November 15, 2016 Newsletter

Dear Friends,

Tangents:
Shichi-Go-San Day in Japan today:
Shichi–Go–San (七五三 ^?, lit. “Seven-Five-Three”) is a traditional rite of passage and festival day in Japan for three- and seven-year-old girls and three- and five-year-old boys, held annually on November 15 to celebrate the growth and well-being of young children.

Good to Know:  CITY GUIDE
If you’re traveling and don’t know the city, the Citymapper app has everything you need to get around, from information on available bicycles, to a path to your destination that keeps you out of the rain, to transportation schedules.  You’ll look as though you’ve lived there for years.  Citymapper is free for iOS and Android and is available for cities all over the world.

A quiet mind is able to hear intuition over fear.
PHOTOS OF THE DAY

A man walks through a garden on an autumn day in Srinagar, India on Tuesday. Danish Ismail/Reuters

A dirt road is illuminated by the supermoon at night at the Sierra de las Nieves (Mountain range of Snows) nature park and biosphere reserve in Parauta, southern Spain, on Monday. Jon Nazca/Reuters
Market Closes for November 15^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1867, the first stock ticker is unveiled in New York City.
Number of the Day
6.8660
The value of one dollar rose as high as 6.8660 yuan in China’s tightly controlled domestic market during the Asian trading morning, its highest point since Dec. 9, 2008
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks rose for a second day, surging the most in seven weeks, as energy producers advanced with the price of oil rebounding from an eight-week low.
     The S&P/TSX Composite Index rose 1.1 percent to 14,756.28 at 4 p.m. in Toronto. The equity benchmark is up 13 percent in 2016, making it the top performer among developed markets tracked by Bloomberg. Canadian stocks are about 10 percent more expensive than their peers in the S&P 500 Index.
     Global market gyrations sparked by the surprise election of Donald Trump as president of the U.S. calmed Tuesday, as a rout in bonds and emerging-market assets eased. Crude surged on the prospects of OPEC reaching a deal to curb output. Gold and silver advanced after a four-day rout fueled by demand for riskier assets at the expense of perceived safe havens.
     The reversals benefited Canadian equities, where energy and raw materials account for about one-third of the market. Energy producers rallied 2.8 percent Tuesday to lead gains across nine of 11 industries. Trading volume was 19 percent higher than the 30-day average. Financial services companies lagged 0.3 percent, with Manulife Financial Corp. dropping 0.4 percent to halt a four-day winning streak.
     Suncor Energy Inc. climbed 3.9 percent, the most in two weeks, even after Warren Buffett’s Berkshire Hathaway Inc. exited its stake in the energy producer. Oil futures climbed 5.8 percent in New York, the biggest gain in seven months, as prices seesawed from the lowest close in eight weeks Monday after dropping 4.3 percent in three sessions.
     Raw-materials producers climbed 2.7 percent as a group, for a second day of gains following a two-day slide. Gold snapped its biggest three-day drop in more than a year amid signs that prices fell too far and too fast. The dollar also fell for the first time since last week’s U.S. presidential election.
     Barrick Gold Corp. added 5.3 percent, the most in a month, as billionaire investor George Soros more than doubled his holdings in the mining company in the third quarter after earlier selling 94 percent of his position in the previous quarter.
     Natural resource producers are the top-performing companies in the Canadian market this year, with materials stocks rallying 41 percent year-to-date on a rebound in commodities prices from gold to crude. Teck Resources Ltd., the nation’s largest diversified miner, is the top stock in the index, up almost six- fold this year as prices for coking coal and zinc have also surged.
US
By Oliver Renick
     (Bloomberg) — Donald Trump’s election has caused the biggest dispersion among U.S. equities in almost eight years. Professional stock pickers couldn’t be happier.
     Lockstep moves on the equities markets have been torn asunder while investors pour in cash as they dissect the potential implications from Trump policies. The Dow Jones Industrial Average and Russell 2000 Index have roared to records since his election, while technology-heavy indexes had slumped. In the S&P 500, the financial group’s 10 percent surge through Monday outpaced the worst-performing group — utilities — by almost 17 percentage points, a degree of divergence last seen in April 2009.
     For active managers who’ve seen their reputation battered this year amid some of the tightest trading ranges in history, the split along industry lines represents an opportunity to put to work skills some say are growing arcane in the era of passive investing. At the same time, Tuesday brought with it a reminder in the danger of rushing to judgment — financial shares slid as much as 1.7 percent before closing little changed, while tech stocks cut their post-election losses by nearly half.
     “You’re seeing money trying to chase the growth that’s perceived,” said Scott Colyer, chief executive officer of Advisors Asset Management in Monument, Colorado, where he oversees $18.5 billion. “This is a market where stock picking works and will reward people for buying some of the things that have been out of favor.”
