Month: October 2016

Dear Friends,

Tangents:

Just returned yesterday from New York where last week I attended the Buttonwood conference on fintech and the annual Barron’s conference on current successful investing strategies where many top money managers give their best investment ideas for the year ahead.   As expected the buzz was all about the election with everyone who spoke confirming their opinion that Hilary is going to win.  Of course all the market fluctuation that we, as investors, have had to bear since last September is due to uncertainty – first it was the uncertainty over Brexit, then Russia, Syria, and finally, the  US election.  One of the speakers began his presentation with addressing that uncertainty.  He said, “I’ve got some good news and some bad news.  The good news is that on November 8^th, one of the candidates is going to win the election.  The bad news is that on November 8^th, one of the candidates is going to win the election.”   Joking aside, most were optimistic that the economic recovery already underway in the US will continue.  However, growth will be slower than many forecasters anticipate.   

PHOTOS OF THE DAY

Italian artist Maurizio Cattelan poses with his creation ‘Him’ (2001) prior to the opening of the exhibition ‘Not Afraid of Love’ at the Hotel de la Monnaie in Paris on Monday. Philippe Wojazer/Reuters

The poppy sculpture ‘Weeping Window,’ a cascade of thousands of handmade ceramic poppies by artist Paul Cummins and designer Tom Piper, is on display at Caernarfon Castle, Wales, on Monday. Rebecca Naden/Reuters
Market Closes for October 17^th, 2016

Market Index	Close	Change
Dow Jones	18086.40	-51.98   -0.29%
S&P 500	2126.50	-6.48   -0.30%
NASDAQ	5199.824	-14.337   -0.27%
TSX	14596.52	+11.53
		+0.08%

International Markets

Market Index	Close	Change
NIKKEI	16900.12	+43.75
		+0.26%
HANG SENG	23037.54	-195.77
		-0.84%
SENSEX	27529.97	-143.63
		-0.52%
FTSE 100	6947.55	-66.00
		-0.94%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.221	1.250
CND. 30 Year Bond	1.846	1.870
U.S.    10 Year Bond	1.7660	1.7977
U.S. 30 Year Bond	2.5216	2.5583

Currencies

BOC Close	Today	Previous
Canadian $	0.76138	0.76113
US $	1.31340	1.31384
Euro Rate 1 Euro=		Inverse
Canadian $	1.44454	0.69226
US $	1.09985	0.90922

Commodities

Gold	Close	Previous
London Gold Fix	1254.80	1251.75
Oil	Close	Previous
WTI Crude Future	49.94	50.35

Market Commentary:
Canada
By John Hyland
     (Bloomberg) — Canadian stocks edged higher in light trading as investors assessed a batch of earnings reports, while Valeant Pharmaceuticals International Inc. slipped after a competitor released a cheaper treatment.
     The S&P/TSX Composite Index rose 0.1 percent to 14,596.52 at 4 p.m. in Toronto, rebounding from a 1.1 percent drop last week. Trading volume was 28 percent lower than the 30-day average. The index is up 12 percent this year, making it the top performing developed equity market in the world, ahead of New Zealand and the U.K.
     Five of the 11 industries in the Canadian equities benchmark edged higher, led by a 0.9 percent gain among raw- materials producers. Barrick Gold Corp. and Goldcorp Inc. gained at least 1.2 percent, rebounding from a rout last week as gold futures tumbled amid speculation that U.S. interest rates will soon rise, which curbs the appeal of the metals that don’t pay interest. There’s a 68 percent chance that the Federal Reserve will raise interest rates December, according to data compiled by Bloomberg.
     Financial services gained 0.1 percent, led by Royal Bank of Canada, which is trading at its highest level since December 2014. Toronto-Dominion Bank rose 0.3 percent to its highest level in more than a month.
     Energy producers fell less than 0.1 percent, as oil dropped to a one-week low after OPEC members added supply and U.S. producers increased drilling. The S&P/TSX Energy index remains 25 percent higher this year and near the highest level since June 2015.
     Health care dropped more than 2 percent, after the sector’s largest company, Valeant, slumped 3.6 percent to the lowest level in more than two months. Valeant declined after Imprimis Pharmaceuticals Inc. announced its availability of a cheaper lead poisoning treatment.
     Canadian stock valuations remain 16 percent higher than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.3 compared with 20.1 for the S&P 500 Index, according to data compiled by Bloomberg.
     The telecommunications sector fell 0.3 percent, after Rogers Communications Inc. announced Guy Laurence resigned as president and chief executive officer. The company named former Telus Corp. Chief Executive Officer Joseph Natale to succeed Laurence. Rogers’ stock has gained 14 percent this year, compared with a 12 percent increase in the S&P/TSX Composite Index.

US
By Rita Nazareth
     (Bloomberg) — Treasuries rebounded from a four-month low, while the dollar retreated after mixed data on the world’s largest economy supported the case for monetary policy to remain accommodative. Oil declined.
     U.S. government bond yields dropped as the greenback retreated against most of its major peers after a measure of manufacturing in New York unexpectedly contracted, while national factory production grew for the third time in four months. Energy shares drove U.S. losses as investors assessed corporate earnings. Crude fell a second day as OPEC members added supply and American producers increased drilling, threatening to compound a global surplus.
     Traders are monitoring economic data and rhetoric from policy makers for clues as to the path of U.S. interest rates. The Federal Reserve Bank of New York said its Empire State index declined this month as analysts projected expansion, while data on U.S. manufacturers signaled recovery. Investors also weighed comments from Fed Vice Chairman Stanley Fischer Monday, who said that he sees limits to how far the central bank can pursue a strategy aimed at continuing to reduce unemployment.
     “People are trying to figure out what the Fed is going to do,” Thomas Garcia, head of equity trading at Thornburg Investment Management Inc. in Santa Fe, New Mexico, said by phone.
     Futures indicate a 66 percent probability the Fed will raise rates by its December meeting, up from around 50 percent as recently as Sept. 27, according to calculations by Bloomberg.
     Benchmark 10-year Treasury yields fell three basis points, or 0.03 percentage point, to 1.77 percent as of 5 p.m. in New York, according to Bloomberg Bond Trader data. The yield earlier touched 1.81 percent, its highest level since June.
     The rally comes following a tumble this month in longer- dated Treasuries. Steven Major, global head of fixed-income research at HSBC Holdings Plc, said the Fed’s policy-tightening pace is too slow for rates to climb meaningfully before the next economic downturn.
     “To me the structural story has not changed — we are talking about the debt overhang, demographics, productivity, excess savings — all the factors for the bond market,” Major said Monday in an interview with Bloomberg TV. “A year out, yields will be lower than they are now. Five years out, I doubt they’d be higher than this level.”
     The selloff in U.K. government bonds gathered pace as prospects of faster inflation gave investors another reason to pull back from a market hurt by the mounting economic and political cost of Brexit.
     The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, fell 0.3 percent after reaching its highest level in almost seven months on Oct. 13. The euro rose 0.3 percent to $1.10000 following its biggest weekly drop since November. The yen also advanced 0.3 percent, to 103.89 per dollar, after weakening 0.5 percent on Friday.
    “We’re looking at this as a short-term pullback after some of the big moves we’ve seen,” said Matt Weller, a senior market analyst at Faraday Research in Grand Rapids, Michigan.
     The pound remained near a three-decade low against the dollar, closing at $1.2181. Bank of England Deputy Governor Ben Broadbent said the currency’s slump since the U.K.’s vote to quit the European Union will help the economy overcome shocks from the decision.
     Elsewhere in the world, the rand led gains among major currencies after a group of senior South African business leaders publicly expressed support for Finance Minister Pravin Gordhan as he faces fraud charges.
     New Zealand’s dollar jumped early on Tuesday after data showed an unexpected increase in consumer prices.
     U.S. stocks slipped Monday, with energy producers falling 0.4 percent as a group as crude oil sank, while Amazon.com Inc. led retailers lower. Lenders retreated even as Bank of America Corp.’s quarterly results exceeded estimates.
     Netflix Inc. surged 20 percent after regular trading hours, as the online television service said it adding more subscribers than estimated in the third quarter. International Business Machines Corp. sank 2.7 percent in late trading after reaffirming its full-year view and despite reporting operating earnings that topped analysts’ forecasts.
     European stocks fell for the fourth time in five days on concern over the health of the global economy, even as speculation grew that inflation will quicken. All industry groups in the Stoxx Europe 600 Index slid, pushing the benchmark gauge down 0.7 percent. The MSCI Emerging Markets Index dropped 0.3 percent, paring its gains this year to 13 percent.
     In Asia, Japanese index futures foreshadowed a retreat, while contracts on stock gauges in Australia and Hong Kong advanced.
     West Texas Intermediate crude dropped 0.8 percent to $49.94 a barrel in New York, its lowest level since Oct. 7. Brent for December delivery fell 0.8 percent to $51.52 a barrel on the London-based ICE Futures Europe exchange, closing at a $1.15 premium to December WTI.
     Libya’s oil output expanded to 560,000 barrels a day, according to the National Oil Corp., up from 540,000 last week. Iran repeated plans to boost production to 4 million barrels a day. Nigeria aims to raise output by 400,000 barrels a day to2.2 million, Oil Minister Emmanuel Ibe Kachikwu said in New Delhi. Rigs targeting crude in the U.S. rose for a seventh week to the highest since February, Baker Hughes Inc. said.
     “There’s a growing recognition that OPEC will have a hard time getting their act together,” said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida.

 

Have a wonderful evening everyone.

 

Be magnificent!

Does a flower, full of beauty, light and loveliness say, ‘I am giving, helping, serving?’
It is!  And because it is not trying to do anything it covers the earth.
Krishnamurti

As ever,

 

Carolann

 

Light tomorrow with today.
-Elizabeth Barrett Browning, 1806-1861

 

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

Dear Friends,

Tangents:

Carolann is out of the office, I will be writing the newsletter on her behalf.  

