September 9, 2015 Newsletter

Dear Friends, 

Tangents: 

PHOTOS OF THE DAY

Members of the European Parliament take part in a voting session in Strasbourg, France, Tuesday. Picture taken with a slow shutter speed and a zoom effect. Vincent Kessler/Reuters

A man is silhouetted walking past the Apple logo during a product display for Apple TV following an Apple event Wednesday in San Francisco. Apple staked a new claim to the living room as the maker of iPhones and other hand-held gadgets unveiled an Internet TV system that’s designed as a beachhead for the tech giant’s broader ambitions to deliver a wide range of information, games, music and video to the home. Eric Risberg/AP

Market Closes for September 9^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, erasing an earlier gain, as a slide in commodities producers overshadowed an equities rally in China and Japan.

     Energy and raw-material producers paced a midday drop in equities. Gold prices fell to a four-week low, and crude declined 3.9 percent in New York on estimates U.S. stockpiles rose ahead of a data release Thursday. Canadian Oil Sands Ltd. lost 3.1 percent.

     The Standard & Poor’s/TSX Composite Index fell 98.82 points to 13,531.85 at 4 p.m. in Toronto. The equity gauge has dropped 7.5 percent this year.

     Canadian and U.S. shares failed to keep pace with increases in Asian and European markets. Japan’s Nikkei 225 Average soared 7.7 percent, the most since October 2008, amid speculation a selloff that drove valuations to an 11-month low was overdone. Equities rallied a second day in China, Canada’s second-largest trading partner.

     Canada’s benchmark index erased an earlier gain of as much as 1 percent after the Bank of Canada maintained its main interest rate at 0.5 percent. The central bank has made two cuts this year amid the plunge in oil prices.

     “In this market the overall sentiment can change very quickly,” said Prab Sagoo, a Canadian equity market analyst at Nasdaq Advisory Services.

     Stephen Poloz, governor of the central bank, was expected to leave the main interest rate unchanged in the lone decision during the Canadian federal election campaign. In its decision the Bank of Canada said a weaker currency and household spending are leading a recovery from the shock of lower oil prices.

     Global shares are rebounding from the worst month since May 2012, as the MSCI World All-Country World Index tumbled 7 percent in August after Chinese stocks slumped amid increasing concern economic growth in the country was stalling.

     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.

     Bombardier Inc. jumped a record 23 percent to pace gains among industrials stocks. The company said its transportation rail unit wasn’t for sale after a report the maker of planes and trains had rejected an offer by a Chinese company. Railway operator Canadian National Railway Co. increased 0.5 percent.

US 

By Oliver Renick and Lu Wang

     (Bloomberg) — U.S. stocks dropped as market volatility remained pervasive, with equities giving back more than half of Tuesday’s gains from the second-strongest climb this year.

     An early advance withered after a report showed job openings rose more than forecast, and declines picked up pace after a jump in Apple Inc. lost momentum during an event unveiling new products. Equity futures had soared at the outset, sparked by strong gains in Japan and China, leading to the brief opening surge. Energy companies led declines as oil slid 3.9 percent. Apple fell 1.9 percent.

     The Standard & Poor’s 500 Index fell 1.4 percent to 1,942.04. at 4 p.m. in New York, after earlier rising as much as 1 percent. The gauge rallied 2.5 percent yesterday, second only in 2015 to a 4 percent jump on Aug. 26. The Dow Jones Industrial Average lost 239.11 points, or 1.5 percent, to 16,253.57. The Dow was up 172 points at its peak today. The Nasdaq Composite Index sank 1.2 percent. About 7.2 billion shares traded hands on U.S. exchanges, in line with the three-month average.

     “Yesterday seemed to be more of a sellers strike with just small buying and today there does not seem to be much buying,” said Rick Fier, director of equity trading at Conifer Securities LLC in New York. “If anything, it’s been selling all day after JOLTS number pointing to higher rates.”

     U.S. data today showed job openings surged to a record in July, as hiring cooled, a sign employers are having a hard time finding qualified workers amid tightening labor market. The number of positions waiting to be filled jumped by 430,000, the biggest gain since April 2010, to 5.75 million. Economists surveyed by Bloomberg forecast 5.3 million openings.

