July 2, 2015 Newsletter

Dear Friends,

Tangents:  Full moon tonight.

Kenny G’s new CD set entitled  Brazilian Nights is terrific music.  I ordered it on Amazon after reading a review and been listening to it this past few nights.  I recommend it.

On this day in 1964, President Lyndon B. Johnson signed into law the Civil Rights Act during a nationally-televised ceremony at the White House.

Tomorrow the US markets are closed for the July 4^th holiday.

Gary and I are taking off on the boat for a few days to go sailing over to the San Juan islands.  I love being in the US for the 4^th of July J!  Karen is off next week for vacation as well.  Bonnie and Leyla will be here and of course, I’ll be checking in…

PHOTOS OF THE DAY

World record-holding pole vaulter Renaud Lavillenie of France jumps in front of the Eiffel Tower as he stands on the roof of a boat on the Seine River after a news conference in Paris, Thursday. Lavillenie will attend the IAAF Diamond League athletics meeting at the Stade de France Stadium in Saint-Denis near Paris on July 4. Philippe Wojazer/Reuters

Dancers of the Friedrichstadt-Palas­t company from the show ‘THE WYLD’ pose during a promotional photoshoot at a former National Security Agency listening station in Berlin, Germany, Thursday. The $13.5 million show has the largest production budget in the 95-year history of Friedrichstadt-Palas­t.Hannibal Hanschke/Reuters

Market Closes for July 2^nd, 2015

International Markets

Bonds

Currencies

Commodities

Even being right 3 or 4 times out of 10 should yield a person a fortune, if he has the sense to cut his losses quickly on the ventures where he has been wrong. –Bernard Baruch, financier, speculator, statesman, presidential advisor, 1870-1965.

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose, after markets re- opened after a holiday, as the U.S. added jobs in June and investors speculated when the Federal Reserve will raise interest rates.

     Valeant Pharmaceuticals International Inc., the third- largest stock by market cap in the benchmark index, climbed 3.3 percent to pace gains among health-care companies. Suncor Energy Inc., the nation’s largest oil producer, rallied 0.8 percent even as crude erased a gain. Railway operators Canadian National Railway Co. and Canadian Pacific Railway Ltd. paced an advance in industrial shares.

     The Standard & Poor’s/TSX Composite Index rose 84.66 points, or 0.6 percent, to 14,637.99 at 4 p.m. in Toronto. Canadian markets were closed yesterday for the Canada Day holiday. U.S. markets will be closed tomorrow for a holiday.

     Valeant increased 3.3 percent and Concordia Healthcare Corp. gained 1.9 percent as health-care companies rose 2.9 percent as a group, the most in the S&P/TSX. Nine of 10 industries advanced on trading volume 7.3 percent higher than the 30-day average today.

     The U.S. economy added 223,000 jobs in June, following a 254,000 increase last month that was revised downward, a Labor Department report showed Thursday in Washington. The jobless rate fell to a seven-year low of 5.3 percent as more people left the work force, while wages stagnated.

     U.S. Federal Reserve policy makers have been watching the labor market as they consider raising the benchmark interest rate this year from near zero.

     “The confirmation of labor-market health the Fed has been looking for will have to wait at least one more month,” Royce Mendes, an economist at CIBC World Markets, said in a report. “With markets already pushing back the timing of the expected first rate hike because of uncertainty surrounding Greece, today’s data will likely drive expectations even further out.”

     Yanis Varoufakis said Greece won’t “extend and pretend” that it can pay its debts, vowing to quit as finance minister if voters don’t support him in Sunday’s referendum.

     Suncor advanced 0.8 percent and Bellatrix Exploration Ltd. added 1.4 percent. Oil for August delivery slipped 3 cents to $56.93 a barrel in New York.

US

By Annelise Alexander and Joseph Ciolli

     (Bloomberg) — U.S. stocks fell, with equities posting their biggest weekly decline since March, as investors looked toward a weekend referendum in Greece after jobs data reflected a more moderate pace of economic growth.

     The Standard & Poor’s 500 Index retreated less than 0.1 percent to 2,076.78 at 4 p.m. in New York, and marked a second consecutive weekly slide. The Dow Jones Industrial Average fell 27.80 points, or 0.2 percent, to 17,730.11. The Nasdaq Composite Index lost 0.1 percent, while the Russell 2000 Index dropped 0.7 percent. The U.S. market is closed Friday for a holiday.

     “You would think that the jobs report would have made the market rally, but it’s kind of fallen into the abyss of Greece,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. “The market can’t and won’t find it’s footing until the vote. Every rally and selloff are ultimately noise until that happens.”

