September 23, 2015 Newsletter

Dear Friends,

Tangents:
 

1846    The planet Neptune was discovered by German astronomer Johann Gottfried Galle. 

AUTUMN

…Move onward , Life; we cannot stop to  grieve.
The seed demands the soil, that it may live;
This mystery of contact, strange, devout
In union, as the general scheme of love.
See, in our careful hoard of leaf-mould, sprout
Chestnuts from conkers, little pallid leaf
Of beech from mast, from acorn little oak,
Each in their germination hopefully
Intent on growing to a forest tree;
Close consequence that seed and soil provoke!
Each to his kind, majestic or minute,
Following unaware but resolute
The pre-ordained plan
That makes an oak, a daisy, or a man…

                            -V. Sackville-West

PHOTOS OF THE DAY

A child plays with a huge red ball that is installed between two buildings as part of the RedBall Project by artist Kurt Perschke in Marseille, France, Wednesday. The RedBall Project is touring Marseille from Sept. 19 to 25, at a new location each day. Jean-Paul Pelissier/Reuters

Children ride their bicycles on an empty street in Jerusalem during the Jewish holiday of Yom Kippur Wednesday. Yom Kippur, or the Day of Atonement, is the holiest of Jewish holidays, when observant Jews atone for the sins of the past year. Traffic is not allowed during the 25-hour-long period.Ammar Awad/Reuters

Market Closes for September 23^rd, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canada capped the biggest two-day drop in a month, as energy shares tumbled with the price of crude and auto-parts makers retreated amid the Volkswagen AG scandal.

     The country’s benchmark index sank 0.8 percent, adding to a 2.1 percent slide Tuesday. Magna International Inc., the auto- parts supplier whose biggest customers include Volkswagen, declined a fourth day. Energy producers fell 2.1 percent as oil in the U.S. sank 4.1 percent amid renewed demand concern.

     The Standard & Poor’s/TSX Composite Index lost 107.40 points to 13,383.69 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has tumbled 2.9 percent in two days, the most since the height of the global equities selloff in August. The index is headed for a fifth straight monthly drop and its worst quarter in four years.

     Canadian equities are among the worst-performing markets in the developed world this year, led by declines among raw- materials and energy producers of at least 23 percent, amid plunging oil prices and uncertainty about global economic growth, especially in China. China is Canada’s second-largest trading partner after the U.S.

     First Quantum Minerals Ltd. retreated 4.2 percent and Teck Resources Ltd. slipped 3.4 percent. Potash Corp. of Saskatchewan Inc. sank 4.8 percent, to a December 2008 low. The stock has slumped 17 percent in five days.

     Crescent Point Energy Corp. tumbled 6.4 percent and Encana Corp. retreated 4.2 percent as West Texas Intermediate oil sank 4.1 percent to settle at $44.48 a barrel after the Energy Information Administration said output increased for the first time in seven weeks.

     The Bloomberg Commodity Index, a basket of prices for natural resources from copper to oil and gold, fell 0.6 percent to the lowest in a month. The gauge has slumped 16 percent this year.

     Magna fell 0.9 percent, for a fourth straight retreat, and Linamar Corp. declined 1.9 percent. Volkswagen, the German automaker, has become engulfed in a scandal over falsified pollution controls that will cost the company at least 6.5 billion euros ($7.3 billion). Chief Executive Officer Martin Winterkorn resigned as a result.

     Valeant Pharmaceuticals International Inc. added 0.9 percent, rebounding from a July low. The drugmaker had slumped 10 percent in the past two days amid a broader selloff in the health-care industry after Democratic presidential candidate Hillary Clinton criticized some pricing practices.

US

By Oliver Renick and Kate Garber

     (Bloomberg) — U.S. stocks posted their fourth loss in the five days since the Federal Reserve’s rate decision, as a rout in the price of crude led commodity shares lower.

     Energy producers slid as oil sank after a U.S. inventory report signaled lower demand, while raw-materials producers slumped as a reading on Chinese manufacturing fell to a six-year low. Trading volume was light amid the Jewish holiday of Yom Kippur, with about 5.9 billion shares trading hands on U.S. exchanges, 18 percent below the three-month average.

     The Standard & Poor’s 500 Index slipped 0.2 percent to 1,938.76 at 4 p.m. in New York, sinking to its lowest level since Sept. 4. The Dow Jones Industrial Average fell 50.58 points, or 0.3 percent, to 16,279.89. The Nasdaq Composite Index declined 0.1 percent.

