November 2, 2016 Newsletter

Dear Friends,

Tangents: ALL SOULS’ DAY
               DAY OF THE DEAD (MEXICO)

The day devoted to prayer and almsgiving on behalf of the departed.  According to tradition, a certain pilgrim returning from the Holy Land took refuge on a rocky island during a storm.  There he met a hermit, who told him that among the cliffs was an opening to the infernal regions, through which flames ascended, and where the groans of the tormented were distinctly audible.  The pilgrim told Odilo, abbot of Cluny, who appointed the day following – November 2, 998 – to be set apart for the benefit of those souls in Purgatory.  In England, it was formerly observed by ringing the “soul bell” or “passing bell”, by making and distributing soul cakes or by blessing beans and so on.
 A passing bell used to be rung when a person was on the point of death, to scare away any evil spirits that might be lurking ready to snatch the soul while passing from the body.  A secondary objective was to announce to the neighborhood so that all might pray for the safe passage of the soul into Paradise.      Athenians used to beat on brazen kettles at the moment of death to scare away the Furies.

On this day in 1947, Howard Hughes pilots the Spruce Goose on its only flight.
On Nov. 2, 1976, former Georgia Gov. Jimmy Carter defeated Republican incumbent Gerald R. Ford, becoming the first U.S. president from the Deep South since the Civil War.

PHOTOS OF THE DAY

University of Edinburgh students wear outfits adorned with lights, mirrors, and bells to mark the Indian Festival of Diwali in Edinburgh, Scotland, on Wednesday. The five-day festival of lights is celebrated worldwide by Hindus. David Cheskin/PA/AP

People pray beside the graves of their relatives at a cemetery during the observance of All Souls Day in Mumbai, India, on Wednesday.Danish Siddiqui/Reuters

The sun rises behind the Manhattan skyline on Wednesday. Lucas Jackson/Reuters
Market Closes for November 2^nd, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
NUMBERS OF THE DAY
$10 billion 

The amount for which Valeant Pharmaceuticals International is in advanced talks to sell Salix Pharmaceuticals, a big stomach-drug business, to Japan’s Takeda Pharmaceutical, a move seen easing pressure on Valeant caused by its hefty debt load

51.4%
The percentage of all mortgage loan dollars in the third quarter extended by nonbank financial firms, according to Inside Mortgage Finance. It marks the first quarter that banks, credit unions and other depository institutions have fallen below the 50% threshold in more than 30 years.

