November 1, 2016 Newsletter

Dear Friends,

Tangents: ALL SAINTS’ DAY
Pope Boniface  IV converted the Pantheon at Rome into  a Christian church, dedicated to all the martyrs, in 610. The original Pantheon built by Agrippa in 27 BC was dedicated to all gods.  This was largely destroyed by fire and its successor, built by Hadrian  c. 120 AD, was also dedicated to all the gods.  It is circular and over 140 ft in diameter (42.6 m) and of similar height.  Since the early 7^th century it has been called Santa Maria Rotunda.  Among the national heroes buried there are the painter Raphael (1483-1520), the first king of Italy, Victor Emmanuel II (1820-78), and Umberto I (1844-1900). The festival of All Saints, originally held on May 1^st was changed to November 1^st in 834.
Hadrian also built a Pantheon at Athens.  The Panthéon at Paris was originally the church of St. Genevieve started by Louis XV in 1764 and completed in 1812.  Jean-Jacques Rousseau (1712-78), Voltaire (1694-1778) and Victor Hugo (1802-85)  are buried there. 
Westminster Abbey has been called the British Pantheon.

You can’t look at the competition and say you’re going to do it better.  You have to look at the completion and say you’re going to do it differently. –Steve Jobs.
PHOTOS OF THE DAY

Two dogs enjoy a park in Frankfurt, Germany, on a foggy Tuesday morning. Michael Probst/AP

A man walks past graves at Powazki cemetery in Warsaw, Poland, on Tuesday. Candles illuminated tombstones in graveyards across Poland on All Saints’ Day, observing one of the most sacred days in the calendar for this deeply Catholic nation. Alik Keplicz/AP
Market Closes for November 1^st, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Number of the Day
40%
The increase in the price of the pipe-making material PVC on the Dalian Commodity Exchange so far this year, one of a number of apparent asset bubbles that have formed in China as speculative money sloshes from stocks to bonds to commodities.
Canada
By John Hyland
     (Bloomberg) — Canadian stocks staged an afternoon comeback to almost erase losses before closing at a two-week low, as Valeant Pharmaceuticals International Inc. surged the most in 23 years to offset declines in industrial and bank shares.
     The S&P/TSX Composite Index fell less than 0.1 percent to 14,778.32 at 4 p.m. in Toronto, the lowest since Oct. 18. The gauge fell as much as 0.5 percent before the Wall Street Journal’s report on Valeant sent the stock surging 30 percent. The S&P/TSX rose 0.4 percent in October for a fourth monthly gain and is up 14 percent in 2016.
     Financial shares slipped as Royal Bank of Canada fell 0.7 percent, sending the largest lender to its lowest level in more than two weeks. Thomson Reuters Corp. jumped 4 percent after it posted third-quarter profit that beat estimates. The company will cut 2,000 jobs worldwide and take a fourth-quarter charge of $200 million to $250 million to reduce expenses.
     Valeant rallied after a report said the company is in talks to sell its Salix gastrointestinal drugs business for as much as $10 billion to Takeda Pharmaceutical Co Ltd. The stock rebounded after falling on Monday to the lowest since 2010, when people familiar with the matter said its former CEO and CFO are the focus of U.S. prosecutors as the as they build a fraud case against the company.
     Among energy shares, Enbridge Inc. sank 0.8 percent, and Cameco Corp. fell 3.7 percent to weigh on the group. Crude in New York declined to a one-month low. Prices earlier swung between gains and losses as a projected U.S. stockpile gain added to supply concerns, while gasoline jumped after an explosion and fire in Alabama shut the largest fuel pipeline in the U.S.
     Gold prices advanced before as the Federal Reserve began a two-day meeting and as investors grew more anxious ahead of a tight U.S. presidential race. Gold miners in the S&P/TSX rallied 2.9 percent, as Barrick Gold Corp. gained 4.5 percent and Goldcorp Inc. increased 2.1 percent to a one-week high.
     WestJet Airlines Ltd. jumped the most since July after Canada’s second-largest airline reported third-quarter profit that beat analysts’ estimates and said capacity growth next year would slow.
     Canadian stocks are now 17 percent more expensive than their peers in the S&P 500 Index. The S&P/TSX trades at 22.9 times earnings, compared with 19.9 for the S&P 500 Index. The S&P/TSX is the top performer among developed equity markets tracked by Bloomberg in 2016.

