November 4, 2016 Newsletter

Dear Friends,

Tangents:
In science one tries to tell people, in such a way as to be understood by everyone, something that no one ever knew before.
But in poetry, it’s the exact opposite.  -Paul Dirac

UNTITLED
 -Emily Dickinson

Morns are meeker than they were,
The nuts are getting brown,
The berry’s cheek is plumper,
The Rose is out of town.
The maple wears a gayer scarf,
The field a scarlet gown,
Lest I should be old fashioned
I’ll put a trinket on.

On this day in:
1922, King Tut’s tomb was found
1946, UNESCO  was founded
1979, the Iranian hostage crisis begins as militants stormed the U.S. Embassy in Tehran.
PHOTOS OF THE DAY

The Chicago River is dyed blue near the Michigan Avenue bridge in honor of the Chicago Cubs World Series win in Chicago on Friday. Cubs fans have packed the streets outside Wrigley Field hours before the start of the parade to honor the World Series champions. Erin Hooley/Chicago Tribune/AP

A woman joggs with her dog through a forest near Cologne, Germany on Friday. Henning Kaiser/AP
Market Closes for November 4th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On [TV financial news programs], if the stock is near its high, 90% of the guests like it, if it is near is low, 90% of the guests hate it. –Michael L. Burke, 1935-2014.

