December 4, 2018 Newsletter

Dear Friends,

Tangents:
December 4, 1980 – The rock group Led Zeppelin announced it was disbanding after the death in September of drummer John Bonham.

See:  All the Vermeers in the world.  A new app, from the Mauritshuis museum in the Netherlands and Google, provides a virtual gallery of the artist’s works.

DECEMBER ~ “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 revitalise old and faded fabrics.  A satisfying occupation when hard frosts make outdoor activities unattractive, but you must have a supply 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.”  -from A Countrywoman’s Notes  by Rosemary Verey.
PHOTOS OF THE DAY

Protestors are reflected in a puddle as they wave European flags to demonstrate against Brexit in front of the Parliament in London, UK. Credit: AP Photo/Frank Augstein

Employees of the ProAurum gold house decorate, what they say is Europe’s most expensive Christmas tree made of 2.018 Vienna philharmonic gold coins, valued at 2.3 million euros in Munich, Germany. Credit: The Telegraph

The Shard Celebrates the ‘London Sky’, as western Europe’s highest festive lights display returns, The Shard’s annual festive lights display – Shard Lights – will illuminate the top 20 storeys of the building throughout December. This year’s theme is ‘reflection’ and is inspired by images taken by the general public of The Shard against the ever-changing London sky. Credit: Shard Lights
Market Closes for December 4^th, 2018

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Bloomberg Automation
     (Bloomberg) — The S&P/TSX Composite fell 1.4 percent at 15,063.59 in Toronto. The move was the biggest since falling 2.5 percent on Oct. 24 and follows the previous session’s increase of 0.5 percent.
     Today, financials stocks led the market lower, as 9 of 11 sectors lost; 183 of 245 shares fell, while 56 rose. Canadian National Railway Co. contributed the most to the index decline, decreasing 3.5 percent. Aphria Inc. had the largest drop, falling 21.2 percent.
Commodities
* Western Canada Select crude oil traded at a $22.50 discount to WTI
* Gold rose to $1,230.30 an ounce
FX/Bonds
* The Canadian dollar dropped to C$1.32602 per U.S. dollar
* The Canada 10-year government bond yield dropped to 2.171 percent
US
By Sarah Ponczek, Vildana Hajric and Luke Kawa
     (Bloomberg) — U.S. stocks plunged, with the Dow Jones Industrial Average tumbling almost 800 points, as a litany of concerns wiped out the rally.
     Trade-sensitive shares sank as angst mounted that the U.S. and China made no meaningful progress on the trade front this weekend. Financial shares got hammered as the yield curve continued to flatten, with the latest nudge from a hawkish comment by a Federal Reserve official.
     Losses accelerated and trading volumes in S&P 500 futures spiked after contracts for broke below their 200-day moving average. Adding to the risk aversion was news that U.K. Prime Minister Theresa May’s push to avoid a so-called “hard Brexit” may be at risk.
     “Today’s move feels like the market is a scorned lover. It had believed, for whatever reason, that progress was being made at the G-20 and that turns out to be murky — it feels lied to,” said Michael Antonelli, a managing director at Robert W Baird & Co. “Then a pile of negative Brexit news, Williams starts to ramp up hawkish talk, then we have our yield curve acting like it got run over and boom, we puke.”
     Major movers in U.S. stocks: Square plunged 12 percent as
 investors ditched stocks that had led the latest rally to all- time highs.  Banks were the worst performing sector in the S&P 500, led by declines in Bank of America, JPMorgan and Wells Fargo UPS and FedEx tumbled, making the Dow Jones Transportation Average Index one of the worst performing major U.S. indexes, amid concern about increasing competition from Amazon Air President Donald Trump suggested Tuesday that he could extend a 90-day truce in his trade war with China, while his top White House economic adviser backtracked from the president’s announcement that Beijing had agreed to reduce tariffs on U.S.- made cars. The developments again called into question the extent of a trade agreement the White House said Trump had struck with Chinese President Xi Jinping over dinner at the Group of 20 summit on Saturday.
     “Yes, there is a halt in tariffs,” said Delores Rubin, senior equities trader at Deutsche Bank Wealth Management. But “we haven’t resolved anything yet.” In the Treasury market, all eyes remain on the yield curve after three-year yields climbed above those of their five-year peers on Monday, potentially foreshadowing the end of the Fed’s tightening campaign. The more closely watched part of the curve — the gap between two-year and 10-year yields — remains upwardly sloped.
     Traders are even starting to bet that the Fed will cut interest rates as soon as 2020. The swaps market has moved up the timing for when it sees the hiking cycle peaking, toward the end of 2019 or early 2020, a period when the Fed’s own projections indicate tightening will still be under way. Swaps indicate about 5 basis points of a cut priced in by mid-2020.
     “Any breakthroughs on trade also brings the Fed back into the picture,” Dan Skelly, Morgan Stanley equity model portfolio solutions head, said on Bloomberg TV. “If you look at the market the last week or so you saw the market pop on both the dovish Fed — or a perceived dovish Fed, if you will — as well as the trade headlines. And it’s hard to have both, in our opinion. And so these positive updates potentially on trade just bring the Fed back even faster.”
Here are some of the key events investors will be watching this week:
* U.S. financial markets are set to close Wednesday for a national day of mourning to honor former President George H.W. Bush. Fed Chairman Jerome Powell’s testimony to Congress scheduled for Wednesday has been canceled.
* Friday brings the U.S. monthly employment report for November.
* China November trade data are due on Saturday.
And these are the main moves in markets:
Stocks
* The S&P 500 fell 3.2 percent to 2,700.06 as of 4:06 p.m. in New York, while the Dow Jones Industrial Average dropped 3.1 percent to 25,027.07 and the Nasdaq Composite Index eased 3.8 percent to 7,158.43.
* The Stoxx Europe 600 eased 0.8 percent. 
* The U.K.’s FTSE 100 slumped 0.6 percent. 
* Germany’s DAX Index fell 1.1 percent.
* The MSCI Emerging Market Index eased 0.5 percent.
* The MSCI Asia Pacific Index fell 0.9 percent.
Currencies
* The Bloomberg Dollar Spot Index was little changed. 
* The euro fell 0.1 percent to $1.1341.
* The British pound fell 0.1 percent to $1.2713.
* The Japanese yen rose 0.8 percent to 112.77 per dollar.
Bonds
* The yield on 30-year bond tumbled nine basis points to 3.17 percent, while yields on five-year notes dropped three basis points to 2.79 percent, or a basis point lower than on two-year notes.
* Germany’s 10-year yield fell four basis points to 0.26 percent.
Commodities
* West Texas Intermediate crude rose 0.3 percent to $52.81 a barrel
* Gold rose 0.7 percent at $1,238 an ounce.
* LME copper fell 1.4 percent to $6,209 per metric ton. 
–With assistance from Liz Capo McCormick.

Have a great night.

Be magnificent!

As ever,

Carolann

The journey of a thousand miles begins with a single step.
                                     -Lao Tzu, 6^th century BC

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
Toll Free: 1.877.430.5895
Fax: 778.430.5828
www.carolannsteinhoff.com