December 16, 2016 Newsletter

Dear Friends,

Tangents:
December 16^th, 1773 – Boston Tea Party.

DECEMBER
-from A COUNTRYWOMAN’S NOTES by Rosemary Verey:
…Now the shortest days are on us and darkness descends soon after four o’clock.  I can come in from the garden to the welcome of a warm fire and the prospect of a long peaceful evening spent with all those books which have been accumulating on my table.  Some have inspired me to use more herbs in the kitchen or to experiment with old ideas like using saponaria leaves and roots as a gentle soap to revitalize old and faded fabrics.  A satisfying occupation when hard frosts make outdoor activities unattractive, but you must have a suppy of roots ready dug and handy.  Soapwort reminds me of a hot day in Ethiopia when we came upon a large patch of it growing beside a lake, and sure enough this was where the women did their laundry…
PHOTOS OF THE DAY

Seagulls sit on a bar above the river Main in Frankfurt, central Germany, Friday. Boris Roessler/dpa/AP
Russian President Vladimir Putin, center right, and Japanese Prime Minister Shinzo Abe, center left, watch the demonstration of an ancient form of judo when they visit the Kodokan Judo Institute, the headquarters of the worldwide judo community, in Tokyo, Japan, on Friday. Toru Yamanaka/AP
Market Closes for December 16^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks rose for a second day as natural-resource producers advanced, with crude prices reversing a weekly loss and gold pushing back after taking a beating during a quarter dominated by the Federal Reserve’s decision to raise interest rates.
     The S&P/TSX Composite Index added 0.2 percent to 15,252.20 at 4 p.m. in Toronto, for a second day of gains. The gauge has risen 17 percent in 2016, the top performer among developed markets tracked by Bloomberg, ahead of No. 2 market Norway’s 14 percent advance.
     Energy producers rose 1.2 percent as a group as six of 11 industries in the S&P/TSX advanced. Crude futures rose for the first time in three days, up 2 percent in New York to reverse a weekly loss. Goldman Sachs Group Inc. increased its second- quarter oil price forecasts and predicted inventories would return to normal levels by the middle of 2017 as OPEC production cuts ripple through the market.
     Franco-Nevada Corp. and Goldcorp Inc. added at least 2.3 percent. Gold edged higher in New York, pulling back from a 10- month low. Base-metals producers offset gold’s gains, as Teck Resources Ltd. tumbled 5.7 percent. Copper prices capped the worst slump since August.
     In other moves:
* Eldorado Gold Corp. added 2.8 percent after the company said CEO Paul Wright is stepping down next year, to be replaced by Goldcorp Inc.’s Chief Operating Officer George Burns
* Bombardier Inc. climbed 5.1 percent. The company won two upgrades from analysts after forecasting improving 2017 results in guidance
* AlarmForce Industries Inc. rallied 4 percent, the most in two years, after the company said it will restate results for 2015 and the first two quarters of 2016, related to revenue previously gained from incorrectly charging customers who had canceled their service; the company said the revenue incorrectly earned not expected to exceed C$3.5 million.
US
By STAN CHOE
     New York (AP) — Falling technology and financial stocks pulled U.S. indexes back from the edge of record highs on Friday. Bond yields gave up some of their big gains from the last few days, and the dollar downshifted from its sharp climb against other currencies.
     The Standard & Poor’s 500 index fell 3.96 points, or 0.2 percent, to 2,258.07. It had wobbled up and down through the day, never rising by more than 0.3 percent or falling by more than 0.3 percent.
     The Dow Jones industrial average fell 8.83 points, or less than 0.1 percent, to 19,843.41. The Nasdaq composite fell 19.69, or 0.4 percent, to 5,437.16 after climbing above its record closing level earlier in the day. All three indexes remain within 1 percent of their record highs.
     Friday’s moves close a week where stocks slowed their sharp ascent since last month’s presidential election, and bond yields and the dollar continued their big gains. A driving force was the Federal Reserve’s move on Wednesday to raise interest rates for only the second time in a decade and indicate several more increases may be in store for 2017.
     The dollar gave back a smidgen of its gains on Friday. The ICE U.S. Dollar index, which measures the dollar against six other currencies, dipped 0.2 percent. The index remains close to its highest level in 14 years.
     The yield on the 10-year Treasury likewise regressed a bit Friday, dipping to 2.59 percent from 2.60 percent late Thursday. It’s still near its highest level since 2014.
     Friday’s drop in yields helped drive stocks that pay big dividends higher. They often trade in the opposite direction of interest rates on expectations that income investors will buy them when bond yields are dropping. Those sectors had struggled in recent days.
     Utility stocks and real-estate investment trusts both rose 1.2 percent on Friday, the largest gains among the 11 sectors that make up the S&P 500.
     Banks and other financial stocks fell in a rare off-day. The sector has been cruising since last month’s election on expectations that higher interest rates will boost their profits.
     Financial stocks in the S&P 500 fell 0.9 percent. Bank of America fell 50 cents, or 2.2 percent, to $22.66, and Regions Financial fell 32 cents, or 2.2 percent, to $14.20.
     Technology stocks in the S&P 500 fell 0.8 percent. Software giant Oracle fell $1.76, or 4.3 percent, to $39.10 after reporting revenue for its latest quarter that fell short of analysts’ expectations.
     Despite drops for the S&P 500 and other indexes, more stocks rose on the New York Stock Exchange than fell.
     Among them was Chipotle Mexican Grill, which jumped $9.72, or 2.5 percent, to $392.07. The restaurant chain said four new directors will join its board as part of an agreement with activist investor Bill Ackman’s Pershing Square.
     Jabil Circuit rose $2.58, or 12 percent, to $24.15 after reporting stronger earnings for its latest quarter than analysts expected.
     Big gains since last month’s election mean stocks generally are more expensive relative to their earnings, a key gauge investors use to measure whether the market is overpriced.
     The S&P 500 is trading at about 19 times its earnings per share over the last 12 months, according to FactSet. That compares with its average price-earnings ratio of 15.6 over the last 15 years and is an indication that stocks are, if not expensive, no longer cheap. And that, in turn, implies lower future returns than the big gains investors have enjoyed since the Great Recession’s end.
     “I do think we’re in a low-return environment,” says Bernie Williams, chief investment officer for USAA’s Wealth Management Investment Solutions. “Of course, we thought that at the start of this year, too, and here we are up 10 percent.”
     In foreign stock markets, Japan’s Nikkei 225 gained 0.7 percent, South Korea’s Kospi rose 0.3 percent and Hong Kong’s Hang Seng fell 0.2 percent. In Europe, Germany’s DAX rose 0.3 percent, France’s CAC 40 rose 0.3 percent and Britain’s FTSE 100 rose 0.2 percent.
     Crude oil rose $1 to settle at $51.90 a barrel in New York. Brent crude, the international standard, rose $1.19 to close at $55.21 a barrel in London. Natural gas slipped nearly 2 cents to settle at $3.415 per 1,000 cubic feet, wholesale gasoline rose 1.5 cents to $1.56 a gallon and heating oil rose 3 cents to $1.67 a gallon.
     Gold recovered a bit after falling to its lowest price in 10 months on Thursday. It rose $7.60 to settle at $1,137.40 an ounce. Silver rose nearly 26 cents to $16.22 an ounce, and copper fell 3.6 cents to $2.56 a pound.
     The euro rose to $1.0433 from $1.0424, the British pound rose to $1.2476 from $1.2436 and the dollar climbed to 118.01 Japanese yen from 117.93 yen.

