July 17, 2015 Newsletter

Dear Friends,

Tangents:

On this day in 1955, Disneyland opened in Anaheim, California.

Henn-na Hotel, the world’s first hotel entirely staffed by robots, opens in Nagasaki, Japan today!

An assortment of bleeping, flashing and perma-smiling robots greet guests at reception

PHOTOS OF THE DAY

Groundstaff remove water from the 18th green after torrential rain forced play to be suspended during the second round of the British Open golf championship on the Old Course in St. Andrews, Scotland, Friday. Eddie Keogh/Reuters

Kashmiri Muslims walk over a bridge, inspecting the water level near Kullan, northeast of Srinagar, Kashmir, on Friday. Fatal flash floods and cloudbursts in Indian Kashmir caused severe damage on Friday. Dar Yasin/AP

Market Closes for July 17^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, halting the biggest rally since February, as raw-materials producers sank with commodities prices amid a slump in the nation’s currency to a six-year low.

     Barrick Gold Corp., the world’s largest gold producer, plunged to a 24-year low to lead mining companies lower. Raw- materials companies tumbled to a seven-month low. Pacific Rubiales Energy Corp. and Bankers Petroleum Ltd. lost at least 9.4 percent, the most among oil producers as the industry traded near a six-year low.

     The Standard & Poor’s/TSX Composite Index fell 88.24 points, or 0.6 percent, to 14,642.84 at 4 p.m. in Toronto. The benchmark equity gauge had gained 3.2 percent in the past five days.

     “For a lot of the generalists that might’ve gone in, they’re just reversing their trade and thinking now is the time to get out,” said John Kim, a fund manager at Aston Hill Financial in Toronto. His firm manages about C$4 billion. “It’s hard to say what happens next. A lot of it is predicated on sentiment for where commodity prices will be six months down the road.”

     Goldcorp Inc. tumbled 6.1 percent to the lowest close since October 2008 and Barrick Gold sank 5.2 percent to a May 1991 low, as raw-materials producers tumbled 2.8 percent to the lowest level since November. Energy producers lost 1.3 percent. Commodities producers account for about 30 percent of the S&P/TSX.

     Gold prices tumbled 1 percent in New York, the lowest close since April 2010, as a commodity meltdown deepened amid an expanding glut in supplies of assets from gold to oil and wheat.

     Four of 10 industries in the S&P/TSX retreated on trading volume 1.5 percent above the 30-day average today. Grocery stores and industrials shares advanced.

     The Canadian dollar weakened to a six-year low amid speculation the nation’s central bank will cut interest rates again to buttress a weakening economy. The price of crude oil, the nation’s top export, is down 51 percent in the past year.

     Energy stocks have slumped 11 percent this year, the worst- performing industry in the S&P/TSX.

     Suncor Energy Inc. lost 1.9 percent and Encana Corp. fell 2.7 percent. Brent oil capped the longest run of weekly declines since January and West Texas Intermediate crude dropped 3.5 percent for the week.

     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 on July 15.

US

By Oliver Renick and Annelise Alexander

     (Bloomberg) — It was back to basics for the U.S. stock market, with investors celebrating by giving the Nasdaq Composite Index its best week since October.

     Volatility tumbled as a Greek bailout agreement eased fears that the nation would exit from the euro and a rout in Chinese equities leveled off. As investors turned their attention to earnings, results from Google Inc. and Netflix Inc. helped send the Dow Jones Internet Composite Index soaring the most in 3 1/2 years.

     “It’s the first weekend we’re going into in a while not worrying about some political event overseas,” Anwiti Bahuguna, senior portfolio manager at Columbia Threadneedle Investments, said by phone. “People can go back to focusing on what is very critical for us, which is earnings for U.S. companies and economic data.”

     The Nasdaq Composite jumped 4.3 percent to a record, while the Nasdaq 100 Index surged 5.5 percent to a 15-year high. The Standard & Poor’s 500 Index gained 2.4 percent for its best week since March, while the Dow Jones Industrial Average added 1.8 percent to top 18,000 points.

