July 16, 2015 Newsletter

Dear Friends,

Tangents:

More from our Croatia Travel Director – fitting for the season!

The Commandments of Travel

Thou shalt not expect to find things precisely as they are at home, for thou hast left home to find things different.

Thou shalt not take anything too seriously, for a carefree mind is the basis for a great vacation.

Thou shalt not worry.  The person who worries hath little joy and few things are fatal.

Thou shalt not judge all the people of a country by one person with whom thou has a problem.

Thou shalt in Rome, do somewhat as the Romans do.

Thou shalt carry thy passport (or copy) at all times, for a traveler without a passport is one without a country.

Thou shalt learn to say “Thank You” in any language.  Verily, it si worthe more than gold.

Thou shalt acquaint thyself with any currency and thou shalt not be cheated.

Thou art welcome in every land.  Treat thy hosts with respect and thou shalt be an honored guest.

Thou shalt always be on time.

PHOTOS OF THE DAY

Marylebone Cricket Club members wait in line for the gates to open before the second Ashes Test cricket series match at Lord’s Cricket Ground in London, Thursday. Philip Brown/Reuters

Swiss dancers give a performance titled ‘Let’s Move Together’ at the Gymnaestrada’s Midnight Sun Special at the Olympic stadium in Helsinki, Wednesday. Mikko Stig/Reuters

Market Closes for July 16^th, 2015

International Markets

Bonds

Currencies

Commodities

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve.  I would like to say to Milton [Friedman]: Regarding the Great Depression, you’re right; we did it.  We’re very sorry.  But thanks to you, we won’t do it again. –Ben Bernanke, Fed Chairman, 2006-2014

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, extending the biggest rally since February to a fifth day, as lenders advanced after the central bank lowered borrowing rates.

     Magna International Inc. dropped 3.5 percent after agreeing to acquire German manufacturer Getrag. Toronto-Dominion Bank and Bank of Nova Scotia added more than 1.1 percent after the Bank of Canada yesterday cut its benchmark lending rate in the face of a slumping economy. Sleep Country Canada Holdings Inc. slumped 5 percent in its trading debut.

     The Standard & Poor’s/TSX Composite Index rose 68.80 points, or 0.5 percent, to 14,731.08 at 4 p.m. in Toronto. The benchmark equity gauge has gained 3.2 percent in five days, the most since February. The rally has pushed the gauge to a 0.7 percent gain this year.

     FirstService Corp. surged 6.7 percent as financial services companies increased 0.8 percent as a group. Eight of 10 industries in the S&P/TSX advanced on trading volume 6.2 percent higher than the 30-day average today.

     The threat of a contracting economy prompted Bank of Canada Governor Stephen Poloz to cut his policy interest rate for the second time this year, to 0.5 percent from 0.75 percent yesterday.

     The nation’s largest lenders, including Scotiabank, Royal Bank of Canada and Toronto-Dominion, have lowered their prime rates in response.

     Bombardier Inc. soared 3.7 percent, rebounding from a 1993 low, after the aircraft maker hired Pratt & Whitney Canada executive John Di Bert as its chief financial officer. Industrials climbed 0.4 percent as a group.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks rose, with the Nasdaq Composite Index reaching a record, after Greek lawmakers passed a bailout agreement while companies including Netflix Inc. and Citigroup Inc. rallied on earnings.

     Netflix jumped 18 percent after subscribers surged in the second quarter, beating projections. EBay Inc. climbed 3.4 percent after quarterly sales exceeded estimates and it agreed to sell its enterprise unit for $925 million. Citigroup added 3.8 percent as cost cuts helped the bank’s quarterly profit beat analysts’ estimates. Google Inc. rallied in late trading after its earnings were better than estimated.

     The Nasdaq Composite increased 1.3 percent to 5,163.18 at 4 p.m. in New York, topping its closing record set on June 23. The Standard & Poor’s 500 Index rose 0.8 percent to 2,124.29, 0.3 percent below its record. The Dow Jones Industrial Average gained 70.08 points, or 0.4 percent, to 18,120.25. About 6.2 billion shares traded hands on U.S. exchanges, 3.6 percent below the three-month average.

     “It looks like the equity market likes the Greek settlement,” said Ron Anari, the Jersey City, New Jersey-based senior vice president of trading at ICAP Plc. “At this stage of the game the Federal Reserve is in the driver’s seat, we’re going to see a hike sometime in September, and the equity market understands that. It’s expecting more positive economic news.”

     Greek lawmakers passed reform measures demanded by creditors in exchange for negotiating a third bailout package. Following the vote, European Central Bank President Mario Draghi said today that the central bank raised the level of emergency aid to Greek lenders.                          

     The S&P 500 is on pace for its biggest weekly gain in four months, as it closes in on its May 21 record. The gauge fell as much as 4 percent from that level amid concern the Greek debt crisis and China’s equities rout would hurt global growth as the Federal Reserve considers raising interest rates this year.