By Oliver Renick
     (Bloomberg) — U.S. stocks slid as a report that China’s navy seized a U.S. drone in international waters in the South China Sea spurred geopolitical concern and financial companies dropped for the third day this week.
     The S&P 500 fell 0.2 percent to 2,258.07 by 4 p.m. in New York. Oil prices rose and 10-year Treasury yields declined as the Pentagon demanded that China immediately return the underwater drone in a confrontation certain to exacerbate tensions in a region where the government in Beijing has sought to assert greater control.
U.S. Market
* Real estate and utility shares up 1.2%; phone companies add 0.6%
* Financial shares and tech drop at least 0.8%
* The Dow jumped 8.2% in the five weeks following Donald Trump’s U.S. election win, the biggest gain in the period that greeted any president since 1900
* Equity funds globally saw “huge” investment inflows in the latest week as the “great rotation” out of bonds and into riskier assets such as stocks accelerated, according to a note by Bank of America Corp.’s Merrill Lynch unit. Since the U.S. election, investors have poured $63 billion into equity funds, following outflows of $151 billion in the January-October period, the report showed
* The S&P 500’s pause near a record high shows little sign of trend exhaustion, and its next set of bullish objectives rest at the 2,285-2,296 area, JPMorgan Chase & Co.’s technical analyst Jason Hunter wrote in a note
* The expiration of some futures and options on stocks and indexes Friday, known as quadruple witching, added to stock volatility

Have a wonderful weekend everyone.

Be magnificent!

The question of whether or not there is a God or truth or reality, or whatever you like to call it,
can never be answered by books, by priests, philosophers or saviors.
Nobody and nothing can answer the question
but you yourself and that is why you must know yourself.
Immaturity lies only in total ignorance of self.
To understand yourself is the beginning of wisdom.
Krishnamurti

As ever,

Carolann

Probable impossibilities are to be preferred to improbable possibilities.
                                                          -Aristotle, 384BC-322BC

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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