July 23, 2015 Newsletter

Dear Friends,

Tangents:

On July 23, 1914, Austria-Hungary issued an ultimatum to Serbia following the killing of Archduke Francis Ferdinand by a Serb assassin; the dispute led to World War I.

THE SUMMER DAY
              -Mary Oliver

Who made the world?
Who made the swan, and the black bear?
Who made the grasshopper?
This grasshopper I mean
the one who has flung herself out of the grass,
the one who is eating sugar out of my hand,
who is moving her jaws back and forth instead of up and down,
who is gazing around with her enormous and complicated eyes.
Now she lifts her pale forearms and thoroughly washes her face.
Now she snaps her wings open, and floats away.
I don’t know exactly what a prayer is.
I do know how to pay attention, how to fall down
into the grass, how to kneel down in the grass,
how to be idle and blessed, how to stroll through the fields,
which is what I have been doing all day.
Tell me, what else should I have done?
Doesn’t everything die at last, and too soon?
Tell me, what is it you plan to do with your one wild and precious life?

PHOTOS OF THE DAY

An exercise rider takes a horse for a morning workout at Saratoga Race Course, Thursday, in Saratoga Springs, N.Y. Saratoga kicks off its 147th summer of thoroughbred racing on Friday. Mike Groll/AP

Farmers use tires to write a message to French Prime Minister Manuel Valls, saying, ‘Valls, we are waiting for you,’ on the highway between Paris and Lyon in central France, Thursday. Angry French farmers have blocked the famed Mont Saint Michel causeway and highways leading to the Alps, hoping to get more government help for their industry whose profits they say are being chipped away by cheap imports and pressure from grocery chains. Thursday’s protests were a rejection of the government offer to back loans to the farmers and delay tax payments as part of a €600 million plan. Vincent Dargent/AP

Market Closes for July 23^rd, 2015

International Markets

Bonds

Currencies

Commodities

I’d be a  bum on the street with a tin cup, if the markets were always efficient. –Warren Buffett.

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canada’s commodity problems continued, as energy and mining stocks resumed slides that sent the nation’s benchmark index to a fifth day of losses.

     Trilogy Energy Corp. sank 6.3 percent as energy producers extended a 2009 low with U.S. crude collapsing into a bear market. First Quantum Minerals Ltd. lost 8.1 percent to lead a 2.8 percent drop in mining stocks. Rogers Communications Inc. jumped to a five-month high and Loblaw Cos. rallied amid earnings. Valeant Pharmaceuticals International Inc. surged 5.7 percent, overtaking Royal Bank of Canada as the nation’s largest company by market value.

     Producers of energy and raw materials, which account for about 30 percent of the equity benchmark, are the worst- performing stocks in Canada this year amid a rout in commodities on concern global economic growth is slowing. The Bloomberg Commodity Index of 22 raw materials dropped 1 percent for a second day of declines, extending a 13-year low.

     The Standard & Poor’s/TSX Composite Index fell 41.75 points, or 0.3 percent, to 14,265.37 at 4 p.m. in Toronto, a January low. The gauge has fallen 3.3 percent during its current five-day slide. The gauge is now lower by 2.5 percent on the year.

     Seven of 10 industries in the S&P/TSX dropped on trading volume 22 percent higher than the 30-day average today. Raw- materials producers traded at a December 2008 low.

     Companies in the benchmark equity gauge are expected to report a 39 percent slump in earnings per share in the latest earnings season, the worst in six years, according to data compiled by Bloomberg. More than 200 companies in the S&P/TSX are set to report earnings by the end of August.

     Among stocks moving on results Thursday, Valeant climbed 5.7 percent and Loblaw gained 3.4 percent, to a 10-year high, after the companies reported better-than-forecast earnings. Superior Plus Corp. sank 12 percent, the most since 2011, after disclosing preliminary second-quarter results worse than year- ago figures.

US

By Callie Bost

     (Bloomberg) — U.S. stocks fell for a third day, as results from 3M Co. and Caterpillar Inc. disappointed investors and commodities continued to slide.

     3M and Caterpillar dropped at least 3.6 percent after both cut their sales forecasts. Miner Freeport-McMoRan Inc. plunged 9.4 percent as metals prices continued to retreat. General Motors Co. jumped 4.2 percent as rising truck sales boosted profits. Amazon.com Inc. and Visa Inc. rallied in late trading after results beat estimates.

     The Standard & Poor’s 500 Index fell 0.6 percent to 2,102.15 at 4 p.m. in New York, closing just below its average price during the past 50 days. The Dow Jones Industrial Average declined 119.12 points, or 0.7 percent, to 17,731.92, while the Nasdaq Composite Index lost 0.5 percent, erasing an earlier gain. About 7 billion shares changed hands on U.S. exchanges, 9 percent higher than the three-month average.