PHOTOS OF THE DAY

Schoolchildren from St Philip’s school in Salford wear masks depicting members of Britain’s royal family as they await the arrival of Prince William and his wife, Catherine, Duchess of Cambridge, at the National Football Museum in Manchester, England, on Friday. Phil Noble/Reuters

A competitor participates in a wingsuit flying contest in Zhangjiajie, Hunan Province, China, on Thursday. Reuters

A man rides his motorcycle at sunset in Nyaung Woon village, Kyauk-Se, Myanmar, on Friday. Aung Shine Oo/AP
Market Closes for October 14^th, 2016

Market Index	Close	Change
Dow Jones	18138.38	+39.44   +0.22%
S&P 500	2132.98	+0.43   +0.02%
NASDAQ	5214.160	+0.827   +0.02%
TSX	14584.99	-58.72
		-0.40%

International Markets

Market Index	Close	Change
NIKKEI	16856.37	+82.13
		+0.49%
HANG SENG	23233.31	+202.01
		+0.88%
SENSEX	27673.60	+30.49
		+0.11%
FTSE 100	7013.55	+35.81
		+0.51%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.250	1.196
CND. 30 Year Bond	1.870	1.831
U.S.    10 Year Bond	1.7977	1.7692
U.S. 30 Year Bond	2.5583	2.4991

Currencies

BOC Close	Today	Previous
Canadian $	0.76113	0.75350
US $	1.31384	1.32715
Euro Rate 1 Euro=		Inverse
Canadian $	1.44142	0.69376
US $	1.09711	0.91149

Commodities

Gold	Close	Previous
London Gold Fix	1251.75	1256.50
Oil	Close	Previous
WTI Crude Future	50.35	50.18

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks ended the day lower, paring a weekly advance as energy producers fell from the highest level in more than a year to offset an advance in the nation’s lenders amid promising results from U.S. banks.
     The S&P/TSX Composite Index slipped 0.4 percent to 14,584.99 at 4 p.m. in Toronto, erasing a climb of 0.6 percent. The index remained higher for the week, trimming its loss in October to 1 percent. It’s rallied 12 percent this year just behind New Zealand and the U.K., the three best performers among developed markets.
     Eight of the 11 industries in the benchmark for Canadian equity fell Friday, led by a 1.5 percent drop in raw-materials producers, as the price of gold held near the lowest in four months. Barrick Gold Corp. and Goldcorp Inc. retreated at least 2.6 percent. Gold in New York has tumbled 4.9 percent in October as a first-half resurgence has fizzled out on increasing speculation the Federal Reserve will raise interest rates in December. Gold is less attractive in an environment of higher rates as it doesn’t pay a yield.
     Energy producers lost 0.6 percent, reversing gains as an earlier increase in crude evaporated. Crude futures in New York lost 9 cents to close at $50.35 a barrel as the dollar rose as much as 0.4 percent against its peers, making commodities less attractive. The S&P/TSX Energy index remains 25 percent higher this year and near the highest level since June 2015.
     Commodities producers have powered gains in Canada this year, fueling a rebound in the wider gauge after a weak 2015 when the benchmark equity index posted its worst loss since the 2008 financial crisis. The S&P/TSX Materials Index is up 36 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second.
     Canadian stock valuations remain 16 percent higher than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.3 compared with 20.1 for the the S&P 500 Index, according to data compiled by Bloomberg.
     Teck Resources Ltd. climbed 3.1 percent after Dundee Securities analyst Joseph Gallucci raised his rating for the diversified mining company to a buy from neutral. The analyst also boosted Teck’s price target to C$31.50. Teck is the best- performing stock in the S&P/TSX this year, up more than four- fold amid a rebound in commodities prices.

US
By MARLEY JAY
     New York (AP) — U.S. stocks gave up large gains and finished barely higher Friday. Banks and technology companies traded higher, while stocks that pay large dividends fell thanks to a jump in bond yields.
     Stocks were on track for large gains early in the day as reports showed consumers in both the U.S. and China appeared to be spending more. Banks rose after JPMorgan Chase and Citigroup disclosed solid quarterly results. But the gains faded as the day wore on. Drug company stocks continued to fall and energy companies slipped.
     “The retail sales numbers on the surface looked pretty good but when you dig into them they were not that great,” said Mike Baele, managing director at U.S. Bank’s Private Client Reserve. “It seems like every good report we get, we get an offsetting weaker report.”
     The Dow Jones industrial average, which had jumped as much as 162 points in the morning, finished up 39.44 points, or 0.2 percent, at 18,138.38. The Standard & Poor’s 500 inched up 0.43 points to 2,132.98. The Nasdaq composite gained 0.83 points to 5,214.16.
     Goldman Sachs was responsible for most of the Dow’s gains. It rose $3.10, or 1.9 percent, to $170.52 after Britain’s High Court threw out a $1 billion lawsuit against the company. Libya’s sovereign wealth fund had accused Goldman Sachs of duping the fund into making risky deals.
     Bond prices fell. The yield on the 10-year Treasury note rose to 1.80 percent from 1.75 percent. Higher bond yields also help banks because they lead to higher interest rates on loans, and that allows banks to make bigger profits from lending.
     JPMorgan Chase and Citigroup reported results were better than investors expected. The reports may have raised investor hopes for companies that will report their results next week, like Morgan Stanley, Charles Schwab, and BlackRock.
     “It was a good kickoff to earnings season” for banks, said Baele. “It was actually some decent revenue as well with both investment banking and trading.”
     Rising bond yields attracted investors’ attention, and they sold utilities, real estate investment trusts, and other stocks that pay large dividends as a result. Those payments are more appealing to investors seeking income when bond yields are low. PG&E Corp. fell 57 cents to $59.80 and Duke Energy slid 73 cents to $77.21.
     The Commerce Department said retail sales bounced back in September as spending on restaurants, cars and gas improved. The agency also said business stockpiles and sales grew in August, which is a sign that economic growth could get stronger.
     Reports suggested consumers in China are starting to spend more, which helped technology companies recover some of Thursday’s losses. Microsoft climbed 50 cents to $57.42 while Intel rose 48 cents, or 1.3 percent, to $37.45 and Apple picked up 68 cents to $117.66.
     While retail spending rose, the Commerce Department’s report also showed that spending at department stores decreased in September as consumers continued to do more of their shopping online. Kohl’s lost $1.44, or 3.2 percent, to $43.68 and Macy’s fell $1.23, or 3.3 percent, to $35.57.
     Computer and printer maker HP said it will cut between 3,000 and 4,000 jobs over the next three years as demand for those products continues to fall. HP stock lost 67 cents, or 4.4 percent, to $14.48.
     Twitter fell 91 cents, or 5.1 percent, to $16.88 after Salesforce.com told the Financial Times it isn’t interested in buying the company. Twitter has lost 32 percent of its value since October 5th on reports that potential buyers were not going to make offers. Salesforce investors were not enthusiastic about the potential offer, and its stock jumped $3.64, or 5.2 percent, to $74.27.
     U.S. crude oil gave up 9 cents to $50.35 a barrel in New York. Brent crude, the international standard, fell 8 cents to $51.95 a barrel in London. That sent energy companies lower.
     Health care stocks, which are by far the worst-performing industry on the S&P 500 this year, continued to slip. EpiPen maker Mylan lost $1.39, or 3.7 percent, and closed at a three- year low of $36.49. Cancer drug maker Celgene sank $2.13, or 2.1 percent, to $98.50.
     In other energy trading, wholesale gasoline added 1 cent to $1.49 a gallon. Heating oil lost 1 cent to $1.57 a gallon. Natural gas slumped 6 cents, or 1.7 percent, to $3.29 per 1,000 cubic feet.
     The price of gold fell $2.10 to $1,255.50 an ounce. Silver lost 2 cents to $17.44 an ounce. Copper slipped 1 cent to $2.11 a pound.
     The dollar rose to 104.18 yen from 103.60 yen. The euro rose to $1.0983 from $1.1053.
     France’s CAC 40 jumped 1.5 percent and Germany’s DAX rose 1.6 percent. In Britain the FTSE 100 advanced 0.5 percent. Japan’s benchmark Nikkei 225 index added 0.5 percent and South Korea’s Kospi advanced 0.4 percent. Hong Kong’s Hang Seng added 0.9 percent. Thailand’s SET index climbed 4.7 percent in the second day of trading after the death of Thailand’s king. The SET fell 4 percent in September as investors worried about the monarch’s health and even with the rally Friday the index fell 1.8 percent this week.

Have a wonderful weekend everyone.

 

Be magnificent!
 

 “I never dreamed about success. I worked for it.” Estee Lauder

As ever,
 

Karen

 

“The purpose of human life is to serve, and to show compassion and the will to help others.” Albert Schweitzer

 

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

Dear Friends,

Tangents:

Carolann is out of the office, I will be writing the newsletter on her behalf.  

PHOTOS OF THE DAY

Pilgrims pray at the Basilica of Our Lady of Aparecida, Brazil’s national saint, in the city of Aparecida, Sao Paulo state, Brazil, on Wednesday. Every year on this date, millions of Brazilian and foreign pilgrims visit the shrine and about 100,000 people usually attend services in Aparecida commemorating her. Roosevelt Cassio/Reuters

Queen Letizia of Spain looks through the window of a car after attending a military parade marking Spain’s National Day in Madrid on Wednesday. Juan Medina/Reuters
Market Closes for October 12^th, 2016

Market Index	Close	Change
Dow Jones	18144.20	+15.54   +0.09%
S&P 500	2139.18	+2.45   +0.11%
NASDAQ	5239.019	-7.769   -0.15%
TSX	14618.97	+69.37
		+0.48%

International Markets

Market Index	Close	Change
NIKKEI	16840.00	-184.76
		-1.09%
HANG SENG	23407.05	-142.47
		-0.60%
SENSEX	28082.34	+21.20
		+0.08%
FTSE 100	7024.01	-46.87
		-0.66%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.196	1.197
CND. 30 Year Bond	1.831	1.835
U.S.    10 Year Bond	1.7692	1.7638
U.S. 30 Year Bond	2.4991	2.5014

Currencies

BOC Close	Today	Previous
Canadian $	0.75350	0.75421
US $	1.32715	1.32589
Euro Rate 1 Euro=		Inverse
Canadian $	1.46149	0.68423
US $	1.10123	0.90808

Commodities

Gold	Close	Previous
London Gold Fix	1256.50	1253.45
Oil	Close	Previous
WTI Crude Future	50.18	50.79

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks halted three days of declines as miners rallied with groups that pay high dividends as the Federal Reserve’s latest meeting minutes showed officials continue to favor only gradual increases in U.S. interest rates.
     The S&P/TSX Composite Index rose 0.5 percent to 14,618.97 at 4 p.m. in Toronto. The gauge has retreated 0.7 percent so far in October after capping a third monthly gain. The index is up 12 percent this year, making it the third-best performing developed market equity index in the world just behind the U.K. and New Zealand.
     Nine of 11 industries in the benchmark for Canadian equity advanced Wednesday, led by a 1.9 percent climb among raw- materials producers. Real-estate, utilities and consumer-staples stocks rose at least 1 percent.
     Gold miners jumped as the price of the metal for immediate delivery added 0.2 percent in New York, holding near the lowest level in four months. Gold has fallen on speculation the Fed will raise rates this year. Officials at the September meeting said a “reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation.”
     Traders have now priced in a 68 percent chance the Fed will increase interest rates in December, a modest increase from before the minutes were released, according to data compiled by Bloomberg. A gauge measuring the dollar against its major peers advanced a third day to trade at the highest in seven months. 
     Gold is less attractive in an environment of rising rates because it doesn’t pay a yield, while a firming greenback is generally negative for commodities priced in U.S. dollars.
     Oil and gas companies lost 0.1 percent, paring an earlier retreat, as crude fell 1.2 percent in New York, holding near $50 a barrel for a second day of losses. Crescent Point Energy Corp. and Husky Energy Inc. lost at least 2.6 percent.
     Enbridge Inc. added 1.1 percent, reversing an earlier decline. Protesters seeking to stop construction of an oil pipeline in North Dakota temporarily shut five pipelines. Protesters used bolt cutters to tamper with valves in an attempt to disrupt a pipeline in Minnesota, forcing Enbridge to shut two of its main lines as a precaution.
     Commodities producers remain the top-performing industries in Canada this year, fueling a rebound in the wider gauge after a weak 2015 when the benchmark equity gauge posted its worst loss since the 2008 financial crisis. The S&P/TSX Materials Index is up 38 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second with a 25 percent gain.
     Canadian stock valuations remain 16 percent higher than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.3 compared with 20.2 for the the S&P 500 Index, according to data compiled by Bloomberg.

