November 19, 2015 Newsletter

Dear Friends,

Tangents:

THE PARADOXICAL COMMANDMENTS/KENT M. KEITH

Kent Keith wrote The Paradoxical Commandments in 1968 when he was a sophomore at Harvard as part of a handbook for high school student leaders.  They’ve appeared on the Web in various guises.   Mother Teresa put a version called Anyway on the wall of her children’s home in Calcutta.  And another version called The Final Analysis is often, wrongly attributed to Mother Teresa.  Here is the original:

1. People are illogical, unreasonable, and self-centered.
    Love them anyway.

2. If you do good, people will accuse you of selfish ulterior motives.
    Do good anyway.

3. If you are successful, you win false friends and true enemies.
    Succeed anyway.

4. The good you do today will be forgotten tomorrow.
    Do good anyway.

5. Honesty and frankness make you vulnerable.
    Be honest and frank anyway.

6. The biggest men and women with the biggest ideas can be shot down by the smallest men and women with the smallest minds.
    Think big anyway.

7. People favor underdogs but follow only top dogs.
    Fight for a few underdogs anyway.

8. What you spend years building may be destroyed overnight.
    Build anyway.

9. People really need help but may attack you if you do help them.
    Help people anyway.

10. Give the world the best you have and you’ll get kicked in the teeth.
     Give the world the best you have anyway.
 

On this day in 1975, “One Flew Over the Cuckoo’s Nest,” a movie based on Ken Kesey’s 1962 novel of the same name, debuted in theaters.

PHOTOS OF THE DAY

Jing Li wears a Tibetan traditional costume as she gets ready for her wedding photo to be taken at the Nianqing Tanggula mountain pass in the Tibet Autonomous Region, China on Wednesday. Jing, and her husband Ke Xu, both from Shiyan in northwestern Hubei province, have lived in Tibet for three years. The couple married last month. Damir Sagolj/Reuters

A youth lights firecrackers while celebrating the Hindu religious festival of Chatt Puja in Agartala, India. During this festival, Hindu women fast for the whole day for the betterment of their families and society. Jayanta Dey/Reuters

Market Closes for November 19^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose a second day as Valeant Pharmaceuticals International Inc. advanced the most in four years and gold prices rebounded from a five-year low, offsetting a decline in energy shares.

     Raw-materials producers jumped 1.2 percent to lead equities higher. Gold futures rose the most in three weeks as a measure of the dollar retreated from the highest in at least a decade. While there is now a 66 percent chance U.S. Federal Reserve policy makers will raise interest rates at their December meeting, the pace of subsequent increases would be slow, according to minutes of their last meeting released Wednesday.

     The Standard & Poor’s/TSX Composite Index rose 73.86 points, or 0.6 percent, to 13,473.83 at 4 p.m. in Toronto. The S&P/TSX has declined 7.9 percent this year, trailed only by Singapore and Greece among developed markets.

     Canadian equities have faltered this year amid declines in commodity and health-care stocks of at least 20 percent. The country’s equity market has been hampered by a slump in oil prices, slowing overseas growth and the prospect of an interest- rate increase from the Federal Reserve.

     Bombardier Inc. ended the day little changed, after gaining as much as 14 percent and losing 6.3 percent. The company agreed to sell a 30 percent stake in its rail business to Caisse de Depot & Placement du Quebec for $1.5 billion, shelving a public stock sale following a strategic review. The deal marks the manufacturer’s second financial injection from within the province in less than a month, after the provincial government invested $1 billion in the C Series jetliner program.

     Montreal-based Bombardier has plummeted 69 percent this year, the worst-performing Canadian industrial stock, as the company’s long-gestating C Series has faced repeated delays and cost overruns. The program’s targeted 2016 debut is now more than two years behind schedule, while Bombardier has also had to cancel one business jet, the Learjet 85, and postpone the debut of another.

     Energy shares dropped 1.3 percent as oil fell to the lowest level in almost three months. Government data showed U.S. crude stockpiles rose to the highest for this time of year since 1930.

     Barrick Gold Corp. added 4.3 percent and First Majestic Silver Corp. increased 8.9 percent as gold rebounded from a five-year low and silver snapped 15 days of losses. Bullion is headed for a third annual loss on expectations that U.S. growth will spur the Fed to increase borrowing costs, curbing appeal of the metal as a haven investment.

     Lucara Diamond Corp. soared 30 percent, the most since December 2008, after discovering a 1,111 carat gem-quality diamond in Botswana. The diamond, just smaller than a tennis ball, is second in size only to the Cullinan diamond cut into the British Crown jewels.

     Valeant jumped 15 percent, the most since January 2011. Citi Research Credit analyst Murali Ganti initiated coverage on the drugmaker with a new overweight rating, writing investor reaction to Valeant has been “largely overdone” with much of the bad news priced in.

     Valeant, briefly the largest stock in Canada by market capitalization this year, has lost 68 percent from an Aug. 5 high amid pressure over how it prices its drugs. Concordia Healthcare Corp., which has dropped 54 percent since Sept. 4, surged 7.2 percent to extend a five-week high.

US

By Dani Burger

     (Bloomberg) — U.S. stocks struggled to add to the biggest rally in nearly a month, as a profit warning from UnitedHealth Group Inc. jolted the health-care sector while energy producers followed oil lower a day after the Federal Reserve eased concern that higher interest rates would derail economic growth.

     UnitedHealth Group slumped 5.7 percent after saying it may pull out of the Obamacare insurance exchange market amid high costs. Competitors Anthem Inc. and Aetna Inc. fell more than 6.5 percent. Consumer staples and technology shares countered with gains as Keurig Green Mountain Inc. jumped 18 percent on better- than-expected results, while Salesforce.com Inc. and Intel Corp. rallied on a stronger-than-estimated sales outlooks.

