September 17th Newsletter

Dear Friends, 

Tangents: 

PHOTOS OF THE DAY

 Parents Jason and Kelli Fenley hold their identical triplets, Owen, left, Noah, center, and Miles Fenley, during a news conference in Mineola, N.Y., Thursday. Identical triplets are very rare, occurring approximately only once in every million births, when a single egg splits into three embryos. Most multiple births are combination of identical and fraternal siblings. Seth Wenig/AP

 Guest walk under the super-sized table by artist Robert Therrien titled ‘Under the Table’ inside The Broad Museum during a media preview in Los Angeles. The new museum built by Philanthropists Eli and Edythe Broad, featuring their collection of modern art, will open to the public on Sept. 20.Kevork Djansezian/Reuters

Market Closes for September 17, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose for a third day, holding onto gains after the U.S. Federal Reserve opted against raising interest rates amid low inflation and an uncertain outlook for global growth.

     Gains among energy producers and health-care stocks led advances. The Fed kept its benchmark federal funds rate at a record low as recent global economic and financial volatility will likely put downward pressure on inflation, policy makers said Thursday in a statement.

     The Standard & Poor’s/TSX Composite Index rose 0.2 percent, or 23.38 points, to 13,787.16 at 4 p.m. in Toronto, the highest since Aug. 31. The benchmark equity gauge has pared a loss in September to 0.5 percent after four monthly declines.

     “It looks as if rates are still set to start rising this year, however there’ll only likely be one move,” said Andrew Grantham, an economist at CIBC World Markets, in a note to clients. “There were hints that a gradual tightening cycle is close.”

     Canadian stocks have rebounded 2.4 percent this week after slumping 4.2 percent in August for the worst performance in a year, amid a rout among global financial markets following China’s shock currency devaluation. China is Canada’s second- largest trading partner after the U.S.

     Shopify Inc. soared a record 24 percent after the Canadian software maker teamed up with online retailing giant Amazon.com Inc. to help merchants create their own online stores.

     Valeant Pharmaceuticals International Inc. jumped 3.4 percent to the highest in a month high, to lead health-care stocks higher. Valeant has rallied 7.5 percent in three days.

     Cenovus Energy Inc. jumped 5.3 percent and Suncor Energy Inc. increased 0.9 percent as crude in New York held near $47 a barrel. West Texas Intermediate oil jumped 5.7 percent Wednesday as U.S. inventories fell.

     Toronto-Dominion Bank lost 0.9 percent and Royal Bank of Canada dropped 0.7 percent as financial stocks retreated.

US 

By Craig Torres

     (Bloomberg) — The Federal Reserve kept its policy interest rate unchanged, showing reluctance to end an era of record monetary stimulus in a time of market turmoil, rising international risks and slow inflation at home.

     “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the Fed said in its statement.

     Thursday’s action signified more than anything the committee’s uncertainty about how global events, such as the slowdown in China, translate into their outlook for U.S. growth.

     “Discretion is the better part of valor,” Ethan Harris, co- head of global economic research at Bank of America Corp. in New York, wrote in an e-mail. The move is a “tactical delay” to gather more information on risks to the forecast, and “as the labor market recovery rolls along, and with capital markets already showing signs of calm, the pressure on the Fed to hike will build at each meeting going forward.”

     The decision featured the first dissent this year by Richmond Fed President Jeffrey Lacker as policy makers faced one of the toughest decisions of Chair Janet Yellen’s leadership of the Federal Open Market Committee. 

     It also bears its own set of risks, such as the perception of a “Yellen put,” or the view that market volatility could stay the Fed’s decision again.

     “They put more emphasis on things that could go wrong than things that are going right,” Harm Bandholz, chief U.S. economist at UniCredit Bank AG in New York, said before the decision.

     The U.S. economy is posting steady job gains and solid household spending. Fed officials, anxious not to tighten policy prematurely and risk having to reverse course and cut rates back to zero, weighed solid domestic fundamentals against uncertainties about the international outlook.

     “The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad,” the statement said.

     Slowing growth in China has rippled across the world, hitting commodity-producing countries hard. The MSCI Emerging Markets Index, which captures stock markets in nations such as Brazil, Chile, Egypt and China, is down 14 percent this year.

     “The outlook for the global economy is being marked down and that is why markets are reacting,” Laura Rosner, U.S. economist at BNP Paribas, said before the decision. Market developments are giving policy makers “fundamental, new and real-time information,” the former New York Fed staff analyst said.

     Domestically, Fed officials are also grappling with an inflation rate that remains too low, rising just 0.3 percent for the 12 months ended July, according to the personal consumption expenditures price index, the Fed’s preferred measure.

     “The case for not going is that the inflation picture is still extremely murky, especially in light of developments in China,” Ward McCarthy, chief financial economist at Jefferies LLC in New York, said before the decision.

     The PCE index has run below the Fed’s 2 percent target for more than three years. “They need to clarify” their inflation target strategy, McCarthy added.

     Officials Thursday said they don’t expect to attain their 2 percent goal until 2018, according to policy makers’ median forecast.

Have a wonderful evening everyone.

Be magnificent!

The best way to find out if you can trust somebody is to trust them.

Ernest Hemingway

As ever,

Leyla

Have courage for the great sorrows of life and patience for the small ones; and when you have laboriously accomplished your daily task, go to sleep in peace.

Victor Hugo

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