     As the S&P 500 rallied to within five points of a record, the Chicago Board Options Exchange Volatility Index sank 29 percent, the worst week for the gauge known as the VIX since January 2013.

     The equity gains halted a three-week slump that saw the S&P 500 decline 1.6 percent amid uncertainty over whether Greece’s crisis would spread to other European nations and if China’s equities rout would hurt global growth at the same time the Federal Reserve is weighing higher interest rates.

     While benchmark indexes are climbing back to record levels, the S&P 500’s rebound kept it within a historically tight range. The gauge hasn’t closed in 2015 more than 3.5 percent above or below where it started the year, the first time that’s happened, according to data compiled by Bespoke Investment LLC and Bloomberg. It ended Friday higher by 3.3 percent for the year.

     Overseas, the Stoxx Europe 600 Index advanced 4.3 percent for its best week since January. The Shanghai Composite Index gained for a second week, as part of a 9 percent rebound from July 8 after tumbling 32 percent in a month.

     Technology and financial shares led gains in the U.S., as investors turned to earnings from some of the industries’ largest companies. Analysts project that profit for members of the S&P 500 dropped 5.3 percent in the second quarter, an improvement from a 6.6 percent decline estimated a month ago.

     The Dow Jones Internet Index surged 7.5 percent in the week, led by Google’s 26 percent rally to an all-time high after the search-engine giant reported profit that topped forecasts. Google added $65 billion to its market capitalization Friday for the biggest one-day gain in value ever for a U.S. company, according to data compiled by S&P Dow Jones Indices.

     “The market is really looking for some meat to bite into, and that meat is the earnings,” said Karyn Cavanaugh, a senior market strategist at Voya Investment Management LLC. Voya oversees $215 billion. “The earnings are doing well, the economy is doing better and it takes the focus off the drama going on in Greece and in China.”

     Netflix jumped 18 percent and closed Thursday at a record after the company said growth in international audiences boosted subscriptions to its Internet TV service. The stock has been the best performer in the S&P this year. Facebook Inc., which is slated to report results July 29, added 8 percent to an all-time high.

     Cost reductions boosted results at the nation’s largest lenders, as bank shares in the S&P 500 delivered their best week since February. JPMorgan Chase & Co. added 3.2 percent after tighter expenses helped profit top estimates.

     Bank of America Corp. climbed 8.4 percent to the highest since December as cuts led earnings to more than double, while Citigroup Inc. added 7.7 percent as its chief executive officer tightened the belt.

     Deals also boosted stocks. EBay Inc. rallied 6.3 percent, the most since October, to end at a record after agreeing to sell its enterprise unit for $925 million. Micron Technology Inc. posted its biggest gain since November 2011 after the investment arm of one of China’s top universities announced plans to offer $23 billion for the chipmaker, according to people familiar with the situation.

     Celgene Corp. jumped 13 percent after it agreed to acquire Receptos Inc. for $7.2 billion, contributing to a 6.8 percent rally in the Nasdaq Biotechnology Index that left the gauge at an all-time high.

     Energy shares declined the most among the S&P’s 10 main groups as oil prices retreated. Consol Energy Inc. sank 12 percent in a 10th week of losses, while Transocean Ltd. tumbled 7.8 percent to a 20-year low.

     Earnings have not diverted attention entirely from the timing of the Fed’s next interest-rate move as investors continue to weigh data to gauge the economy’s strength. Reports in the week showed new-home construction climbed in June to the second-highest level since November 2007, while the cost of living rose for the fifth consecutive month.

     Chair Janet Yellen told lawmakers in her semi-annual testimony to Congress that the central bank remains on track to boost borrowing costs this year, while emphasizing that the timing of the first rise is less important than the subsequent path of increases, which she said would be gradual.

Have  a wonderful weekend everyone.

Be magnificent!

We gain our freedom when we realize our most true nature.

The man who is an artist gains his artistic freedom when he discovers the true ideal of art.

Rabindranath Tagore

As ever,

Carolann

Manners require time, and nothing is more vulgar than haste.

                                  -Ralph Waldo Emerson, 1803-1882

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