October 5, 2015 Newsletter

Dear Friends,

Tangents:

On Oct. 5, 2011, Apple co-founder Steve Jobs dies of complications from pancreatic cancer.  The movie Steve Jobs opens this week; people who were closest to him, including his wife, have apparently panned it as it supposedly describes him as insensitive and cruel.

Long-time Vancouver restaurateur Umberto Menghi, reopened Il Giardino a few months ago and we finally had  a chance to go on Saturday night.  Its on Hornby Street still but a different location.  The old Il Giardinowas opened for an astonishing 37 years before Umberto decided to shut it down 2 years ago.   We consoled ourselves by making his cannelloni out of the recipe book he published.  The new restaurant is Tuscan in style like its predecessor and has a lovely garden area in which to dine like the old Il Giardino.  And like the old one, it was humming with diners on Saturday night – packed.   Several of the old waiters have returned and Umberto was there on Saturday night greeting the patrons – very wonderful and nostalgic.  It is no doubt  destined to be one of Vancouver’s favorites again.

I took my Mom to the new Nordstrom’s in Vancouver yesterday to buy some new sweaters  – pretty nice store!  Great wine bar on the second floor, and we were joined by a few family members for lunch in their third floor restaurant.  The food was excellent and the views over Robson Street and Robson Square make for interesting people watching. 

 
On October 5, 1947, in the first televised White House address, President Truman asked Americans to refrain from eating meat on Tuesdays and poultry on Thursdays to help stockpile grain for starving people in Europe.

PHOTOS OF THE DAY

Shepherd Ben Blackmore stands with his sheep dog and flock of Exmoor Horn sheep in Savile Row, London, Britain on Monday. The Campaign for Wool marked the beginning of Britain’s national Wool Week on Monday, on one of London’s most renowned streets. Peter Nicholls/Reuters

People watch the sun set from the observatory deck of the Marina Bay Sands hotel in Singapore on Monday. The 3-hour haze Pollutant Standards Index (PSI) reached a high of 186 at 4pm on Monday, according to the National Environment Agency. Slash-and-burn agriculture in neighboring Indonesia has blanketed Singapore in a choking haze for weeks. Edgar Su/Reuters

Market Closes for October 5^th, 2015

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     (Bloomberg) — A rally in commodities from copper to oil sent Canadian stocks to a two-week high.

     Energy and raw-materials producers led a 1.6 percent gain in Canadian equities. Copper advanced a second day, while crude climbed past $46 a barrel in New York, lifting Canada’s resource-heavy benchmark index.

     The Standard & Poor’s/TSX Composite Index rose 212.46 points to 13,552.20 at 4 p.m. in Toronto, capping a Sept. 21 high. Canada joined a global rally in equities, as a weaker U.S. dollar spurred gains in commodities and emerging-nation assets.

     A disappointing U.S. jobs report last week fueled bets the Federal Reserve will keep interest rates pinned near zero into 2016. That prospect of continued stimulus boosted demand for risk assets such as commodities.

     Canada was among a dozen Pacific-rim that nations agreed to a historic pact that would cut trade barriers on items ranging from cars to rice. The Trans-Pacific Partnership, more than five years in the making, is designed to boost commerce among nations that produce 40 percent of global economic output.

     Teck Resources Ltd. jumped 9.6 percent and First Quantum Minerals Ltd. increased 18 percent to lead mining shares higher. Copper for delivery in three months gained 1.5 percent in London. Aluminum and tin also advanced.

     Canadian Oil Sands Ltd. surged a record 55 percent after Suncor Energy Inc. made an unsolicited offer to buy the company in an all-share deal for about C$4.3 billion. Under terms of the offer, Canadian Oil Sands shareholders would receive a quarter of a Suncor share, worth about C$8.84 a share based on Suncor’s closing price on Friday.

     Energy producers soared 4.6 percent as a group, the most in five weeks. MEG Energy Corp. surged 2 percent and Penn West Petroleum Ltd. rallied 22 percent as oil extended gains a second day after the number of rigs drilling in the U.S. slumped to a five-year low. Baytex Energy Corp. jumped 9.7 percent and Canadian Natural Resources Ltd. gained 8.1 percent.

     Potash Corp. of Saskatchewan Inc. increased 1.7 percent after the company walked away from its 7.85 billion-euro proposal to acquire German fertilizer producer K+S AG. Potash Corp. said significant declines in commodity and equity markets as well as a lack of engagement from K+S management led to the decision.

US

By Roxana Zega and Dani Burger

     (Bloomberg) — U.S. stocks climbed, with the Standard & Poor’s 500 Index posting its longest winning streak this year, on speculation that the worst has been priced into shares and growth in the economy will be strong enough to support corporate profits.

     Equities rallied as companies that benefit from a weaker dollar climbed. Disappointing employment data Friday pushed out expectations for an interest-rate increase by the Federal Reserve, sending the dollar lower which helps boost American multinational companies’ profits when their overseas earnings are converted back to the U.S. currency.