     Equities earlier joined in a global rally as China’s markets climbed amid optimism that more government stimulus is on the way,while stocks in Tokyo staged the biggest rally since 2008 amid speculation a selloff that drove valuations to an 11- month low was overdone.

     “The market is trying to consolidate from a huge move we had yesterday,’’ said Jeffrey Yu, head of U.S. single stock derivatives trading at UBS AG in New York. “We’re sitting in a range. It’s just that it’s very volatile within that range.”

     Wide market swings and rapid shifts in sentiment have become more prevalent since China’s currency devaluation on Aug. 11 sparked concerns that a slowdown in the world’s second- largest economy would spread. The S&P 500 yesterday regained almost three-quarters of its 3.4 percent slide last week, which was the second-biggest retreat since December behind the 5.8 percent plunge it suffered in the five days through Aug. 21. In 11 of the last 14 days, the benchmark has closed with a move of at least 1.3 percent.

     The Chicago Board Options Exchange Volatility Index Tuesday snapped a streak of 11 straight sessions above 25, a level that before August it touched on just five days since 2011. The respite was brief as the measure of market turbulence known as the VIX climbed 5.3 percent today to 26.23.

     Investors remain confident the Federal Reserve will raise borrowing costs this year, even as they pare bets on a move at next week’s meeting. Traders are pricing in a 28 percent chance the central bank will increase rates this month, down from 48 percent before China’s devaluation. Odds of a move at the December gathering are about 59 percent, according to data compiled by Bloomberg.

     A Bank of America study showed that the Fed rarely makes a move amid the level of recent equity turbulence. In four tightenings since 1990, including the tapering of bond purchases announced in 2013, the S&P 500 had posted positive returns over the prior three and six month periods, and was within 3 percent of the gauge’s 52-week high, according to the report. By comparison, the benchmark index is down 6.6 percent over the last three months and is 8.9 percent below its high of 2,130.82 reached in May.

     “Today’s job openings report is very important because with the combination of job openings and an unemployment rate down to 5 percent, it’s clearly a tight labor market and it copper- fastens some of the criteria the Fed looks at,” said David Kelly, chief global strategist at JP Morgan Funds in New York.

     The afternoon swoon sent all of the S&P 500’s 10 main groups lower, led by energy, consumer staples and health-care companies as they fell at least 1.6 percent. Nine of the industries lost more than 1 percent.

     West Texas Intermediate crude fell 3.9 percent as estimates that U.S. stockpiles rose reinforced worries that there’s no end in sight for the global supply surplus. Marathon Oil Corp. tumbled 8.6 percent, the most since November, while Apache Corp. and Noble Energy Inc. slumped at least 3.9 percent.

     Coca-Cola Enterprises Inc. sank 4 percent to lead the slide among consumer staples companies. Philip Morris International Inc., Wal-Mart Stores Inc. and Procter & Gamble Co. paced declines, losing more than 1.8 percent.

     Biotechnology shares weighed on the health-care group. Alexion Pharmaceuticals Inc. and Regeneron Pharmaceuticals Inc. slid more than 2.8 percent. Amgen Inc. dropped 2.3 percent after a 5.1 percent jump Tuesday. The Nasdaq Biotechnology Index sank 2.2 percent following a 4.2 surge yesterday.

     Device maker St. Jude Medical Inc. lost 3.7 percent, its biggest slide since last October, after the company said Chief Executive Officer Daniel Starks will retire at the end of the year and be replaced by Michael Rousseau, currently chief operating officer.

     United Continental Holdings Inc. rose 0.3 percent, trimming an earlier 2.5 percent gain following the ouster of Chief Executive Officer Jeff Smisek and two of his lieutenants while federal investigators probe the airline’s ties to the former chairman of the Port Authority of New York & New Jersey.

     Netflix Inc. climbed 4.5 percent to snap a seven-session losing streak, its longest since March 2014. The shares had fallen 19 percent since Aug. 27. The online video-streaming company plans to enter Hong Kong, Taiwan, Singapore and South Korea early next year as it races to complete a global rollout.

Have a wonderful evening everyone.

Be magnificent!

“Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world.” Joel A. Barker

As ever,

Karen

“Start by doing what’s necessary; then do what’s possible; and suddenly you are doing the impossible.” Francis of Assisi

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