December 22, 2015 Newsletter

Dear Friends,

Tangents:

PHOTOS OF THE DAY

A competitor takes part in the Christmas Really Wild Mud Run on a 4.6 miles course across undulating farm land at Celtic Camping, St David’s, Pembrokeshire, Wales. Rebecca Naden/AP

The Lower Manhattan skyline is seen as runner trots at Pier A Park, Saturday, in Hoboken, N.J. Julio Cortez/AP

Market Closes for December 22^nd, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose the most in a week as energy producers advanced with the price of crude and Valeant Pharmaceuticals International Inc. increased a second day.

     Energy producers rose 0.6 percent as a group, as pipeline operators Enbridge Inc. and TransCanada Corp. increased at least 1.3 percent. Oil futures advanced in New York for the first time in five days, halting a decline near the lowest price in more than six years.

     Valeant rallied 4 percent amid a deal with Walgreens Boots Alliance Inc. to repurchase drugs from the U.S. pharmacy operator and sell them on consignment, the Wall Street Journal reported. The stock, briefly the most valuable in Canada earlier this year before plunging amid scrutiny over its pricing practices, has soared 31 percent in December headed for the biggest monthly gain since 1999.

     The Standard & Poor’s/TSX Composite Index rose 0.4 percent, or 49.78 points, to 13,084.16 at 4 p.m. in Toronto, the biggest gain since Dec. 16. The Canadian benchmark equity gauge has lost 11 percent this year, the third-worst performing developed market in the world ahead of only Singapore and Greece.

     Bank of Montreal and Toronto-Dominion Bank lost at least 0.4 percent. Data on Tuesday showed the U.S. economy grew at a revised 2 percent annualized rate in the third quarter, ahead of market expectations for a 1.9 percent increase, according to the median forecast of economists surveyed by Bloomberg. 

     The downward revision was “relatively minimal” and is enough of a sign of the economic recovery for the Federal Reserve to continue increasing interest rates into 2016, Paul Ferley, assistant chief economist at RBC Capital Markets, wrote in a note to clients.

     Raw-materials and energy producers have plunged at least 21 percent this year. Weekly U.S. inventory and production data Wednesday is expected to show inventories rose by 1.2 million barrels last week, according to a Bloomberg survey.

     Dominion Diamond Corp. surged 22 percent, the most in more than six years, after the Canadian mining company hired financial advisers to explore a sale, according to people familiar with the matter. Hedge fund K2 & Associates Investment Management sent a letter to the company’s board Monday requesting a meeting to discuss changes, including a strategic review.

US

By Lu Wang

     (Bloomberg) — U.S. stocks rose for a second day as a rally in commodity shares ignited broader gains, while data showed consumer spending bolstered the economy amid slowing growth overseas.

     The two most beaten-down industries this year — energy and raw-materials — led most of Tuesday’s advance, keeping alive prospects for an anticipated year-end rally. Caterpillar Inc.

surged to its best gain in two months, while Wal-Mart Stores Inc. gained 1.7 percent as data showed consumers continued to spend. Chipotle Mexican Grill Inc. fell on an investigation into its links to a new spate of illnesses in three additional states.

     The Standard & Poor’s 500 Index climbed 0.9 percent to 2,038.97 at 4 p.m. in New York, as the gauge added to its rebound from a two-month low. The Dow Jones Industrial Average rose 165.65 points, or 1 percent, to 17,417.27, while the Nasdaq Composite Index advanced 0.7 percent. About 6.4 billion shares traded hands on U.S. exchanges, 12 percent below the three-month average.

     “Most of the major data is behind us for this year, you’re going to see volumes continue to decline,” said Michael Arone, the Boston-based chief investment strategist at State Street Global Advisors’ U.S. Intermediary Business. The firm oversees $2.4 trillion. GDP data “continues to tell us the same thing, that is the consumer is in reasonable shape and exports are continuing to struggle.’’