US
By John Hyland and Anna-Louise Jackson
     (Bloomberg) — U.S. stocks extended gains after minutes from the Federal Reserve’s latest meeting showed officials were in no rush to raise interest rates as they wait for additional data on the strength of the labor market.
     The S&P 500 Index rose 0.3 percent to 2,143.69 at 2:22 p.m. in New York, near its average price during the past 100 days after the steepest selloff in four weeks took it below that closely watched level for the first time since June. The index extended gains following the Fed release as officials were seen debating the timing for higher rates amid data showing steady but slow improvement in the economy.
     “It was a little bit more balanced in the sense of more talking around the possibility of raising the rates,” said Melda Mergen, senior vice president and director of U.S. equities in Boston at Columbia Threadneedle Investments. “That being said, it’s pretty much offset with the factors like looking at the downside risk outside the U.S. and maybe the other things in the economy can give them a pause here.”
     Uncertainties over the economic outlook and the desire by the committee to assure that job growth remains strong are likely to delay another rate increase until December, federal funds futures traders are betting. Fed officials next meet Nov. 1-2, just before the U.S. election on Nov. 8.
At the September meeting, the Federal Open Market Committee left the benchmark lending rate unchanged, even as a majority of the 17 participants still forecast at least one hike this year. Officials debating the merits of raising interest rates last month described the decision as a close call, with several saying a rate hike was needed “relatively soon,” minutes of the September meeting showed.
     Equity investors are on edge after Alcoa Inc. yesterday dropped the most in seven years following results that missed analysts’ estimates. The release came as projections called for a sixth quarter of falling earnings for the S&P 500, while speculation intensified that the Fed will raise borrowing costs this year. The benchmark U.S. 10-year note yield rose to a four- month high Wednesday, while traders place the odds of a move in December at 67 percent, up from 50 percent two weeks ago.
     “The combination of bad out-the-gate earnings reports, rising sense of Fed raising rates, and bond yields going up is a tough combination for stocks,” said Jim Paulsen, chief investment strategist at Wells Capital Management, which manages about $350 billion. “The market is going to need a show of momentum economically and on earnings to handle higher yields.”
     Recent economic data beating forecasts and comments by Fed officials have fueled bets that the central bank is on a path to increase rates this year. Investors will watch reports on retail sales, consumer sentiment and producer prices due on Friday.
     “Some investors are a bit nervous,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “Hiking once is fine, but a series of increases could hurt the market. While good for banking, it means higher financing costs, which means lower profits for firms.”
     Railroad CSX Corp. will release earnings after Wednesday’s market close, while Delta Air Lines Inc., JPMorgan Chase & Co. and Citigroup Inc. are also among those scheduled to report this week. Analysts forecast a profit drop of 1.6 percent for S&P 500 companies in the third quarter.
     “The trend coming out of the industrials companies that reported is very weak, but we’re not seeing any indication that that’s bleeding outside of industrials,” said John Augustine, chief investment officer for Huntington Bank in Columbus, Ohio, which oversees more than $17 billion. “There’s still the potential for a 2 to 3 percent upside surprise overall to earnings estimates and that will end the profits recession.”
     After surging as much as 7.2 percent this year through a record in August, the S&P 500 has failed to push higher. On Tuesday, the gauge closed at an almost one-month low, while the CBOE Volatility Index surged 15 percent. The measure of expected stock-price swings added 3.3 percent on Wednesday.

 

Have a wonderful evening everyone.

 

Be magnificent!

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

 

As ever,
 

Karen

 

“Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment.” Buddha

 

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

Dear Friends,

Tangents:

Yesterday was Columbus Day in the US (only the bond markets were closed, stock markets were open).  Tomorrow marks the anniversary of Christopher Columbus landing in the Americas in 1492.
He wrote in his journal on October 12, 1492:
When we stepped ashore we saw fine green trees, streams everywhere and different kinds of fruit….Soon many of the islanders gathered round us.  I could see that they were people who would be more easily converted to our Holy Faith by love than by coercion, and wishing them to look on us with friendship I gave some of them red bonnets and glass beads which they hung round their necks, and many other things of small value, at which they were so delighted and so eager to please us that we could not believe it.  Later they swam out to the boats to bring us parrots and balls of cotton thread and darts, and many other things, exchanging them for such objects as glass beads and hawk bells.  They took anything, and gave willingly whatever they had.
   However, they appeared to me to be a very poor people in all respects.  They go about as naked as the day they were born, even the women, though I saw only one, who was quite young.  All the men I saw were quite young, none older than thirty, all well built, finely bodied and handsome in the face.  Their hair is coarse, almost like a horse’s tail, and short; they wear it short, cut over the brow, except a few strands of hair hanging down uncut at the back…
   They carry no weapons, and are ignorant of them; when I showed them some swords they took them by the blade and cut themselves.  They have no iron; their darts are just sticks without an iron head, though some of them have a fish tooth or something else at the tip.
PHOTOS OF THE DAY

Costumed characters pose for a group photograph as they parade through the Brand Licensing Europe 2016 exhibition at Olympia in London on Tuesday. The 3-day trade show brings together brand owners, retailers, licensees, and manufacturers for deal making, networking, and trend spotting.Matt Dunham/AP

Northern Ireland soccer fans celebrate prior to the kickoff of the World Cup Group C qualifying soccer match against Germany in Hannover, Germany, on Tuesday. Martin Meissner/AP
Market Closes for October 11^th, 2016

Market Index	Close	Change
Dow Jones	18128.66	-200.38   -1.09%
S&P 500	2136.73	-26.93   -1.24%
NASDAQ	5246.789	-81.885   -1.54%
TSX	14549.60	-16.66
		-0.11%

International Markets

Market Index	Close	Change
NIKKEI	17024.76	+164.67
		+0.98%
HANG SENG	23549.52	-302.30
		-1.27%
SENSEX	28082.34	+21.20
		+0.08%
FTSE 100	7070.88	-26.62
		-0.38%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.197	1.170
CND. 30 Year Bond	1.835	1.818
U.S.    10 Year Bond	1.7638	1.7216
U.S. 30 Year Bond	2.5014	2.4546

Currencies

BOC Close	Today	Previous
Canadian $	0.75421	0.75278
US $	1.32589	1.32841
Euro Rate 1 Euro=		Inverse
Canadian $	1.46559	0.68232
US $	1.10536	0.90469

Commodities

Gold	Close	Previous
London Gold Fix	1253.45	1258.75
Oil	Close	Previous
WTI Crude Future	50.79	49.81

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks ended the day lower, extending a three-day slide, as a rally in energy companies stoked by crude trading near a 15-month high was offset by declines among raw-materials producers amid slumping gold prices.
     The S&P/TSX Composite Index fell 0.1 percent to 14,549.60 at 4 p.m. in Toronto. Canadian markets were closed Monday for the Thanksgiving holiday. The index is up 12 percent this year, making it the third-best performing developed market equity index in the world behind the U.K. and New Zealand.
     Raw-materials producers fell 0.6 percent as gold traded near the lowest in four months. The precious metal fell for the seventh time in eight sessions and has tumbled 4.8 percent in October. Barrick Gold Corp. and Franco-Nevada Corp. lost more than 1.7 percent.
     Traders have now priced in a 67 percent chance the Federal Reserve will increase interest rates in December, according to data compiled by Bloomberg. Gold is less attractive in an environment of rising rates because it doesn’t pay a yield.
     Meanwhile oil and gas companies added 0.6 percent, one of only two industries among 11 to advance in the S&P/TSX. Crude traded just under $51 a barrel in New York, after climbing 3.1 percent Monday. Russia’s biggest producer, Rosneft PJSC, said it won’t reduce output, according to Reuters, increasing uncertainty over whether the country will join OPEC’s deal to curb supply and balance the market. Suncor Energy Inc. rose 7.3 percent and Cenovus Energy Inc. added 2.7 percent.
     Raw-materials and energy remain the top-performing industries in Canada this year, fueling a rebound in the wider gauge even as its first-half resurgence has sputtered somewhat in the second. The S&P/TSX Materials Index is up 35 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second with a 26 percent gain.
     Canadian stock valuations remain 15 percent higher than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.2 compared with 20.1 for the the S&P 500 Index, according to data compiled by Bloomberg.
     Teck Resources Ltd. jumped 4.4 percent, the most in two weeks, for a second day of gains. A potential benchmark settlement between Peabody Energy Corp. and Nippon Steel & Sumitomo Metal Corp. at $200 per metric ton may be a “meaningful positive” for metallurgical coal producers, according to FBR Capital Markets analyst Lucas Pipes.