     The Standard & Poor’s 500 Index slipped 0.1 percent to 2,081.24 at 4 p.m. in New York, with the gauge trading in its tightest intraday range since May 22. The Dow Jones Industrial Average lose 4.41 points to 17,732.75, and the Nasdaq Composite Index declined less than 0.1 percent. About 6.5 billion shares traded hands on U.S. exchanges, 13 percent below the three-month average.

     “The market probably needs to move sideways here for a while,” David Spika, global investment strategist for GuideStone Capital Management, said by phone. “The way we rebounded from the correction was very rapid. There are more reasons to go down than up.”

     Minutes from the Federal Reserve’s October meeting released Wednesday indicated that policy makers believe the economy is strong enough to withstand higher rates as early as next month, while stressing that the pace of any tightening will be gradual. That message yesterday helped unleash a rally that sent the S&P 500 to within 2.3 percent of its May all-time high.

     The gauge is up about 11 percent from the bottom of a summer selloff sparked by worries that a slowdown in China’s economy would spread. Caution over the impact of China’s weakness kept the Fed from raising rates in September.

     Recent data has bolstered the case for raising borrowing costs for the first time since 2006, with the latest payroll report — released after the Fed’s October meeting — showing the biggest increase in hiring this year. A report today showed initial jobless claims continued to hover around four-decade lows as the labor market strengthens toward full employment.

     The Philadelphia Fed’s monthly business outlook unexpectedly rose in November, while an October index of leading economic indicators gained for the first time since June. Traders are now pricing in a 68 percent probability that the Fed will raise rates next month.

     The earnings season is drawing to a close, with 95 percent of S&P 500 companies having reported. Of those, 74 percent beat earnings estimates, while 44 percent exceeded sales forecasts. Analysts project profits for index members dropped 3.7 percent in the third quarter, compared with for a 7.2 percent decline at the start of the season.

     The Chicago Board Options Exchange Volatility Index rose 0.8 percent Thursday to 16.99, after sliding the most in nearly four weeks yesterday. The measure of market turbulence known as the VIX is up about 13 percent this month after posting its biggest monthly drop ever in October.

     Seven of the S&P 500’s 10 main groups advanced, with technology, utilities and phone companies rising the most. Health-care companies fell 1.6 percent, and energy retreated along with oil prices.

     Salesforce.com rallied to a record after forecasting stronger-than-estimated sales in its approaching fiscal year, demonstrating growing demand for cloud-based software. Also boosting the tech group, Intel surged 3.4 percent after saying 2016 sales will climb in the “mid single-digit” percent range, making the case that it doesn’t need a buoyant personal-computer market to achieve growth. Analysts had estimated growth of about 4 percent. Apple Inc. gained 1.3 percent, rising for the third time in four days.

     Joining Keurig Green Mountain at the top of the consumer staples group, J.M. Smucker Co. jumped 7 percent to a record. The food maker’s quarterly profit beat estimates, helped by demand for coffee products including its new Dunkin’ Donuts- branded pods. Coca-Cola Co., Keurig Green Mountain’s largest shareholder with a 17 percent stake, added 2 percent, the most in four weeks.

     Amid the dollar’s biggest slide in a month, companies that benefit from a weaker U.S. currency gained. Kraft Heinz Co., Campbell Soup Co. and Philip Morris International Inc. each increased at least 0.8 percent.

     Square Inc. and Match Group Inc. jumped in their first day of trading, after pricing initial public offerings low enough to entice investors rattled by choppy markets, as well as bulls confident in their growth prospects. Square surged 45 percent, while Match advanced 23 percent.

     Shares of embattled drugmakerValeant Pharmaceuticals International Inc.rose 16 percent, the most since 2011. Citigroup Global Markets credit analyst Murali Ganti said in a note to clients that investors’ concerns over the company’s pricing practices and business model were “overdone.”

     UnitedHealth posted its biggest drop since 2011, sparking a selloff among health insurers after announcing it’s scaling back marketing efforts for plans it’s selling this year under the Affordable Care Act, and may quit the business entirely in 2017 because of high costs. The company also cut its 2015 earnings forecast. Hospital operators Tenet Healthcare Corp. and HCA Holdings Inc. fell more than 6.9 percent.

     Pfizer Inc. and Allergan Plc. declined at least 2.8 percent amid plans by the U.S. Treasury Department to deter companies from doing deals to move their headquarters abroad for tax purposes. People familiar with the matter said Pfizer is in advanced talks to buy the Ireland-based drugmaker for as much as the $380 a share, or $150 billion, a deal that would be the largest ever for the drug industry.

     Energy companies in the benchmark sank 1.3 percent, nearly erasing a 1.6 percent rally yesterday as the group continued to swing with seesawing crude prices. Oil slid to its lowest in almost three months amid signs of ample supplies, and labored to hold above $40 a barrel. Chevron Corp. declined 1.5 percent. Chesapeake Energy Corp. dropped 10 percent to a 13-year low, while Southwestern Energy Co. and Consol Energy Inc. lost more than 5.6 percent.

     Six S&P 500 companies, including Gap Inc., release quarterly results today. The earnings season is drawing to a close, with 95 percent of companies in the benchmark having reported. Of those, 74 percent beat earnings estimates, while 44 percent exceeded sales forecasts. Analysts project profits for index members dropped 3.7 percent in the third quarter, compared with for a 7.2 percent decline at the start of the season.

Have a wonderful evening everyone.

Be magnificent!

To conquer the subtle passions

seems to me to be far harder than the

physical conquest of the world by the force of arms.

Mahatma Gandhi

As ever,

Carolann

You make mistakes.  Mistakes don’t make you.

                          -Maxwell Maltz, 1889-1975

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