     A Labor Department report Thursday showed the addition of 223,000 jobs in June followed a 254,000 increase in the prior month that was less than previously estimated. The jobless rate fell to a seven-year low of 5.3 percent as more people left the labor force. Average hourly earnings at private employers held at $24.95.

     The economy has just completed its sixth year of expansion since the recession ended in June 2009. While the job market has rebounded, faster wage growth has been slow to follow suit. The participation rate, which indicates the share of the working-age people in the labor force, decreased to 62.6 percent, the lowest since October 1977, from 62.9 percent.                          

     A separate report Thursday showed factory orders in May slipped more than forecast, down 1 percent compared with economists’ estimated 0.5 percent decline.

     The Federal Reserve is scrutinizing incoming data for signs the world’s largest economy can withstand the first interest- rate increase since 2006. Recent reports on housing, consumer spending and sentiment have helped support policy makers’ expectation that early year weakness was temporary, and growth will be sturdy enough for higher rates.

     Fed Chair Janet Yellen has said she expects the central bank to raise borrowing costs this year, and that subsequent increases will be gradual without following a predictable path.

     The S&P 500 halted a nine-quarter winning streak Tuesday, losing 0.3 percent in the past three months and extending its worst start to a year since 2010.

     Stocks in the benchmark are up 200 percent since March 2009 as earnings doubled and companies bought back about $2 trillion of their stock. Now the gauge is mired in one of the tightest ranges in two decades, caught in a tug-of-war over whether the economy is strong enough to withstand higher borrowing costs and bolster corporate profits.

     Equities fell for a second week, with the S&P 500 down 1.2 percent after negotiations over Greece’s bailout broke down following Prime Minister Alexis Tsipras’s unexpected announcement of a July 5 referendum on creditors’ aid terms.

     Greece is now living with capital controls and has shut banks and its stock market after its euro-area financial-aid package expired and it missed a payment to the International Monetary Fund.

     A survey showed 47 percent leaned toward a “yes” vote on the referendum, an endorsement of austerity and the international bailout. The “no” camp, the government’s position rejecting those terms, was 43 percent. The margin of error in the survey of 1,000 people was 3.1 percentage points.

     “Who wants to go home long stocks when the Greeks have the ball?” said John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York. “It’s the Greek issue, the long weekend and the natural skepticism that’s still in place.”                         

     The Chicago Board Options Exchange Volatility Index increased 4.4 percent to 16.79. The gauge, known as the VIX, had its biggest weekly gain since January, up almost 20 percent. Six of the S&P 500’s 10 main groups declined Thursday, led by financial and health-care companies. About 5.6 billion shares traded hands on U.S. exchanges, 11 percent below the three-month average.

     Banks dropped with Treasury yields after the jobs report, amid doubts about when the Fed will be able to raise rates. Regions Financial Corp. and KeyCorp lost at least 1.3 percent. Bank of America Corp. fell 1.1 percent, while JPMorgan Chase & Co. sank 0.8 percent.

     Health-care companies slipped, paced by declines in managed-care shares. Aetna Inc. and Humana Inc. decreased more than 2.6 percent, while UnitedHealth Group Inc. slid 1.3 percent.                         

     Centene Corp. fell 8 percent after agreeing to buy Health Net Inc. for about $6.3 billion in cash and stock, creating a combination of two smaller U.S. health insurers ahead of an expected round of mergers among the industry’s giants. Health Net rose 10 percent, the most in more than two years, to a record.

     Yelp Inc. tumbled 10 percent to a nearly two-year low after people with knowledge of the matter said the consumer-review website has temporarily decided not to pursue a sale.

     Energy shares gained, even as oil erased a rebound from the worse drop in almost three months. Chesapeake Energy Corp. and Tesoro Corp. climbed more than 2 percent. BP Plc jumped 5.1 percent, the most since January, after agreeing to pay a record $18.7 billion to resolve claims related to the 2010 Gulf of Mexico oil spill.

     Utility companies had their best gain in more than two months, up 1.4 percent, as the sector’s dividend payout becomes more attractive to investors amid the drop in Treasury yields. Duke Energy Corp. added 2 percent, the most in eight months, and Edison International gained 2 percent, its best since March 18.

     Semiconductors advanced for a third day, boosted by Intel Corp.’s 1.2 percent gain, the best in the Dow. President Renée James will step down to seek appointment as chief executive officer elsewhere in a reshuffle that cements CEO Brian Krzanich’s control over the world’s largest chipmaker.

Have a wonderful evening everyone.

Be magnificent!

We must refuse to be lifted off our feet.

A drowning man cannot save others.

Mahatma Gandhi

As ever,
 

Carolann

To exactly the opposite is also a form of imitation.

                         -G.C. Lichtenberg, 1742-1799

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