US
By Dani Burger and John Hyland
     (Bloomberg) — The S&P 500 Index fell to an almost four- week low as an early batch of disappointing corporate results damped optimism over a rebound in earnings, while growing speculation that the Federal Reserve will raise interest rates this year undermined demand for riskier assets.
     Equities suffered the worst decline in a month, with Alcoa Inc. tumbling the most in seven years as its earnings missed estimates. Health-care shares were the biggest losers, weighed down by Illumina Inc.’s 25 percent plunge after it said sales were lower than anticipated. Commodity producers retreated as a gauge on the dollar reached a two-month high, and chipmakers saw their biggest drop in four weeks.
     The S&P 500 slid 1.2 percent to 2,136.73 at 4 p.m. in New York, with losses accelerating in afternoon trading as the gauge fell below its average price during the past 100 days. The Dow Jones Industrial Average lost 200.38 points, or 1.1 percent, to 18,128.66. The Nasdaq 100 Index declined 1.5 percent following a fresh record on Monday, and the CBOE Volatility Index jumped 15 percent to a three-week high. About 6.7 billion shares traded hands on U.S. exchanges, in line with the three-month average.
     “We’ve got several factors weighing on the market right now,” said Alan Gayle, a senior strategist at RidgeWorth Investments. “Earnings, politics, Fed and oil taking a breather after a strong run. Typically, companies step over earnings guidance and the early news is that may not be happening. Investors have gotten news from multiple sources that are making them increasingly nervous and the market’s selling off.”
     It’s not the beginning to the earnings season investors had hoped for, with S&P 500 companies forecast to post a sixth consecutive decline in profits and trading at more than 18 times estimated earnings, compared with a 15.6 average for the past five years. In addition to the selloffs in Alcoa and Illumina, Fastenal Co. fell the most in 20 months after the industrial supplier’s profit missed predictions, and Seagate Technology Plc lost 7.6 percent after forecasting higher expenses.
     “Alcoa is always the first off and seen as a bellwether for industrial demand,” Chris Gaffney, president of world markets at St. Louis-based EverBank, said by phone. “People need to see strong earnings, especially with the thought that rates will start moving higher. The environment for companies is going to get less accommodating. The drivers today and going forward are going to be earnings.”
     Meanwhile, traders boosted odds for a December rate hike to nearly 68 percent, from 64 percent on Friday and about 50 percent two weeks ago as encouraging data signaled the U.S. economy is strong enough to cope with higher borrowing costs. They are pricing in a 17 percent chance of a move next month. Chicago Fed President Charles Evans told reporters in Sydney that a December move “could be fine,” after arguing in a speech to keep rates low until core inflation moves higher.
     Investors will also look to data and minutes from the Fed’s September meeting, which will be released on Wednesday, for clues on the health of the world’s biggest economy and the likely trajectory of interest rates. Reports on retail sales, producer prices and consumer sentiment are due Friday.
     “I think the only rationale for having valuations where they are is in the context of low interest rates,” said Mark Heppenstall, the Horsham, Pennsylvania-based chief investment officer of Penn Mutual Asset Management, which oversees about $20 billion. “If the bond market begins to show signs of weakness, that could spill over into pressure on equity prices.”
     Treasuries fell Tuesday amid bets that inflation will pick up, with 30-year bond yields touching the highest since June.
All of the S&P 500’s 11 main industries retreated, with health- care companies dropping to a three-month low amid the biggest selloff since June, while raw-materials fell 1.3 percent. Phone, real estate and consumer-staples companies were the only ones to lose less than 1 percent.
     Illumina posted its steepest drop in five years after saying third-quarter sales were lower than it previously anticipated because of declining demand for its high-speed genetic sequencers. Health-care equipment stocks saw their biggest slump since June’s Brexit vote, with Abbott Laboratories falling 5.4 percent, the most since April.
     Alcoa’s slide dragged raw-materials to a three-month low, with the aluminum producer capping its worst day since March 2009. Freeport-McMoRan Inc. lost 3.1 percent and International Paper Co. declined 2.3 percent.
     Intel Corp. decreased 2 percent to pace a retreat among chip stocks, the worst performers today in the broader tech group. Micron Technology Inc. and Applied Materials Inc. sank at least 2.5 percent.
     Banks in the benchmark index slumped 0.9 percent, even as rising bond yields signaled the potential for better earnings prospects. Citigroup Inc. and Bank of America Corp. fell more than 1.1 percent.

 

Have a wonderful evening everyone.

 

Be magnificent!

Beauty lies in the total abandonment of the observer and the observed,
and there can be self-abandonment only when there is total austerity.
There is no ladder to climb; there is only the first step
and the first step is the everlasting step.
Krishnamurti

As ever,
 

Carolann

 

 

The media.  It sounds like a convention of spiritualists.
                                   – Tom Stoppard, b. 1937

 

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

Dear Friends,

Tangents:

THANKSGIVING
ANYONE CAN DO IT
   -by Thich Nhat Hanh

Looking at Your Empty Plate:
My plate, empty now,
will soon be filled
with precious food.

Looking at Your Full Plate:
In this food,
I see clearly the presence
of the entire universe
supporting my existence.

Contemplating Your Food:
This plate of food,
so fragrant and appetizing,
also contains much suffering.

Beginning to Eat:
With the firs taste, I promise
to offer joy.
With the second, I promise to
help relieve
the suffering of others.
With the third, I promise to
see other’s joy
as my own.
With the fourth, I promise to
learn the way
of non-attachment and
equanimity.

Finishing Your Meal:
The plate is empty.
My hunger is satisfied.
I vow to live
for the benefit of all beings.

Washing the Dishes:
Washing the dishes
is like bathing a baby Buddha.
The profane is the sacred.
Everyday mind is Buddha’s
mind.

PHOTOS OF THE DAY

Trees sway in heavy rain and wind from hurricane Matthew in front of Exploration Tower early Friday in Cape Canaveral, Fla. Matthew weakened slightly to a Category 3 storm, with maximum sustained winds near 120 mph, but the US National Hurricane Center says it’s expected to remain a powerful hurricane as it moves closer to the coast. Craig Rubadoux/Florida Today/AP

A stunt driver shows his skills at the international motorcycle exhibition in Cologne, Germany, on Friday. The motorcycle and scooter industry will show the latest bikes, from classic scramblers to the fastest racing bikes, at INTERMOT 2016, which runs through Sunday. Martin Meissner/AP
Market Closes for October 7^th, 2016

Market Index	Close	Change
Dow Jones	18240.49	-28.01   -0.15%
S&P 500	2156.27	-4.50   -0.21%
NASDAQ	5292.406	-14.445   -0.27%
TSX	14562.95	-32.55
		-0.22%

International Markets

Market Index	Close	Change
NIKKEI	16860.09	-39.01
		-0.23%
HANG SENG	23851.82	-100.68
		-0.42%
SENSEX	28061.14	-45.07
		-0.16%
FTSE 100	7044.39	+44.43
		+0.63%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.170	1.150
CND. 30 Year Bond	1.818	1.801
U.S.    10 Year Bond	1.7216	1.7372
U.S. 30 Year Bond	2.4546	2.4576

Currencies

BOC Close	Today	Previous
Canadian $	0.75278	0.75662
US $	1.32841	1.32167
Euro Rate 1 Euro=		Inverse
Canadian $	1.48752	0.67226
US $	1.11978	0.89303

Commodities

Gold	Close	Previous
London Gold Fix	1258.75	1254.50
Oil	Close	Previous
WTI Crude Future	49.81	50.44

Market Commentary:
Canada
By John Hylan 
     (Bloomberg) — Canadian stocks declined for a second day as employment data from the U.S. signaled that interest rates may be rising soon. Gold had the biggest weekly loss in more than three years.
     The S&P/TSX Composite Index fell 0.2 percent to 14,566.26 at 4 p.m. in Toronto, capping a weekly drop of 1.1 percent. The index is up 12 percent this year, making it the third-best performing developed market equity index in the world just behind New Zealand and the U.K.
     Gold capped its biggest weekly loss since 2013 as investors judged that a weaker-than-expected U.S. payrolls report won’t be enough to sidetrack the Federal Reserve from raising interest rates this year. Higher rates hurt the precious metal’s appeal since it doesn’t pay interest. Traders have now priced in a 64 percent chance that rates will rise in December, according to data compiled by Bloomberg.
     Canadian stocks remain expensive compared to their U.S. peers. The S&P/TSX is carrying a price-to-earnings ratio of 23.2 compared with 20.3 for the the S&P 500 Index, according to data compiled by Bloomberg.
     The decline in the S&P/TSX was broad-based, as nine of the 11 sectors declined. Raw-materials producers led gains, jumping 0.4 percent. Raw-materials and energy producers remain the top- performing industries in Canada this year. The S&P/TSX Materials Index is up 35 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second with a 25 percent gain.
     Barrick Gold Corp. rose 1.6 percent erasing losses earlier this week. Goldcorp Inc. gained 0.4 percent and Franco-Nevada Corp. jumped 0.8 percent.
     Financial shares declined 0.2 percent. Royal Bank of Canada and Bank of Nova Scotia fell 0.3 percent. First National Financial Corp. tumbled 1.1 percent to its lowest level since April 2016. The company said Thursday that new housing rules will cut into its profit growth.
     Sunopta Inc. stock declined to the lowest level in seven months after announcing the conclusion of a strategic review. Oaktree Capital Management invested $85 million into the Canadian natural and organic food producer, and appointed new directors to the board.

US
By Dani Burger and Joseph Ciolli
     (Bloomberg) — U.S. stocks slipped Friday, adding to the first weekly decline in four, as jobs data showing steady growth in the labor market kept the Federal Reserve on track to carry out an interest rate increase this year.
     Materials producers led declines Friday, as gold and silver capped the worst week since at least November. Industrial shares tumbled after Honeywell International Inc. plunged the most since 2011 after profit missed targets. Tyson Foods Inc. retreated after an analyst downgraded the stock while citing a “powerfully convincing” class-action lawsuit.
     The S&P 500 Index slipped 0.3 percent to 2,153.73 at 4 p.m. in New York, pushing the decline this week to 0.7 percent. The Dow Jones Industrial Average lost 31.26 points, or 0.2 percent, to 18,239.74. It dropped 0.4 percent in the week. Equities pared losses in afternoon trading as investors speculate growth isn’t robust enough to warrant an increase in the pace of tightening.
     “There are still signs of overall health in a very tight labor market,” said Tony Bedikian, head of global markets for Citizens Bank in Boston. “This still leaves a likely December hike on the table here. I don’t think this report sways the Fed in terms of holding back from tightening.”
     Employers added 156,000 jobs in September, showing the labor market is settling into a pace that will support the economy as the Federal Reserve considers tightening monetary policy as soon as next month. The median forecast in a Bloomberg survey of economists called for a 172,000 advance. The jobless rate rose to 5 percent as the labor participation rate ticked up.
     The odds for a Fed rate hike in December have increased to 64 percent from 53 percent last week, while traders are pricing in a 17 percent chance of an increase as early as November. Officials have indicated a desire to tighten policy to a more normal level, while signaling that the pace of rate increases would be gradual so as not to knock economic growth off kilter.
     The S&P 500 trades at 16.8 times its members’ earnings, compared with global stocks’ valuation of 15.5 times and 14.8 for the Stoxx Europe 600 Index.
     The upcoming earnings season, which Alcoa Inc. unofficially kicks off on Oct. 11, will be closely watched for further indications of the health of corporate America. Analysts forecast a 1.5 percent contraction in three-month profit for S&P 500 members, which would be a sixth straight quarterly drop.

