December 7, 2016 Newsletter

Dear Friends,

Sorry this is late – our email was dysfunctional last night.
Tangents:

In this week’s Barron’s:

Baby Boomers Pitch In
Senior citizens are channeling time and money to volunteer efforts. One estimate: They’ll contribute $8 trillion in two decades.
The “me generation” is finding that it’s better to give than to receive, especially in retirement.
According to a study by Bank of America Merrill Lynch and Age Wave, a think tank focused on aging, baby boomers will donate $8 trillion in time and money over the next two decades, as the population of those 65 and older surges. The study found that current retirees are three times more likely to say they derive more happiness from “helping people in need” than spending on themselves.
“Boomers always had a desire to change the world,” says Ken Dychtwald, founder and CEO of Age Wave.
He predicts that “you’ll see millions and millions more retirees doing very high-grade volunteer work in very interesting ways,” including contributing work skills to charitable causes, something he calls “philanthropreneurism.”
The study found that “making a difference in the lives of others” is by far the top motivation, five times more important than getting a tax deduction. The wealthiest people rank highest in both money and time donated. It would be typical of boomers, he says, to lead another revolution—in volunteerism.
PHOTOS OF THE DAY

University of Southern California student Bre Flores practices her routine for her team’s upcoming ice show in front of a large Christmas tree at an outdoor skating rink Tuesday, in Los Angeles. Jae C. Hong/AP

Britain’s Prince Harry, center, talks on the phone, during an ICAP Charity Trading Day in support of Sentebale – a charity supporting orphans and vulnerable children in London, Wednesday. Geoff Pugh/AP

