November 17, 2016 Newsletter

Dear Friends,

Tangents:

Carolann is out of the office, I will be writing the newsletter on her behalf.

PHOTOS OF THE DAY

A girl looks into the mouth of a polar bear head ice sculpture at the launch of Hyde Park Winter Wonderland’s Magical Ice Kingdom in London on Thursday. This year’s Winter Wonderland starts on Nov. 18, 2016 and lasts until Jan. 2, 2017. Frank Augstein/AP

The International Space Station (ISS) crew member Thomas Pesquet of France gestures as he sits in a bus before boarding spacecraft at the Baikonur cosmodrome, Kazakhstan, Thursday. Kirill Kudryavtsev/Reuters
Market Closes for November 17^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks rose for the third time in four sessions, to the highest close in three weeks, joining gains around the world as the Federal Reserve signaled the pace of interest rate increases will be gradual while energy producers advanced with crude.
     The S&P/TSX Composite Index rose 0.6 percent to 14,826.09 at 4 p.m. in Toronto. The equity benchmark is up 14 percent in 2016, making it the top performer among developed markets tracked by Bloomberg. Canadian stocks are about 10 percent more expensive than their peers in the S&P 500 Index.
     Global equity markets rallied after Fed chair Janet Yellen said a rate hike could come “relatively soon” in prepared text for testimony she’s scheduled to deliver before Congress’s Joint Economic Committee in Washington. Traders are now pricing in 98 percent probability of a rate hike next month, from 68 percent at the start of November, according to data compiled by Bloomberg. 
     Energy producers rallied 0.5 percent as 10 of 11 industries in the S&P/TSX posted gains. Trading volume was 12 percent higher than the 30-day average. Suncor Energy Inc. added 0.5 percent.
     Crude futures declined 0.3 percent in New York, erasing earlier gains after dropping 0.5 percent Wednesday. Saudi Arabia’s minister of energy and industry said he’s optimistic producers will reach a deal at OPEC’s highly anticipated meeting in Vienna Nov. 30. Crude prices have whipsawed between gains and losses this week as the outcome of the meeting remains murky.
     Natural resource producers are the top-performing companies in the Canadian market this year, with materials stocks rallying 39 percent year-to-date on a rebound in commodities prices from gold to crude. Teck Resources Ltd., the nation’s largest diversified miner, is the top stock in the index, up almost six- fold this year as prices for coking coal and zinc have also surged.
     Valeant Pharmaceuticals International Inc. added 1.1 percent, reversing an earlier loss of as much as 7.8 percent. The head of the drugmaker’s mail-order pharmacy affiliate and a former Valeant manager were indicted on federal charges that they defrauded shareholders. The executives Andy Davenport and Gary Tanner were charged by federal prosecutors in Manhattan on multiple counts including wire fraud and conspiracy to launder money.
     Great Canadian Gaming Corp. slumped 8.4 percent, the most in more than four years, after insider Neil Baker agreed to sell as much as eight million shares of the company. Prior to the deal, Baker owned or controlled almost 11 million shares, or about 18 percent of the casino company’s issued and outstanding stock.
US
By Rita Nazareth, John Hyland and Stephen Kirkland
     (Bloomberg) — The S&P 500 Index neared an all-time high, rising with the dollar as Treasuries fell after Federal Reserve Chair Janet Yellen signaled the central bank is close to raising interest rates.
     The U.S. stock benchmark rose to within four points of a record, and the Russell 2000 Index of smaller companies capped its longest rally since March 2013, while the Dow Jones Industrial Average gained despite a disappointing sales forecast from Cisco Systems Inc. U.S. government bonds slid after Yellen’s comments and a wave of data that pointed to U.S. economic strength. The greenback’s gains helped oil fall below $45 a barrel.
     In her first public comments since the U.S. election, Yellen told lawmakers that the Fed is close to boosting borrowing costs as the economy continues to gain traction. The comments weighed on Treasuries, with yields on 10-year notes slipping to 2.29 percent. Bank stocks pushed their rally since Donald Trump’s presidential victory back above 10 percent, while energy shares retreated. Speculation that Trump’s administration will carry out fiscal stimulus continues to lift industries that are perceived to benefit from economic growth.
