November 30, 2015 Newsletter

Dear Friends,

Tangents:

MY NOVEMBER GUEST

My Sorrow, when she’s here with me,
Thinks these dark days of autumn rain
Are beautiful as days can be;
She loves the bare, the withered tree;
She walks the sodden pasture lane.

Her pleasure will not let me stay.
She talks and I am fain to list:
She’s glad the birds are gone away,
She’s glad her simple worsted gray
Is silver now with clinging mist.

The desolate, deserted trees,
The faded earth, the heavy sky,
The beauties she so truly sees,
She thinks I have no eye for these,
And vexes me for reason why.

Not yesterday I learned to know
The love of bare November days
Before the coming of the snow,
But it were vain to tell her so,
And they are better for her praise.

                     -Robert Frost

PHOTOS OF THE DAY

Japanese macaques (Snow Monkeys) hold each other while sitting on rocks near a hot spring in a valley in Yamanouchi town, Nagano prefecture, Japan, Monday. Yuya Shino/Reuters

Grumpy Cat arrives to ride in the 84th Annual Hollywood Christmas Parade in Los Angeles Sunday. David McNew/Reuters

Market Closes for November 30^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canada stocks rose, trimming their sixth monthly loss in seven, as commodities producers advanced with gold increasing for the first time in three sessions and the nation’s largest banks rose ahead of fourth-quarter earnings.

     Energy stocks advanced 1.3 percent, recovering from an Oct. 2 low, while raw-materials producers increased 2.4 percent to lead equities higher. Gold futures for February delivery gained 0.9 percent in New York, the first advance since Nov. 24.

     Crude futures settled little changed after rallying as much as 2 percent in New York, capping an 11 percent drop in November. Iran expects no major decisions that would change OPEC’s output target when the group gathers Dec. 4 in Vienna.

     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, leading energy and raw-materials producers lower for the year. The two groups, which account for about 30 percent of the index, lost more than 1.2 percent in November to extend declines in 2015 past 20 percent.

     The Standard & Poor’s/TSX Composite Index rose 101.59 points, or 0.8 percent, to 13,469.83 at 4 p.m. in Toronto. The benchmark equity gauge retreated 0.4 percent in November. It has dropped 8 percent this year, trailed only by Singapore and Greece among developed markets. 

     Canada’s current account deficit narrowed to C$16.2 billion in the third quarter, the smallest this year, as merchandise exports jumped. Canada’s weaker dollar, constrained by the drop in oil prices, has given a lift to exporters. The loonie, as the currency is known, has dropped 13 percent this year.

     Royal Bank of Canada increased 1.1 percent, the most in two weeks, and Bank of Montreal rose 0.6 percent to lead lenders higher. Bank of Montreal and Bank of Nova Scotia report fourth- quarter earnings tomorrow.

     BlackBerrry Ltd. rose 2 percent after the company said it’s shuttering its Pakistan operations to avoid allowing authorities in the nation to monitor its main business enterprise server and e-mail messages. There are as many as 5,000 BES customers in Pakistan, the Dawn newspaper reported in July.

     Canadian Oil Sands Ltd. rose 2.8 percent, rebounding from the worst loss in almost two months. Suncor Energy Inc. said Nov. 26 it may scrap its $4.5 billion hostile bid for the company if Alberta regulators endorse a poison pill that would give the target company more time to find other bidders.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks trimmed monthly gains, with the Standard & Poor’s 500 Index clinging to a slim November increase, as investors prepared for policy decisions from central banks while awaiting a slew of economic data this week.

     The S&P 500 advanced this month as signs of a strengthening U.S. economy offset concerns that the Federal Reserve intends to raise interest rates this year, throttling back on stimulus that has underpinned the 6 1/2 year equities bull market. The rising prospects for tighter monetary policy boosted financial shares to a 1.7 percent gain in November, while utility stocks tumbled 2.8 percent as their dividend yields lose luster as bond rates rise.

     The S&P 500 Index fell 0.5 percent to 2,080.41 at 4 p.m. in New York, paring its November climb to 0.05 percent while capping its first consecutive monthly gains since May. The Dow Jones Industrial Average slipped 78.57 points, or 0.4 percent, to 17,719.92, and the Nasdaq Composite Index lost 0.4 percent. About 7.7 billion shares traded hands on U.S. exchanges, 8.3 percent above the 30-day average.

