October 26, 2016 Newsletter

Dear Friends,

Tangents:
On October 26^th, 1819, Lord Byron wrote to Douglas Kinnaird about his poem Don Juan:

As to Don Juan – confess – confess – you dog – and be candid – that it is the sublime of that there sort of writing – it may be bawdy – but is it not good English? – it may be profligate – but is it not life, is it not thething? – Could any man have written it – who has not lived in the world? – and tooled in a post-chaise? in a hackney coach? in a gondola? against a wall? in a court carriage? in a vis á vis? – on a table? – and under it?

 –from Don Juan
…Your bays may hide the baldness of your brows— 
       Perhaps some virtuous blushes—let them go— 
To you I envy neither fruit nor boughs— 
       And for the fame you would engross below, 
The field is universal, and allows 
       Scope to all such as feel the inherent glow: 
Scott, Rogers, Campbell, Moore and Crabbe, will try 
‘Gainst you the question with posterity. 

For me, who, wandering with pedestrian Muses, 
       Contend not with you on the winged steed, 
I wish your fate may yield ye, when she chooses, 
       The fame you envy, and the skill you need; 
And, recollect, a poet nothing loses 
       In giving to his brethren their full meed 
Of merit, and complaint of present days 
Is not the certain path to future praise. 

He that reserves his laurels for posterity 
       (Who does not often claim the bright reversion) 
Has generally no great crop to spare it, he 
       Being only injur’d by his own assertion; 
And although here and there some glorious rarity 
       Arise like Titan from the sea’s immersion, 
The major part of such appellants go 
To—God knows where—for no one else can know…
                                               By Lord Byron

PHOTOS OF THE DAY

Wafts of mist move over the landscape near Tolzin, northeastern Germany, on Wednesday morning. Bernd Wuestneck/dpa/AP

A street vendor looks at garlands on sale for the Tihar festival, also called Diwali, along the streets of Kathmandu, Nepal, on Wednesday.Navesh Chitrakar/Reuters
Market Closes for October 26^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
NUMBER OF THE DAY
70 years

The term of Austria’s newest bond, issued Tuesday—the longest-dated publicly issued government bond in the eurozone and the latest example of how central banks’ easy-money policies are prompting issuers to secure cheap borrowing for many decades ahead.
Canada
By John Hyland
     (Bloomberg) — Canadian stocks declined for a third day as disappointing corporate earnings raised concerns about the strength of the nation’s economy.
     The S&P/TSX Composite Index fell 0.4 percent to 14,807.56 at 4 p.m. in Toronto. The index has fallen 0.9 percent since closing at a 15-month high on Friday. It’s still up 14 percent in 2016, the top performance among developed equity markets tracked by Bloomberg.
     Seven of 11 sectors in the index fell Wednesday, led by drops of more than 1.5 percent by information technology companies, industrials and materials producers. DH Corp. plunged 43 percent to the lowest level in almost five years after it reported that a decline in its legacy check-making business was speeding up and large banks were delaying purchases of new software. Its third quarter earnings missed analysts estimates and the company provided a cautious outlook for 2017.
     Canadian National Railway Co. fell 3.8 percent, the most since April, amid concern its margins may contract and next year’s earnings expectations may be too optimistic. Energy producers also slipped as crude remained below $50 a barrel on renewed concerns over a supply glut. Financials gained 0.4 percent, paced by Toronto-Dominion Bank, which rose for a 10th consecutive day and reached a record high of $60.84.
     Raw materials producers took a hit as metals retreated after Tuesday’s rally. In corporate news, Premier Gold Mines Ltd. fell 7.7 percent after saying it will buy exploration projects in Nevada and Mexico from Goldcorp Inc. and Kinross Gold Corp. The materials industry remains the best performing sector in the index, having gained 45 percent this year.
     Energy producers, Canada’s second-largest sector, retreated as oil fell to a three-week low after a government report showed an unexpected decline in U.S. petroleum supply was centered on the West Coast. Crude has fluctuated as concerns grow over Russia and Iraq’s willingness to cooperate with OPEC on output cuts. Encana Corp. fell 0.8 percent to the lowest level this month and Canadian Natural Resources Ltd. slid from the high it hit on Monday.
     Medical marijuana producer Canopy Growth Corp. gained 6.1 percent after Shoppers Drug Mart, Canada’s largest drug store chain, applied for a medical marijuana retail license. Loblaw Companies Ltd., the owner of Shoppers, jumped more than 1 percent on the news, which is the company’s biggest intraday gain since August. Tal Woolley, an analyst at Dundee Securities in Toronto, wrote that other companies will follow Loblaw’s lead and medical marijuana will be one of the largest retail categories to emerge in Canada over the next five to 10 years.

