October 5, 2018 Newsletter

Dear Friends,

Tangents: Happy Thanksgiving! 

Samuel Johnson:  “As the Spanish proverb says, ‘He, who would bring home the wealth of the Indies, must carry the wealth of the Indies with him.’

James Boswell, The Life of Samuel Johnson

PHOTOS OF THE DAY

Women dressed in traditional attire display their decorated hands as they pose for pictures during rehearsals for Garba, a folk dance, ahead of Navratri, a festival during which devotees worship the Hindu goddess Durga and youths dance in traditional costumes, in Ahmedabad, India. CREDIT: AMIT DAVE/REUTER

With temperatures gradually dropping as autumn arrives, dawn sees a beautiful sunrise over the small coastal village of Instow in North Devon. CREDIT: TERRY MATTHEWS/ALAMY LIVE NEW

The west coast of southern Africa is pictured from the International Space Station by International Space Station Commander Alexander Gerst, who said: “Not many artists in this world are as creative as Mother Nature.” CREDIT: ALEXANDER GERST/AFP/GETTY IMAGES
Market Closes for October 5th, 2018

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Tatiana Darie
(Bloomberg) — Canadian stocks extended losses, alongside U.S. peers, to end the week lower amid a persistent selloff in bonds that took U.S. Treasury yields to seven-year highs.
     Canadian 10-year yields rose to the highest since 2014.  The S&P/TSX Composite Index fell 0.4 percent, with energy and tech shares leading the decline. Industrials, health care and utilities rose. Pot stocks were mixed after a Canadian government official said in a briefing that it’s still unclear whether investors in the Canadian marijuana industry will be denied entry into the U.S.
                                                   Stocks
* Ensign Energy Services Inc. fell 8 percent after Precision Drilling outbid it for Trinidad Drilling with a C$540 million ($417 million) deal; Raymond James analyst Andrew Bradford wrote that walking away from M&A may not be the best idea.
* Algonquin Power & Utilities Corp. fell 1 percent after NBF downgraded it to sector perform from outperform (PT $10.50 from $11).
* TransCanada Corporation rose 0.8 percent after FERC said in a filing that Columbia Gas Transmission can start service at an Ohio compressor station as part of its Mountaineer Xpress natgas pipeline.
                                                   Commodities
* Western Canada Select crude oil traded at a $45.00 discount to WTI
* Gold gained 0.5 percent to $1,207.00 an ounce
                                                   FX/Bonds 
* The Canadian dollar fell 0.2 percent at C$1.2947 per U.S. dollar* The Canada 10-year government bond yield gained 4.3 basis points to 2.595%
US
By Jeremy Herron and Vildana Hajric
(Bloomberg) — U.S. stocks capped the worst week in a month, as the selloff in Treasuries that took yields to seven-year highs persisted amid speculation the latest jobs report clears the path for raising interest rates.
    Technology shares led losses Friday, sending the Nasdaq 100 Index to a weekly drop of 3 percent amid concern the U.S.-China trade spat will intensify. Eight of 11 sectors declined in the S&P 500. Intel Corp. dropped the most in the Dow Jones Industrial Average after Bloomberg’s report on Chinese hacking. Stocks began the day higher after the employment data added to confidence in the strength of the American economy.
     Just a week after U.S. stocks plowed to fresh records, investors continued to sell the bull market’s biggest winners, ditching high-flyers from Amazon.com to Netflix. The tech rout is the latest blow for global stocks in a week that saw 10-year U.S. Treasury yields climb to seven-year highs, reducing demand for riskier assets. Fed Chairman Jerome Powell stoked the rates surge when he said the central bank could eventually boost its benchmark past the neutral level.
     “It’s more trade worries than anything else because these companies, they either sell a lot to China or produce a lot in China,” said Matt Maley, equity strategist at Miller Tabak + Co. “And we have the issue of the two naval boats in China, which raises it to more than just an economic issue — there’s political tensions there. And then of course there’s the hacking issue.”
     The 10-year bond yield pushed above 3.21 percent as the unemployment rate fell to a 48-year low, though the number of jobs created fell short of estimates. The dollar turned lower versus major peers. Gold futures rose, crude gained and the pound advanced.
     “The jobs report was nothing great — it was ok. Today we’re all over the place,” Donald Selkin, chief market strategist at Newbridge Securities, said. “It will be volatile, it will chop around in both directions. We’ll settle into a lower range until earnings start coming out towards the end of the month.”
     Treasuries resumed a slide as investors speculated the low unemployment rate and major upward revision to prior months would do little to deter the Fed from raising rates for a fourth time this year. The hiring figures were influenced by the hurricane that hit the Southeast last month, muddling the picture.
     “This is a report that’s consistent with being pretty close to full employment and it’s going to reinforce the Fed’s path for raising rates,” Alan Krueger, professor of economics at Princeton University, said on Bloomberg TV.
     Earlier, a rout in technology shares roiled Asian equity markets. PC maker Lenovo Group Ltd. plunged 15 percent in Hong Kong, amid Bloomberg’s report that China infiltrated U.S. companies by hacking hardware.
     In Europe, miners led the Stoxx 600 lower as industrial-metal prices fell and Danske Bank A/S headed for a four-year low. Germany’s 30-year bond was poised for its biggest one-week yield increase since April. Italian bonds also slipped as GDP forecasts failed to convince investors the country will be able to meet fiscal targets. 
     Elsewhere, West Texas Intermediate crude oil prices climbed back toward $75 a barrel. Copper led a decline in industrial-metal prices as a rally in raw materials stalled. Gold advanced, capping the best week in six for the precious metal.
These are the main moves in markets:
                                                 Stocks
* The S&P 500 fell 0.6 percent at 4 p.m. in New York. It’s down 0.9 percent in the week.
* The Nasdaq 100 Index dropped 1.2 percent, and was off 3 percent for the worst week since March.
* The Stoxx Europe 600 Index fell 0.9 percent to the lowest in three weeks. 
* The MSCI All-Country World Index declined 0.6 percent.
* The MSCI Emerging Market Index dipped 1 percent to the lowest since May 2017.
                                                 Currencies
* The Bloomberg Dollar Spot Index fell 0.2 percent. 
* The euro declined less than 0.1 percent to $1.1524. 
* The British pound climbed 0.7 percent to $1.3113. 
* The Japanese yen increased 0.2 percent to 113.753 per dollar.
                                                  Bonds
* The yield on 10-year Treasuries advanced four basis points to 3.2271 percent, the highest in more than seven years. 
* The two-year yield rose two basis points to 2.89 percent.
* Germany’s 10-year yield climbed four basis points to 0.57 percent, the highest in more than 19 weeks. 
* Italy’s 10-year yield jumped 10 basis points to 3.42 percent.
                                                  Commodities
* West Texas Intermediate crude was flat at 74.34 a barrel. 
* Gold futures increased 0.5 percent to $1,207.60 an ounce. 
* Copper fell 0.3 percent to $2.78 a pound, the lowest in more than two weeks.
–With assistance from Jeremy Herron, Sarah Ponczek, Robert Brand and Luke Kawa.

Have a wonderful weekend. 

Be magnificent!
As ever,

Carolann

 Feel the fear and do it anyway.
       –Susan Jeffers, 1938-2012

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Senior Investment Advisor

Queensbury Securities Inc.,
St. Andrew’s Square,
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7

Tel: 778.430.5808
(C): 250.881.0801
Toll Free: 1.877.430.5895
Fax: 778.430.5828
www.carolannsteinhoff.com