     A report today showed the economy expanded at a revised 2 percent annualized rate in the third quarter, buoyed by consumer spending. Meanwhile, businesses struggled with weaker overseas growth and a strong dollar, which have been a drag on net exports. Sustained growth in the U.S. combined with weakening in other parts of the globe, including in China, could widen the gap between exports and imports in the quarters ahead.

     Investors have wavered between optimism on the U.S. economy and concern that slower growth overseas will spread. Federal Reserve policy makers last week signaled faith that the economy is performing well, while emphasizing they’re in no hurry to further boost interest rates. Investors were initially soothed by that message, though oil’s collapse below levels last seen during the 2008 global financial crisis weighed on sentiment.

     The S&P 500 historically rises in December, with the final two weeks delivering an average gain of 1.7 percent. The so- called Santa rally is under pressure this year, with the benchmark down 2 percent in December and in the midst of its worst final month since 2002. After rebounding as much as 13 percent from its summer low through early November, the S&P 500 has retreated 3.4 percent, putting it on track for its biggest annual drop since the 2008 financial crisis.

     In addition to the GDP numbers, data this week on new-home sales, durable-goods orders and personal spending will offer further clues on the health of the economy, after the Fed’s first rate increase in almost a decade. Officials at the central bank said any further rate hikes will be gradual and depend on the path of the recovery.

     A report today showed sales of previously owned homes fell in November to the lowest level since April of last year as a change in industry rules lengthened the amount of time it took buyers to close on a deal.

     The Chicago Board Options Exchange Volatility Index fell 11 percent Tuesday to 16.60, a two-week low. The measure of market turbulence known as the VIX further pared its gain this month to about 3 percent, after surging as much as 51 percent.

     All of the S&P 500’s 10 main industries advanced, with energy, consumer staples, industrial and raw-material companies rising more than 1.2 percent. Energy remains on pace for its worst monthly decline in more than three years. Anadarko Petroleum Corp. and Diamond Offshore Drilling Inc. added more than 4.3 percent. West Texas Intermediate crude futures rose 0.9 percent to $36.14 a barrel.

     Raw-material shares gained as fertilizer maker Mosaic Co. and steel company Nucor Corp. rose at least 3.5 percent. The group rallied even as most commodities retreated, with nickel leading a drop in industrial metals as stockpiles expanded to the highest in more than two months amid signs of slowing demand.

     Caterpillar’s strongest gain since Oct. 5 led the benchmark’s industrial group. The heavy-machinery maker is one of the Dow’s worst performers this year, down 25 percent as the slump in commodities has weighed on mining-equipment manufacturers. United Rentals Inc., among the S&P 500 industrials’ weakest in 2015, climbed 4.3 percent Tuesday to trim its drop this year to 29 percent.

     The story was similar in consumer staples, where two companies battered this year were the strongest gainers today. Whole Foods Market Inc., which has struggled amid intensified competition, jumped 5.5 percent. The grocery store chain is down 31 percent year to date, headed toward its worst since 2008. Archer-Daniels-Midland Co. added 3.1 percent to pare its 2015 drop to 30 percent.

     Chipotle fell 5.3 percent, down for the seventh time in eight sessions as it reels from recent outbreaks of E. coli and norovirus at its restaurants. The shares are down almost 15 percent this month, on track for the worst in three years and have tumbled 35 percent since reaching an all-time high on Aug. 5.

     Among other companies moving on corporate news, NetApp Inc. fell 5 percent after agreeing to buy SolidFire Inc. for $870 million in cash to boost its presence in the growing market for systems that can retrieve and store vast amounts of data at rapid speeds.

Have a wonderful evening everyone.

Be magnificent!

 “Patience is the best remedy for every trouble”. Plautus

As ever,
 

Karen
 

“Spread love everywhere you go. Let no one ever come to you without leaving happier.” Mother Teresa

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