahead 17.72 points at 2,443.25, while the Nasdaq composite index climbed 67.87 points, or more than one per cent, to 6,261.17.
     Federal Reserve chairwoman Janet Yellen kicked of two days of testimony in front of Congress Wednesday, telling legislators that the U.S. central bank expects to keep raising its key interest rate at a gradual pace and also plans to start trimming its massive bond holdings this year.
     Many economists believe the Fed, which has raised rates three times since December, will hike rates one more time this year.
     In commodities, the August crude contract advanced 45 cents to US$45.49 and August gold gained $4.40 at US$1,219.10 an ounce.
      The September copper contract jumped a penny at US$2.68 a pound and August natural gas was down six cents to US$2.99 per mmBTU.
US
By Cecile Gutscher and Jeremy Herron
     (Bloomberg) — U.S. stocks rose toward records, Treasuries rallied and the dollar retreated after Janet Yellen signaled the Federal Reserve won’t rush to tighten monetary policy as inflation remains persistently below target.
     The Dow Jones Industrial Average closed at a fresh all-time high, technology shares added more than 1 percent and emerging- market equities surged to levels last seen in 2015 as Yellen expressed confidence in the American economy while suggesting inflation rates won’t force the Fed’s hand.
     The dollar fell versus most major peers, 10-year Treasury yields slid below 2.32 percent and gold futures rose. Oil bounced above $45 a barrel. The Brazilian real strengthened after former President Luiz Inacio Lula da Silva was convicted of graft and money-laundering, while Canada’s dollar rallied on central bank tightening.
     The statement from Yellen diverted attention from the release of emails by Donald Trump Jr. about his controversial meeting with a Russian lawyer, though concern remains that the latest saga in Washington may be an unwelcome distraction for the Fed seeking to dismantle a decade of monetary stimulus. The Fed chair made no mention of asset prices just a week after her comment that some looked “somewhat rich” added to selling in stocks and bonds.
     Yellen’s dovish tone came as the Bank of Canada raised interest rates for the first time in seven years even as inflation in the country remains stubbornly sluggish. Central banks around the world have been hinting that the accommodative policies in place for years may no longer be needed amid signs that the global economy is gaining traction.
     Here’s what investors are watching:
* Yellen will continue testifying Thursday.
* JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. report results this week.
* The U.K. is due to publish its Repeal Bill on EU membership this week.
     These are the main moves in markets: 
     Stocks
* The S&P 500 Index advanced 0.7 percent as of 4 p.m. in New York, 0.4 percent short of its closing record. Real-estate and technology shares led gains.
* The Dow rose 123.58 points to a record 21,532.65, while the Russell 2000 Index added 0.9 percent, 0.2 percent from its high.
* The Stoxx Europe 600 Index added 1.5 percent, led by builders and energy companies. The FTSE 100 rose 1.2 percent.
     Currencies
* The Bloomberg Dollar Spot Index fell 0.4 percent.
* The pound strengthened 0.3 percent to $1.2884 after U.K. payrolls data beat estimates and unemployment fell to a 42-year low, erasing an earlier loss.
* The yen gained 0.7 percent to 113.14 per dollar.
* The euro fell 0.4 percent to $1.1422.
* The loonie rose 1.4 percent to $1.27356.
     Bonds
* The 10-year U.S. Treasury yield dropped four basis points to 2.32 percent.
* German benchmark bund yields rose three basis points to 0.58 percent.
    Commodities
* West Texas Intermediate crude climbed 1 percent to settle at $45.49 a barrel.
* Crude inventories fell 7.56 million barrels last week, the EIA said. U.S. production, though, continued to rise, gaining 0.6 percent to 9.397 million barrels a day. At the same time, the Organization of Petroleum Exporting Countries is said to have set a meeting for July 17.
* A billion-barrel crude discovery in Mexico could be just the lure the country badly needs to boost investment from oil majors.
* Gold futures added 0.6 percent to $1,220.60 an ounce.

Have  a wonderful evening everyone.

Be magnificent!

Only the intelligence of love and compassion can solve all problems of life.
Krishnamurti

As ever,

Carolann

However impenetrable it seems, if you don’t try it, then you can never do it.
–Andrew Wiles, 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

Tel: 778.430.5808
(C): 250.881.0801
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www.carolannsteinhoff.com