June 15, 2016 Newsletter

Dear Friends,

Tangents:

From this year’s Commencement addresses:

Roanoke College
Michael Rhodin
IBM Watson senior vice president
“A decade ago, I was sitting in the office of the co-CEOs of a company called BlackBerry, the world’s dominant mobile email platform, and a pretty good phone.  It was the day after Apple released something it called the iPhone.  (The BlackBerry CEOs0 explained to me why it would fail.  They missed the point.   They were stuck in their own paradigm.  They failed to see outside the lines.  Today, while iPhone is a leading mobile platform, it is not the only player.  Another group of people from a company called Google looked outside the lines again and released a free operating system called Android to disrupt the smartphone market.  Always remember, when you look outside the lines, you implicitly create new ones, and others will look beyond those.  Never be afraid to challenge your own beliefs and restlessly reinvent your ideas.”

University of Wisconsin
Russell Wilson, Seattle Seahawks quarterback
“I’m here to share some things I’ve learned – things like if you’re dating a woman that’s way out of your league, ask her to marry you.  If you can throw a football 80 yards, for some reason people think that’s pretty cool.  And if you’re playing the New England Patriots in  the Super Bowl and you’ve go 26 seconds left and you’re down by four and it’s second-and-goal on their 1-yard line, try not to throw an interception.  That’s purely, purely hypothetical though, of course.  If my dad were here with us, this is the point where he’d remind us that potential means we just haven’t done it yet.  So I would say good luck, but I don’t believe in good luck.  Go make it happen.  Congratulations to the Class of 2016.  I’m out.”

Meredith College
Ellen Stofan, NASA chief scientist
“Even in my current position, I don’t know all there is to know.  That’s why we keep conducting research and exploring the unknown.  I think a lot of people have the perception that we’re in this era where we’re  at the peak of knowing about the world around us and how it works.  However, I would argue that we know so little, and we’re on the verge of knowing so much – because the more we learn, the more questions we have, the more we seek knowledge.  Just in the last few years, we have discovered about 5,000 candidate planet around other stars.  New worlds to understand – and targets for looking for signs of life.  The world you have in front of you provides a wealth of opportunity – figure out where you fit in, and go for it.”

On this day in 1923, Lou Gehrig makes his major league debut with the New York Yankees.

PHOTOS OF THE DAY

Musician and campaigner Bob Geldof (c.) joins a counter demonstration as a flotilla of fishing vessels campaigning to leave the European Union sails up the river Thames in London on Wednesday. Stefan Wermuth/Reuters

A worker cleans the floor of British artist Wolfgang Buttress’ 17-meter-high, bee-health-inspired ‘The Hive’ aluminum installation in Kew Royal Botanic Gardens, west London, on Wednesday. The installation is fitted with LED lights and a unique sound accompaniment that respond to the real-time activity of bees in a beehive behind the scenes. The sound and light intensities change as the energy levels in the real beehive surge, giving visitors an insight into life inside a bee colony. Matt Dunham/AP

A racegoer takes a photo with his cell phone during Royal Ascot at the Ascot Racecourse in Britain on Wednesday. Andrew Boyers/Reuters

Market Closes for June 15^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Number of the Day
0.37%
The effective fed funds rate every day in June has been 0.37%, within the Federal Reserve’s 0.25%-0.50% target range.

Canada

By Anna-Louise Jackson

     (Bloomberg) — Canadian stocks gained Wednesday, rebounding from the steepest slump since February, even as their U.S. counterparts succumbed to a late session selloff.

     The S&P/TSX Composite Index maintained gains to advance 0.3 percent to 13,923,45 at 4 p.m. in Toronto, halting a five-day retreat that sent the gauge 3.4 percent lower. A report Wednesday showed manufacturing sales in the country rose more than expected in April. Canadian stocks rose amid the biggest rally in copper prices in three months and broader gains in base metals.

     Following the Federal Reserve’s decision to leave interest rates unchanged, the U.S. stock market erased gains that earlier were poised to be the biggest in three weeks.

     Shares of Canadian raw-materials companies jumped 2.9 percent, leading gains as six of the benchmark’s 10 main industries advanced. Pretium Resources Inc. jumped 8.6 percent to the highest since January 2013, while Semafo Inc. added 7.1 percent to close at levels last seen in March 2012.

     Utilities companies pared earlier gains of as much as 0.8 percent to close little changed. Superior Plus Corp. jumped 2 percent, the most since May 27, while Transalta Corp. fell 1.6 percent.

     Energy companies slipped 0.2 percent after oil fell a fifth day, capping the longest run of declines since February, as the return of Canadian output offset a U.S. crude stockpile drop.

     Shares of consumer-staples companies fell 0.6 percent, dragged down by Alimentation Couche-Tard Inc.’s 0.7 percent decline.

US

By Joseph Ciolli and Oliver Renick

     (Bloomberg) — U.S. stocks erased gains in a late-day collapse after the Federal Reserve held pat on interest rates, with mixed American growth and a sluggish global economy heightening concern the effectiveness of central-bank stimulus has reached its limits.