     Investors continued to target equities hardest hit during the third quarter, which was the worst for stocks since 2011. Energy companies in the S&P 500 added to their rebound from an 18 percent quarterly drop. Alcoa Inc. and Dow Chemical Co. gained at least 4.1 percent Monday to pace a climb in raw- materials. The Dow Jones Industrial Average reached a six-week high.

     “Pushing out interest rate hike expectations to next year has been critical,” said Michael Purves, chief global strategist at Weeden & Co in Greenwich, Connecticut. “Today is simply a response to oversold conditions.”

     The S&P 500 rose 1.8 percent to 1,987.05 at 4 p.m. in New York, and is up 5.6 percent since last Monday’s close. The Dow climbed 304.06 points, or 1.9 percent, to 16,776.43. The Russell 2000 Index increased 2.5 percent, the most in more than a month, and is 5.3 percent higher since ending its longest losing streak in nine years last week.

     Equities have see-sawed between gains and losses since August’s selloff, as investors wrestle with concerns about a slowing global economy and confusion over the Fed’s rate plans. The S&P 500 rallied 6.8 percent from its August low into last month’s Fed meeting, and then fell in seven of the next eight sessions before finishing the quarter down 6.9 percent.

     The odds of a Fed liftoff on rates this month have fallen to 10 percent since the weaker payroll report, and most futures traders don’t see an increase from near zero until at least March. The chance for a January increase was priced at about 45 percent, down from 52 percent before the September jobs report.

     Chances of a Fed rate increase aren’t the only things falling. After the S&P 500 plunged 10 percent in four days in August for the first correction since 2011, 12 of the 21 strategists surveyed by Bloomberg cut their year-end forecasts. The average prediction has dropped 4.1 percent to 2,142 since Aug. 10.

     To get to analysts’ average estimate, the S&P 500 would have to rally more than 7.8 percent between now and the end of the year. Such an advance during that period wouldn’t be a far cry from the average 6.4 percent rally that occurred over that stretch since 2009.

     Attention will shift to earnings this week, as investors look for further insight on how slowing global growth is affecting U.S. companies. Alcoa unofficially kicks off the latest reporting season after the markets close on Oct. 8.

     Analysts project earnings for S&P 500 members dropped 6.9 percent in the third quarter. Still, a Fed measure of corporate income has posted its biggest quarterly increase since 2012, suggesting the overall picture for profits may be skewed by downgrades at energy producers combating weak oil prices.

     Energy shares were among the strongest performers in the S&P 500’s 10 main industries Monday, rising 2.9 percent. Raw- material, industrial and phone companies added at least 2.6 percent. Health-care lagged as biotechnology shares slipped, with the Nasdaq Biotechnology Index down for the first time in four days.

     The Chicago Board Options Volatility Index fell 6.7 percent Monday to 19.54 amid its longest stretch of declines since July. The gauge known as the VIX closed below 20 for the first time since Aug. 20, ending its lengthiest run above that level since 2012. About 7.9 billion shares changed hands on U.S. exchanges, 7 percent above the three-month average.

     “Those people that wanted to sell have already sold by now, and now the market is coming up,” said Otto Waser, chief investment officer at R&A Research & Asset Management AG in Zurich. “Given the current market reaction, the correction seems to be over. The market should stabilize and either rally now or in the first quarter of next year. We’re looking at a very modest pace of rate increases anyway.”                     

     General Electric Co. rose 5.3 percent to a two-month high, helping to boost industrials after Nelson Peltz’s Trian Fund Management LP acquired a $2.5 billion stake in the company. “We invested in GE because it is undervalued and under-appreciated by the market despite what we believe is a transformation that will allow its world-class industrial businesses to drive attractive shareowner returns,” Peltz said in the statement.

     Consol Energy Inc., the worst-performer in the S&P 500 this year, climbed 9 percent to rank among today’s leaders in the benchmark index. Chesapeake Energy Corp. added 6.7 percent to trim its decline this year to 57 percent, the second-biggest drop within the energy group in 2015. Oil rose for a second day after the number of rigs drilling in the U.S. slumped to a five- year low, continuing a slowdown in crude production that promises to reduce a global glut.

     Capital-goods companies in the S&P 500 are up 6.7 percent since reaching an almost two-year low last Monday. United Rentals Inc. jumped 8 percent to lead the group, its biggest gain since July 2013. Deere & Co. rose 6.3 percent, the most in more than four years. Members of the United Auto Workers ratified a new six-year labor agreement with Deere.

     Endo International Plc lost 5.3 percent to weigh on the Nasdaq Biotech Index, after a three-day rally pushed shares up
17 percent. Incyte Corp. retreated 5.5 percent after soaring 33 percent over four days last week.

Have a wonderful evening everyone.

Be magnificent!

In Sanskrit, one calls the bird twice born.

And this name is also given to the man who submits for at least twelve years

to the discipline of mastering his self and the  noble thought, who emerges from it with simple needs,

with a pure heart, and ready to take upon himself all the responsibilities of life

in a broad and disinterested spirit.  One estimates that this man is born again from the blind envelopment

of the ego to the freedom of the life of the soul,

that he has entered into lively connection with his environment,

that he has become one with the Whole.

Rabindranath Tagore

As ever,

Carolann

The only sin is mediocrity.

   -Martha Graham, 1894-1991

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