November 24, 2015 Newsletter

Dear Friends,

Tangents:

Carolann is out of the office, I will be writing the newsletter on her behalf.

PHOTOS OF THE DAY

Kazakh herdsmen drive their sheep and goats through snow-covered fields in Guozigou valley in Yili, Xinjiang Uighur Autonomous Region, China. China Daily/Reuters

The sun rises behind the Lower Manhattan skyline, seen from The Heights neighborhood of Jersey City, N.J., Tuesday. Julio Cortez/AP

Market Closes for November 24^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks rose for the first time in three days, as commodities producers jumped with the price of oil after Turkey’s downing of a Russian warplane near the Syrian border sparked concern of supply interruptions.

     Equities also got a boost after a Kremlin spokesman said Russia’s response won’t include the military, fueling speculation any fallout from the incident will be contained. Resource producers advanced at least 1.4 percent in Canada to lead equities higher.

     Turkey’s action near the border with northwestern Syria marked the first direct clash between the foreign powers embroiled in the civil war and sparked selling in global equities in morning trading. Canada’s resource-rich equity market rose as crude rallied on speculation supplies from the Middle East may be disrupted.

     Bombardier Inc. fell 4.8 percent after predicting a decline in profit next year. Royal Bank of Canada slipped 0.3 percent to lead lenders lower. Crew Energy Inc. and Ecnana Corp. jumped at least 6.3 percent.

     The Standard & Poor’s/TSX Composite Index rose 25.45 points, or 0.2 percent, to 13,407.83 at 4 p.m. in Toronto. The index has pared declines for the year to 8.4 percent, trailed only by Singapore and Greece among developed markets. 

     Russian President Putin accused Turkey of being an accomplice of terrorism and warned of “very serious consequences” for their relations. The escalating tension in the region comes with Brussels on the highest-level terror alert and after the U.S. State Department issued a global alert for Americans.

     Raw-materials and energy producers, which account for almost 30 percent of Canada’s benchmark stock index, were two of the three industries among 10 in the S&P/TSX to advance. Consumer staples stocks added 0.3 percent after Alimentation Couche-Tard Inc. posted second-quarter earnings ahead of estimates and boosted its dividend.

     Encana jumped 6.5 percent and Cenovus Energy Inc. added 1.7 percent as energy producers rallied 1.5 percent as a group. West Texas Intermediate touched a high of $43.46 with volume of all futures traded 18 percent higher than the 100-day average.

     Energy and raw-materials producers, along with health-care stocks, have fallen at least 20 percent this year to lead declines in the S&P/TSX. A combination of slowing economic growth in China and a rally in the U.S. dollar due to impending interest-rate increases from the Federal Reserve as soon as December have crimped commodities prices.

     Bombardier fell for a third day of losses. The struggling planemaker predicted a drop in 2016 earnings at its annual investor day in New York amid lower output of its biggest current business jets and costs from the oft-delayed C Series airliner.

US

By Anna-Louise Jackson

     (Bloomberg) — U.S. stocks erased early losses as investors shook off concerns over the downing of a Russian warplane by Turkish forces, and energy shares rallied for their first back- to-back gains in three weeks.

     Commodity companies led a rebound, with raw-materials joining energy to rise the most among the S&P 500’s main groups. Airlines slumped along with travel-related shares after a government warning to American travelers abroad coupled with a jump in crude prices.

     The Standard & Poor’s 500 Index rose 0.1 percent to 2,089.14 at 4 p.m. in New York, after earlier falling as much as 0.8 percent. The gauge has gone without two straight winning sessions since Nov. 3. The Dow Jones Industrial Average erased a 109-point slide to rise 19.51 points, or 0.1 percent, to 17,812.19. The Nasdaq Composite Index was little changed. About 6.9 billion shares traded hands on U.S. exchanges, 6.8 percent below the three-month average.

     “When you see this type of uncertainty happening, it reinforces looking at the U.S. as a safe haven,” said Tom Anderson, who helps oversee about $8 billion as chief investment officer at Boston Private Wealth. “The U.S. economy is in very solid shape. We’re pretty positive on equities as a result. But there’s certain to be noise and volatility around those events.”

     Turkey shot down the Russian warplane near the border with northwestern Syria, drawing an angry rebuke from President Vladimir Putin and marking the first direct clash between foreign powers embroiled in the civil war. He said Russia “won’t tolerate such crimes” but stopped short of threatening any military response against Turkey, which is a member of the North Atlantic Treaty Organization, warning only of “serious consequences” for bilateral ties.