 

Have a wonderful weekend everyone.

 

Be magnificent!

What does it matter if we do not understand the exact meaning of the grand harmony?
Is it not like the bow player who touches a string and at once releases every resonance?  This is the language
of beauty, this is the caress that comes from the heart of the world and goes straight to our hearts.
Rabindranath Tagore

As ever,

 

Carolann

 

Recollect that you must be a seaman to be an officer; and also, that you cannot
be a good officer without being a gentleman.
     -Horatio Nelson, Lord Nelson, 1758-1805
to his midshipmen, in Robert Southey, The Life of Nelson, 1860 ed.

 

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

 

Dear Friends,

Tangents:

Today is my wedding anniversary and Gary gave me a book of poetry this morning; it is entitled Robert Browning on Love, edited by Stephen Brenna.  This is from the poem Mesmerism:

Then, – if my heart’s strength serve,
And through all and each
Of the veils I reach
To her soul and never swerve,
Knitting an iron nerve –
Command her soul to advance
And inform the shape
Which has made escape
And before my countenance
Answers me glance for glance –
                        -Robert Browning

I love  David Tang’s column in the weekend edition  of the Financial Times (House & Home section).  Last weekend one of his readers wrote in and commented, “I felt certain that you were going to discover the old aphorism of American divorce lawyers: 50 per cent of marriages end in divorce; the other 50 per cent in death.”  To which David Tang replied, “Not exactly a happy proposition.  It reminds me of the story of the woman who consulted a gypsy clairvoyant.  Looking into her crystal ball, the gypsy looked alarmed and reluctantly warned the woman that her husband would soon die a violent death.  The woman then asked if the gypsy could gaze further into her crystal ball and tell her if she would be acquitted.

  Talking of death, a very old friend of mine aged 89 told me one day that he was marrying someone aged 25.  I was astonished by the age gap and asked how he had managed to persuade someone so much younger to marry him.  ‘I told her I was 98,’ he replied.”

PHOTOS OF THE DAY

Raindrops sit on leaves in a park in Wernigerode, central Germany, on Thursday. Matthias Schrader/AP

People stop to watch the sunset next to a public fountain at the Temple of Debod park in Madrid on Thursday. The park is popular with locals but also attracts tourists because of its view at sunset. Francisco Seco/AP
Market Closes for October 6^th, 2016

Market Index	Close	Change
Dow Jones	18269.67	-11.36   -0.06%
S&P 500	2160.99	+1.26   +0.06%
NASDAQ	5306.852	-9.168   -0.17%
TSX	14603.39	-7.18
		-0.05%

International Markets

Market Index	Close	Change
NIKKEI	16899.10	+79.86
		+0.47%
HANG SENG	23952.50	+164.19
		+0.69%
SENSEX	28106.21	-114.77
		-0.41%
FTSE 100	6999.96	-33.29
		-0.47%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.150	1.091
CND. 30 Year Bond	1.801	1.759
U.S.    10 Year Bond	1.7372	1.7021
U.S. 30 Year Bond	2.4576	2.4234

Currencies

BOC Close	Today	Previous
Canadian $	0.75662	0.75863
US $	1.32167	1.31817
Euro Rate 1 Euro=		Inverse
Canadian $	1.47401	0.67842
US $	1.11526	0.89665

Commodities

Gold	Close	Previous
London Gold Fix	1254.50	1269.40
Oil	Close	Previous
WTI Crude Future	50.44	49.83

Market Commentary:
On this day in 2008, the Dow Jones Industrial Average closes below 10000 for the first time since 2004.
Number of the Day
19
The “cyclically adjusted price-earnings” ratio calculated using Commerce Department corporate profit data as of the end of the second quarter, just above its 50-year average of around 17.
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks ended the day lower as a rout in gold miners worsened while financial shares advanced on speculation that interest rates are poised to rise.
     The S&P/TSX Composite Index fell 0.1 percent to 14,595.50 at 4 p.m. in Toronto, after recovering from a three-day slide Wednesday that had wiped out 1.6 percent of its value. The index is up 12 percent this year, making it the second-best performing developed market equity index in the world just behind New Zealand.
     Canadian stock valuations remain 15 percent higher than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.3 compared with 20.4 for the the S&P 500 Index, according to data compiled by Bloomberg.
     Raw-materials producers tumbled the most in the index, with gold miners dropping 2.3 percent to the lowest since April. Gold fell for a fifth day in New York, to the lowest in almost four months, wiping out more than 5 percent of value during a five- day slide. 
     Raw-materials and energy producers remain the top- performing industries in Canada this year, fueling a rebound in the wider gauge even as its first-half resurgence has sputtered somewhat in the second. The S&P/TSX Materials Index is up 35 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second with a 25 percent gain.
     Traders have now priced in a 64 percent chance the Federal Reserve will raise interest rates in December, according to data compiled by Bloomberg. The U.S. is expected to report Friday that it added roughly 171,000 jobs in September, according to consensus estimates ahead of the latest jobs report. Gold is less attractive in an environment of higher rates as it doesn’t pay any yield.
     The prospect for higher rates lifted shares of some of Canada’s largest lenders, the largest component of the S&P/TSX.
     Canadian Western Bank jumped 2.6 percent, while Royal Bank of Canada added 0.6 percent. First National Financial Corp. fell 1.2 percent, erasing an earlier gain to extend losses for a fourth day. The alternative lender has now plunged 20 percent in four days, after Finance Minister Bill Morneau introduced measures this week to cool housing markets in Toronto and Vancouver and curb the rise in household debt.
     Imperial Oil Ltd. and Cenovus Energy Inc. rose more than 1.5 percent to lead gains among energy producers, as seven of 11 industries in the S&P/TSX advanced, offsetting some losses. Oil futures added 1.2 percent to settle at $50.44 in New York, extending gains after closing at the highest in more than three months Wednesday. The price of crude surged above $50 a barrel for the first time since June as U.S. stockpiles fell.
     Canopy Growth Corp. ended the day down 1.8 percent, after touching a record high. The marijuana producer’s Tweed brand is partnering with rapper Snoop Dogg to introduce a selection of varieties of cannabis under the “Leafs by Snoop” brand. Canopy is up 65 percent this year, after graduating to the Toronto Stock Exchange in July.

US
By Anna-Louise Jackson
     (Bloomberg) — U.S. stocks closed little changed, as rising technology shares helped offset declines among drugmakers, while investors awaited payrolls data for more evidence that the economy is strong enough to cope with higher borrowing costs.
     Apple Inc. rose for a third day to boost tech shares and Whole Foods Market Inc. rallied as much as 6.7 percent on takeover speculation, bolstering consumer staples. Mylan NV sank to a three-year low as drugmakers weighed on the health-care group, with lawmakers continuing to pressure the company over prices for its EpiPen allergy shot. Utilities extended their longest losing streak in 14 years.
     The S&P 500 Index added less than 0.1 percent to 2,160.77 at 4 p.m. in New York, erasing a 0.4 percent slide after a European Central Bank official affirmed that the ECB is still in an “accommodative mode.” The Dow Jones Industrial Average lost 12.53 points, or 0.1 percent, to 18,268.50, after reversing a 118-point drop. The Nasdaq Composite Index slipped 0.2 percent. About 6.3 billion shares traded hands on U.S. exchanges, 5 percent below the three-month average.
     “There is a lot of optimism priced into the market especially when it comes to the jobs,” said Kevin Kelly, chief investment officer at Recon Capital Partners LLC in Greenwich, Connecticut, which oversees $350 million. “The number this time better live up to expectations because every other indicator is showing that this economy is moving forward and it is doing well. The market is anticipating a rate hike in December, so should a really good jobs number come out, I don’t think it should spook it.”
     Stocks fell earlier Thursday as lackluster corporate results damped sentiment before the government’s jobs report Friday and the start of earnings season next week. The September employment release is in focus as recent data have exceeded forecasts, with a Bloomberg index tracking economic surprises turning positive yesterday for the first time since August. Odds of higher borrowing costs in December are almost 64 percent, while traders are pricing in a nearly 24 percent chance of a Fed hike in November, up from 17 percent last week.
     The labor market displayed further signs of strengthening as a report today showed filings for unemployment benefits fell last week almost to the lowest level since 1973. Continuing claims declined to the lowest since 2000. Economists surveyed by Bloomberg forecast data tomorrow will show the economy added 172,000 jobs in September, up from 151,000 a month earlier.
     “This is an economy that doesn’t need emergency rates any more,” said Ben Kumar, a London-based investment manager at Seven Investment Management LLP, which manages the equivalent of $13 billion. “Recent data and upbeat Fed comments on growth have allowed investors to get more comfortable with that idea, and it means they’re ready to tolerate a bit of higher market volatility.”
     Among shares moving today, Wal-Mart Stores Inc. dropped 3.2 percent and Yum! Brands Inc. fell 1.3 percent as their disappointing reports added to anxiety over corporate earnings on the cusp of the reporting period. Wal-Mart forecast profits for its next fiscal year that missed some estimates. American Express Co. lost 3.8 percent amid concerns its revenue will miss forecasts. Home Depot Inc. rallied 2.1 percent, the most in three months, as Florida braces for Hurricane Matthew.
     The upcoming earnings season will provide fresh indications on the health of corporate America. Analysts are still predicting a profit contraction for S&P 500 members in the third quarter, a sixth straight drop, before Alcoa Inc. unofficially kicks off the reporting period on Oct. 11.
     Stocks had a rocky start to the month, with the S&P 500 slipping 0.8 percent in the first two sessions before a bounce yesterday. While the gauge has historically been more volatile in October, it’s also a month that has typically yielded the best gains of the year, with an average advance of 1.9 percent over the past 25 such periods. The benchmark on Thursday closed 1.3 percent below the record it last reached in August.
     In today’s trading, the CBOE Volatility Index fell 1.2 percent to 12.84, wiping out an earlier 6.5 percent climb. The measure of market turbulence fell 1 percent in September after erasing a gain that reached 35 percent. Seven of the S&P 500’s 11 main industries advanced Thursday, with raw-materials producers leading with a 0.8 percent climb, while biotechnology shares dragged down the health-care group.
     Energy producers gained with crude oil futures above $50 a barrel today for the first time since June on optimism that the global glut will diminish. Schlumberger Ltd. and Occidental Petroleum Corp. increased more than 1.3 percent.
     Utilities fell for a 10th consecutive session, the longest since September 2002, with investors continuing to pivot away from shares that offer relatively high dividends as bond yields become more attractive. Amid increased wagers on higher rates, the yield on 10-year Treasuries rose to a three-month high. Phone companies retreated for the sixth time in seven days to hold at a four-month low.
     Health-care shares were the biggest drag today, with Endo International Plc down 3.7 percent, while Celgene Corp. and Gilead Sciences Inc. declined more than 1.2 percent. The Nasdaq Biotechnology Index dropped 2.2 percent to a three-week low.
      Alnylam Pharmaceuticals Inc. plunged 48 percent to a three- year low after ending development of its late-stage experimental drug for a rare disease because of safety concerns.

