October 14, 2016 Newsletter

Dear Friends,

Tangents:

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

PHOTOS OF THE DAY

Schoolchildren from St Philip’s school in Salford wear masks depicting members of Britain’s royal family as they await the arrival of Prince William and his wife, Catherine, Duchess of Cambridge, at the National Football Museum in Manchester, England, on Friday. Phil Noble/Reuters

A competitor participates in a wingsuit flying contest in Zhangjiajie, Hunan Province, China, on Thursday. Reuters

A man rides his motorcycle at sunset in Nyaung Woon village, Kyauk-Se, Myanmar, on Friday. Aung Shine Oo/AP
Market Closes for October 14^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Eric Lam
     (Bloomberg) — Canadian stocks ended the day lower, paring a weekly advance as energy producers fell from the highest level in more than a year to offset an advance in the nation’s lenders amid promising results from U.S. banks.
     The S&P/TSX Composite Index slipped 0.4 percent to 14,584.99 at 4 p.m. in Toronto, erasing a climb of 0.6 percent. The index remained higher for the week, trimming its loss in October to 1 percent. It’s rallied 12 percent this year just behind New Zealand and the U.K., the three best performers among developed markets.
     Eight of the 11 industries in the benchmark for Canadian equity fell Friday, led by a 1.5 percent drop in raw-materials producers, as the price of gold held near the lowest in four months. Barrick Gold Corp. and Goldcorp Inc. retreated at least 2.6 percent. Gold in New York has tumbled 4.9 percent in October as a first-half resurgence has fizzled out on increasing speculation the Federal Reserve will raise interest rates in December. Gold is less attractive in an environment of higher rates as it doesn’t pay a yield.
     Energy producers lost 0.6 percent, reversing gains as an earlier increase in crude evaporated. Crude futures in New York lost 9 cents to close at $50.35 a barrel as the dollar rose as much as 0.4 percent against its peers, making commodities less attractive. The S&P/TSX Energy index remains 25 percent higher this year and near the highest level since June 2015.
     Commodities producers have powered gains in Canada this year, fueling a rebound in the wider gauge after a weak 2015 when the benchmark equity index posted its worst loss since the 2008 financial crisis. The S&P/TSX Materials Index is up 36 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second.
     Canadian stock valuations remain 16 percent higher than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.3 compared with 20.1 for the the S&P 500 Index, according to data compiled by Bloomberg.
     Teck Resources Ltd. climbed 3.1 percent after Dundee Securities analyst Joseph Gallucci raised his rating for the diversified mining company to a buy from neutral. The analyst also boosted Teck’s price target to C$31.50. Teck is the best- performing stock in the S&P/TSX this year, up more than four- fold amid a rebound in commodities prices.

