October 30, 2015 Newsletter

Dear Friends,


The Poem:

 -by Kathleen Jamie
Well, friend, we’re here again,

        sauntering the last half-mile to the land’s frayed end
to find what’s laid on for us, strewn across the turf-
gull feathers, bleached shells,
                 a whole bull seal, bone-dry,
knackered from the rut
(we knock on his leathern head, but no-one’s home).

Change, change – that’s what the terns scream
                        down at their seaward rocks
fleet clouds and salt kiss –
everything else is provisional,
                        us and all our works.
I guess that’s why we like it here.
                  Listen a brief lull,
                          a rock pipit’s seed-small notes.


Autumn leaves are at their peak on a sunny day in the western Austrian city of Innsbruck Friday. Dominic Ebenbichler/Reuters


Students from the Brainshire Science School wear costumes as they participate in a Halloween parade in Paranaque city, metro Manila, Philippines, Friday. Romeo Ranoco/Reuters

A woman, her face covered in white, paints the tombstones at a cemetery in Casabermeja, southern Spain, Friday. Catholics will mark All Saints’ Day on Nov. 1 by visiting cemeteries and graves of relatives and friends. Jon Nazca/Reuters

Market Closes for October 30th, 2015



Close Change


17663.54 -92.26



S&P 500 2085.72 -3.69



NASDAQ 5053.750 -20.524



TSX 13559.61 -232.27




International Markets



Close Change
NIKKEI 19083.10 +147.39






22640.04 -179.90




SENSEX 26656.83 -181.31




FTSE 100 6361.09 -34.71





Bonds % Yield Previous  % Yield

10 Year Bond

1.543 1.550



30 Year


2.306 2.320

10 Year Bond

2.1439 2.1743



30 Year Bond

2.9262 2.9621



BOC Close Today Previous  
Canadian $ 0.76516 0.75770




1.30691 1.31978
Euro Rate

1 Euro=

Canadian $ 1.43670 0.69604




1.09931 0.90966


Gold Close Previous
London Gold


1148.60 1179.60
Oil Close Previous
WTI Crude Future 46.59 45.94


Market Commentary:

Regardless of current economic condition, it’s always best to remember that the stock market is a barometer and not a thermometer. –Yale Hirsch, 1923-


By Eric Lam

     (Bloomberg) — Canadian stocks dropped the most in four weeks, paring the best monthly gain since April, as the nation’s largest lenders slumped and Valeant Pharmaceuticals International Inc. capped its worst-ever monthly performance.

     Health-care and financial services stocks led Canadian equities lower, as Valeant extended its October rout to 48 percent amid intense scrutiny over its business practices. The stock had been one of the best performers in Canada through the first half of the year and briefly became the biggest company in the country by market capitalization.

     The Standard & Poor’s/TSX Composite Index fell 262.71 points, or 1.9 percent, to 13,529.17 at 4 p.m. in Toronto, the biggest drop since Sept. 28. The decline trimmed the Canadian benchmark’s October advance to 1.7 percent, 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’s been the primary drag on the market. The embattled drugmaker sank 18 percent after it said Friday it will terminate its relationship with Philidor Rx Services, the closely-associated pharmacy that Valeant has used to distribute its products. The decision came after Bloomberg News reported Philidor altered doctors’ prescriptions to wring more reimbursements from U.S. health insurers.

     Energy and materials producers rallied more than 6.9 percent in October to lead gains after weighing most on the benchmark index for the first nine months of the year. Financial stocks pared a rally for the month to a 3.4 percent gain.

     Royal Bank of Canada and Toronto-Dominion Bank sank at least 2.3 percent to lead lenders lower. A gauge of U.S. banks slumped 1.9 percent, the most in a month, as lenders from Wells Fargo & Co. to JPMorgan Chase & Co. face a $120 billion total shortfall of long-term debt under a Federal Reserve proposal aimed at ensuring their failure wouldn’t hurt the broader financial system.