 

Have a wonderful evening everyone.

 

Be magnificent!

The divine music is incessantly going on within ourselves,
but the loud senses drown the delicate music,
which is unlike and infinitely superior to anything we can perceive with our senses.
Mahatma Gandhi

 

As ever,

 

Carolann

 

Can’t you read?  The score demands con amore, and what are you doing?
You are playing it like married men!
        -Arturo Toscanini, 1867-1957
Italian conductor, criticizing the playing of the
Austrian orchestra during rehearsal.

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

Dear Friends,

Tangents:
On this day in…
On October 5, 1947, in the first televised White House address, President Truman asked Americans to refrain from eating meat on Tuesdays and poultry on Thursdays to help stockpile grain for starving people in Europe.
On this day in 2011, Apple founder Steve Jobs dies at age 56.

And it is Bonnie’s 25^th wedding anniversary!
PHOTOS OF THE DAY

A girl rides a swing set up as part of festivities for Dashain as others await their turn in Kathmandu, Nepal, on Wednesday, Oct. 5, 2016. Dashain, the most important religious festival of Nepal’s Hindus, commemorates the victory of the gods over demons. Niranjan Shrestha/AP

People enjoy warm weather on the beach near a memorial for the victims of the July 14 attack on the Promenade des Anglais in Nice, France, on Wednesday. Eric Gaillard/Reuters

 

Stewards and stewardesses stand in line during the inauguration of the new train line linking Addis Ababa to the Red Sea state of Djibouti, in Addis Ababa, Ethiopia, on Wednesday. Tiksa Negeri/Reuters
Market Closes for October 5^th, 2016

Market Index	Close	Change
Dow Jones	18281.03	+112.58   +0.62%
S&P 500	2159.73	+9.24   +0.43%
NASDAQ	5316.020	+26.362   +0.50%
TSX	14610.58	+89.58
		+0.62%

International Markets

Market Index	Close	Change
NIKKEI	16819.24	+83.59
		+0.50%
HANG SENG	23788.31	+98.87
		+0.42%
SENSEX	28220.98	-113.57
		-0.40%
FTSE 100	7033.25	-41.09
		-0.58%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.091	1.064
CND. 30 Year Bond	1.759	1.731
U.S.    10 Year Bond	1.7021	1.6864
U.S. 30 Year Bond	2.4234	2.4121

Currencies

BOC Close	Today	Previous
Canadian $	0.75863	0.75818
US $	1.31817	1.31895
Euro Rate 1 Euro=		Inverse
Canadian $	1.47728	0.67692
US $	1.12070	0.89230

Commodities

Gold	Close	Previous
London Gold Fix	1269.40	1283.30
Oil	Close	Previous
WTI Crude Future	49.83	48.69

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks rose for the first time in four days driven by miners and energy producers as crude advanced to near $50 a barrel and the recent plunge in gold prices leveled off.
     The S&P/TSX Composite Index rose 0.6 percent to 14,610.58 at 4 p.m. in Toronto, recovering from a three-day slide that wiped out 1.6 percent of its value. The index is up 12 percent this year, making it the third-best performing developed market equity index in the world just behind New Zealand and the U.K.
     Canadian exports rose 0.6 percent in August, their third straight monthly gain. And the nation posted a smaller-than- expected trade deficit.
     Gold was essentially flat at around $1,270 an ounce in New York, after falling more than 3 percent on Tuesday, as the Federal Reserve appears on track to raise interest rates in December. Oil rose 2.3 percent to settle at $49.73 a barrel in New York.
     Canadian stock valuations remain 15 percent higher than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.3 compared with 20.3 for the the S&P 500 Index, according to data compiled by Bloomberg.
     Barrick Gold Corp., the world’s largest gold producer, added 3.4 percent after plunging the most in more than a year Tuesday. Raw-materials producers rose 0.8 percent following the worst one-day slide in three years. The gauge retreated 9.8 percent over the preceding four days.
     Energy producers jumped 1.4 percent, the biggest gain among seven of 11 industries in the S&P/TSX, led by Suncor Energy Inc. and Canadian Natural Resources Ltd.
     Raw-materials and energy producers remain the top- performing industries in Canada this year, fueling a rebound in the wider gauge even as a resurgent first half has sputtered somewhat in the second. The S&P/TSX Materials Index is up 37 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second with a 25 percent gain.
     First National Financial Corp. slumped 9.9 percent for a third day of losses. The alternative lender has plunged 19 percent during its current slide, after Finance Minister Bill Morneau introduced measures this week to cool housing markets in Toronto and Vancouver and curb the rise in household debt. Mortgage insurer Genworth MI Canada Inc. lost 3.2 percent, falling to the lowest close since March.

US
By Anna-Louise Jackson
     (Bloomberg) — Once again, it’s all about the economy.
     That’s what investors in the U.S. stock market are thinking as the Federal Reserve moves closer to raising interest rates and new data show the world’s largest economy strengthening. The S&P 500 Index snapped a two-day drop after reports showing acceleration in the manufacturing and services sectors. While the gauges bolstered the case for higher rates, rallies in homebuilders, truckers and banks overshadowed the angst equity investors normally associate with a looming tightening of monetary policy.
     The readings follow recent assurances from Federal Reserve officials that the U.S. is on firmer footing, and a jobs report Friday could cement the central bank’s position that the economy is sound enough to withstand higher rates. Today’s reports provide relief to investors looking for signs that economic gains will help end five straight quarters of contraction in corporate earnings, said John Augustine, chief investment officer for Huntington Trust in Columbus, Ohio, which oversees more than $17 billion.
     “That could give the central bank some freedom to potentially remove some accommodation moving into next year,” he said. “Central banks are the source of volatility right now, and we suspect they’re going to continue to be the source of volatility in the fourth quarter.”
     The S&P 500 rose 0.4 percent to 2,159.73 at 4 p.m. in New York, rebounding from a drop Tuesday sparked by concerns tighter monetary policy from Europe to the U.S. could derail economic growth. Odds of the Fed raising rates by December climbed to 63 percent, boosting bank shares that benefit from a steeper yield curve. The Dow Jones Transportation Average of truckers and railroad operators posted its highest close this year. Energy producers jumped as crude approached $50 a barrel.
     Figures Wednesday showed factory and durable-goods orders accelerated modestly in August and followed a report on Monday that the Institute for Supply Management’s index — known as the PMI — advanced to 51.5 from August’s contraction-level 49.4 reading. The readings came after data showed car sales were stronger than analysts had estimated in September, suggesting there’s still some steam left in the U.S. auto industry’s six- year growth spurt.
     Nascent improvements in manufacturing help allay concerns about a broader slowdown that would stanch any hope that the recession in corporate earnings will end this year. Rising crude prices have also fed speculation that capital spending in the energy industry will accelerate, benefiting a swath of domestic industries.
     Today’s data are also a reminder what a difference a year can make. Last October, investors were fretting about a contraction in manufacturing that might spill over into a broader economic slowdown. Those fears were stoked in part by Daniel Florness, Fastenal Inc.’s now-chief executive officer, who said at the time that the industrial segment was in a recession. The concerns weren’t wholly unwarranted — the PMI measure of manufacturing activity slumped to 48 in the December reading, which was the lowest since the financial crisis.
     “We’re on firmer footing, but by no means are we seeing a meaningful or durable acceleration in manufacturing,” said Katie Nixon, chief investment officer of wealth management at Northern Trust Corp. “Thank heavens we got the PMI above 50, so we’re not contracting.”
     Crude rose Wednesday to the highest since June after government data showed U.S. stockpiles dropped last week, sending oil and gas companies to an almost four-week high. ConocoPhillips climbed 2.4 percent and Transocean Ltd. added 5.9 percent. Investors continued to unload defensive shares, with phone companies tumbling to the lowest since May, while utilities extended their losing streak to the longest in 14 years.
     U.S. shares overcame anxiety abroad as European stocks slid amid concern that the European Central Bank is moving toward a less accommodative stance. Fed policy makers continued to steer investor expectations toward a December rate increase, with a host of officials calling for tightening as the economy continues to improve. The Dow Jones Industrial Average gained 112.58 points, or 0.6 percent, to 18,281.03. About 7 billion shares traded hands on U.S. exchanges, 6 percent more than the three-month average.
     “The Fed has little excuse to not hike,” said Brian Jacobsen, chief portfolio strategist with Wells Fargo Funds Management LLC, which oversees $242 billion. “The big excuse is on the inflation front and even there, incremental progress is being made.”
     Stocks bounced from a rocky start to the month, as the S&P 500 slipped 0.8 percent over the first two sessions. While the gauge has historically been more volatile in October, it’s a month in which it posted larger gains in the last 25 years, with an average advance of 1.9 percent. The measure closed Wednesday 1.4 percent below the record it reached in August, bringing its annual gain to 5.7 percent.

 

Have a wonderful weekend everyone.

 

Be magnificent!

At our first meeting with beauty, we see it in its gaudy faded finery, jarring us with its garish tones,
its frills and flounces, even its deformed shapes.  But when we get to know it better,
the apparent discord reveals itself to us as rhythmic modulations.
At first, we isolate beauty from all that is around it; we detach it from the rest;
but in the end, we understand its harmony with the whole.
Rabindranath Tagore

As ever,

 

Carolann

 

The best thing about the future is that it comes one day at a time.
                                                -Abraham Lincoln, 1809-1865

 

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

Dear Friends,

Tangents:

On Oct. 4, 1957, the Space Age began as the Soviet Union launched Sputnik, the first man-made satellite, into orbit.