US
By MARLEY JAY
     New York (AP) — U.S. stocks gave up large gains and finished barely higher Friday. Banks and technology companies traded higher, while stocks that pay large dividends fell thanks to a jump in bond yields.
     Stocks were on track for large gains early in the day as reports showed consumers in both the U.S. and China appeared to be spending more. Banks rose after JPMorgan Chase and Citigroup disclosed solid quarterly results. But the gains faded as the day wore on. Drug company stocks continued to fall and energy companies slipped.
     “The retail sales numbers on the surface looked pretty good but when you dig into them they were not that great,” said Mike Baele, managing director at U.S. Bank’s Private Client Reserve. “It seems like every good report we get, we get an offsetting weaker report.”
     The Dow Jones industrial average, which had jumped as much as 162 points in the morning, finished up 39.44 points, or 0.2 percent, at 18,138.38. The Standard & Poor’s 500 inched up 0.43 points to 2,132.98. The Nasdaq composite gained 0.83 points to 5,214.16.
     Goldman Sachs was responsible for most of the Dow’s gains. It rose $3.10, or 1.9 percent, to $170.52 after Britain’s High Court threw out a $1 billion lawsuit against the company. Libya’s sovereign wealth fund had accused Goldman Sachs of duping the fund into making risky deals.
     Bond prices fell. The yield on the 10-year Treasury note rose to 1.80 percent from 1.75 percent. Higher bond yields also help banks because they lead to higher interest rates on loans, and that allows banks to make bigger profits from lending.
     JPMorgan Chase and Citigroup reported results were better than investors expected. The reports may have raised investor hopes for companies that will report their results next week, like Morgan Stanley, Charles Schwab, and BlackRock.
     “It was a good kickoff to earnings season” for banks, said Baele. “It was actually some decent revenue as well with both investment banking and trading.”
     Rising bond yields attracted investors’ attention, and they sold utilities, real estate investment trusts, and other stocks that pay large dividends as a result. Those payments are more appealing to investors seeking income when bond yields are low. PG&E Corp. fell 57 cents to $59.80 and Duke Energy slid 73 cents to $77.21.
     The Commerce Department said retail sales bounced back in September as spending on restaurants, cars and gas improved. The agency also said business stockpiles and sales grew in August, which is a sign that economic growth could get stronger.
     Reports suggested consumers in China are starting to spend more, which helped technology companies recover some of Thursday’s losses. Microsoft climbed 50 cents to $57.42 while Intel rose 48 cents, or 1.3 percent, to $37.45 and Apple picked up 68 cents to $117.66.
     While retail spending rose, the Commerce Department’s report also showed that spending at department stores decreased in September as consumers continued to do more of their shopping online. Kohl’s lost $1.44, or 3.2 percent, to $43.68 and Macy’s fell $1.23, or 3.3 percent, to $35.57.
     Computer and printer maker HP said it will cut between 3,000 and 4,000 jobs over the next three years as demand for those products continues to fall. HP stock lost 67 cents, or 4.4 percent, to $14.48.
     Twitter fell 91 cents, or 5.1 percent, to $16.88 after Salesforce.com told the Financial Times it isn’t interested in buying the company. Twitter has lost 32 percent of its value since October 5th on reports that potential buyers were not going to make offers. Salesforce investors were not enthusiastic about the potential offer, and its stock jumped $3.64, or 5.2 percent, to $74.27.
     U.S. crude oil gave up 9 cents to $50.35 a barrel in New York. Brent crude, the international standard, fell 8 cents to $51.95 a barrel in London. That sent energy companies lower.
     Health care stocks, which are by far the worst-performing industry on the S&P 500 this year, continued to slip. EpiPen maker Mylan lost $1.39, or 3.7 percent, and closed at a three- year low of $36.49. Cancer drug maker Celgene sank $2.13, or 2.1 percent, to $98.50.
     In other energy trading, wholesale gasoline added 1 cent to $1.49 a gallon. Heating oil lost 1 cent to $1.57 a gallon. Natural gas slumped 6 cents, or 1.7 percent, to $3.29 per 1,000 cubic feet.
     The price of gold fell $2.10 to $1,255.50 an ounce. Silver lost 2 cents to $17.44 an ounce. Copper slipped 1 cent to $2.11 a pound.
     The dollar rose to 104.18 yen from 103.60 yen. The euro rose to $1.0983 from $1.1053.
     France’s CAC 40 jumped 1.5 percent and Germany’s DAX rose 1.6 percent. In Britain the FTSE 100 advanced 0.5 percent. Japan’s benchmark Nikkei 225 index added 0.5 percent and South Korea’s Kospi advanced 0.4 percent. Hong Kong’s Hang Seng added 0.9 percent. Thailand’s SET index climbed 4.7 percent in the second day of trading after the death of Thailand’s king. The SET fell 4 percent in September as investors worried about the monarch’s health and even with the rally Friday the index fell 1.8 percent this week.

Have a wonderful weekend everyone.

Be magnificent!
 

 “I never dreamed about success. I worked for it.” Estee Lauder

As ever,
 

Karen

“The purpose of human life is to serve, and to show compassion and the will to help others.” Albert Schweitzer

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