Intelligence, May 2002.
Number of the Day
$12 billion
John Paulson’s drug-company investments has led to big losses and extended a period of uneven performance that has left the firm managing about $12 billion, down from $38 billion in 2011.
Canada
By John Hyland
     (Bloomberg) — Canadian stocks extended losses for a fourth day, closing at their lowest level since September as trade data overshadowed a third month of job gains.
     The S&P/TSX Composite Index fell 0.5 percent to 14,509.25 at 4 p.m. in Toronto, with its longest decline since August. Raw materials producers led the decline, falling 1 percent. Energy companies dropped for the sixth consecutive day, their longest losing streak since May, retreating after oil capped its biggest weekly decline since January.
     Stronger-than-forecast jobs data was countered by a trade deficit that widened to a record C$4.1 billion ($3.1 billion) in September as export volumes fell 0.8 percent from the previous month. However, the spike in the trade deficit was largely on the back of a one-time purchase related to an offshore oil project, described by Statistics Canada as “exceptionally large.” Excluding that impact, the trade gap narrowed, the agency said.
     Financial stocks declined for the third time in four days amid U.S. election angst. The group fell to its lowest level since mid-October, as Toronto-Dominion Bank and Bank of Nova Scotia slumped to two-week lows.
     Raw-materials producers fell as gold miners retreated, even as the precious metal held near a one-month high. Investors weighed the need for a haven before next week’s U.S. presidential election against expectations of higher interest rates. Detour Gold Corp. slumped to a seven-month low in an “overdone” selloff, according to Cormark Securities analyst Richard Gray. Kinross Gold Corp. lost 2.3 percent.
     Energy shares declined 0.5 percent to their lowest level since September, after oil capped its biggest weekly loss in almost 10 months. Crude slumped as hopes fade that OPEC will be able to implement a promised deal to cut production and ease global oversupplies. Suncor Energy Inc. fell 1 percent to a two- week low, and Canadian Natural Resources Ltd. fell to its lowest level since September.
     Canadian stocks are now 13 percent more expensive than their peers in the S&P 500 Index. The S&P/TSX trades at 22.1 times earnings, compared with 19.5 for the S&P 500 Index. The S&P/TSX is the top performer this year among developed equity markets tracked by Bloomberg.
US
By Dani Burger
     (Bloomberg) — The S&P 500 Index extended its longest losing streak in more than three decades, as data bolstered speculation interest rates will rise before year-end and investors remained wary before the looming presidential election.
     Equities faded in afternoon trading as declines among consumer, financial and energy shares overshadowed gains in drugmakers. Procter & Gamble Co. and Amazon.com Inc. were among the biggest drags, sinking more than 1.5 percent. Insurer Willis Towers Watson Plc tumbled 5.6 percent after cutting its full- year revenue forecast, and Wells Fargo & Co. lost 1.6 percent. Crude’s biggest weekly drop since January weighed on oil and gas producers.
     The S&P 500 fell 0.2 percent to 2,085.18 at 4 p.m. in New York, after erasing a 0.5 percent advance. The gauge has retreated 3.1 percent over nine days, the longest since 1980 when it dropped 9.4 percent. The Dow Jones Industrial Average lost 42.39 points, or 0.2 percent, to 17,888.28, and the Nasdaq Composite Index declined 0.2 percent. The CBOE Volatility Index rose for a ninth session, the longest ever. About 7.3 billion shares traded hands on U.S. exchanges, 12 percent more than the three-month average.
     “The jobs number should increase rate-hike odds and push up the dollar further, but nothing is happening in the markets ahead of the election,” said Dennis Debusschere, a senior managing director and global portfolio strategist at Evercore ISI in New York. “All expectations of the rate outlook and by extension the markets are being muted by election uncertainty.”
     A report today showed payrolls climbed by 161,000 last month following a 191,000 gain in September that was larger than previously estimated. Wages rose from a year earlier by the most since 2009, and the jobless rate fell to 4.9 percent. The figures are likely to keep the Federal Reserve on track to raise borrowing costs next month for the first time in 2016.
     While shares have almost always risen in the days before a presidential election, anxiety about the outcome of the Nov. 8 vote has weighed on stocks, overshadowing even a Fed meeting earlier this week. The S&P 500 fell Friday as low as 2,083, its average price during the past 200 days, and a technical level it hasn’t breached since the rout that followed the U.K.’s June vote to leave the European Union.
     The main U.S. equity benchmark posted a fourth weekly decline in the last five, down 1.9 percent as polls showed a dwindling lead for Democratic presidential candidate Hillary Clinton. Republican nominee Donald Trump showed strength in Iowa and Ohio pre-Election Day voting, while Clinton’s advantage in early balloting looked favorable in North Carolina and Nevada, according to a Bloomberg Politics analysis.
     The tightening race sent the CBOE Volatility Index surging 73 percent during the past two weeks, and dragged the S&P 500 to a four-month low. The measure of market turbulence known as the VIX reversed an earlier decline Friday as it rose 2 percent to 22.51, the highest since the Brexit aftermath.
     “The U.S. elections are the elephant in the room for markets at the moment,” said Christian Gatticker, Zurich-based head of research at Julius Baer Group Ltd. “The best case is gridlock where Hillary wins and works with a Republican Congress, while a worst case is a hung vote.”
     Hedge fund manager Dan Loeb said he’s cutting risk in his portfolio ahead of the vote on concern that surprises could rattle financial markets. “We’ve reduced our exposures, we’ve cut some positions and increased some hedges,” Loeb said Friday in a conference call discussing results at Third Point Reinsurance Ltd., the Bermuda-based insurer where he oversees investments. “And it isn’t just about the president. Obviously who wins is going to impact the market. I think equally important is what happens in the House and Senate.”
     Before today’s payrolls report and the approaching election, the Fed on Wednesday kept rates unchanged in a widely expected move, and indicated the argument for raising them has strengthened. Other data this week was mixed, with modest expansion in manufacturing last month, while services industries growth slowed. Traders are pricing in a 74 percent chance the central bank will act in December, up from 69 percent a week ago.
     “It’s worth noting that unemployment is the single best determining factor of market direction,” said Ross Yarrow, director of U.S. Equities at Robert W. Baird & Co. In London. “The S&P 500 almost never peaks for the cycle until unemployment troughs.”
     Traders are also parsing corporate results as the earnings season winds down. More than four out of five S&P 500 companies have reported so far, with 56 percent beating sales estimates and 75 percent topping profit forecasts. Analyst predict earnings for members of the index grew 2.5 percent in the July- September period, snapping a five-quarter stretch of declines.
     Among shares moving on earnings news, NRG Energy Inc. surged the most since December, after raising profit guidance for 2016. Mohawk Industries Inc. jumped 7.8 percent to its best one-day gain in five years after the flooring maker’s results topped estimates.
     Fluor Corp. sustained its steepest drop since 2008 after cutting its profit forecast because of a delayed construction project, and its earnings target for next year fell short of analysts’ expectations. Symantec Corp. slumped to a 2 1/2-month low after its current quarter sales and profit outlooks missed predictions and the chief financial officer stepped down.

Have a wonderful weekend everyone.

Be magnificent!

Our responsibility is no longer to acquire, but to be.
Rabindranath Tagore

As ever,

Carolann

The only real failure in life is one not learned from.
-Anthony J. D’angelo, b. 1974

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