US
By Anna-Louise Jackson and Rebecca Spalding
     (Bloomberg) — The S&P 500 Index edged lower, after lurching between gains and losses, with corporate reports spurring a tug of war as financial and industrial companies advanced to counter losses among health-care and technology shares.
     A disappointing forecast from Apple Inc. weighed on tech, and Edwards Lifesciences Corp. plunged the most in three years to drag health-care lower after the company’s sales missed estimates. Countering declines, Boeing Co. jumped the most in 21 months following its quarterly report. Mondelez International Inc. rallied after boosting its profit forecast, and the KBW Bank Index rose to its best level this year as Treasury yields approached June highs.
     The S&P 500 fell 0.2 percent to 2,139.43 at 4 p.m. in New York, after briefly erasing a 0.5 percent slide when crude oil wiped out losses on signs of lower supplies. The benchmark renewed declines as oil again lost momentum in the afternoon. The Dow Jones Industrial Average rose 30.06 points, or 0.2 percent, to 18,199.33, bolstered by Boeing. The Nasdaq Composite Index slumped 0.6 percent, the most in two weeks. About 6.7 billion shares traded hands on U.S. exchanges, 3 percent above the three-month average.
     “It’s not common to see the Dow, the S&P and the Nasdaq performing in such disparate ways,” said Brian Jacobsen, chief portfolio strategist with Wells Fargo Funds Management LLC, which oversees $242 billion. “Only 4 percent of the time have we seen the Dow outperform the S&P and the S&P outperform the Nasdaq by these margins. It’s typically driven by just a handful of names or sectors sticking out like sore thumbs, so it’s important to not assume the Nasdaq is telling us something the Dow or the S&P are missing. Still, it’s rare and rare events tend to grab our attention.”
     The S&P 500 hasn’t climbed for more than two consecutive days for almost five weeks, unable to gain traction during an earnings season dappled with disappointing forecasts from Intel Corp. to 3M Co. and Apple. While 78 percent of companies that have reported so far beat profit forecasts and 62 percent exceeded revenue estimates, analysts still predict third-quarter income will be flat compared to a year ago. Google parent Alphabet Inc. and Amazon.com Inc. are among those releasing results tomorrow.
     Shares moving on earnings news included:
     * Chipotle Mexican Grill Inc. sank to a three-year low, with quarterly results missing estimates as the company struggles to come back from an outbreak of foodborne illnesses last year.
     * Southwest Airlines Co. dropped 8.5 percent after predicting a revenue measure may worsen this quarter, a sign of diminished power to raise airfares.
     * Biogen Inc. rallied 3.7 percent after its quarterly profit topped estimates, with sales from a top-selling multiple- sclerosis drug jumping 10 percent.
     * Northrop Grumman Corp. climbed to a record, after raising its full-year earnings forecast as third-quarter results topped estimates.
     * Akamai Technologies Inc. and Juniper Networks Inc. surged more than 10 percent after their profits beat estimates, offsetting some of Apple’s drag on the technology group.
     * Huntington Bancshares Inc. advanced 5 percent to a nine-month high after its quarterly results topped predictions. That helped sending lenders in the S&P 500 toward a ten-month high.
     Meanwhile, investors are assessing the likely trajectory of interest rates and the outcome of the the U.S. presidential elections, with the next Federal Reserve meeting and the vote both due in the next two weeks. Traders see a less than one-in- five chance the Fed will raise rates at its next meeting before the election. They are pricing in nearly 73 percent odds of a December move.
     A report today showed purchases of new-homes in September stayed close to an almost nine-year high, showing residential real estate was maintaining momentum heading into the quieter selling season.
     “The market is pretty directionless at the moment, chopping around in a range,” said Michael Hewson, a market analyst at CMC Markets in London. “Some investors are trimming down their portfolios ahead of next week’s Fed announcement.”
     The S&P 500 is on track for a third monthly decline and its worst since January. That goes against its historical trend — the benchmark has climbed 1.9 percent on average in the past 25 Octobers, the biggest gain of any month. It’s trading at 18 times forecast earnings, the highest since 2009.
     In Wednesday’s trading, seven of the S&P 500’s 11 main industries retreated, with real estate sinking 1.3 percent while technology and health-care shares lost at least 0.5 percent. Financials and industrials increased more than 0.4 percent. The CBOE Volatility Index rose 5.8 percent to a one-week high.
     “The markets typically trade defensively in October before an election anyway, I expect more of the same,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird. “The market is going to go lower before it goes higher. It’s going to require a springboard and that springboard requires slightly lower prices.”

Have a wonderful evening everyone.

Be magnificent!

We must always bear in mind
that we rarer not going t be free,
but are free already.
Every idea that we are bound is a delusion.
Every idea that we are happy or unhappy
is a tremendous delusion.
Swami Vivekananda

As ever,
 

Carolann

Never attribute to malice what can adequately
be explained by stupidity.
                                          -Hanlon’s Razor

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

Tel: 778.430.5808
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