     Fed Chair Janet Yellen appeared Thursday before the Senate Banking Committee in Washington, continuing her semi-annual testimony on monetary policy. She told lawmakers that raising rates too late holds risks, along with tightening too quickly.

     Yesterday Yellen signaled the Fed is on track to raise rates this year, while emphasizing that the timing of the first rate rise is less important than the subsequent path of increases, which she said would be gradual.

     Policy makers are watching for further improvement in the labor market. A report today showed filings for U.S. unemployment benefits fell last week for the first time in a month, heading back toward the lowest levels in more than a decade.

     Separate data showed confidence among homebuilders held in July at the highest level since November 2005, indicating the residential real estate market may be picking up speed. Meanwhile, a gauge on manufacturing in the Philadelphia area fell more than estimated by economists surveyed by Bloomberg.

     Earnings season is also drawing more focus as investors sift for clues on the health of the world’s largest economy. S&P 500 companies reporting quarterly results today. Analysts project earnings for members of the S&P 500 dropped 6.4 percent in the second quarter.

     “We’re going to start getting into the thick of earnings this week and with stocks like Netflix responding today, Microsoft and Intel up, you get the sense that betting against the market is a foolish bet,” said Rick Fier, director of equity trading at Conifer Securities LLC in New York.

     With its Thursday 18 percent post-earnings climb, Netflix extended its all-time high, and was the biggest driver of gains in the Nasdaq Composite and S&P 500. The shares are up 137 percent this year, the most in the benchmark index.

     EBay rallied the most since April to a record, helping to lead the technology group to a fifth straight session of gains. The online auction site agreed to sell its enterprise unit to a private-equity group led by Permira and Sterling Partners for $925 million. The unit provides warehousing, delivery and customer support to Web merchants.

     Microsoft Corp. and International Business Machines Corp. each rose at least 1.4 percent, leading the Dow, with both stocks headed toward their strongest weekly gains in three months.

     Google increased 9.9 percent as of 5:01 p.m. as the search engine giant’s second-quarter profit topped analysts’ estimates amid slower spending. Google soared 3.1 percent in regular trading to the highest since September, with the gain almost doubling in the final 15 minutes of trading before the earnings release.

     The Chicago Board Options Exchange Volatility Index fell 8.5 percent Thursday to 12.11, marking its biggest five-day decline ever.

     Nine of the S&P 500’s 10 main groups gained, with utility, phone and technology companies rising the most. Banks in the benchmark extended a rally to a sixth day, the longest winning streak since Dec. 2013. Citigroup rose to a more than six-year high after its quarterly results. M&T Bank Corp. climbed 2.2 percent to a record after its second-quarter profit exceeded estimates.

     Charles Schwab Corp. advanced 3.3 percent to its highest since Nov. 2000 after reporting second-quarter profit in line with analysts’ estimates, while revenue beat forecasts. E*Trade Financial Corp. surged 2.9 percent.

     Philip Morris International Inc. added 3.2 percent, the most in three months, to pace a rise in consumer staples. The world’s largest publicly traded tobacco company posted quarterly profit that topped estimates. Altria Group Inc. gained 3.3 percent to a four-month high, and Reynolds American Inc. rose 1.8 percent to a record.                          

     Automakers and parts suppliers retreated after Barclays Plc cut them to negative from neutral as China car sales continue to disappoint. General Motors Co. fell 2.6 percent to its lowest since October, while parts makers Delphi Automotive Plc and BorgWarner Inc. dropped at least 3.7 percent.

     Sherwin-Williams Co. fell 7.4 percent, the most in two years. The paint maker cut its full-year earnings forecast, citing the effects of a stronger dollar. Rival PPG Industries Inc. slid 4.4 percent after also citing currency headwinds in its earnings report.

     Garmin Ltd. lost 7.1 percent after the navigation device company’s preliminary second-quarter and full-year profit views were below analysts’ estimates. Shares fell to the lowest since Sept. 2013.

Have a wonderful evening everyone.

Be magnificent!
 

Do not believe a thing simply because it has been said.

Do not put your faith in traditions only because they have been honored by many generations.

Do not believe a thing because the general opinion believes it to be true or because it has been said repeatedly.

Do not believe a thing because of the single witness of one of the sages of antiquity.

Do not believe a thing because the probabilities are in its favor,

or because you are in the habit of believing it to be true.

Do not believe in that which comes to your imagination,

thinking that it must be the revelation of a superior Being.

Believe nothing that binds you to the sole authority of your masters or priests.

That which you have tried yourself, which you have experienced, which you have recognized as true,

and which will be beneficial to you and to others;

believe that, and shape your conduct to it.

Buddha

As ever,

Carolann

I know of nothing sublime which is not some modification of power.

                                                    -Edmund Burke, 1729-1797

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM

Senior Portfolio Manager &

Senior Vice-President

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7