November 20, 2015 Newsletter

Dear Friends,

Tangents:

   A philosophy professor stood before his class and had some items in front of him.  When class began, wordlessly he picked up a large empty mayonnaise jar and proceeded to fill it with rocks right to the top, rocks about 2” in diameter.  He then asked the students if the jar was full.  They agreed that it was.

   So the professor then picked up a box of pebbles and pored them into the jar.  He shook the jar lightly.  The pebbles, of course, rolled into the open areas between the rocks.  The students laughed.  He asked his students again if the jar was full.  They agreed that yes, it was.  The professor then picked up a box of sand and poured it into the jar.  Of course, the sand filled up everything else.  “Now,” said the professor, “I want you to recognize that this is your life.  The rocks are the important things – your family, your partner, your health, your children – anyone and anything that is so important to you that if lost, you would be nearly destroyed.  The pebbles are the other things in life that matter, but on a smaller scale.  The pebbles represent things liked your job, your house, your car.  The sand is everything else.  The small stuff.  If you put the sand or the pebbles in the jar first, there is no room for the rocks.

  The same goes for your life.  If you spend all your energy and time on the small stuff, material things, you will never have room for the things that are truly most important….Take care of the rocks first – the things that really matter.  Set your priorities.  The rest is just pebbles and sand.”

On this day in 1945, the Nuremberg Trials began in Germany with 24 high-ranking Nazis going to court for atrocities committed during World War II.

Bobby Kennedy was born on this day in 1925.

Sunday is the anniversary of his brother, John F. Kennedy’s assassination.

Venus crosses the star-rich area of Sagittarius this weekend. 

Education is a companion which no misfortune can depress, no crime destroy, no enemy alienate, no despotism enslave.  At home, a friend; abroad, an introduction; in solitude, a solace; and in society, an ornament.  Without it, what is man?  A splendid slave, a reasoning savage.  –Charles Varle.

I smiled when I saw the photo below taken today at the Pushkar Fair in Rajastan.   How the smart phone has changed the world!  Gary and I went to the Pushkar Fair on one of our trips to India only a few years ago and there was not even wireless service then in that remote part of India where the fair is held, let alone camel herders with smart phones.  Amazing…

PHOTOS OF THE DAY

An Indian camel herder takes pictures of hot air balloons flying over the fair grounds early morning at the annual cattle fair in Pushkar, in the western Indian state of Rajasthan, Friday. Pushkar is a popular Hindu pilgrimage spot that is also frequented by foreign tourists who come to the town for its annual cattle fair. Deepak Sharma/AP

Hundreds of beachgoers crowd Sydney’s Bondi Beach on Friday, during a heatwave that hit Australia’s largest city. Jason Reed/Reuters

Market Closes for November 20^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, as a two-day advance fizzled amid renewed selling in miners, paring the benchmark index’s best weekly gain since early October.

     Financial services companies advanced this week amid the prospect of additional stimulus in Europe and gradual interest rate increases in the U.S., joining a rally in global markets. Health-care shares bolstered the Canadian market in the week, as Valeant Pharmaceuticals International Inc. surged 21 percent in five days for its biggest surge in four years. Commodity producers have lagged, as oil hovers near $40 a barrel and industrial metals trade at multiyear lows.

     The Standard & Poor’s/TSX Composite Index fell 40.34 points, or 0.3 percent, to 13,433.49 at 4 p.m. in Toronto. The S&P/TSX has added 2.7 percent this week, the most since Oct. 9. That pared declines for the year to 8.2 percent, trailed only by Singapore and Greece among developed markets. 

     The benchmark’s heavy weighting toward commodity shares has kept its gains in check during the latest week. Energy and raw- materials producers retreated at least 1.7 percent Friday, as oil capped a third weekly loss. Crude dipped below $40 a barrel in New York Wednesday for the first time since August. Gold traded near a five-year low as the price posted a fifth straight weekly retreat, the longest slide since July.

     The S&P/TSX Financials Index ended Friday little-changed, rallying 2.8 percent this week. Scotiabank and Bank of Montreal kick off fiscal fourth-quarter results for the big banks Dec. 1.

     Lenders got a boost from diverging monetary policy in Europe and the U.S. The European Central Bank said it will do what’s necessary to reach its inflation goal rapidly. American equities rose as investors are getting more comfortable with the idea the Federal Reserve will raise interest rates gradually as the economy warrants.

     Valeant jumped 8.3 percent to a two-week high, as the embattled drugmaker has advanced for three straight days. The company will be hosting an investor day Dec. 16, providing updated guidance, discussing certain business operations and highlighting certain research and development programs. Concordia Healthcare Corp., a smaller Canadian peer, added 3.8 percent to extend a six-week high.

US

By Anna-Louise Jackson

     (Bloomberg) — U.S. stocks advanced, with the Standard & Poor’s 500 Index capping its best weekly gain this year, as Nike Inc. paced a rally in consumer companies andEuropean Central Bank President Mario Draghi hinted at additional stimulus.

     Equities reversed most of last week’s selloff, boosted by a snap-back among retailers in the S&P 500. The group was on track for its strongest week in four years, immediately after suffering the worst weekly drop since 2011. Ross Stores Inc. and Gap Inc. helped power the sector’s rally Friday. Nike’s 5.5 percent gain bolstered the broader consumer group on its $12 billion buyback plan and dividend increase.

     The S&P 500 added 0.4 percent to 2,089.17 at 4 p.m. in New York, after rising as much as 0.8 percent. Declines in energy and consumer staples shares whittled down earlier gains. The Dow Jones Industrial Average rose 91.06 points, or 0.5 percent, to 17,823.81, with Nike contributing about 46 points to climb. The Nasdaq Composite Index increased 0.6 percent. About 6.9 billion shares traded hands on U.S. exchanges, 8 percent below the three-month average.

