October 26th, 2020 Newsletter

Dear Friends,

Tangents:

Check out 11 new books that Times editors recommend.

How a pair of raccoons (probably) broke into a bank.  Carefully, we would assume.

There’s water on the Moon. 

These tiny-winged dinosaurs were probably terrible at flying.-Ellen Kominers

On Oct. 25, 1971, the United Nations General Assembly voted to admit mainland China and expel Taiwan. Go to article »

PHOTOS OF THE DAY

Clear night over Ladybower Reservoir in the Peak District.
CREDIT: GREG BUTLER/BAV MEDIA

Morning fog blankets the Przemyskie Foothills, near Cisowa, southeastern Poland.
CREDIT: DAREK DELMANOWICZ/EPA-EFE/SHUTTERSTOCK

A seagull flies to catch a piece of bread thrown by a tourist on the coast of the Baltic Sea in Timmendorfer Strand, northern Germany.
CREDIT: MICHAEL PROBST/AP

Market Closes for October 26th, 2020 

International Markets

Bonds

Currencies

Commodities

Market Commentary
On this day in 1825, the Erie Canal was inaugurated as New York City hosted a flotilla of boats with a parade, banquet and fireworks display after they traversed the 363-mile run from Lake Erie. Financed with $6 million in stock and bonds and eight years in the making, the canal cut shipping time from New York to Buffalo from three weeks to eight days—and slashed the cost of transporting goods from $100 a ton to $15. Suddenly the American frontier was opened to a two-way flood of commerce.

Canada
By Aoyon Ashraf
(Bloomberg) — Canadian shares fell with the broader equity markets, on rising investor concerns that climbing coronavirus cases will hurt the global economy, and on dimming prospects for fiscal aid from Washington before the presidential election. The S&P/TSX Composite index fell 1.4% in Toronto, the most since Sept. 23. Almost all sectors were in the red, except for tech, which was helped by Shopify Inc.
     Meanwhile, healthcare and consumer discretionary were the worst performers. The TSX fell below its 100-day moving average and touched the lower end of its trading envelope, first time since Sept. 23. However, this sell-off could be a good opportunity for investors to buy into the equity markets, according to Canaccord Genuity’s technical analyst Javed Mirza. His analysis suggests a new intermediate-term (3-6 months) equity market rally is underway and investors should take advantage of any short-term equity market weakness to “aggressively minimize cash balance.” On the short-term, Mirza  sees important support for the TSX around 15,222 level and major resistance near 17,848.
     Meanwhile, one of Canada’s largest public-pension managers, Ontario Municipal Employees’ Retirement System, aims to double its C$25 billion ($19 billion) of infrastructure investments in its home country within a decade.
Commodities
* Western Canada Select crude oil traded at a $11.25 discount to West Texas Intermediate
* Spot gold was flat at $1,902.9 an ounce
FX/Bonds
* The Canadian dollar fell 0.5% to C$1.3196 per U.S. dollar
* The 10-year government bond yield fell slightly to 0.626%
–With assistance from Divya Balji.
By Bloomberg Automation:
(Bloomberg) — The S&P/TSX Composite fell 1.4 percent at 16,079.55 in Toronto. The move was the biggest since falling 2 percent on Sept. 23 and follows the previous session’s increase of 0.2 percent. Royal Bank of Canada contributed the most to the index decline, decreasing 1.9 percent. Vermilion Energy Inc. had the largest drop, falling 9.0 percent. Today, 210 of 223 shares fell, while 12 rose; 10 of 11 sectors were lower, led by financials stocks.
Insights
* This month, the index fell 0.3 percent
* This year, the index fell 5.8 percent, heading for the worst year since 2018
* The index declined 2 percent in the past 52 weeks. The MSCI AC Americas Index gained 13 percent in the same period
* The S&P/TSX Composite is 10.5 percent below its 52-week high on Feb. 20, 2020 and 43.9 percent above its low on March 23, 2020
* The S&P/TSX Composite is down 1.2 percent in the past 5 days and was little changed in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 24.7 on a trailing basis and 23 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.2 percent on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$2.5t
* 30-day price volatility rose to 13.32 percent compared with 12.93 percent in the previous session and the average of 14.92 percent over the past month
================================================================
| Index Points | | Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -78.5670| -1.7| 2/24
Industrials | -39.1160| -1.9| 0/28
Energy | -32.3887| -1.9| 1/22
Materials | -25.9340| -1.0| 4/48
Communication Services | -15.0111| -1.7| 0/7
Consumer Discretionary | -12.9680| -2.1| 0/13
Real Estate | -8.2292| -1.6| 1/26
Utilities | -6.9292| -0.8| 1/15
Consumer Staples | -5.6511| -0.8| 1/9
Health Care | -5.4021| -3.1| 1/9
Information Technology | 5.6548| 0.3| 1/9