     “A Trump victory could herald higher inflation, a roll back of financial regulation, higher spending and renewed attacks on the Fed’s independence,” said Michael Ingram, a market strategist at BGC Partners in London. “Having made some apocalyptic predictions in the event of Trump’s victory, markets quickly took a ‘glass half-full’ view. The more appropriate question is ‘What’s in the glass — champagne or cyanide?”’
     Traders are betting a Trump presidency will quicken the pace of interest-rate increases, pricing in a 98 percent chance that the Fed will act next month, compared with odds of about 80 percent before the election. Reports Thursday showed U.S. housing starts jumped to a nine-year high in October, while jobless claims fell to the lowest level in four decades.
     The S&P 500 added 0.5 percent to 2,187.12 as of 4 p.m. in New York, the highest close since Aug. 15, when the gauge closed at a record 2,190.15. The Russell 2000 jumped 0.6 percent to a record, while the Dow Average gained 0.2 percent.
     Earnings reports were also in focus. Best Buy Co. jumped 14 percent after its profit surpassed expectations, while Cisco slid 4.8 percent after predicting worse-than-estimated earnings and unexpectedly forecasting a decline in sales. Wal-Mart Stores Inc. and Staples Inc. dropped after reporting sales that missed estimates.
     The Stoxx Europe 600 Index climbed 0.6 percent, the most in a week and erasing a slide of as much as 0.3 percent.
     Longer-dated U.S. government bonds led losses as Yellen told U.S. lawmakers Thursday that a rate hike could come relatively soon. The economy continues to create jobs at a healthy clip and is inflation inching higher, she said.
     Benchmark Treasury 10-year yields climbed six basis points, or 0.06 percentage point, according to Bloomberg Bond Trader data. Thirty-year Treasury yields jumped eight basis points to 3 percent. Two-year yields added two basis points to 1.03 percent.
     A bond-market gauge of expectations for U.S. consumer prices over the next decade climbed this week to the highest since April 2015. The measure, known as the break-even rate, which represents the extra yield investors demand on regular 10- year notes over similar-maturity TIPS, reached 1.97 percentage points. The difference has risen from below 1.2 percentage points in February. The debt pays interest on a principal amount that rises with consumer prices.
     The dollar climbed to a five-month high versus the yen as Japanese Prime Minister Shinzo Abe prepared to meet President- elect Trump in New York.
     Traders are watching for any comments from Trump, who’s accused Japan of currency manipulation. He and Abe will meet at 5 p.m. New York time, according to a Trump adviser. The U.S. currency was buoyed after Fed Chair Yellen said a rate hike could come “relatively soon.”
     “The fact that she didn’t push back against market expectations for a December hike is perhaps the most significant takeaway,” said Jack Spitz, managing director for foreign exchange at National Bank of Canada in Toronto. “The dollar is higher as a result.”
     The dollar rose 0.8 percent to 109.99 yen, after reaching 108.56 yen, the strongest level since the start of June. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, extended gains at its highest level since February. The gauge surged 2.8 percent last week, the most since September 2011.
     West Texas Intermediate oil for December delivery declined 0.3 percent to $45.42 a barrel on the New York Mercantile Exchange.
     “The only that’s changed from earlier today is that the dollar is stronger,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The rising dollar appears to be triggering selling of commodities.”
     Copper rebounded, ending a two-day slide, amid signs of resilient demand from U.S. home builders.
     On the London Meal Exchange, copper, zinc, lead and tin rose, while aluminum and nickel slipped. Meanwhile, a gauge of 18 base-metals producers tracked by Bloomberg Intelligence climbed 0.7 percent.

Have a wonderful evening everyone.

Be magnificent!

“Your present circumstances don’t determine where you can go; they merely determine where you start.” Nido Qubein

As ever,
 

Karen

 
“Education is the most powerful weapon which you can use to change the world.” Nelson Mandela

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

 
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