November 5, 2015 Newsletter

Dear Friends,

Tangents:

Holiday: Sadie Hawkins Day, November 5^th.

Sadie Hawkins, a folk event, made its debut in Al Capp’s Li’l Abner comic strip November 15, 1937.  Sadie Hawkins was the  “homeliest gal in the hills” who grew tired of waiting for the fellows to come a courtin’.   Her father, Hekzebiah Hawkins, a prominent resident  of Dogpatch, was even more worried about Sadie living at home for  the rest of his life, so he decreed the first annual Sadie Hawkins Day, a foot race in which the unmarried gals pursued the town’s bachelors, with matrimony the consequence.  By the late 1930’s the event had swept the nation and had a life o f its own.  Life magazine reported that more than 200 colleges held Sadie Hawkins Day events in 1939, only two years after its inception.  It became a woman-empowering rite at high schools and college campuses, long before the modern feminist movement gained prominence.  The basis of Sadie Hawkins Day is that women and girls take the initiative in inviting the man or boy of their choice out on a date, typically to a dance attended by other bachelors and their aggressive dates.  When Al Capp created the event, it was not his intention to have the event occur annually on a specific date because it inhibited his free-wheeling plotting. However, due to its enormous popularity and the numerous fan letters Capp received, the event became an annual event in the strip during the month of November, lasting four decades.

For more information on Sadie Hawkins, L’ il Abner and Al Capp, see http://www.lil-abner.com.

This day in 1994, George Foreman became the oldest heavyweight champion at age 45 when he defeated 26-year-old Michael Moorer in the 10^th round of their World Boxing Association fight in Las Vegas.

PHOTOS OF THE DAY

The sculpture ‘Le Penseur’ (The Thinker, 1903) by French sculptor Auguste Rodin (1840-1917) is seen in the garden of the Musee Rodin in Paris, France, Thursday. After a complete restoration over the past three years, the Hotel Biron, home of the Rodin Museum since 1919, will reopen its doors to the public on November 12, 2015, the 175th birthday of the famous French sculptor. Philippe Wojazer/Reuters

Turtles crawl to the ocean after being released, as part of conservation efforts, on the beach of Puerto Quetzal in Guatemala, Wednesday.Jorge Dan Lopez/Reuters

Market Closes for November 5^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian stocks retreated as Valeant Pharmaceuticals International Inc. declined to a two-year low and Magna International Inc. tumbled the most since 2011 on weaker quarterly sales.

     Valeant sank 15 percent for a third day of losses, to a September 2013 low. The drugmaker has now lost 70 percent from an Aug. 5 high amid pressure over how it prices its drugs. Magna, the largest North American auto-parts supplier, tumbled 10 percent as sales slumped 7 percent in the third quarter, missing analysts’ estimates. The two companies accounted for almost 70 points of the Standard & Poor’s/TSX Composite Index’s 103.04 point decline.

     The Canadian benchmark equity gauge dropped 0.8 percent to 13,558.78 at 4 p.m. in Toronto. The index climbed 1.7 percent in October, the most since April. It was nevertheless the worst performance among 24 developed-nation markets in that time, as a gauge of global equities capped its best month in four years.

     Valeant, briefly the largest stock in the S&P/TSX by market capitalization earlier this year, plunged a record 49 percent in October after short-seller Citron Research accused Valeant of an Enron-like strategy of recording fake sales using an affiliated pharmacy. Valeant denied the allegation.

     The Quebec-based drugmaker and Turing Pharmaceuticals AG are the focus of two probes in Congress seeking to examine why the companies raised the prices of medications sharply after acquiring them. Jana Partners yesterday disclosed it had sold its stake in Valeant due to concerns about the company’s changing business model.

     Investor Bill Ackman, one of Valeant’s top shareholders, gave Chief Executive Officer Mike Pearson a fresh vote of confidence Thursday. While he disagreed with some of Pearson’s decisions, Ackman said in a letter he felt he was the right CEO for the drugmaker.

     Ackman’s letter came after an earlier interview published late Wednesday in which he told the Wall Street Journal how he has pressed the drugmaker’s executives for answers and has told the company’s lead director that Pearson may need to leave.

     Magna International tumbled 10 percent after blaming weakness in the euro and Canadian dollar against the U.S. dollar for the “significant negative impact” on sales. Foreign currency translation reduced revenue by about $870 million compared with year-ago figures, Magna said.

     Smaller peer Linamar Corp. also tumbled 7.5 percent for the biggest decline in three months after TD Securities analyst Brian Morrison lowered his rating for the stock to a hold from a buy as consumer discretionary shares lost 2.8 percent.

     Magna is among more than 40 companies in the S&P/TSX reporting quarterly earnings today. Penn West Petroleum Ltd. dropped 8.7 percent as revenue slumped. The company suspended its dividend and cut its workforce by about a third during the quarter. Paramount Resources Ltd. plunged the most in almost three decades after reporting a third-quarter loss late yesterday.

     First Quantum Minerals Ltd. slumped 6.8 percent as copper for December delivery fell 2.9 percent in New York, the most in six weeks. Factory orders in Germany, the third-biggest copper user, unexpectedly dropped for a third month, data showed Thursday. Copper has sunk 20 percent this year as slowing Chinese growth cut demand.

     Hydro One Ltd., Ontario’s largest electricity transmission and distribution company, jumped 5.5 percent in its trading debut. The Ontario government raised C$1.66 billion from the initial public offering, at a price of C$20.50 a share. The stock trades under the “H” ticker on the Toronto Stock Exchange.