US
By Claire Ballentine and Vildana Hajric
(Bloomberg) — The S&P 500 Index posted its biggest drop in a month on concern rising coronavirus cases will hurt the global economy and as prospects dimmed for fiscal aid from Washington before the presidential election. Losses for energy and industrial companies sent the benchmark gauge down 2.9% at one point, though stocks pared losses in the afternoon amid recoveries for the biggest technology companies and as House Speaker Nancy Pelosi voiced optimism on a stimulus deal. Boeing Co., Lockheed Martin Corp. and Raytheon Technologies Corp. slid on China’s plan to sanction the companies over arms sales to Taiwan.
In Europe, a gauge of tech stocks fell the most since March after German software maker SAP SE plunged 22% following a cut to its sales forecast and warnings that the pandemic will hurt business through mid-2021.  The dollar strengthened and Treasuries rose, sending yields on the 10-year lower. Oil futures and copper declined, while gold was little changed. Investors remain focused on the prospect of a U.S. stimulus deal, even as time runs out to finish an aid package before the election. On the virus front, U.S. infections have hit a record in recent days. Europe took a step closer to the strict rules imposed during the initial wave of the pandemic, with leaders struggling to regain control of the spread while confronting growing opposition to restrictions.
“Fiscal stimulus seems to not be coming as quickly as we thought and the virus is coming quicker than we imagined,” said Keith Buchanan, portfolio manager for GLOBALT Investments in Atlanta. “Putting those two together is somewhat of a reality check for the markets.” Pelosi, Mnuchin Trade Blame on Unending Stimulus Stalemate In Washington, Pelosi and Treasury Secretary Steven Mnuchin again attempted to reconcile differences on a virus relief package. Differences between the two sides “have narrowed,” but “the more it narrows, the more conditions come up on the other side,” White House economic adviser Larry Kudlow told reporters. “The overwhelming consensus in the market is that while the economic recovery to date is impressive, it still needs help,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “It’s not ready to stand on its own, and so some fiscal support is necessary and does not really seem to be forthcoming before year-end.”
In other markets, the MSCI Asia Pacific Index slipped, with Japan and South Korea posting declines. Emerging-market stocks were also lower. Turkey’s lira weakened past 8 per dollar for the first time. The central bank rattled investors last week by unexpectedly keeping rates on hold, and geopolitical risks have sapped interest in Turkish assets.

These are some events to watch this week:
* The Chinese Communist Party’s Central Committee holds its all- important plenum, where it’s expected to chart the course for the economy’s development for the next 15 years. Through Oct. 29.
* Brexit negotiating teams have started intense daily negotiations, and these are likely to continue as both sides push to finalize a deal by the middle of November.
* Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Kuroda and President Lagarde.
* The first reading of U.S. 3Q GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.

Here are the major moves in markets:
Stocks
* The S&P 500 Index decreased 1.9% as of 4 p.m. New York time.
* The Stoxx Europe 600 Index fell 1.8%.
* The MSCI Asia Pacific Index dipped 0.4%.
* The MSCI Emerging Market Index declined 0.6%.
Currencies
* The Bloomberg Dollar Spot Index rose 0.4%.
* The euro fell 0.5% to $1.1807.
* The British pound fell 0.2% to $1.3019.
* The Japanese yen weakened 0.1% to 104.85 per dollar.
Bonds
* The yield on 10-year Treasuries declined four basis points to 0.80%.
* Germany’s 10-year yield was little changed at -0.58%.
* Britain’s 10-year yield was little changed at 0.27%.
Commodities
* West Texas Intermediate crude declined 3.2% to $38.56 a barrel.
* Gold was little changed at $1,902.20 an ounce.
–With assistance from Andreea Papuc and Anchalee Worrachate.

Have a great night.

Be magnificent!
As ever,

Carolann

The most  important thing in communication is hearing what isn’t said.
                                                        –Dr. Peter Drucker, 1909-2005

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Senior Investment Advisor

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