Number of the Day
22%
The percentage below book value that Deutsche Bank’s shares traded last week, the lowest since Thomson Reuters Datastream calculations started in 1980.

OCTOBER
The western wind has blown but a few days
Yet the first leaf already flies from the bough.
On the drying paths I walk in my thin shoes;
In the first cold I have donned my quilted coat.

This is Arthur Waley’s translation of a Chinese poem.  The western wind has blown here for several days bringing the leaves tumbling, but it is the wind from the east and north that sends me indoors to don my quilted jacket.  The temperature is so changeable that one must be equipped for anything.  At one moment the day is thunderous;  a few moments later there is hardly a cloud to be seen, the sun is warm on my back and just as quickly my mood can change.  But as for thin shoes, wellingtons are surely more useful.  If I need to wear my quilted coat then it is time for some tender plants to be given a layer of bracken or an extra mulch, or to be taken indoors for the winter.  We know what time the sun will set and when the clocks are put back but what is always unknown is when the first frost will assail us.  We must be prepared. –Rosemary Varey, A Countrywoman’s Notes.

PHOTOS OF THE DAY

People walk through an installation by artist Zak Ove of a Nubian army of masked men in the courtyard of Somerset House in London on Tuesday. The unveiling of Ove’s resin and Jesmonite statues marks the launch of the 1:54 Art Fair. Kirsty Wigglesworth/AP

A stag stands in an inversion fog during rutting season, when they breed, in Richmond Park, southwest London, on Tuesday. Matt Dunham/AP

Actors dressed as ‘Yetis’ ride a tour bus during a promotional event for the Travel Channel’s ‘Expedition Unknown: Hunt for the Yeti’ in Manhattan, New York, on Tuesday. Brendan McDermid/Reuters
Market Closes for October 4^th, 2016

MarketIndex	Close	Change
DowJones	18168.45	-85.40  -0.47%
S&P 500	2150.50	-10.70  -0.50%
NASDAQ	5289.656	-11.217  -0.21%
TSX	14515.15	-173.89
		-1.18%

International Markets

MarketIndex	Close	Change
NIKKEI	16735.65	+136.98
		+0.83%
HANGSENG	23689.44	+105.01
		+0.45%
SENSEX	28334.55	+91.26
		+0.32%
FTSE 100	7074.34	+90.82
		+1.30%

Bonds

Bonds	% Yield	Previous  % Yield
CND.10 Year Bond	1.064	1.007
CND.30 Year Bond	1.731	1.666
U.S.   10 Year Bond	1.6864	1.6238
U.S.30 Year Bond	2.4121	2.3420

Currencies

BOC Close	Today	Previous
Canadian $	0.75818	0.76228
US$	1.31895	1.31185
Euro Rate1 Euro=		Inverse
Canadian $	1.47774	0.67671
US$	1.1209	0.89255

Commodities

Gold	Close	Previous
London GoldFix	1283.30	1313.30
Oil	Close	Previous
WTI Crude Future	48.69	48.81

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks fell the most in three weeks, as plunging gold prices dragged raw-materials producers lower, while the Bank of Montreal was forced to restate some financial data.
     The S&P/TSX Composite Index sank 1.1 percent to 14,520.92 at 4 p.m. in Toronto, declining for a third session. The S&P/TSX is still up almost 12 percent this year, making it the third- best performing developed market equity index in the world behind New Zealand and the U.K.
     Canadian stock valuations touched the highest level in 14 years Friday and remain more expensive than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.2 compared with 20.2 for the the S&P 500 Index, according to data compiled by Bloomberg.
     Barrick Gold Corp., the world’s largest gold producer, slumped 10 percent as raw-materials producers tumbled 6.7 percent, the worst one-day slide in three years. The gauge has retreated 9.8 percent amid a four-day drop. Gold fell below $1,300 an ounce for the first time in more than three months as the Federal Reserve appears on track to raise interest rates in December. Silver Standard Resources Inc. of Vancouver sank 8.7 percent as silver prices also plunged.
     Goldcorp Inc. lost 8.1 percent to the lowest level since March, capping a third day of losses. The shares have erased 13 percent of their value during this stretch after the Vancouver company shut down one of its biggest mines amid a labor protest.
     Raw-materials and energy remain the top-performing industries in Canada this year, fueling a rebound in the wider gauge. The S&P/TSX Materials Index is still up 36 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second with a 23 percent gain.
     Meanwhile, Bank of Montreal tumbled 1.8 percent, its biggest drop in three months. The nation’s fourth-largest lender restated its regulatory capital ratios for the first three quarters of the year, a move akin to wiping out C$1.3 billion ($1 billion) in excess capital, according to a research note from Canaccord Genuity Group Inc.
     Genworth MI Canada Inc., a residential mortgage insurer, sank a record 8.7 percent to lead declines among mortgage- related companies in Canada amid concern new measures by the federal government to cool the housing market will hurt their businesses. Genworth said more than a third of insured mortgage borrowers would struggle to meet new standards introduced Monday. Real-estate stocks lost 1.5 percent as a group.
     Intact Financial Corp. lost 1 percent, the biggest slide in almost three weeks, after the insurer reported a third-quarter catastrophe pretax loss estimate of C$170 million. Intact blamed the loss on severe weather conditions during the summer months including hail, wind and rain that affected communities across Canada.

US
By Anna-Louise Jackson and John Hyland
     (Bloomberg) — The U.S. stock market may be headed for some turbulence, and possibly a fresh record.
     October’s delivered the most swings of at least 1 percent for the S&P 500 Index since 2000, giving investors reason for caution following a summer of muted volatility. If history’s any guide, though, the benchmark for American equity will post an outsize gain in a period that’s been the best over the last 25 years, with an average advance of 1.9 percent. The S&P 500 slipped 0.5 percent to 2,150.49 at 4 p.m. in New York, 1.8 percent below its all-time high from Aug. 15.
     Its reputation for delivering heightened investor anxiety is inextricably linked to the two worst single days in market history, in 1929 and 1987, and more recently the 17 percent rout during the financial crisis in October 2008 that was the most in 21 years. Those have been shown to be outliers, as investors have tended to reward companies during the third-quarter earnings season, particularly technology, health-care and consumer-discretionary stocks that have notched their best monthly gains on average during the 10th month in data going back to 1991.
     “Those stocks, if they have relatively good numbers, they tend to have a bigger pop after earnings,” said Frank Cappelleri, executive director at Instinet LLC in New York. That doesn’t mean the market will go straight up, he said, noting that the S&P 500 often tests key technical levels before rallying into the end of the month, something that’s happened almost 70 percent of the time since 1997. “We could potentially go through some more volatile activity in the market.”
     While seasonal trends can easily be broken — September’s 0.1 percent decline paled in comparison to weakness that historically has made it the worst month — they provide a useful backdrop as investors consider end-of-year positioning and the commencement of the quarterly earnings next week, Cappelleri said.
     Stocks have gotten off to a rocky start to October, with the S&P 500 slipping 0.8 percent over two days and the CBOE Volatility Index of investor anxiety rising as high as 14.57 after averaging 13.27 over the prior quarter. Confidence has been shaky in the past week amid concerns over Europe’s banking sector, and Deutsche Bank AG in particular. Seattle-based Russell Investments said in a Monday report that further declines would offer an opportunity for investors as the slowly- expanding economy puts a floor under equity prices.
     Tuesday’s decline in the S&P 500 followed hawkish comments from Federal Reserve Bank of Cleveland President Loretta Mester and Richmond Fed President Jeffrey Lacker, who argued in favor of tightening monetary policy sooner than later. Investors see a 61 percent chance of the Fed raising rates in December, up 11 percentage points from a week earlier.
     The higher odds for a rate increase sent Treasury yields rising to a two-week high, damaging the investment case for stocks with high dividend payouts. Utilities tumbled for an eighth day, sliding 2.2 percent to a five-month low, while phone and real-estate shares dropped at least 1.5 percent. The three have the highest yield relative to their dividends among 11 groups in the S&P 500.
     The best dollar rally since Sept. 16 weighed on energy and raw-materials producers, while rising bond yields lifted banks on speculation higher rates will boost their profits. The Dow Jones Industrial Average lost 85.40 points, or 0.5 percent, to 18,168.45. The Nasdaq Composite Index slipped 0.2 percent. About 7.3 billion shares traded hands on U.S. exchanges, 11 percent above the three-month average.
     The next corporate earnings season unofficially kicks off when Alcoa Inc. reports results next week. Analysts forecast a drop of 1.5 percent in S&P 500 companies’ third-quarter profits, which would mark a sixth consecutive three-month decline.
     Should that trend hold, October may have trouble living up to its statistical trend as the market’s best month. And with an uncertain outcome in the U.S. election keeping investors on the edge of their seats, October’s history as the locus for market selloffs could capture attention.
     “They affect the data and contribute to the idea that October is a spooky month,” said Kevin Caron, a Florham Park, New Jersey-based market strategist and portfolio manager who helps oversee $180 billion at Stifel Nicolaus & Co.

 

Have a wonderful evening everyone.

 

Be magnificent!

