July 19, 2016 Newsletter

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

International Markets

Bonds

Currencies

Commodities

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