US

By Joseph Ciolli

     (Bloomberg) — U.S. stocks closed little changed near a three-month high as the specter of an interest rate increase this year left investors looking to Friday’s jobs report for fresh signs the economy is strong enough to withstand tightening.

     Equities swung between gains and losses in the session as a rally in banks helped erase declines sparked by a renewed selloff in embattled drugmaker Valeant Pharmaceuticals International Inc. Weakness in commodity producers also held back stocks for a second day.

     The Standard & Poor’s 500 Index slipped 0.1 percent to 2,099.93 at 4 p.m. in New York, trimming a drop of as much as 0.6 percent. The Dow Jones Industrial Average declined 4.15 points, or less than 0.1 percent, to 17,863.43. The Nasdaq Composite Index declined 0.3 percent, dragged lower as Qualcomm Inc. and Celgene Corp. fell more than 5 percent after their results disappointed.

     “The only thing that’s certain today is that there are going to be significant price swings in both directions,” said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “If the implications from the jobs report tomorrow do imply a December rate hike, it could weigh on the market. The Valeant debacle continues to weigh on health-care.”

     Equities trimmed a weekly advance after reaching a three- month high on Tuesday, stalling a rally that boosted the S&P 500 by as much as 13 percent from an August low and carried the benchmark to within 1 percent of its record. Gains in the past two months have been paced by a rebound in commodity shares, after they led declines during a summer selloff sparked by worries that weakness in China’s economy would spread.

     Stocks are coming off their strongest month in four years, bolstered as central banks in Europe and China pledged more stimulus and the Federal Reserve refrained from boosting interest rates in October. Traders now price in a 56 percent chance the Fed will increase rates at next month’s meeting, up from 50 percent earlier this week, after Fed Chair Janet Yellen said yesterday the economy is performing well enough to possibly raise rates in December.

     Fed Bank of New York President William Dudley backed Yellen’s stance that December is a “live possibility,” while Fed Vice Chairman Stanley Fischer expressed confidence that inflation isn’t too far below the central bank’s goal. Fed Bank of Atlanta President Dennis Lockhart said today liftoff “will soon be appropriate,” in remarks prepared for delivery today in Bern, Switzerland.

     Tomorrow’s report on payrolls and unemployment will garner even more scrutiny as it feeds into the Fed’s assessment of the economy’s strength. A report today showed the number of Americans filing for unemployment benefits rose more than economists forecast to a five-week high, representing a pause in the recent progress that left claims at their lowest level since 1973.                       

     Mixed earnings reports provided little direction for equities today. Facebook Inc. rose 5.2 percent to a record after posting higher-than-expected revenue and profit. Ralph Lauren Corp. surged 16 percent, the most in seven years after its earnings beat estimates.

     Qualcomm slid 15 percent after the chipmaker’s sales and profit forecasts fell short of some analysts’ estimates, underscoring its struggle to collect technology-licensing fees for smartphones sold in China. CF Industries Holding Inc., the largest U.S. producer of nitrogen fertilizer, fell 9.5 percent after posting lower-than-expected earnings.

     With more than 80 percent of S&P 500 companies having reported, about three-quarters have beaten earnings estimates, while only 45 percent have topped sales forecasts. Analysts estimate profits dropped 3.9 percent in the third quarter, up from predictions for a 6.1 percent decline a week ago.

     The Chicago Board Options Exchange Volatility Index fell 3 percent Thursday to 15.05, down for the first time in three days. The measure of market turbulence known as the VIX posted its biggest monthly drop ever in October. About 7.3 billion shares traded hands on U.S. exchanges, in line with the three- month average.

     Seven of the S&P 500’s 10 main industries declined, with energy, utilities and raw-materials the worst performers. Financial and consumer discretionary shares rose, while industrials were little changed.

     Energy companies in the benchmark fell 1 percent in volatile trading, led by Transocean Ltd.’s 8.2 percent drop. A plan to slash more than $1 billion in costs next year wasn’t enough to excite investors of the world’s largest offshore rigs provider as signs warn of more pain ahead. Chevron Corp. and Exxon Mobil Corp. retreated more than 1.3 percent as crude fell again after its worst drop in three weeks yesterday.                       

     Valeant lost 14 percent after earlier sliding more than 20 percent. The shares fell below $80 for the first time in more than two years as investors grappled with the drugmaker’s mounting challenges and a top shareholder, Bill Ackman, discussed how his confidence in the company’s leadership had briefly wavered. Ackman later expressed support for Chief Executive Mike Pearson.

     Endo International Plc sank 15 percent, the steepest decline among health-care companies in the S&P 500 and the company’s biggest drop since 2009, despite earnings and sales that exceeded analysts’ estimates. Celgene lost 5.3 percent, the most this year, after quarterly sales were short of analysts estimates as the company’s top cancer drugs didn’t grow as fast as expected. The Nasdaq Biotechnology Index slumped 1.9 percent.

     Banks climbed amid speculation that rising bond yields will help boost profitability, as the U.S. 10-Year Treasury yield reached a seven-week high. Bank of America Corp. increased 1.8 percent to its highest since Aug. 19. State Street Corp., Bank of New York Mellon Corp. and Comerica Inc. added more than 1.6 percent. The KBW Bank Index gained 1 percent, near its highest level in 11 weeks.

     Ralph Lauren’s 15 percent rally led a group of apparel and accessory companies higher. Fossil Group Inc. climbed 3.1 percent, the most in a month, while PVH Corp. and Michael Kors Holdings Ltd. added more than 2.1 percent.

Have a wonderful evening everyone.

Be magnificent!

What is then worth having?

Mukti, freedom.

Swami Vivekananda

As ever,

Carolann

There are no traffic jams along the extra mile.

                         -Roger Staubach, 1942-

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