June 19, 2015 Newsletter

Dear Friends,

Tangents:

On this day in 1971, American singer and songwriter Carole King scored her first number one hit as a performer for “It’s Too Late/I Feel the Earth Move.”

And it’s worth the effort and expense to get to New York to see the play “Beautiful” the story of Carole King’s life.  One of the best plays ever.

In the Wall Street Journal today:  “The Treasury Department’s decision to put a woman on America’s paper currency for the first time in more than a century drew a common reaction on Thursday: It’s about time that happened…” 

PHOTOS OF THE DAY

An Efan 1 electric plane performs its demonstration flight at the Paris Air Show in Le Bourget, north of Paris, Friday. The Efan is a two-seat experimental electric aircraft developed by Airbus Group and partners. Some 300,000 aviation professionals and spectators are expected at this week’s Paris Air Show. Remy de la Mauviniere/AP

A patriotic racegoer holds her bag at the Ascot Racecourse in Berkshire, England, Friday. Eddie Keogh/Reuters

George Kaihara (l.) and his wife Miko Nakamura Kaihara, both 90 years old, show off their high school diplomas at the Tustin High School commencement ceremony in Tustin, Calif., Thursday. George and Miko were juniors at the school when the Japanese bombed Pearl Harbor, and they were sent to Poston Internment Camp in Arizona. Dennis Hayden, a classmate of George and Miko, recently reconnected with them, and made it his mission to see them graduate. Ed Crisostomo/AP

Market Closes for June 19^th, 2015

International Markets

Bonds

Currencies

Commodities

The only function of economic forecasting is to make astrology look respectable. –John Kenneth Galbraith.

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, briefly erasing gains for the year before recovering some losses in the final hour, as the nation’s largest banks tumbled and commodities producers slid with base-metals prices.

     Bank of Nova Scotia and Royal Bank of Canada retreated at least 1.1 percent to lead declines among financial services companies. First Quantum Minerals Ltd. sank 3.3 percent as copper capped the longest run of weekly drops since 2013. Enbridge Income Fund Holdings Inc. climbed 4.1 percent after agreeing to buy Enbridge Inc.’s Canadian liquids pipeline business for C$30.4 billion ($24.8 billion). Enbridge rose 3.2 percent.

     The Standard & Poor’s/TSX Composite Index fell 117.52 points, or 0.9 percent, to 14,645.11 at 4 p.m. in Toronto. The benchmark index fell as much as 1.3 percent before paring the drop. The gauge is little changed for the year, after capping a fourth straight weekly slide for the longest streak since October.

     “The TSX is heavy on financials and with a possible move on interest rates plus credit issues in Europe, the index remains vulnerable,” said Youssef Zohny, a portfolio manager at Stenner Investment Partners of Richardson GMP Ltd. in Vancouver. Richardson GMP manages about C$28 billion.

     Eight of 10 industries in the S&P/TSX fell Friday. Trading volumes were about double the 30-day average amid a quarterly phenomenon known as quadruple witching, when futures and options contracts on indexes and individual stocks expire.

     Royal Bank stumbled 1.1 percent and Bank of Nova Scotia retreated 1.2 percent as financials dropped 0.9 percent as a group. The industry accounts for about a third of the benchmark equity gauge.                      

     Raw-materials producers slumped 2 percent. Integrated miner First Quantum declined 3.3 percent, and Teck Resources Ltd. lost 2.3 percent. Copper posted a fifth weekly decline, the longest run of losses in two years, and aluminum fell to a 16-month low on concern demand will weaken in China, the largest user of industrial metals.

     Goldcorp Inc. tumbled 2.7 percent and Detour Gold Corp. fell 6.1 percent.

     Canadian Oil Sands Ltd. lost 3.9 percent and Canadian Natural Resources Ltd. retreated 2 percent. Crude for July delivery fell 1.4 percent in New York.

     Retail sales posted a surprise 0.1 percent decline in April on a drop in food and electronics, less than all 18 forecasts in a Bloomberg News survey with a median estimate of a 0.7 percent increase. Canada’s inflation rate advanced 0.9 percent in May from a year earlier.

     Investors are also watching developments in Europe. Euro- area leaders will hold an emergency summit in Brussels on Monday to discuss Greece after finance ministers failed to reach an agreement.

US

By Callie Bost and Jennifer Kaplan

     (Bloomberg) — U.S. stocks declined, after the Standard & Poor’s 500 Index traded near a record, as energy shares slumped with oil and financial companies fell from a seven-year high.

     Banks in the benchmark index posted their steepest drop in two months. Marathon Oil Corp. and Schlumberger Ltd. lost more than 2.2 percent. Hershey Co. fell to a 10-month low after cutting its annual profit forecast. ConAgra Foods Inc. rallied to a record after activist investor Jana Partners disclosed a new stake.

     The S&P 500 Index fell 0.5 percent to 2,109.99 at the close in New York, after earlier coming within 0.5 percent of an all- time high. The Dow Jones Industrial Average lost 99.89 points, or 0.6 percent, to 18,015.95. The Nasdaq Composite Index declined 0.3 percent from a record. Selling accelerated in the final minutes of trading as some stock and index futures and options expired in a process known as quadruple witching.