US
By Joseph Ciolli and Anna-Louise Jackson
     (Bloomberg) — U.S. stocks fell to the lowest since July, breaking below chart levels that have held for four months, as concern over everything from presidential politics to Federal Reserve rate hikes and coming data on the labor market sent gauges of anxiety surging.
     The S&P 500 Index declined 0.7 percent to 2,111.72 at 4 p.m. in New York, the most since Oct. 11. The index has tumbled 1.8 percent during a six-day losing streak that’s its longest since August 2015. It sank as low as 2,097.85 before a bounce, dipping below 2,100 for the first time since July 7. The Dow Jones Industrial Average slipped 105.32 points, or 0.6 percent, to 18,037.10. The Nasdaq Composite Index dropped 0.7 percent, and the CBOE Volatility Index surged 8.8 percent to the highest since June 28.
     “This unbelievable election season we’re going through isn’t exactly engendering confidence,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said by phone. “There’s more uncertainty as nervousness reaches a crescendo in the final days. Earnings season is basically over, and while it was a pretty good one, there’s nothing out there to trigger an up-move.”
     U.S. equities joined a selloff in riskier assets following an ABC News/Washington Post tracking poll that showed Republican Donald Trump with 46 percent support to Democrat Hillary Clinton’s 45 percent. Gold surged more than 1 percent, the dollar weakened versus the Swiss franc, and Mexico’s peso, considered an inverse proxy for Trump’s election fortunes, tumbled.
     Pacing the equity declines, Pfizer Inc. sank the most in three months as its quarterly profit fell short of estimates, while Apple Inc. slipped to a seven-week low to weigh on technology shares, amid signs of softness in demand in China for the iPhone 7. Occidental Petroleum Corp. dropped the most since March following its results. About 8.1 billion shares traded hands on U.S. exchanges, 25 percent more than the three-month average.
     Tuesday’s equity rout jolted stocks from the tightest trading range since 2006 as investors brace for market turmoil a week from one of the most contentious presidential elections in memory. Just four months removed from the U.K.’s shock decision to leave the European Union in an outcome not predicted by betting markets, anxiety levels have spiked as Clinton’s once dominant lead over Trump withers in the latest polls.
     “So many people have said that if Trump wins there’s going to be some big downside event and with the polls tightening and revelations around Clinton, it just has traders looking to trade on the basis of that,” said Jim Paulsen, chief investment strategist at Wells Capital Management. “Then it caught some momentum, because we took out some of the lows technically where we’ve been at since it rallied to new highs.”
     Hedges against a market decline surged in recent days. The CBOE Volatility Index yesterday capped its biggest monthly jump since August 2015, with the measure of market turbulence known as the VIX rising 28 percent during the period. The S&P 500 fell 1.9 percent in October, the most since a selloff at the start of the year, trimming its annual advance to 4 percent. The last time it fell below 2,100, it started a five-week rally of 4.4 percent that took it to its most recent all-time high.
     Ten of 11 main industries in the S&P 500 fell Tuesday, with real estate and utility stocks leading losses with declines of at least 1.7 percent. Technology shares, the biggest group by weighting, slid 0.8 percent as Apple and Facebook Inc. dropped more than 1.1 percent.
     The Fed’s next monetary policy decision is due Wednesday afternoon. Traders are pricing in a 16 percent chance the central bank will raise rates tomorrow, less than a week before the Nov. 8 election, while the odds on a December move are about 70 percent.
     A report Tuesday showed America’s factories barely expanded last month as faster production cushioned a slowdown in orders that signals a plodding manufacturing sector. Earnings are also in focus, with 40 members of the S&P 500 reporting Tuesday. Two- thirds of the way through the season, analysts now expect third- quarter profit growth of 1.6 percent for the benchmark’s constituents, after calling for declines as recently as Oct. 21. 
     If the forecast holds, it would bring an end to the longest earnings recession since the financial crisis.

Have a wonderful evening everyone.

Be magnificent!

If you wish to free yourself from suffering, you must free yourself from pleasure,
and not free yourself from suffering.  Suffering is a reaction.
If you wish to release yourself from suffering,
you must first of all release yourself from pleasure.
Then the suffering will disappear.
Swami Prajnanpad

As ever,

Carolann

Land of Heart’s Desire, Where beauty has no ebb, decay no flood,
But joy is wisdom, time an endless song.
                                                           -W.B Yeats, 1865-1939
                                                           The Land of Heart’s Desire

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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