     “Today is going to be a little quiet,” said Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York. “We have the Jewish holiday, but we also have a speech out of Yellen tomorrow. People are hoping that she’ll make some further comments that will take away some of the confusion and uncertainty that her comments from last week made.”

     Equities have been volatile in recent weeks, as the Fed’s stimulus policy, which has helped to support the bull market for more than six years, has only served to confuse investors of late. More clarity may be on the way as Fed Chair Janet Yellen is slated to deliver a lecture in Massachusetts after the markets close Thursday.

     Yellen said last week that policy makers would scrutinize slowing growth in China and emerging markets for risks that could spill over to the U.S. Still, the market is split on whether the Fed will raise rates this year. Traders are pricing in a roughly 43 percent chance of liftoff in December, while about 51 percent are betting on January.

     European Central Bank President Mario Draghi said in remarks today that it’s too soon to decide whether risks to the economic outlook warrant a step-up in the ECB’s stimulus. The macroeconomic environment is “more challenging,” Draghi said, and he vowed the ECB won’t hesitate to act if risks increase. Similar to the Federal Reserve, Draghi’s comments suggest the ECB is also having a hard time assessing the impact of slowing growth in developing countries.

     The Chicago Board Options Exchange Volatility Index jumped the most since August’s selloff on Tuesday as companies from energy to autos slumped. The measure of market turbulence known as the VIX has closed above 20 for 23 straight sessions, the longest stretch since June 2012. The gauge fell 1.4 percent Wednesday to 22.13.

     Meanwhile, the ratio of puts to calls on the Standard & Poor’s 500 Index has surged 12 percent over the past week, signaling investor appetite for protection against losses. That’s the most pronounced five-day jump since 2009, with the biggest increase coming the day after the Fed’s rate decision last week.

     “While volatility had been largely absent for the last year, it’s going to be part of our daily existence,” said Eric Wiegand, senior portfolio manager at the Private Client Reserve of US Bank in New York. “The next real material event for investors is going to be the announcement of third-quarter earnings. We’re not likely to get any economic data to resolve the uncertainty. We’ve been left in this purgatory.”

     The S&P 500 had climbed 6.8 percent from its August low before the Fed unveiled its decision last Thursday to leave interest rates near zero. The benchmark has slumped 2.8 percent since the meeting concluded, and is down 9 percent from its all- time high in May.

     Six of the benchmark index’s 10 main industries fell Wednesday, led by raw-material and energy companies. Freeport- McMoRan sank 5.6 percent and extended its post-Fed slide to almost 17 percent. Vulcan Materials Co. lost 3.7 percent, while Monsanto Co. decreased 2.5 percent. Returns from raw materials are languishing near the weakest in 16 years amid rising inventories just as demand growth slows in China, the world’s biggest consumer of everything from cotton to zinc.

     Energy shares followed a 4 percent drop in West Texas Intermediate crude. A government report showed U.S. refineries cut operating rates by the most in eight months, signaling lower demand for crude as units are shut for seasonal maintenance. Consol Energy Inc. and Transocean Ltd. sank more than 5.7 percent. Chesapeake Energy Corp. slid 5.3 percent to lose 15 percent so far this week.                       

     Among the industrials, machinery companies in the S&P 500 fell to their lowest since July 2013. The group’s recent woes can be traced back to investor concern that global economic growth is slowing, particularly in China. Caterpillar Inc., which generates more than half its revenue outside the U.S., slid 2.1 percent to a five-year low. Joy Global Inc. lost 5.6 percent to its lowest since March 2009. Overseas business makes up almost 70 percent of Joy’s revenue.

     NCR Corp. sank 4.5 percent, the most since Aug. 25, after the New York Post reported Blackstone Group LP had dropped its pursuit of the ATM machine maker.

     Technology companies climbed, led by a 2.4 percent gain in PayPal Holdings Inc. Chipmaker Qorvo Inc. added 1.5 percent after a 5.1 percent decline yesterday. Skyworks Solutions Inc., Visa Inc. and Facebook Inc. gained more than 1 percent.

     First Niagara Financial Group Inc. soared 15 percent, the most in almost seven years, following reports that the lender is exploring a possible sale or other alternatives.
 

Have a wonderful evening everyone.

Be magnificent!

With the clouds hanging in the air above the trees,

and the birds falling silent before the storm,

this morning brings forth serious reflection,

bringing into question the entirety of existence,

the gods themselves, and all human activity.

Krishnamurti

As ever,

Carolann

You should always go to other people’s funerals; otherwise they won’t come to yours.

                                                                                    -Yogi Berra, 1925-2015

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