December 29, 2015 Newsletter

Dear Friends,

Tangents:

PHOTOS OF THE DAY

Jockey David Noonan falls from Steady Eddie at the first fence during a hurdle race at Doncaster Racecourse in Doncaster England on Friday. Mike Egerton/PA/AP

Canada’s Prime Minister Justin Trudeau poses with airport staff as they await Syrian refugees to arrive at the Toronto Pearson International Airport in Mississauga, Ontario, Thursday. After months of promises and weeks of preparation, the first planeload of Syrian refugees was headed to Canada on Thursday, aboard a military plane to be met at Toronto’s airport by Trudeau. Mark Blinch/Reuters

Market Closes for December 29^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks fell, snapping a five-day rally as the market re-opened following the Christmas holiday, as Valeant Pharmaceuticals International Inc. slumped after the embattled drugmaker’s chief executive took a medical leave of absence.

     Valeant, briefly the largest company in Canada by market capitalization this year, sank 11 percent for the biggest decline in seven weeks. Chief Executive Officer Michael Pearson, who was hospitalized with a severe case of pneumonia last week, will be replaced by a team of executives while he recovers from his illness, the company said Monday.

     The Standard & Poor’s/TSX Composite Index lost 0.5 percent, or 64.05 points, to 13,245.75 at 4 p.m. in Toronto, halting a five-day rally that added 2.3 percent to the gauge. The Canadian market was closed Monday for the Boxing Day holiday. Trading volume Tuesday was 45 percent lower than the 30-day average.

     Energy producers slipped 0.9 percent as crude in New York recovered after a 3.4 percent slide Monday. The industry remains the worst-performing among 10 in the S&P/TSX this year, down 25 percent as slowing economic growth in China and Europe and a supply glut in crude battered commodities prices around the world.

     Equity valuations in the S&P/TSX have declined 9.7 percent to about 20.5 times earnings from a 2015 high of 22.7 on April 15, according to data compiled by Bloomberg. The S&P/TSX is among the worst-performing developed equity markets this year, ahead of only Singapore and Greece. The benchmark is down 1.7 percent for December and 9.5 percent for the year, headed for the worst annual retreat since 2011.

     BlackBerry Ltd. added 2.4 percent, to a more than nine- month high, after ProPakistani reported Monday the smartphone maker may reach a deal to stay in Pakistan, according to unnamed sources. BlackBerry said Nov. 30 it will shutter its operations in the country to avoid allowing authorities there to monitor its main business enterprise server and e-mail messages.

     Uni-Select Inc., the second-best performing stock in the S&P/TSX this year with a 130 percent advance, rose to a record after the automotive replacement parts maker’s FinishMaster paint unit agreed to buy ColorMaster Automotive Paint assets Monday for an undisclosed amount.

     Laval, Quebec-based Valeant has plunged 60 percent from its August peak amid intense scrutiny from investors and lawmakers over its pricing practices, use of mail-order pharmacies and acquisitions for growth.

US

By Jeremy Herron and Anna-Louise Jackson

     (Bloomberg) — U.S. stocks advanced to a three-week high, helping trim the first annual loss for global equities since 2011, while Treasuries declined as oil led a rally among commodities.

     The Standard & Poor’s 500 Index halted a two-day slide as all 10 main groups climbed, and the MSCI All-Country World Index cut its loss for the year to 2.9 percent. European stocks trimmed their worst December drop since 2002. Oil gained above $37 a barrel amid forecasts for falling U.S. stockpiles. Yields on 10-year Treasury notes rose eight basis points to 2.31 percent, while a gauge of the dollar advanced.

     “This remains a Teflon market, it has been all year,” said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “There have been plenty of negative headwinds that should’ve had the market significantly lower than it is now. And to be basically unchanged for the year is probably a net win-win for those that have a bullish mentality and bullish expectations for 2016.”

     Global equities are on track for the worst year since 2011, as the global oil glut and China’s economic weakness fanned the biggest annual drop in commodity prices in seven years. The rout in energy and resources is undermining corporate earnings and hindering central bank attempts to ignite inflation. The Bloomberg Commodity Index is down about 25 percent in 2015, while global bonds lost 2.4 percent, according to a Bank of America Merrill Lynch index. The S&P 500’s rally Tuesday left it higher by 1 percent this year.

     The S&P 500 rose 1.1 percent at 4 p.m. in New York, as technology shares surged 1.4 percent. Stocks are defying the historical trend of gains in the final month of the year, with the benchmark index down by 0.3 percent, after a series of sharp rallies and selloffs.

     Amazon.com Inc. paced gains among retailers for a second day, rising 2.9 percent to a record in post-holiday trading that was 37 percent below the 30-day average for this time of day. The so-called “FANG” stocks — Facebook Inc., Amazon, Netflix Inc. and Google’s parent Alphabet Inc. — rose at least 1.2 percent today.

     The Stoxx Europe 600 Index added 1.4 percent. The European benchmark is down 4.1 percent this month amid a disappointing increase in European Central Bank stimulus, along with the commodity rout. The index lost a big part of its annual advance amid concern over global growth, just as the Federal Reserve raised its interest rates for the first time in almost a decade.

     After surging as much as 21 percent to a record in April, the Stoxx 600 slid 12 percent through yesterday. It’s still up 7.9 percent this year, poised for a fourth annual advance.

     West Texas Intermediate crude advanced 2.9 percent to settle at $37.87 a barrel while Brent traded 3.2 percent higher to end at $37.79.

     U.S. crude inventories probably fell for a second week, according to a Bloomberg survey before government data Wednesday. Saudi Arabia’s 2016 spending plan assumes a Brent price of $37 a barrel, according to John Sfakianakis, a Riyadh- based economist at Ashmore Group Plc and a former government adviser.

     Gas futures headed for the first monthly gain since June, wiping out December losses of as much as 25 percent, after overnight computer models predicted colder weather would boost demand and may help ease a supply glut. Natural gas advanced 5.1 percent in the U.S. to $2.341 per million British thermal units, adding to a surge of 10 percent on Monday.

     Copper futures rose the most in more than a week as Chinese refiners agreed to cut sales of the metal that’s trading near a six-year low.

     The Bloomberg Dollar Spot Index gained 0.1 percent. The gauge that tracks the U.S. currency against 10 of its most- traded peers has retreated about 0.1 percent since Central bank increased the interest rate earlier in December.

     The euro dropped to $1.0938. The joint currency will fall about 4 percent against the dollar in 2016, according to the consensus of analyst forecasts compiled by Bloomberg, though two of the biggest participants in the market — Barclays Plc and Bank of America Corp.’s Merrill Lynch unit — expect it to drop through parity with the greenback.

     Emerging-market equities fell, extending the biggest annual decline in four years, as persistent weakness in commodities weighs on the global growth outlook. The MSCI Emerging-Markets Index dropped for a second day, with health care and utility stocks leading declines. Energy stocks rose for the first time in three days as oil rebounded back above $37 a barrel, outweighing concern that global growth is slowing.

     A gauge tracking 20 currencies in developing nations retreated 0.1 percent.
 

Have a wonderful evening everyone.

Be magnificent!
 

“Coming together is a beginning;

keeping together is progress;

working together is success.”

Henry Ford

As ever,
 

Karen

“A smile is the universal welcome.” Max Eastman

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