Interesting – I attended an all day conference in NYC on the topic of  FinTech put on by Buttonwood (The Economist) a couple of weeks ago and one of the astonishing revelations is that fintech now commands 30% of what used to be conventional banking.
Canada
By John Hyland
     (Bloomberg) — Canadian stocks tumbled for a second day as investors retreated from equities amid concerns about the upcoming U.S. presidential election and the increased probability of an interest rate hike before the end of the year.
     The S&P/TSX Composite Index fell 1.2 percent to 14,594.72 at 4 p.m. in Toronto. All 11 industry groups in the index retreated. Health care shares lost 6.2 percent as Valeant Pharmaceuticals International Inc. was sued over its failed marketing of a female libido pill. Energy stocks also weighed down the gauge as oil dropped to a one-month low after data showed U.S. stockpiles grew. And raw-materials producers snapped a four-day rally as miners dropped 2.3 percent
     Oil fell to the lowest level in more than a month after industry data showed U.S. crude stockpiles grew and supplies from OPEC members increased. Among energy shares, TransCanada Corp. tumbled nearly 5 percent to the lowest level since June 2016, after the company announced it’s raising about $6.1 billion to help fund its acquisition of Columbia Pipeline Group Inc.
     Gold prices advanced for a fifth day on increased concern over the outcome of the election. Miners ended a four-day rally, falling after the Federal Reserve meetings ended and the probability of a December interest rate hike increased. Barrick Gold Corp. snapped its longest winning streak since July 2016, falling 1.7 percent. Detour Gold Corp. fell 18.8 percent to its lowest level since April 2016 after missing production and revenue estimates.
     Lenders slipped as investors crowded into haven assets after a poll on Nov. 1 showed Donald Trump gaining ground against Hillary Clinton. Royal Bank of Canada fell 0.8 percent, sending the country’s largest bank to its lowest level in more than two weeks. Toronto-Dominion Bank fell 0.6 percent.
     Valeant led the health care sector lower, falling 9.1 percent on the marketing lawsuit and reports that its exploring a sale of some eye-surgery assets worth $2.5 billion. Yesterday, the shares surged 30 percent after a report said it’s looking to sell the Salix gastrointestinal drug business it acquired last year for $11.1 billion.
     Canadian stocks are now 15 percent more expensive than their peers in the S&P 500 Index. The S&P/TSX trades at 22.6 times earnings, compared with 19.7 for the S&P 500 Index. The S&P/TSX is the top performer among developed equity markets tracked by Bloomberg in 2016.
US
By Rebecca Spalding, Joseph Ciolli and Anna-Louise Jackson
     (Bloomberg) — U.S. stocks fell, with the S&P 500 Index mired in its longest slump in five years, after investors shrugged at the Federal Reserve’s decision to stand pat on interest rates and remained on edge before the U.S. presidential election.
     The Fed’s as-expected message did little to temper increasing anxiety over the implications from the Nov. 8 vote, which has begun to dominate market sentiment. Equities are also grappling with mixed earnings reports and a plunge in crude prices that sent oil to a one-month low. Facebook Inc. edged higher in after-hours trading following the social network’s quarterly results.
     The S&P 500 Index dropped 0.7 percent to 2,097.94 at 4 p.m. in New York, capping a seventh straight loss to remain near a four-month low. The benchmark closed below 2,100, after briefly dipping beneath the technically sensitive level Tuesday for the first time since July 7. The Dow Jones Industrial Average lost 77.46 points, or 0.4 percent, to 17,959.64, and the Nasdaq Composite Index slid 0.9 percent.
     “The FOMC minutes were benign and came in as expected, with the only real change coming as we went from three dissenters to two,” Yousef Abbasi, a global market strategist at JonesTrading Institutional Services LLC, said by phone. “More than anything right now we’re seeing a combination of uncertainty and a lack of motivation to do anything before the election. People are de- risking their books, and in some cases opting to sit on the sideline.”
     Wednesday’s retreat came after the S&P 500 fell yesterday by the most in three weeks, amid polls showing Hillary Clinton’s once formidable lead over Donald Trump in the presidential race has withered. That jolted stocks from the tightest trading range since 2006 as investors brace for market turmoil. Just four months removed from the U.K.’s shock decision to leave the European Union in an outcome not predicted by betting markets, anxiety levels have spiked as the election polls have narrowed.
     The CBOE Volatility Index remained at its highest since June after spiking more than 48 percent in seven days. The measure of market turbulence known as the VIX extended its streak of gains to the longest since 2013. About 8.1 billion shares traded hands on U.S. exchanges, 25 percent more than the three-month average.
     Banks and energy producers were among the biggest drags today as bond yields retreated amid demand for havens, and crude prices sank to the lowest in more than a month. Gilead Sciences Inc. and Allergan Plc fell more than 2.1 percent after both drugmakers’ profits missed estimates. Technology shares were weighed by Google parent Alphabet Inc.’s slide to a three-month low, and as Facebook sank 1.8 percent before its earnings report.
     After markets closed, Facebook was little changed as of 4:35 p.m. The company said revenue jumped to a record, boosted by video advertising and sales from Instagram. The results exceeded analysts’ estimates.
     Meanwhile, policy makers said today the case to boost borrowing costs has continued to strengthen, but decided, “for the time being,” to wait for more evidence of progress toward their employment and inflation objectives. The decision to forgo a rate increase had been widely expected owing to the proximity of next week’s election.
     The central bank has held the target range for the benchmark fed funds rate at 0.25 to 0.5 percent all year after raising it in December for the first time in nearly a decade. Concerns over slowing global growth and a slide in U.S. inflation expectations have kept them sidelined. Officials last December forecast it would be appropriate to raise rates four times in 2016, their median estimate showed. That projection was cut in March to two moves this year and lowered again in September to just one.
     Data today showed companies added fewer workers than forecast in October, signaling slower progress than estimated in the labor market. The government’s monthly payrolls report is due Friday. Following the FOMC decision, traders now price in 80 percent odds on a December increase, compared to 67 percent before the statement was released.
     “They’ve done everything they need to do to tee December up,” said Chris Zaccarelli, chief investment officer of Cornerstone Financial Partners, which oversees more than $1 billion in assets in Huntersville, North Carolina. “They’ve all but indicated they’re going to raise rates in December, but they’re leaving a little room in case something unexpected happens with the election or something that sends the market into a tailspin.”
     The S&P 500 has advanced the five days before a presidential election in 20 of the past 22 votes, according to data compiled by Bloomberg. The gauge has climbed an average 1.9 percent in the run-up to all elections going back to 1928. It’s down 1.3 percent since Monday, with three trading days left until polls open Nov. 8.
     Canaccord Genuity Inc.’s Tony Dwyer upgraded his view of equities to positive from neutral Wednesday. In a note, the co- head of U.S. equity research said the selloff provided a window for active investors to become more aggressive. “While the markets hate uncertainty, in a positive fundamental backdrop, investors should love it because it creates opportunity,” Dwyer said by telephone, highlighting health-care, financials, industrials and technology as groups to consider. “The seasonal history suggests you want to buy any weakness.”

Have a wonderful evening everyone.

Be magnificent!

Such awareness is like living with a snake in the room;
you watch its every movement, you are very, very sensitive to the slightest sound it makes.
Such a  state of attention is total energy;
in such awareness the totality of yourself is revealed in an instant.
Krishnamurti

As ever,

Carolann

There are only two days in the year that nothing can be done.  One is called yesterday
and the other is called tomorrow, so today is the right day to love, believe , do
and mostly live.
                                                                                             -The Dalai Lama

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
(C): 250.881.0801
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www.carolannsteinhoff.com