     Data Friday showed Canada’s economy grew for a third month in August, increasing 0.1 percent led by manufacturing. Oil and gas extraction and retailing measures also rose. The third quarter may be a high point in a recovery from falling commodity prices, which the Bank of Canada said last week will take around the middle of 2017 to complete.

     “After the lows earlier in the year and highs of the June and July rebound, it was back to reality for the Canadian economy in August,” said Andrew Grantham, an economist at CIBC World Markets in a note to clients. “Given the lingering effects of the oil price shock in some areas of the country, that reality appears to be one of very modest growth.”

     Canada’s central bank has cut interest rates twice this year, to 0.5 percent, to spur growth in a flagging economy amid oil’s price collapse. Governor Stephen Poloz cut his growth forecasts for the next two years on Oct. 21 as weak investment by energy companies will restrain growth.

     Bombardier Inc. yesterday reported a $4.9 billion loss in part due to writedowns related to its oft-delayed CSeries jetliner. The aerospace company’s quarterly loss was the third- largest in Canada since the third quarter of 2007, according to data compiled by Bloomberg. Bombardier rebounded 3.7 percent.


By Joseph Ciolli

     (Bloomberg) — U.S. stocks faded late in October’s final session, paring the strongest monthly gain since 2011 as weaker- than-estimated quarterly results weighed on financial and consumer staples shares.

     The pace of the October advance leveled off since stocks on Wednesday pushed to their highest since August, capping a robust rally in a more stoic fashion. Energy and raw-material companies — two of the strongest groups since September — added to their gains in the month’s final session, with Exxon Mobil Corp. and Chevron Corp. rising after posting better-than-expected earnings.

     The S&P 500 declined 0.5 percent to 2,079.36 at 4 p.m. in New York, with the gauge up 8.3 percent this month. Stocks are also extended to five their longest streak of weekly advances this year. The Dow Jones Industrial Average lost 92.26 points, or 0.5 percent, to 17,663.54. The Nasdaq Composite Index fell 0.4 percent.

     “Recent Fed comments have been a little more hawkish, and we didn’t get further easing from the Bank of Japan,” said Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York. “It’s not like the market is falling out of bed, but when you combine that with how much we’ve been up lately, it gives us an excuse to pull back. We just had this huge rally — pulling back is normal and healthy.”

     Analysts project profits for S&P 500 members dropped 3.9 percent in the third quarter, improving from an estimated 6.1 percent decline a week ago, following better-than-forecast results from Chevron and Exxon Mobil. With about two-thirds of companies in the index finished with reporting this season, 75 percent have beaten profit projections, while only 44 percent have exceeded sales estimates.

     Genworth Financial Inc. lost 10 percent, the biggest drop in the S&P 500, after its profit missed analysts’ estimates. CVS Health Corp. sank as its outlook disappointed. LinkedIn Corp. jumped 11 percent as its revenue forecast topped projections, and AbbVie Inc. surged 10 percent after its earnings beat expectations. First Solar Inc., the biggest U.S. solar manufacturer, climbed 12 percent, the most in almost three months after third-quarter profit almost quadrupled.

     The S&P 500 has rebounded more than 11 percent from its August low, spurred by gains in energy and technology shares — the same groups that helped drag the index to its worst quarter since 2011. Both posted their strongest monthly increase in four years amid easing concern that weakness in China will spread.

     The Chicago Board Options Exchange Volatility Index rose 3.2 percent Friday to 15.07. The measure of market turbulence know as the VIX saw its steepest monthly retreat ever, down 39 percent, amid equities’ strong rebound from the weak third quarter.

     Central banks have dominated markets this month, with a weak U.S. jobs report jolting equities out of a summer swoon and sinking the dollar on speculation the Federal Reserve would keep interest rates pinned near zero into 2016. Persistent signs of weak global growth prompted the European Central Bank to hint at potential extra stimulus, while China unexpectedly cut its lending rate.

