December 9, 2022 Newsletter

Dear Friends,

Tangents: Happy Friday.
December 9, 1868: the world’s first traffic light was erected near Westminster Bridge in London; however, it was removed a month later after a gas leak caused one of the lights to explode.

2002 United Airlines filed the biggest bankruptcy in aviation history after losing $4 billion in the previous two years.  Go to article »

Full crew for SpaceX’s privately funded moon mission announced.  A Japanese fashion mogul has invited DJ Steve Aoki and seven other lucky people to join him on a trip around the moon — free of charge.

Gold-and-garnet cross necklace found buried with wealthy medieval British woman: Archaeologists in England have unearthed medieval bling — an elaborate silver cross with human faces and a necklace made of gold with semiprecious gems and Roman coin pendants — in the grave of what might be an early female Christian leader, such as an abbess or potentially even royalty.  The team made the discovery during the ground breaking for a housing development in Northamptonshire, England. Full Story: Live Science (12/8)

How did the Milky Way form?  The exact origins of the Milky Way are shrouded in mystery. But astronomers believe that our home galaxy started out more than 13 billion years ago, and that it was much smaller than its present-day size.  How did it grow so much to reach its current size? For that, we can likely thank eons of galactic cannibalism.  Full Story: Live Science (12/8)

PHOTOS OF THE DAY

Shenyang, China
A winter swimming enthusiast in a partly frozen lake after snowfall at Shenyang, in north-eastern China’s Liaoning province
Photograph: AFP/Getty Images

Lyon, France
A projection at La Place des Terreaux during the city’s festival of light
Photograph: Yannis Vlamos/Sipa/Rex/Shutterstock

Consett, UK
The sun rises over the snowy County Durham town as a cold snap grips the country
Photograph: Owen Humphreys/PA
Market Closes for December 9^th, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1906, Grace Murray Hopper (nee’ Grace Brewster Murray) was born in New York City. She invented the COBOL computer language, one of the first software programs enabling computers to be used by non-mathematicians. She also coined the term “bug” for an electronic glitch when, in 1945, she captured a moth that had been fluttering around inside a computer and causing electrical relays to fail.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the sixth day, dropping 0.1%, or 22.12 to 19,947.07 in Toronto.
The index dropped to the lowest closing level since Nov. 17.
Canadian Pacific Railway Ltd. contributed the most to the index decline, decreasing 1.2%.
OceanaGold Corp. had the largest drop, falling 6.5%.
Today, 122 of 236 shares fell, while 105 rose; 8 of 11 sectors were lower, led by energy stocks.
Insights
* This year, the index fell 6%, poised for the worst year since 2018
* This quarter, the index rose 8.1%, heading for the biggest advance since the second quarter of 2020
* So far this week, the index fell 2.6%, heading for the biggest decline since the week ended Sept. 23
* The index declined 4.7% in the past 52 weeks. The MSCI AC Americas Index lost 17% in the same period
* The S&P/TSX Composite is 10.2% below its 52-week high on April 5, 2022 and 11.6% above its low on Oct. 13, 2022
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.2 on a trailing basis and 12.6 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.2% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.18t
* 30-day price volatility fell to 15.19% compared with 15.21% in the previous session and the average of 17.25% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -18.5168| -0.5| 10/25
Industrials | -11.6355| -0.4| 14/12
Materials | -8.7389| -0.4| 14/35
Consumer Discretionary | -7.1748| -1.0| 3/10
Communication Services | -1.4263| -0.1| 1/6
Health Care | -0.7798| -0.9| 3/4
Real Estate | -0.3921| -0.1| 14/7
Consumer Staples | -0.2422| 0.0| 7/4
Utilities | 2.9751| 0.3| 10/6
Information Technology | 4.5465| 0.4| 9/5
Financials | 19.2710| 0.3| 20/8
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Canadian Pacific | -8.1310| -1.2| -29.6| 18.5
Dollarama | -6.0710| -3.6| -25.3| 30.2
Canadian National | -4.7500| -0.7| 13.7| 9.4
Nutrien | 3.6730| 1.0| -16.8| 10.2
Bank of Nova Scotia| 4.2710| 0.8| -34.9| -23.3
TD Bank | 8.2100| 0.7| 5.5| -6.6
US
By Rita Nazareth
(Bloomberg) — Stock traders took risk off the table at the end of a week that saw recession fears resurface and a hotter-than-estimated inflation print with the Federal Reserve decision just around the corner.
A late-day slide in equities shattered the calm that prevailed throughout most of the trading session, with the S&P 500 closing near Friday’s lows.
The Dow Jones Industrial Average notched its worst weekly drop since September.
Treasury 10-year yields climbed, approaching 3.6%.
In the run-up to the Fed meeting, all eyes will be on Tuesday’s consumer inflation data — which is forecast to show prices, while much too high, continued to decelerate.
Swaps signaled bets policymakers will raise rates by 50 basis points Wednesday after four straight 75 basis-point hikes.
Officials including Chair Jerome Powell have been indicating a downshift, while stressing borrowing costs will need to remain restrictive for some time to beat inflation.
“Bottom line: the Fed has already come to terms with the fact that they are likely risking a recession, to anchor inflation longer-term,” said Don Rissmiller at Strategas. “The job is not done. Rate hikes can likely slow down to 50 bp, but we are still looking at policy tightening (and staying tight) in 2023.”
Financial conditions have eased dramatically since the October consumer-price reading, so the Fed will likely use the December meeting to walk those back, according to Cliff Hodge at Cornerstone Wealth.
The most straightforward way to do so would be the Summary of Economic Projections — specifically the so-called dot plot, he noted.
“We think the markets are too sanguine on rates after the first quarter, and we expect Powell to take a more hawkish tone and for the dots to indicate higher rates for a longer period of time than what is currently being priced in by the futures markets,” Hodge said. “A ‘hawkish’ step-down so to say.”