A man is a universe in miniature, and the universe, a giant living body;
the cosmos is similar to a large man,
and a man is similar to a small cosmos; so say the Sufis.
Kabir

As ever,

 

Carolann

 

Don’t dig up in doubt what you planted in faith.
                              -Elisabeth Elliot, 1926-2015

 

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

Dear Friends,

Tangents:
On Oct. 3, 1990, West Germany and East Germany ended 45 years of postwar division, declaring the creation of a new unified country.
Go to article »
PHOTOS OF THE DAY

Policemen walk through Theaterplatz during celebrations marking German Unification Day in Dresden on Monday. Fabrizio Bensch/Reuters

LEGO statues for the ‘South by South Lawn Festival’ of ideas, arts, and action are on exhibit at the White House in Washington, D.C. on Monday. Gary Cameron/Reuters

 

A photographer takes a picture as a fish balloon floats through hanging speakers, part of the new commission entitled ‘Anywhen’ by French artist Philippe Parreno, in the Turbine Hall at the Tate Modern in London on Monday. The commission transforms the area into an experience that plays with time and space. It is open to the public from Oct. 4 until April 2, 2017. Kirsty Wigglesworth/AP
Market Closes for October 3^rd, 2016

Market Index	Close	Change
Dow Jones	18253.85	-54.30   -0.30%
S&P 500	2161.20	-7.07   -0.33%
NASDAQ	5300.875	-11.127   -0.21%
TSX	14689.04	-36.82
		-0.25%

International Markets

Market Index	Close	Change
NIKKEI	16598.67	+148.83
		+0.90%
HANG SENG	23584.43	+287.28
		+1.23%
SENSEX	28243.29	+377.33
		+1.35%
FTSE 100	6983.52	+84.19
		+1.22%

Bonds

Bonds	% Yield	Previous  % Yield
CND. 10 Year Bond	1.007	0.998
CND. 30 Year Bond	1.666	1.657
U.S.    10 Year Bond	1.6238	1.5927
U.S. 30 Year Bond	2.3420	2.3147

Currencies

BOC Close	Today	Previous
Canadian $	0.76228	0.76170
US $	1.31185	1.31285
Euro Rate 1 Euro=		Inverse
Canadian $	1.47068	0.67996
US $	1.12106	0.89201

Commodities

Gold	Close	Previous
London Gold Fix	1313.30	1318.10
Oil	Close	Previous
WTI Crude Future	48.81	47.83

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks slipped for a second day as financial-services shares retreated after the group capped the best quarterly performance since 2013, while Aritzia Inc. surged in its trading debut.
     The S&P/TSX Composite Index fell 0.3 percent to 14,689.04 at 4 p.m. in Toronto, in the first day of trading in the fourth quarter. The index rose 4.7 percent for the three months since the end of June on Friday for a third quarterly gain, its longest streak in two years. The S&P/TSX is up 13 percent this year, making it the the second-best performing developed market equity index in the world behind New Zealand.
     Canadian stock valuations touched highest level in 14 years Friday, and remain more expensive than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.5 compared with 20.3 for the the S&P 500 Index, according to data compiled by Bloomberg.
     Raw-materials producers slumped 1.8 percent to lead losses across seven of 11 industries in the S&P/TSX. Goldcorp Inc. tumbled 4.4 percent after halting work at one of its biggest mines amid a labor protest. Oil and gas companies ended the day 0.3 percent higher after crude settled at the highest level in three months to follow up an 8.5 percent rally last week.
     Financial services companies dropped 0.2 percent as Royal Bank of Canada lost0.4 percent. The group comprises one-third of the Canadian stock market.
     Canadian Finance Minister Bill Morneau introduced a series of new measures to tighten access to mortgage insurance for commercial banks and close a tax loophole on home purchases by foreigners, in an attempt to cool the Vancouver and Toronto real-estate markets without harming other regions.
     The banks joined a retreat in financials in Europe and the U.S., with losses coming as British Prime Minister Theresa May pledged to start pulling the U.K. out of the European Union by March. Deutsche Bank AG said it was poised to reach an agreement with labor representatives paving the way for the elimination of 1,000 jobs. The lender has come under pressure as mounting legal costs have prompted some clients to pull funds and investors to question Deutsche Bank’s financial health. Meanwhile banks across Europe are preparing to cut some 20,000 jobs.
     Aritzia, the Canadian women’s fashion retailer, jumped 11 percent after raising C$400 million in its initial public offering, the largest in Canada this year. Aritzia was started in 1984 by Brian Hill, who’s the current CEO. The company sells clothes and accessories aimed at women aged 15 to 45 has 75 locations across North America.
     Energy and raw-materials producers remain the top- performing industries in Canada this year, fueling a rebound in the wider gauge. The S&P/TSX Materials Index is up 46 percent and set to halt its longest yearly losing streak since 1988, while energy producers are second with a 24 percent gain.
     Ritchie Bros. Auctioneers Inc. added 3 percent for a third day of gains, climbing to a record. The company said they conducted their largest-ever two-day auction in the U.S. last week, selling more than $76 million worth of equipment.

US
By Rita Nazareth and Anna-Louise Jackson
     (Bloomberg) — Government debt fell with stocks after data showing expansion in U.S. manufacturing bolstered wagers that the Federal Reserve will raise interest rates this year. The pound slid on concern Britain may face a so-called hard Brexit.
     Treasuries declined across maturities and the S&P 500 Index fell following three straight weekly gains. U.K. shares climbed the most among western-European markets as the weaker currency boosted exporters with Prime Minister Theresa May saying the country will begin to exit the European Union next year. Colombian assets sank as the government’s failure to gain popular support for a peace deal fueled speculation it won’t be able to deliver key tax reforms. Oil rallied as traders mulled last week’s shift in OPEC policy.
     Traders are keeping a close watch on U.S. economic reports this week, scouring data for clues as to the timing of a potential Fed rate increase. New orders and production swung into expansion territory last month, indicating gradual improvement across America’s manufacturing landscape. At the same time, factories continued to focus on becoming leaner by trimming inventories and cutting employment. Later this week, a key jobsreport could show a pickup in the pace of hiring, according to economists surveyed by Bloomberg.
     “You’ve got to watch the bond markets, that’s been key,” said John Canally, chief economic strategist at LPL Financial in Boston, which oversees about $479 billion. “Markets are warming up to the idea that the Fed is going to hike rates.”
     While the U.S. central bank decided last month to wait for stronger signs of growth before raising rates, some officials have since publicly endorsed a hike in the near term amid signs of a tightening labor market and expectations that inflation will move closer to the Fed’s 2 percent target. Traders are pricing in 60 percent odds of Fed action in December, up from 51 percent a week ago.
     Fed Bank of New York President William Dudley suggested the central bank should be cautious in raising interest rates. Noting concerns from some economists that the risk of a recession is increasing, he told a central-banking seminar hosted at his bank that the Fed may have limited room to cut rates in the event of a downturn in the next few years. That may fuel the need to turn again to unconventional policies, such as purchasing bonds.
     The S&P 500 Index lost 0.3 percent to 2,161.20 as of 4 p.m. in New York. Financial shares in the benchmark index lost momentum after jumping the most in eight weeks on Friday.
      “Data will matter,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. in Milwaukee. “Earnings kick off in a couple weeks. I think people have their eyes on that.”
     The reporting season unofficially starts in about a week, when Alcoa Inc. posts results. Analysts forecast a drop of 1.5 percent in S&P 500 company profits in the third quarter, which would mark a sixth consecutive decline.
     Britain’s megacap stocks rose to their highest level in more than 16 months, with companies that get most of their revenue outside the U.K. contributing the most to gains in the FTSE 100 Index. HSBC Holdings Plc, Royal Dutch Shell Plc, GlaxoSmithKline Plc and British American Tobacco Plc all advanced at least 1 percent.
     Henderson Group Plc surged 17 percent after agreeing to buy Janus Capital Group Inc. to create a $320 billion money manager, while peers Aberdeen Asset Management Plc and Jupiter Fund Management Plc advanced 5 percent or more. The Stoxx Europe 600 Index gained 0.1 percent.
     Emerging-market shares extended their best quarterly performance since 2012 as a strong Chinese manufacturing reading eased anxiety over the world’s second-largest economy. Egyptian stocks soared as investors bet that policy makers may devalue the country’s currency, luring back foreign investors.
     Saudi Arabia’s benchmark, which fell to the lowest level since 2011 on Sunday, has lost about $30 billion since the nation last week announced a series of cuts to government salaries and bonuses as part of efforts to slash spending.
     Exchanges in China, Germany and South Korea were shut for holidays on Monday. Asian index futures foreshadowed a mixed picture for Tuesday, with contracts on Japan’s Nikkei 225 Stock Average diverging despite losses in the yen.
     Ten-year U.S. yields rose three basis points, or 0.03 percentage point, to 1.62 percent. The yields on two-year bonds, which are most sensitive to Fed expectations, advanced three basis points to 0.79 percent.
     Benchmark securities posted their first back-to-back declines in two weeks. The U.S. manufacturing report will be followed by data on services and factory orders, while the non- farm payrolls numbers are due out Friday.
     “The most important thing, of course, will be Friday’s payrolls data,” said Philip Marey, a strategist at Rabobank International in Utrecht, Netherlands. “Provided the data goes in the right direction, they will hike but there are considerable downside risks. The market has been prepared by the Fed for a December hike.”
     Treasuries advanced last week as mounting concern over the financial health of Germany’s Deutsche Bank AG roiled financial markets and fueled demand for the safest assets. Those bond gains were pared Friday on a media report that the lender was nearing a settlement with the U.S. Department of Justice that was less than half the amount initially requested.
     Italy’s yield spread with Spanish securities widened to the most in almost two years after an opinion poll showed that the constitutional referendum, on which Prime Minister Matteo Renzi’s political fate hangs, is too close to call.
     Sterling dropped 1 percent to $1.2842, the most among its 16 major peers. British financial-services companies will get no special favors in Brexit negotiations, according to three senior figures in Prime Minister May’s administration. The government will refuse to prioritize the protection of the sector after the U.K. has left the EU, the people said.
     May told delegates at her Conservative Party’s annual conference at the weekend that she’ll curb immigration, stoking speculation the nation is headed toward a Brexit scenario that involved limited access to the EU’s single market.
     “Hard Brexit is a sell for the pound,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd in London. “I know the government line is that they don’t see a need to differentiate between hard and soft Brexit, but the market certainly does.”
     The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 0.1 percent.
     Colombia’s peso weakened 1.7 percent versus the dollar after citizens narrowly rejected a peace agreement with Marxist guerrillas by 50.2 percent to 49.8 percent in a weekend ballot.
     West Texas Intermediate crude climbed 1.2 percent to $48.81 a barrel after rallying 8.5 percent last week. It was the highest close since July 1 and followed a 7.9 percent jump in September.
     While the Organization of Petroleum Exporting Countries outlined an accord to curb output by as much as 750,000 barrels a day last week, Libyan production rose and will advance further this month, according to an official of the state oil company. Independent crude producers are using the rally that followed the agreement to hedge their price risk for next year, banks and consultants said. Rigs targeting oil in the U.S. also rose to the most since February, Baker Hughes Inc. said on its website Friday.
     “This looks like follow through from the OPEC accord last week,” said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida. “For all the holes in this agreement it’s still the first one that’s been reached in eight years.”
     Gold futures for December delivery slipped 0.3 percent to settle at $1,312.70 an ounce on the Comex in New York as silver also slumped. Nickel slid 2.1 percent in London, leading losses among industrial metals.

 

Have a wonderful evening everyone.

 

Be magnificent!

The lamp is empty, the oil is used up.
The tambourine is dead, the dancer lies down,
The fire is out, and no smoke rises from it.
The soul is absorbed into the Unique, and there is no longer a duality.
Kabir

 

As ever,
 

Carolann

 

We shall never know all the good that a simple smile can do.
                                           -Mother Teresa, 1910-1997

 

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