October 27, 2015 Newsletter

Dear Friends,

Tangents:

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

PHOTOS OF THE DAYBaby pandas born in 2015 are placed on the grass during a photo opportunity at a Giant Panda breeding center in Ya’an, Sichuan province, China. Reuters

Artistes from Cirque du Soleil perform during a media preview of the production ‘Totem’ Tuesday in Singapore, where they will be performing until the end of the year. Wong Maye-E/AP

Market Closes for October 27^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — Canadian equities fell, capping the biggest two-day decline since September, as a renewed selloff in crude sent energy stocks to a three-week low while industrial shares tumbled on concern transportation volumes may slide.

     Energy producers, the worst-performing industry in Canada this year, lost 1.6 percent as the persistent supply glut sent crude to a two-month low. Materials producers also retreated as the Bloomberg Commodity Index headed for a fourth straight monthly slide. Railroads led a 2.9 percent rout in industrial stocks, as transportation shares slid on concern that slowing U.S. industrial activity is hurting cargo demand.

     The Standard & Poor’s/TSX Composite Index fell 91.30 points, or 0.7 percent, to 13,699.60 at 4 p.m. in Toronto. The gauge tumbled 1.2 percent yesterday and has now trimmed its October advance to 3 percent, still on pace for the biggest monthly increase since February. 

     U.S. orders for business equipment unexpectedly declined in September as tepid global markets gave American companies little reason to expand. The latest data comes as the Federal Reserve begins two days of meetings with the central bank widely expected not to raise interest rates.

     Canadian industrial stocks slipped the most among 10 major groups Tuesday. Canadian Pacific Railway Ltd. tumbled 4.7 percent, the most in three months, and Canadian National Railway Co. lost 2.8 percent to lead industrial stocks lower. Canadian National reported third-quarter earnings after the market close, including revenue of C$3.22 billion, ahead of estimates for C$3.15 billion.

     Commodities producers retreated, led by declines among oil stocks. Crescent Point Energy Corp. dropped 2.2 percent and Canadian Natural Resources Ltd. lost 2.5 percent. WTI crude was down 1.8 percent in New York, failing to sustain a rally earlier this month to $50 a barrel amid surging U.S. inventories.

     Valeant Pharmaceuticals International Inc., the drugmaker under scrutiny for its accounting and pricing practices, ended the day little-changed after touching a one-year low yesterday. Bill Ackman, the billionaire activist investor, will discuss his holding in Valeant on a conference call with other investors Friday. Ackman’s fund Pershing Square Holdings Ltd. is Valeant’s third-biggest holder, according to a June 30 regulatory filing.

     Shares of Laval, Quebec-based Valeant plummeted 32 percent last week, the most since 1993, after short-seller Citron Research said Valeant is using Philidor to store inventory and record those transactions as sales. Valeant denied the accusations, saying that sales are recorded only when the drugs are sent to patients.

US

By Oliver Renick

     (Bloomberg) — U.S. stocks declined amid mixed earnings reports and data that renewed concern on the strength of the global economy as the Federal Reserve began a two-day monetary policy meeting.

     A rally in equities has tapped the brakes as investors await the latest from the Fed. Policy makers kept interest rates near zero last month, opting to hold off for a better read on the impact of weaker growth in China and lackluster inflation. Central bankers in Europe and China last week signaled commitment to bolstering their economies, which helped the Standard & Poor’s 500 Index erase a loss for the year.

     Apple Inc. advanced following its earnings report after markets closed, while Twitter Inc. tumbled as its revenue outlook was below expectations.

     The S&P 500 fell 0.3 percent to 2,065.89 at 4 p.m. in New York, after briefly slipping below its average price during the past 200 days. The Dow Jones Industrial Average slipped 41.62 points, or 0.2 percent, to 17,581.43. The Nasdaq Composite Index declined 0.1 percent, while the Russell 2000 Index lost 1.2 percent. About 7.2 billion shares traded hands on U.S. exchanges, 3 percent below the three-month average.

     “We’re in wait-and-see mode for the Fed,” said Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in New York. “We’re definitely seeing softer data across the U.S., and more negatives than positives in earnings.”

     International Business Machines Corp. fell 4 percent to a five-year low. The company disclosed today that regulators are investigating its accounting treatment of certain transactions in the U.S., the U.K. and Ireland.

     Ford Motor Co. lost 5 percent after its profit missed estimates, and United Parcel Service Inc. fell 2.9 percent as its sales were short of forecasts. Drugmakers Pfizer Inc. and Bristol-Myers Squibb Co. gained at least 2.2 percent after their profits topped projections. Alibaba Group Holding Ltd. rose 4.1 percent after its results beat estimates. Yahoo! Inc., which plans to spin off its Alibaba stake, climbed 2.7 percent.

     More than 40 S&P 500 companies reported earnings today, with analysts projecting profits for index members dropped 6.1 percent in the third quarter. Of those that have released results this season, 74 percent have exceeded profit projections, while 57 percent missed sales estimates.

     Apple rose 1.7 percent as of 5:09 p.m. after posting quarterly profit and sales that exceeded analysts’ predictions. The company sold 48 million iPhones last quarter, up 22 percent from a year earlier and shy of analysts’ average estimate of 48.5 million shipments. Its quarterly sales forecast for the critical holiday shopping season fell short of some analysts’ forecasts, showing there may be a limit to the growth it can squeeze out of the iPhone.

     Twitter sank 11 percent amid a fourth-quarter sales outlook that may miss estimates and another slowdown in user growth. In the U.S., the world’s largest advertising market, Twitter’s user count remained flat at 66 million last quarter.

     As investors assess earnings, uneven economic data recently has meant a murkier outlook on how growth will fare under higher rates. A report today showed orders for business equipment unexpectedly declined in September as tepid global markets gave American companies little reason to expand. A separate gauge showed home prices in 20 cities rose at a faster pace in the year ended August, while another report said consumer confidence fell in October to a three-month low.

Have a wonderful evening everyone.

Be magnificent!

On the mountains of truth you can never climb in vain: either you will reach a point higher up today, or you will be training your powers so that you will be able to climb higher tomorrow.

Friedrich Nietzsche

As ever,

Leyla  

It is the mark of an educated mind to be able to entertain a thought without accepting it.

Aristotle

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