     While global financial markets were jolted by concerns that the situation could escalate, political analysts in Russia and Europe said that seemed unlikely given the risks associated with any conflict between Russia and a NATO member. The incident comes with Brussels on the highest-level terror alert and after the U.S. State Department issued a global alert for Americans.

     The geopolitical tensions overshadowed data today that showed the economy expanded at a faster pace in the third quarter than previously reported, bolstering the Federal Reserve’s case for raising borrowing costs for the first time since 2006. Traders are now pricing in a 74 percent probability that the Fed will increase interest rates next month.

     A separate report showed home prices climbed more than estimated in September compared to a year earlier, signaling residential real estate is sustaining momentum. Another gauge showed consumer confidence unexpectedly fell in November to the lowest since September 2014.

     Stocks struggled to add to an advance following the S&P 500’s strongest weekly gain this year, with the gauge little changed from its Friday close. The benchmark is 2 percent away from its May record after rallying 12 percent from a summer swoon and its first correction in four years.

     The Chicago Board Options Exchange Volatility Index rose 2 percent Tuesday to 15.93, trimming an earlier 10 percent rise. The measure of market turbulence known as the VIX fell 23 percent last week, the most since July.

     Six of the S&P 500’s 10 main industries advanced, with energy and raw-material companies up the most. Financial, utility and industrial companies were the worst performers.

     Energy stocks rose for second day, up 2.2 percent on higher oil prices. Marathon Oil Corp. and Chesapeake Energy Corp. added more than 5.5 percent, while Pioneer Natural Resources Co. rose to a five-month high. Exxon Mobil Corp. advanced 2 percent.

     Among raw materials, Newmont Mining Corp. gained 2.5 percent as gold rose for the first time in three sessions amid demand for haven assets. Steelmaker Nucor Corp. climbed 3.7 percent after analysts at BB&T Corp. rated the shares a buy. Miner Freeport-McMoRan Inc. added 3.8 percent for its first climb in four sessions as copper rallied.

     Analog Devices Inc. rallied 6.4 percent to lead semiconductors in the benchmark index higher after the chipmaker posted better-than-expected earnings. Avago Technologies Ltd. and Skyworks Solutions Inc. gained more than 2.5 percent.

     Dollar Tree Inc.’s better-than-expected earnings propelled the shares up 6.6 percent to the highest since 2013. Keurig Green Mountain Inc. and Campbell Soup Co. rose more than 3 percent, though the broader consumer-staples group was little changed. Campbell gained after forecasting full-year profit above analysts’ estimates, even as it trimmed its sales outlook.

     A group of homebuilding stocks rose 1.4 percent to the highest level in two months on better-than-expected increases in home prices in September. D.R. Horton Inc., the largest U.S. homebuilder, advanced 1.5 percent to a level last seen in 2006.

     Consumer-discretionary stocks fell amid a slump in travel- related companies. Priceline Group Inc., Expedia Inc. and TripAdvisor Inc. retreated more than 1.9 percent, while cruise operators Royal Caribbean Cruises Ltd. and Carnival Corp. also sank at least 1.9 percent.

     Similarly, shares of industrial companies were weighed by a selloff in airline operators. The Bloomberg U.S. Airlines Index slumped 2.7 percent, its biggest decline in seven weeks, as United Continental Holdings Inc. and Delta Air Lines Inc. fell at least 3 percent.

     Outside of the travel companies among consumer shares, Signet Jewelers Ltd. declined 4.1 percent, the most since February 2014. Its quarterly results missed analysts’ estimates and its outlook fell short of some forecasts.

     Three of the Internet’s biggest names — Google parent Alphabet Inc., Amazon.com Inc. and Facebook Inc. — fell at least 0.9 percent. Those shares, along with Priceline and a 1.4 percent drop in Netflix Inc., dragged the Nasdaq Internet Index down 0.9 percent after it closed yesterday at a record.

     Financial shares fell for a second day, with real-estate companies among the worst performers in the group. Mall owner Simon Property Group Inc. lost 2 percent. SL Green Realty Corp. and AvalonBay Communities Inc. slipped more than 1.1 percent.

     The earnings season is drawing to a close, with almost all members of the gauge having reported. Of those, 74 percent beat profit estimates, while only 44 percent exceeded sales forecasts. Analysts project profits for index members fell 3.8 percent in the third quarter, compared with expectations for a 7.2 percent drop at the start of the season.

Have a wonderful evening everyone.

Be magnificent!

 “Dictionary is the only place that success comes before work. Hard work is the price we must pay for success. I think you can accomplish anything if you’re willing to pay the price.” Vince Lombardi

As ever,

Karen
 

 “The starting point of all achievement is desire.” Napoleon Hill

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