     “There’s continued upward momentum in the market as people get more comfortable with the fact that rates are probably going up, and they’re only going up because the economy is strong enough to justify that,” said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “I don’t think people were positioned for that coming into the week, and I think that’s why you’ve seen the market do as well as it has.”

     Ross Stores jumped 10 percent after posting better-than- estimated earnings and boosting its profit forecast. Gap rose the most since 2013, even after cutting its profit outlook. Abercrombie & Fitch Co. surged 25 percent after its results beat analysts’ expectations, and tax software maker Intuit Inc. rallied 5.9 percent on a higher revenue outlook. Energy companies fell as oil declined for as third straight week amid a global crude glut.

     The S&P 500 rose 3.3 percent this week, the most since December, as shares rebounded from the worst weekly decline in almost three months. Minutes from the Federal Reserve’s October meeting released Wednesday stressed that the pace of any interest-rate increases will be gradual, reassuring investors that higher borrowing costs won’t derail economic growth. The index has rallied 12 percent from its August trough and is 2 percent from its all-time high set in May.

     While U.S. policy makers are preparing investors for higher interest rates, the ECB’s Draghi hinted at further stimulus measures, saying today that the institution will do what’s necessary to reach its inflation goal rapidly. His comments underline a concern that the inflation rate in the euro area will slip further amid a high degree of economic slack and slumping oil prices. The central bank’s next monetary policy meeting is Dec. 3.

     Fed Bank of St. Louis President James Bullard said today investors should prepare for uncertainty on whether the Federal Open Market Committee will raise its target interest rate at each meeting next year, as the era of signaling moves is over.

     Fed Bank of New York President William C. Dudley reiterated in comments Friday that a rate decision in December will be dependent on economic data. Fed Vice Chairman Stanley Fischer said late Thursday the central bank has done its best to prepare international markets for higher rates.

     Recent data has bolstered the case for raising borrowing costs for the first time since 2006, with the latest payroll report — released after the Fed’s October meeting — showing the biggest increase in hiring this year while claims for jobless benefits hover near four-decade lows. Traders are now pricing in a 68 percent probability that the Fed will raise rates next month.

     “A rate hike has got to be the central case for December,” said Alex Scott, who helps oversee about $14 billion as Seven Investment Management’s deputy chief investment officer. “It’s important that the Fed’s language is couched in very dovish terms to offer significant reassurance to investors. The fact that we saw some very strong gains in the market just this week is a fairly good sign that markets are prepared to deal with it.”

     With the earnings season drawing to a close, profits from S&P 500 companies have fallen by about $25 billion in the first three quarters of the year, according to data compiled by Bloomberg. A sharp rally in the dollar has hit exporters while a drop in oil prices has hurt energy firms. Aggregate revenue for members in the benchmark has dropped $287 billion compared to a year ago.

     The Chicago Board Options Exchange Volatility Index fell 9 percent Friday to 15.47. The measure of market turbulence known as the VIX lost 23 percent this week after a 40 percent surge last week, which was the most since August.

     Six of the S&P 500’s 10 main industries advanced, with health-care, consumer discretionary and technology stocks leading the gains. Energy, consumer staples and phone companies fell the most.                       

     Consumer discretionary stocks climbed 1.2 percent, rising for a fifth consecutive day. Ross Stores, Gap Inc. and Nike each added more than 5.4 percent. An exchange-traded fund of retail stocks rose 2 percent, the most in three weeks.

     Health-care stocks climbed 0.7 percent, led by Aetna Inc. and Allergan Plc. Aetna surged 4.5 percent, the most since April 2014, after the company reaffirmed its forecast for 2015 earnings.

     Allergan gained 3.5 percent on news that Pfizer Inc. is in advanced talks to buy the company for as much as $380 a share. Medical equipment maker C.R. Bard Inc. climbed 3 percent after agreeing to acquire Liberator Medical Holdings Inc. for about $181 million.

     Industrial stocks rose to the highest level since June, led by CSX Corp., which advanced 2.3 percent to the highest since August. An index of railroad stocks rose for the fifth consecutive day. Rockwell Collins Inc., Lockheed Martin Corp. and Raytheon Co. advanced at least 0.8 percent, with all three military hardware companies rising for a fifth day following the terrorist attacks in Paris.

     Among the worst performers in the benchmark gauge were Southwestern Energy Co. and Chesapeake Energy Corp., which fell more than 5.9 percent to levels last seen more than 10 years ago. A slump in oil prices helped drag down energy stocks for a second day. Chevron Corp. declined 2 percent to fall for the third time in four days.

     Chipotle Mexican Grill Inc. tumbled 12 percent to its lowest in almost 18 months after the Center for Disease Control said three additional states have reported people sickened with a strain of E.coli linked to the company’s restaurants.

     Akamai Technologies Inc. and Autodesk Inc. were among the biggest decliners in the S&P 500 and the worst performers among tech companies, losing more than 2.9 percent. Goldman Sachs Group Inc. cut Akamai to sell from neutral, while Autodesk was reduced to the equivalent of neutral from buy at RBC Capital Markets Corp.

Have a wonderful weekend everyone.

Be magnificent!

Watching and listening are a great art.

By watching and listening we learn infinitely more than we do from any books.

Books are necessary, but watching and listening sharpen your senses.

Krishnamurti

As ever,
 

Carolann

Knowledge is power.

     -Francis Bacon, 1561-1626

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