     “Investors have been somewhat surprised at how unimpressive earnings have been considering where the stock market is,” said Jeff Sica, who oversees over $1.5 billion as president and chief executive officer of Circle Squared Alternative Investments in Morristown, New Jersey. “Earnings have not proven to be the catalyst they’ve looked for. Investors are just very tentative.”

     Sluggish international markets are damping earnings at U.S. industrials giants. Caterpillar is selling fewer of its signature yellow diggers and dump trucks to miners amid the deepening slump in prices for copper, coal and iron ore. Sales of engines and generators to the energy industry also have been hurt by the slide in oil and natural gas prices.

     Analysts now call for a 5.3 percent drop in second-quarter profit for S&P 500 companies, shallower than July 10 estimates for a 6.4 percent decline.

     Amazon soared 19 percent as of 4:51 p.m. as quarterly revenue jumped 20 percent, buoyed by its fast-growing cloud computing business and efforts to lure more customers with online video and faster delivery of goods bought on the Web.

     Visa gained 6.5 percent as the world’s largest payments network said profit rose 25 percent as consumer spending increased.

     The S&P 500 has gone without a fresh peak for the longest stretch since 2013, stuck in a pattern of nearing an all-time high without breaking it for two months now. The gauge is 1.4 percent away from its May record, after sliding as much as 4 percent from the high as concerns about Greece’s debt crisis and China’s stock market rout weighed on sentiment.                          

     Investors are also watching economic reports for clues on when the Federal Reserve will start raising interest rates. Data today showed jobless claims plunged to the lowest level in four decades. A separate report said the index of U.S. leading economic indicators climbed more than forecast in June as historically low borrowing costs and a rebound in housing propelled growth.

     Economists surveyed by Bloomberg put odds for a September Fed rate increase at 50 percent, exactly where they were in June. The outlook for a September move remained intact even as crises in Greece and China temporarily rocked markets and dimmed global economic prospects.

     The Chicago Board Options Exchange Volatility Index rose 4.3 percent Thursday to 12.64. The gauge, know as the VIX, is up 5.8 percent for the week after it tumbled 29 percent last week, the biggest such slide since January.                       

     Utility and raw-material companies fell the most, as all of the S&P 500’s 10 main groups retreated. Freeport-McMoRan sank 9.4 percent, amid uncertainty about the copper producer’s direction. Dow Chemical Co. lost 4.5 percent, the most this year, as second-quarter sales were below estimates.

     Transportation companies sank for the third time in four days, with Union Pacific Corp. dropping 5.7 percent, the most since Sept. 2011. The railroad’s chief financial officer said profits this year are unlikely to grow after 2014’s record. Kansas City Southern and Norfolk Southern Corp. slipped at least 2.2 percent. The Dow Jones Transportation Average lost 2.1 percent.

     United Rentals Inc. dropped almost 14 percent to its lowest since Nov. 2013, pacing declines with Caterpillar and 3M in the industrials group. The construction-equipment rental company cut its 2015 revenue outlook.

     American Express fell the most in three weeks, while Discover Financial Services decreased 4.2 percent, its biggest slide since its quarterly report in January. Discover’s second- quarter revenue was below analysts’ forecasts.                         

     The technology group declined after a brief rebound from the worst drop in two weeks. Qualcomm Inc. fell 3.8 percent after posting its biggest sales decline since 2009. That offset some of SanDisk’s Corp.’s 18 percent rally on its  better-than- estimated results.

     Google Inc. and Facebook Inc. slid more than 1.6 percent. Apple was little changed, erasing an earlier 1.5 percent climb, after its largest retreat in almost 18 months.

     Semiconductors climbed for the first time in five sessions as Skyworks Solutions Inc. and Micron Technology Inc. rallied more than 3.4 percent. Texas Instruments Inc. gained 2.5 percent.

     A Bloomberg gauge of U.S. airlines advanced for a third day to a two-month high. Southwest Airlines Co. jumped 3.9 percent after saying it would accelerate the pace of stock buybacks.

American Airlines Group Inc. and Spirit Airlines Inc. added more than 2.2 percent.

     Under Armour Inc. jumped 7.3 percent, the most in a year, to an all-time high. The athletic-gear maker’s second-quarter earnings topped analysts’ estimates, helped by a push into footwear and other new products.

Have a wonderful evening everyone.

Be magnificent!

When you believe that the truth is living, moving, that it does not have one home or rest in any temple,

mosque, or church, in any religion, master or philosopher – in short, that nothing can lead you to it-

you will see also that you are this living thing in every respect;

it is your anger, your brutality, your violence, your despair.

It is the agony and the pain that you live through.  The truth is in the comprehension of all of this;

you cannot comprehend it unless you are determined to see it in your life.

Krishnamurti

As ever,

Carolann

Happiness is when what you think, what you say, and what you do are in harmony.

                                                                      -Mohandas Gandhi, 1869-1948

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