September 10, 2015 Newsletter

Dear Friends, 

Tangents: 

PHOTOS OF THE DAY

The Duke and Duchess of Devonshire look at a piece titled ‘The Dappled Light of the Sun’ by Conrad Shawcross during the Beyond Limits selling exhibition at Chatsworth House near Bakewell, Britain, Thursday. Darren Staples/Reuters

A camel and her calf stand in a field during a sandstorm near Rahat, southern Israel, Thursday. Amir Cohen/Reuters

Market Closes for September 10^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose as oil producers gained while better-than-expected earnings from Dollarama Inc. and Hudson’s Bay Co. boosted retailers.

     Industrial stocks paced gains among Canadian equities as Bombardier Inc. soared a record 28 percent after showing off its long-delayed CSeries jet in Toronto. Energy stocks rose 0.7 percent, erasing an earlier loss. Energy and raw-materials producing companies make up about 30 percent of the broader index. Agnico Eagle Mines Ltd. added 1 percent as gold futures gained 0.7 percent in New York to snap a five-day losing streak.

     Dollarama and Hudson’s Bay rallied at least 4.6 percent to lead consumer discretionary stocks higher, after second-quarter earnings for both companies topped analysts’ estimates.

     Canadian stocks are rebounding from the worst month in a year, slumping 5.2 percent in August after Chinese stocks sank amid increasing concern economic growth in the country was stalling. China is Canada’s second-largest trading partner after the U.S.

     The Standard & Poor’s/TSX Composite Index added 38.04 points, or 0.3 percent, to 13,569.89 at 4 p.m. in Toronto. The equity gauge has advanced 0.7 percent this week, after alternating between gains and losses for four straight days.

     Suncor Energy Inc. added 0.8 percent and Encana Corp. rallied 3.5 percent as energy producers increased 0.7 percent as a group. Crude in New York advanced 4 percent, the first increase in four days. The Energy Information Administration cut forecasts for U.S. oil production in 2015 and 2016.

     The resource-rich S&P/TSX has been one of the worst- performing developed markets in the world this year as crude plunged. Energy and raw-materials producers have the biggest declines among 10 industries in the S&P/TSX this year.

     China’s stocks dropped for the first time in three days after the nation’s producer-price index fell 5.9 percent in August, extending slides to 42 straight months. Consumer prices rose at the fastest pace in a year.

     Bombardier, the train and plane maker, one of the worst performers in the benchmark gauge this year, has surged 58 percent in two days amid growing optimism over the potential value of Bombardier’s rail unit and sales prospects for the CSeries jet.

     Sun Life Financial Inc. rose 3.1 percent after agreeing to buy the U.S. employee benefits business of Assurant Inc. for a net investment of $975 million.

US 

By Stephen Kirkland and Jeremy Herron

     (Bloomberg) — U.S. stocks rose amid light volumes a week before the Federal Reserve’s policy decision. Apple Inc. led a rally in technology shares, while a retreat in the dollar sparked a surge in commodities from oil to metals.

     The Standard & Poor’s 500 Index rebounded from a selloff yesterday in a market increasingly characterized by sharp shifts in sentiment amid the looming threat of higher interest rates. The dollar slipped to a one-week low on speculation the Fed won’t act next week amid continued turbulence in global financial markets. Oil surged past $45 a barrel in New York.

     While a second day of robust U.S. jobs data bolstered the case for higher rates, money-market derivatives traders see only a 28 percent chance of an increase at next week’s meeting. The Bank of England said turmoil in global markets hasn’t upset its economic outlook, fueling speculation the Fed could also look past recent volatility.

     “People are on the sidelines and you get these violent moves and you don’t know what’s behind them,” Dan McMahon, director of institutional equity trading at Raymond James and Associates, said by phone. “There’s really no rhyme or reason so it’s very difficult to make a rational decision in this kind of environment.”