     The S&P 500 rose 0.8 percent to 2,180.39 at 4 p.m. in New York, pushing its advance since Nov. 8 to 1.9 percent as tech shares paced gains after lagging behind. The Dow erased an early slide, climbing 0.3 percent to a fourth consecutive record close. The Nasdaq 100 Index jumped 1.3 percent, and the Russell 2000 Index added 0.3 percent to an all-time high for a second day. About 8.4 billion shares traded hands on U.S. exchanges, 22 percent more than the three-month average.
     The pre-election jitters that pushed cash levels among money managers to near records gave way to bullish euphoria as investors added more than $14 billion to the biggest exchange- traded fund tracking the S&P 500 in the past week. That the stock market is suddenly making distinctions between winners and losers is a bonus to active managers who have seen money under their oversight shifted to passive ETFs and mutual funds that have outperformed for most of the year.
     What’s unusual about the level of dispersion within the equity market since the election is that recent instances of such disparity have come when the market’s been falling. The degree now being seen last occurred during the height of the financial crisis and the bottom of the dot-com bust 16 years ago. Most recently, measures of dispersion jumped during the selloff after Brexit, as the S&P 500 plunged at the start of the year and during a correction in August 2015.
     “This stands in contrast to the behavior following prior macro events over the last 18 months that were accompanied with correlations spiking in their aftermath,” analysts at Strategas Research Partners LLC wrote in a note to clients Tuesday. “Historically, declining correlations are consistent with a more supportive market backdrop.”
     Investors seem to agree, as they bolstered the SPDR S&P 500 ETF since Tuesday with the biggest five days of inflows since September 2015. The $14 billion surge was more than three times the net amount they had invested from the start of the year through the election.
     Flows into funds tracking specific industries showed enthusiasm for financial and health-care companies. More than $2 billion was added to the SPDR exchange-traded fund tracking financial companies on Thursday, the biggest single-day inflow in the product’s history. A fund tracking health care set a simultaneous record with more than $1 billion added the same day.
     Some of the biggest losers since Trump’s win reversed direction today, as Alphabet Inc. and Microsoft Corp. added at least 1.9 percent to pace a tech rebound. Utilities rose after a four-day rout and energy producers rallied the most in seven weeks as crude surged nearly 6 percent, the most since April. The CBOE Volatility Index fell to a three-week low. An index of banks in the S&P 500 erased a selloff in the final minutes, after falling 2.2 percent, to close little changed.
     For investors like hedge fund manager Trip Miller, the ups and downs of 2016 have provided an opportunity to win on both the short and the long side of trades.
     “It hasn’t been one single thing this year, it’s been positions from top to bottom contributing,” Miller, founder and managing partner at Gullane Capital LLC in Memphis, said in an interview. His firm manages about $57 million. “Even though the market is up, we’ve also been able to buy names that were down that have been on our wish list. You have to be patient and be willing to sit on cash at a zero interest rate.”
     The main U.S. equity benchmark gained 3.8 percent last week on wagers Trump will enact a pro-business agenda, including loosening regulations and boosting infrastructure spending. The president-elect’s appointment of Republican National Committee Chairman Reince Priebus as his White House chief of staff signaled a willingness to work with GOP lawmakers to pass significant legislation, though the specifics of the administration’s near-term agenda remain open to speculation.
     Investors are also considering what a Trump presidency might mean for Federal Reserve policy and the path for interest rates. Richmond Fed President Jeffrey Lacker said yesterday that easier fiscal policy may require higher rates, but it’s too early to react to potential policy changes by the incoming administration. Chair Janet Yellen is scheduled to testify on the economic outlook before lawmakers on Thursday. Odds for an increase in borrowing costs next month have risen to 96 percent from 80 percent a week ago.

Have a wonderful evening everyone.

Be magnificent!

As long as you pursue pleasure, you are attached to the sources of pleasure;
and as long as you are attached to the sources of pleasure,
you cannot escape pain and sorrow.  The soul shines in the hearts of all living beings.
When you see the soul in others, you forget your own desires and fears,
and lose yourself in the service of others.
The soul shines equally in people on the farthest island, and in people close at hand.
Mundaka Upanishad

As ever,
 

Carolann

Only when he has ceased to need things can a  man
truly be his own master and so really exist.
–Anwar Sadat, 1918-1981

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

 
Tel: 778.430.5808
(C): 250.881.0801
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www.carolannsteinhoff.com