The Fed is set to keep rates at their peak throughout 2023, dashing hopes markets have priced in for rate cuts in the second half, according to economists surveyed by Bloomberg.
The Federal Open Market Committee’s median projection is expected to show the benchmark peaking at 4.9% in 2023 — reflecting a 4.75%-5% target range — compared to 4.6% seen in September.
That would deliver a hawkish surprise to investors — who currently bet rates will be cut by a half percentage point in the second half of next year, though they too see rates peaking around 4.9%.
The current range is between 3.75% and 4%.
While many investors are impatient for the Fed to deliver its last rate hike, history shows they should be wary of doing so while inflation remains elevated, according to Bank of America Corp. strategists.
An analysis by Michael Hartnett showed that stocks outperformed after the Fed stopped increasing rates during periods of disinflation in the past 30 years.
However, during the era of high inflation in the 1970s and 1980s, equities had fallen after the last hike, they wrote. In the current cycle, they expect the Fed to raise rates for the last time in March 2023.
After analyzing 15 economic downturns going back to 1929, strategists at Bloomberg Intelligence found a strong link between the length of recessions and the time it took the S&P 500 to reclaim its previous high.
In all instances, it’s taken the gauge about 386 days to reach the bottom and 573 days to recover to peak levels.
But if the bottoming process took longer than average, the road to reclaim a previous peak has then lasted 1,997 days, six times the length of the ascents that came after a quicker-than-average bottoming process.
Stocks might be on track for their worst returns since the global financial crisis, but the market has endured the most daily routs in almost five decades, according to data compiled by Bloomberg as of Wednesday’s close.
Those selloffs are calculated by a so-called hit ratio that measures the number of gains versus losses as a percentage of the total number of trading days.
That ratio stands at 43%, the S&P 500’s lowest since 1974.
An annual hit ratio lower than 50% has only been seen 10 other times in the past 48 years, and the recovery has been painfully slow in most cases.
Still, some of the world’s biggest investors predict that stocks will see low double-digit gains next year.
Seventy one percent of respondents in a Bloomberg News survey expect equities to rise, versus 19% forecasting declines.
For those seeing gains, the average response was a 10% return.
Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.7% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.6%
* The Dow Jones Industrial Average fell 0.9%
* The MSCI World index fell 0.2%
Currencies
* The Bloomberg Dollar Spot Index rose 0.1%
* The euro fell 0.2% to $1.0530
* The British pound rose 0.2% to $1.2255
* The Japanese yen was little changed at 136.71 per dollar
Cryptocurrencies
* Bitcoin fell 0.5% to $17,099.03
* Ether fell 1.3% to $1,261.63
Bonds
* The yield on 10-year Treasuries advanced 10 basis points to 3.58%
* Germany’s 10-year yield advanced 11 basis points to 1.93%
* Britain’s 10-year yield advanced nine basis points to 3.18%
Commodities
* West Texas Intermediate crude was little changed
* Gold futures rose 0.3% to $1,807.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Elena Popina

Have a wonderful weekend everyone.

Be magnificent!
As ever,

Carolann

Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity. –Dr. Martin Luther King Jr., 1929-1968.

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