     Equities seesawed post-meeting and during Fed Chair Janet Yellen’s press conference, maintaining gains before caving in the final minutes, spurred by falling crude-oil prices and tumbling Treasury yields which weighed on financial shares.

     The S&P 500 Index fell 0.2 percent to 2,071.50 at 4 p.m. in New York, erasing a climb of 0.5 percent, and posting a fifth straight drop, the longest since February. The gauge also closed below its average price during the past 50 days, after holding above the level until the closing minutes. The Dow Jones Industrial Average slipped 34.65 points, or 0.2 percent, to 17,640.17. The Nasdaq Composite Index decreased 0.2 percent.

     “The Fed scaling back the indicated pace of rate hikes can be construed as them not seeing requisite strength — there’s a malaise that’s set into the economy,” said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. “Without something to push equities higher, besides low rates, we’re losing steam here. With uncertainty around the British vote later this month, the path of least resistance seems to be down at this point.”

     Equities had been on track to snap a four-day losing streak for most of the day as investors focused on the outcome of the Fed meeting, briefly pushing into the background recent worries about Britain’s potential exit from the European Union.

     Traders said selling pressure built through the afternoon but didn’t hit stocks until after Yellen finished her press conference. One signal was in crude, where New York-traded futures began to decline roughly when the Fed’s statement hit, then kept slipping as Yellen answered questions. Others pointed to an imbalance of orders that often materialize at the end of trading sessions.

     “There are still a lot of people that use the market on open and close to trade, and what happens is there are buy and sell imbalances,” Joe Sowin, head of global equity trading at Dallas, Texas-based Highland Capital Management LP, said by phone. “There was a $1.1 billion sell imbalance, and when you have an interesting move in the S&P down, more people are inclined to sell in the last half hour. It’s kind of a guerrilla warfare signal.”

     Oil fell for a fifth day, capping the longest run of declines since February, with futures dropping 6.3 percent in New York over the last five sessions.

     The central bank today signaled a cautious approach to further raising borrowing costs, with more officials seeing only one rate increase this year compared to the previous forecasting round in March.

     Policy makers reiterated rates are likely to rise at a “gradual” pace. A tightening labor market, signs of rising wages and a pickup in consumer spending have nudged the Fed toward another hike, while a slowing pace of job creation, evidence of lower inflation expectations and persistent risks from outside the U.S. have provided reason for caution.

     Traders trimmed bets on higher rates, pricing in less than 6 percent chance of a rate move in July, down from 18 percent before the Fed statement and 53 percent two weeks ago, before probabilities were doused by weak May payroll gains. The first month with at least even odds for an increase is pushed out beyond February.

     “We’ve had Yellen and other Fed officials speak to us about the strength of the economy since the April meeting, and if you read the release today, they basically pushed the spaghetti around the plate — the strengths and weaknesses in the economy just shifted,” said Anna Rathbun, director of research for CBIZ Inc.’s retirement-plan services unit in Cleveland. “This isn’t good news, this is status quo. So the rate hike not coming means we haven’t gone anywhere, and as an investor, I don’t find that encouraging.”

     Equities have retreated this week as the potential fallout from Britain’s June 23 referendum spooked investors, just days after optimism over low rates and moderate economic growth buoyed the S&P 500 to an almost 11-month high.

     With policy makers depending on data to decide when to act on borrowing costs, a report today showed a rebound in fuel costs pushed up wholesale prices for a second month. Excluding volatile components such as food, energy and trade services, prices declined for the first time in seven months. Other data showed factory production fell more than forecast in May, while manufacturing in the New York region unexpectedly expanded this month, according to a separate measure.

     The S&P 500 had rallied as much as 16 percent from a 22- month low in February to within 0.6 percent of an all-time high last week, with a multimonth advance bolstered as crude oil rebounded from a 12-year low and the economy showed signs of gaining enough traction to handle higher rates. The index is still less than 3 percent from its record set nearly 13 months ago, and has gone the longest without a fresh high outside of a bear market since 1984.

     The CBOE Volatility Index fell 1.8 percent today to 20.14, slipping for a second day after reaching a three-month high. The measure of market turbulence known as the VIX yesterday ended its longest streak of gains since August. About 6.9 billion shares traded hands on U.S. exchanges, in line with the three- month average.

     In Wednesday’s trading, six of the S&P 500’s 10 main industries fell, with utilities and health-care shares sliding at least 0.6 percent. Raw-materials rose 0.4 percent and consumer discretionary shares added 0.3 percent. Financial shares were little changed, nearly wiping out a 1.2 percent rally as a rebound in banks lost momentum amid sliding Treasury yields. Industrials also finished barely changed after rising 0.8 percent.

Have  a wonderful evening everyone.

Be magnificent!

Every man has an equal right

to the necessities of life,

even as birds and beasts have.

Mahatma Gandhi

As ever,

Carolann

Dream and give yourself permission to envision a You that you choose to be.

                                                                           -Joy Page, 1924-2008

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