     “The simple answer is because we were up yesterday,” said Tom Wirth, senior investment officer for Chemung Canal Trust Co., which manages $1.9 billion in Elmira, New York. “It’s quadruple witching day today. People are closing out positions and that can add to volatility in the market.”

     The S&P 500 dropped after its strongest three-day run in three months. It’s the best performing developed-market index in June, and the only benchmark heading for a gain. Three rounds of Federal Reserve bond purchases and borrowing costs near zero have propelled the gauge up by more than 200 percent during the six-year bull market.                           

     Equities were boosted this week as the Fed signaled that it won’t be raising rates quickly, with officials still holding out for more decisive evidence of a rebound in growth. Fed Chair Janet Yellen stressed that the central bank has no set course for raising rates, and will continue to evaluate incoming data to decide when to move.

     Fed Bank of San Francisco President John Williams said today the central bank is likely to raise interest rates this year as the economy reaches full employment, though he’s troubled by low inflation.

     Meanwhile, the breakdown in Greece’s talks with creditors was a non-event for U.S. equity investors, with the S&P 500 up 0.8 percent this week. Traders are losing interest even as European finance officials called for an emergency meeting on Monday to resolve the Greek impasse before its financial lifeline expires at month’s end.                          

     “Right now, we’re just immune to Greece,” said Yousef Abbasi, the global market strategist at JonesTrading Institutional Services LLC in New York. “Europe seems to think the Greece situation is under control and if something does happen, it won’t cause contagion.”

     The Chicago Board Options Exchange Volatility Index climbed 5.8 percent Friday to 13.96. The gauge, known as the VIX, rose 1.3 percent for the week. About 8.1 billion shares traded hands on U.S. exchanges Friday, 29 percent above the three-month average.

     All of the S&P 500’s 10 main groups fell, with utility, financial and energy companies declining the most. Financial shares in the S&P 500 slid as the yield on 10-year Treasuries dropped to an almost three-week low. The group climbed Thursday to its highest since May 2008, buoyed by a rally in interest rates last week to the highest level since September.

     JPMorgan Chase & Co. slipped 1 percent, pacing losses in the KBW Bank Index. Bank of America Corp. and Wells Fargo & Co. lost at least 1.1 percent. Allstate Corp. and Travelers Cos. led insurers lower, falling more than 1.9 percent.                        

     Macerich Co. fell 6.8 percent to a seven-month low amid speculation Simon Property Group Inc., which attempted to take over the shopping-mall owner earlier this year, was responsible for offering a block of the company’s shares overnight.

     Energy companies retreated with oil as both the group and the commodity swung between gains and losses this week. Noble Corp. lost 2.5 percent after slumping 3.4 percent Thursday. Schlumberger Ltd. and Halliburton Co. slid at least 1.6 percent.

     Technology shares fell, with Microsoft Corp. down 1.3 percent after three days of gains, and Oracle Corp. slipping 2.7 percent on top of yesterday’s 4.8 percent drop. Finisar Corp. dropped 10 percent, the most in a year, after its fiscal first- quarter outlook trailed analysts’ forecasts. Xilinx Inc. and Juniper Networks Inc. lost more than 1.8 percent.                      

     West Corp. slumped 5.5 percent, the most since March. The communications company announced a secondary offering of 8 million shares sold by investors related to private-equity firms Thomas H. Lee Partners and Quadrangle Group, representing a 9.6 percent stake.

     Consumer staples closed little changed after erasing gains in the final hour. ConAgra jumped 11 percent, the biggest climb in more than 25 years, after being targeted by activist Jana Partners. Tyson Foods Inc. added 1.7 percent.

     Homebuilders rallied after KB Home reported fiscal second- quarter earnings that beat analysts’ estimates as orders jumped. KB climbed 9.4 percent, the most in more than two years, to lead the group. Lennar Corp. and D.R. Horton added more than 1.8 percent as an S&P index of builders hit a two-month high.

     Airlines gained as crude prices declined. A Bloomberg index of U.S. carriers rose 2 percent, the biggest gain since June 1. SkyWest Inc., American Airlines Group Inc. and United Continental Holdings Inc. added at least 2.3 percent.

     Peabody Energy Corp. advanced 6.9 percent amid a plan to sell its Queensland coal exploration portfolio, the Australian Financial Review reports, without saying where it got the information. Shares are down 22 percent this month.

     FitBit Inc. advanced 9.5 percent, after surging 48 percent in its trading debut yesterday.

Have a wonderful weekend everyone.

Be magnificent!

All of our selfish impulses, all of our personal desires, obscure our true vision of the soul,

as they only point out our shabby ego.  When we are aware of our soul,

we perceive the inner life that surpasses our ego

and that has profound affinities with the Whole.

Rabindranath Tagore

As ever,

Carolann

A diamond is a piece of coal that stuck to the job.

                           -Thomas Edison, 1847-1931

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