     Fed officials said this week that U.S. growth was moderate, and they will evaluate progress in the labor market and inflation readings when considering whether to raise rates at their next meeting in December. Traders have now shifted their bets on the likelihood of a December increase — pricing in a 50 percent chance of liftoff by year end, compared with as low as 30 percent last week.

     An earlier report today showed household spending rose less than forecast in September, with the smallest gain since January. Separate data showed wages and salaries rose in the third quarter at a faster pace, while another report showed consumer sentiment increased less than forecast in October as Americans viewed buying conditions as less favorable than they did earlier in the month.

     Five of the S&P 500’s 10 main industries fell today, with financial and consumer staples companies leading declines. Energy and utilities shares rose the most, with the energy group capping an 11 percent gain for the month, the most since October 2011.

     Financial companies in the benchmark gauge declined for the fourth time in five days. Genworth Financial, the insurer battered by losses on long-term care coverage, fell 10 percent after Chief Executive Officer Tom McInerney said there are limited options to simplify the company in the short term. KeyCorp led banks lower, falling 7.2 percent after agreeing to buy First Niagara Financial Group Inc. in a $4.1 billion cash- and-stock deal.

     The KBW Bank Index fell 1.9 percent, the most in a month. The largest U.S. banks would face a $120 billion total shortfall of long-term debt under a Federal Reserve proposal aimed at ensuring their failure wouldn’t hurt the broader financial system. Bank of America Corp. and Wells Fargo & Co. sank more than 1.7 percent.

     Consumer staples slid 1.1 percent. CVS, the biggest provider of prescription drugs in the U.S., fell 4.8 percent as 2016 guidance came in below consensus expectations. Colgate- Palmolive Co. lost 4.2 percent, the most since August, after reporting a quarterly profit that fell short of forecasts.

     The S&P 500 Technology Index slipped as Electronic Arts Inc. lost 5.3 percent, its biggest retreat in two months, even after the publisher of the Madden NFL video games delivered quarterly earnings that beat analysts’ estimates. Facebook Inc. declined 2.8 percent, the most in four weeks.

     Valeant Pharmaceuticals International Inc. tumbled 16 percent to its lowest since July 2013. The embattled drug maker failed to comfort investors after cutting ties with Philidor Rx Services, the closely-associated pharmacy Valeant has used to distribute its products and that’s under scrutiny for its business practices. Billionaire William Ackman also didn’t convince investors after spending four hours on a call Friday defending his outsize bet on Valeant.

     Geo Group Inc., a provider of correction, detention and community re-entry services, slipped 1.3 percent, paring a slide of as much as 4.2 percent, after a tweet from Democratic presidential candidate Hillary Clinton saying “we need to end private prisons.” Corrections Corp. of America lost as much as 6.2 percent before closing down 2.6 percent.

     Exxon Mobil and Chevron paced an advance among energy companies, with each rising more than 0.6 percent. Exxon’s profit beat estimates as soaring margins on processing oil into fuels blunted the impact of collapsing crude markets.

     Chevron was also boosted by its refining business, and said it’s cutting about 10 percent of its workforce while scaling back its long-term production target. Phillips 66, the largest U.S. refiner by market value, also exceeded analysts’ profit views, sending its shares up 3 percent to an all-time high.

     Expedia Inc. surged 7.3 percent to an all-time high, leading gains in consumer discretionary shares. The online travel site said it would realize more cost savings than originally projected from its $1.3 billion acquisition of Orbitz Worldwide Inc., and it also beat quarterly earnings estimates. TripAdvisor Inc. and Priceline Group Inc. added at least 2 percent.

     Utility companies gained as 10-year U.S. Treasury yields slipped 1.4 percent. Lower bond yields help the group’s dividend payout look more attractive to investors. The increase ended a five-day streak of declines for the index of power stocks, the longest since June.


Have a wonderful weekend everyone.


Be magnificent!

If a man does not of his own free will put himself last among his creatures,

there is no salvation for him.

Mahatma Gandhi

As ever,




A person’s greatest virtue is his ability to correct his mistakes

and continually make a new person of himself.

                                            -Wang Yangming, 1472-1529


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