     Fed officials in recent weeks, while giving a nod to global events including the equity rout that followed China’s currency devaluation, haven’t been willing to rule out a September hike. While futures traders have pared bets, many economists are still predicting the Fed will increase its key rate.

     The S&P 500 rose 0.5 percent by 4 p.m. in New York. The gauge rallied as much as 1 percent before paring the advance throughout the afternoon and then padding out the gain in the session’s final minutes. Volumes in S&P 500 shares were about 9 percent below the 30-day average.

     Apple Inc. rallied 2.2 percent to lead technology shares higher as nine of the 10 main S&P 500 groups advanced. Pfizer Inc. and Merck & Co. climbed at least 1.5 percent as health-care stocks gained amid deal announcements.

     “It’s a pretty choppy trade today and volumes are a little low,” Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in New York. “You have a mentality right now where people don’t want to add risk but they do want to play intraday volatility. They’re not taking on new risk but they’re trying to take advantage and trade around the market.”

     In 11 of the last 14 sessions through Wednesday, the S&P 500 had closed with a move exceeding 1.3 percent, as wide market swings have become more prevalent since China’s currency devaluation on Aug. 11.

     Investors are assessing whether the ructions on financial markets would prevent the Fed from raising rates even as the central bank insists its focus will be on economic data. A report Thursday showed fewer Americans lined up last week to file for jobless benefits.

     Equities from Asia to Europe declined on renewed concerns that U.S. policy tightening would damp global growth, while a downgrade of Brazil’s debt rating to junk roiled markets there and underscored weakness in developing nations.

     The MSCI Emerging Markets Index slid 0.7 percent, halting a two-day advance as renewed concern over the U.S. rate outlook and Brazil’s downgrade damped demand for riskier assets. Chinese stocks fell for the first time in three days after data indicated a widening divergence between consumer and producer prices. The Brazilian real slid to the lowest level in 13 years.

     Brazilian bonds fell and Petroleo Brasileiro SA’s American depositary receipts declined after S&P cut the sovereign one step to BB+, with a negative outlook.

     The yen was little changed versus the dollar after recovering earlier losses as an aide to Prime Minister Shinzo Abe said October would be a “good opportunity” for the central bank to boost stimulus.

     China appeared to expand efforts Thursday to bolster the yuan in what traders said is an attempt to align its exchange rates at home and abroad.

     The pound jumped 0.5 percent to $1.5445 after the Bank of England said the turmoil in global markets hasn’t shaken its view that the time for a rate increase is approaching.

     Treasuries extended losses, with 10-year note yields down two basis points to 2.22 percent. Buyers piled into U.S. auctions of notes and bonds this week, with investors undeterred by the chance of a Fed rate hike next week. Thursday’s auction of 30-year bonds drew a yield of 2.98 percent, the highest since July.

     Bond bulls are wagering that even if the Fed does move, slower inflation will keep longer-term Treasury yields in check.

     The Bloomberg Commodity Index rose 1.1 percent after falling 1.3 percent on Wednesday to a two-week low. Metals led gains, with copper climbing for a fourth day in its longest run of gains in three months.

     The jittery equities trading prompted investors to seek the safety of gold as the metal ended a five-session losing streak. Gold futures for December delivery gained 0.6 percent to $1,108.40 an ounce.

     West Texas Intermediate crude advanced 4 percent to settle at $45.92 a barrel, snapping a three-day losing streak. Brent futures added 2.8 percent to end at $48.89 in London.

     The Energy Information Administration cut forecasts for U.S. crude output in 2015 and 2016, predicting a slide to 8.82 million barrels a day next year from 9.22 million a day in 2015 in its monthly Short-Term Energy Outlook Wednesday. The market shrugged off an EIA report Thursday that showed crude supplies climbed last week as refineries idled units to perform seasonal maintenance.

Have a wonderful evening everyone.

Be magnificent!

“Perfection is not attainable, but if we chase perfection we can catch excellence.” Vince Lombardi

As ever,

Karen

“Try to be a rainbow in someone’s cloud.” Maya Angelou

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