Dusk falls over Parliament Square outside the Supreme Court after the third day of the challenge against a court ruling that Theresa May’s government requires parliamentary approval to start the process of leaving the European Union, in central London, Britain on Wednesday. Peter Nicholls/Reuters
Market Closes for December 7^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks rose a fourth day, extending gains to a 19-month high, as raw-material producers advanced with gold while the Bank of Canada kept its key stimulative interest-rate unchanged.
     The S&P/TSX Composite Index added 0.7 percent to 15,237.75 at 4 p.m. in Toronto, the highest closing level since May 4, 2015. The index has risen 17 percent in 2016, the top performer among developed markets tracked by Bloomberg, well ahead of No. 2 market Norway’s 12 percent advance.
     Canada’s central bank kept interest rates at a stimulative 0.5 percent amid uncertain prospects for a recovery in exports and business investment following the U.S. election. Policy makers warned a significant amount of slack remains in the economy, in contrast with the U.S.
     “Today’s statement continued to highlight that a hike is still a distant proposition,” said Nick Exarhos, an economist with CIBC World Markets in a note to clients. Exarhos estimates any tightening on the part of the Bank of Canada as a late-2018 proposition, given that continued slack in the economy.
     “That is contrasted explicitly with developments stateside, an apparent attempt to highlight the economic, and more importantly, the rate divergence expected between the two nations ahead of the Fed’s likely hike next week,” he said.
     In other moves:
* Gauges of financial and raw-material stocks each climbed at least 0.7 percent as nine of 11 industries in the S&P/TSX advanced
* Gold rebounded after trading near a 10-month low
* DH Corp. soared a record 14 percent after the company said it had formed a committee to evaluate acquisition inquiries from other firms; DH is a Canadian check maker trying to transition to a financial-technology firm
* Valeant Pharmaceuticals International Inc. dropped 3.9 percent after U.S. President-elect Donald Trump said he would bring down drug prices in an interview with Time Magazine
* Concordia International Corp., a smaller drug maker, fell 5.7 percent after RBC analyst Douglas Miehm slashed the stock’s rating to underperform with a price target of $1 for its U.S. shares
* Dollarama Inc. added 1.3 percent as the nation’s largest dollar-store chain posted fiscal third-quarter profit ahead of analysts’ estimates after adding new stores
US
By Lu Wang, Joseph Ciolli and Oliver Renick
     (Bloomberg) — Donald Trump is doing to U.S. equity bears what seven years of economic stimulus rarely could: shut them up.
     Two years of paralysis has for now ended in stocks, with more than $1 trillion added to shares values since Election Day and the Dow Jones Industrial Average looking bound for 20,000. Both the Dow and S&P 500 Index jumped to fresh records Wednesday, joined by transportation companies and small caps, while banks traded at eight-year highs.
     Wall Street stock forecasters, more pessimistic than any time since 2013 as recently as September, are suddenly falling over themselves to push up targets and explain a market where measures of anxiety are near five-year lows. The average call of bank prognosticators is for the S&P 500 to rally 3.4 percent next year, with strategists at JPMorgan Chase & Co. and Bank of Montreal calling for even bigger gains.
     For investors, the question is how much credence to put in analysts whose futility in sussing out Trump’s impact on share prices was rivaled only by the inaccuracy of political polls prior to his victory. Not only has he not been the disaster many of them warned about, the rally since he defeated Hillary Clinton is now the biggest for any new president since Ronald Reagan.
     “What we didn’t expect was the speed and the magnitude of the so-called ‘Trump Trade,’” Doug Ramsey, chief investment officer at Leuthold Group LLC, wrote in a note published Wednesday. “The consensus hope, which we share, is that tax reform and regulatory roll-back will extend and maybe enliven an economic recovery that’s already long in the tooth.”
     To be sure, pinpointing Trump’s role in the rally is an inexact science, and a case could be made that his election is coinciding with the consummation of the Federal Reserve’s efforts. Among other things, annualized gross domestic product rose 3.2 percent in the third quarter, the most in two years, while unemployment hit a nine-year low in November.
     But the rally is particularly hard to reconcile with the body of pessimism that has shadowed the Barack Obama bull market since it started in 2009. Headwinds that looked certain to halt the advance just one month ago — from stalled corporate earnings to the highest valuations since the Internet bubble and the sputtering economy — are proving little match for the new president’s economic pronouncements.
     Not that those obstacles have gone away. While signs of a rebound emerged in the third quarter, profits for S&P 500 companies just underwent one of the longest stretches of declines for any non-bear market period on record. At just under 21 times earnings, stocks are trading at the highest multiple since 2001, excluding a few months after the financial crisis when earnings in some industries were close to nothing.
     The Dow rose 14 points to 19,563 at 9:49 a.m. in New York.
     The suddenly booming stock market has prompted fund managers who had been hoarding cash amid economic and political uncertainty to put money to work at the fastest rate since 2009. According to Bank of America Corp.’s latest survey in November, cash levels plunged to 5 percent from 5.8 percent in October.
     Investors are fretting they’ll miss out on a year-end rally. They added almost $50 billion to exchange-traded funds that track U.S. equities last month, the most since Bloomberg began tracking the data since 2000.
“US equity investors have focused more on hope than fear since Donald Trump’s election,” David Kostin, chief U.S. equity strategist at Goldman Sachs Group Inc. wrote in his 2017 outlook. “Hope will dominate during the first part of 2017. The prospect of lower corporate taxes, repatriation of overseas cash, reduced regulations, and fiscal stimulus has already led investors to expect positive EPS revisions.”
     Not only are stocks rising, they’re offering fertile ground for a category of mutual funds that suffered as the Obama rally devolved into a monolith of lockstep moves. Dispersion among S&P 500 stocks, trader lingo for the ability of share prices to chart an independent course, is increasing and poised to get better, according to Goldman.
     Next year will bring “opportunity for alpha generation,” due to macro and micro shifts associated with Trump administration and aging economic cycle, Kostin wrote in a note to clients this week. By one measure, dispersion the week after the election reached the biggest in almost eight years.

Have a wonderful evening everyone.

Be magnificent!

Everyone is but a manifestation of the Impersonal, the basis of all being,
and misery consists in thinking of ourselves as different from this Infinite, Impersonal Being,
and liberation consists in knowing our unity with this wonderful Impersonality.
Swami Vivekananda

As ever,

Carolann

Change is not made without inconvenience, even from worse to better.
                                                 -Richard Hooker, 1924-1997

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Portfolio Manager &
Senior Vice-President

Queensbury Securities Inc.,
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