     “This is a fairly big week between the ECB Thursday and the jobs number on Friday,” Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC, said by phone. “The market is looking for a rate hike by the Fed in December and further easing by the ECB, so these are going to be a pivotal two weeks to set us up through the end of the year.”

     As investors look for further confirmation that the economy is sturdy enough to handle higher borrowing costs, data today showed contract signings to purchase previously owned U.S. homes rose less than forecast in October, showing residential real estate is cooling heading into the quieter selling season. Other reports this week include manufacturing data tomorrow and the monthly government jobs report on Friday.

     Federal Reserve Chair Janet Yellen will speak to Congress on Thursday and the European Central Bank will hold its last policy meeting of the year amid growing speculation the ECB will take additional steps to boost inflation. OPEC members will also meet to discuss oil production.

     The S&P 500 has rebounded about 12 percent from its low in August as concern eased that a slowdown in China would spread. Fed policy makers have signaled the economy is strong enough to withstand the first U.S. interest-rate increase since 2006, and traders are pricing in a 72 percent chance that the central bank will act at the conclusion of its two-day meeting on December 16.

     The U.S. benchmark stock index closed the month 2.4 percent away from its record reached in May while alternating between gains and losses over the last ten sessions, the longest such streak since 2013. Meanwhile, the Russell 2000 Index of small- cap shares snapped its longest rally since March after reaching a three-month high Friday. The gauge rose 3.1 percent this month after rallying 5.6 percent in October.

     The Chicago Board Options Exchange Volatility Index rose 6.7 percent Monday to 16.13. The measure of market turbulence known as the VIX finished November up 7 percent, its first monthly increase since August.

     Energy stocks rose the most among ten primary groups in the benchmark gauge Monday. That shaved their November decline, though the sector is still headed toward the sixth loss in seven months. Oil is set to average below $50 for a fourth month, the longest stretch since the global financial crisis, as a record supply glut showed no signs of ending. Southwestern Energy Co. climbed 3.1 percent, with the shares still off more than 18 percent this month.

     Pressure on brick-and-mortar retailers this month hasn’t let up following the Black Friday weekend. More than 103 million people shopped online over the four-day weekend, which started Thursday on Thanksgiving, according to an annual survey commissioned by the National Retail Federation. That compares with fewer than 102 million who ventured into traditional stores, the trade group said.                       

     Fossil Group Inc., Macy’s Inc. and Urban Outfitters Inc. were each down more than 21 percent in November, among the biggest drops in the S&P 500 and their worst such declines in at least three years after posting quarterly results that disappointed investors. Those companies added to their losses on Monday, with each sliding at least 1.5 percent.

     Under Armour Inc. had its largest monthly retreat since April 2014. The athletic-wear maker’s shares lost 3.9 percent today after Piper Jaffray Cos. cut its earnings estimates, saying it remains “one of the more promotional brands” in athletic space.

     Health-care companies erased a November increase in the month’s final session as a selloff in biotechnology shares led the group lower. The Nasdaq Biotechnology Index sank 1.9 percent today, while still marking its second straight monthly gain. Mylan NV and Illumina Inc. rose more than 16 percent in November, while Celgene Corp. slid 11 percent to lead declines.

     Industrial companies posted their first back-to-back monthly gains this year, helped by speculation on railroad mergers as Canadian Pacific Railway Ltd. made a $28 billion offer to buy Norfolk Southern Corp. earlier this month. Kansas City Southern was up almost 10 percent in November, while CSX Corp. gained 5.3 percent.

     Deal activity also helped boost raw-material shares in November, as the S&P 500’s best-performer this month — Airgas Inc. — soared after agreeing to be acquired by France’s Air Liquide SA for about $13.4 billion. Alcoa Inc. added 4.8 percent this month as activist investor Elliott Management Corp. disclosed a 6.4 percent stake in the aluminum company.

     Semiconductors added to the strongest monthly advance among 24 industry groups in the benchmark index, rising 0.9 percent Monday to take November’s increase to 3.9 percent. Qorvo Inc. rose 32 percent this month, pacing the advance after posting better-than-estimated earnings and announcing plans to buy back $1 billion in stock. Applied Materials Inc. and Nvidia Corp. each climbed nearly 12 percent this month.

Have a wonderful evening everyone.

Be magnificent!

Watching and listening are a great art.

By watching and listening we learn infinitely more than we do from any books.

Books are necessary, but watching and listening sharpen your senses.

Krishnamurti

As ever,

Carolann

Whatever you are, be a good one.

      -Abraham Lincoln, 1809-1865

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