February 6, 2023 Newsletter

Dear Friends,

Tangents: Happy Monday.
Full moon last night.

February 6, 1945 Reggae musician Bob Marley was born in St. Ann parish in Jamaica. Go to article » 
February 6^th, 1958: Eight Manchester United F.C. players and 15 other passengers are killed in the Munich air disaster.

Babe Ruth, b.1895.
ZsaZsa Gabor, b.1919.

Watch this dramatic ocean rescue: See the moment a huge wave pummels a boat during a Coast Guard rescue attempt in the Pacific Northwest.

8 possible alien ‘technosignatures’ detected around distant stars in new AI study.  Using a new machine-learning algorithm, scientists have picked up eight extraterrestrial signals that seem to bear the hallmarks of technology.   The research, published Jan. 30 in the journal Nature Astronomy, doesn’t claim to have really found proof of intelligent aliens; a brief follow-up search for the signals detected in the study turned up only silence. But the study authors say that using artificial intelligence is a promising way to search for extraterrestrial intelligence. Full Story: Live Science (2/3).

What did the ancient Egyptian pyramids look like when they were built?
The Egyptian pyramids erupting from the sands at Giza are a testament to human ingenuity and engineering. Raised to mark the tombs of ancient pharaohs, these great structures have stood for thousands of years.
But over the millennia, the pyramids have changed, largely due to construction workers’ repurposing of in-demand materials and looting. So what did the pyramids look like when they were built? Full Story: Live Science (2/5)

‘1-in-10-billion’ star system is doomed to explode in a fiery kilonova: For the first time, scientists have discovered a double-star system that is doomed to explode in a fiery “kilonova,” a precious-metal-creating blast caused by the merger of two stellar corpses.  The kilonova — which will send gold, silver, platinum and other new heavy elements careening into space — won’t happen for millions of years.  Full Story: Live Science (2/4)

Hidden tide in Earth’s magnetospheric ‘plasma ocean’ revealed in new study: The moon exerts a previously unknown tidal force on the “plasma ocean” surrounding Earth’s upper atmosphere, creating fluctuations that are similar to the tides in the oceans, a new study suggests.  Scientists used more than 40 years of data collected by satellites to track the minute changes in the shape of the plasmasphere, the inner region of Earth’s magnetosphere, which shields our planet from solar storms and other types of high-energy particles.  Full Story: Live Science (2/3)

17th-century Frenchwoman’s ‘innovative’ gold dental work was likely torturous to her teeth: An aristocratic woman at the height of French society at the turn of the 17th century preserved her alluring smile by having her teeth secured with gold wires — a painful procedure that may have made her condition worse.   The remains of the woman, Anne d’Alègre, who lived from 1565 until 1619, were discovered during archaeological excavations in 1988 at the Chateau de Laval in northwestern France. Full Story: Live Science (2/6)

A Henry VIII-era pendant was found using a metal detector. (h/t Ellen Kominers)

PHOTOS OF THE DAY

Chablais valaisan, Switzerland
The full moon sets behind the mountains, including the twin peaks of Les Jumelles
Photograph: Anthony Anex/EPA

Jilin, China
On the third day after the beginning of spring, Jilin City in Jilin province witnessed a rare natural spectacle of heavy fog, snowflakes, rime and sun gathering
Photograph: Sipa Asia/Rex/Shutterstock

Tynemouth, UK
People walk their dogs at sunrise along Tynemouth longsands
Photograph: Owen Humphreys/PA
Market Closes for February 6^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1808, the Milan Stock Exchange was established. It was first known as the Borsa Valori di Milano and is now called the Borsa Italiana
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.6% at 20,628.92 in Toronto.
The move follows the previous session’s increase of 0.1%.
Brookfield Corp. contributed the most to the index decline, decreasing 3.6%.
Osisko Mining Inc. had the largest drop, falling 10.5%.
Today, 174 of 236 shares fell, while 54 rose; 10 of 11 sectors were lower, led by financials stocks.
Insights
* The index declined 3% in the past 52 weeks. The MSCI AC Americas Index lost 9.2% in the same period
* The S&P/TSX Composite is 7.1% below its 52-week high on April 5, 2022 and 15.4% above its low on Oct. 13, 2022
* The S&P/TSX Composite is up 0.3% in the past 5 days and rose 4.1% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.5 on a trailing basis and 13.3 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.1% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.3t
* 30-day price volatility fell to 9.85% compared with 10.36% in the previous session and the average of 12.60% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -40.4153| -0.6| 7/22
Materials | -30.1063| -1.2| 8/39
Industrials | -17.6712| -0.7| 5/20
Information Technology | -16.2079| -1.2| 6/8
Consumer Discretionary | -7.5691| -1.0| 3/12
Energy | -7.3370| -0.2| 11/26
Real Estate | -7.2428| -1.3| 0/22
Consumer Staples | -1.6639| -0.2| 5/6
Health Care | -1.4839| -1.8| 0/6
Communication Services | -0.3451| 0.0| 3/3
Utilities | 0.6126| 0.1| 6/10
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Brookfield Corp | -17.9400| -3.6| 5.7| 14.4
Shopify | -13.0600| -2.2| -38.9| 47.5
TD Bank | -9.0190| -0.8| -15.5| 4.6
Fortis | 1.8840| 1.0| 8.1| 2.7
Waste Connections | 2.6810| 0.9| -31.0| -0.5
Bank of Montreal | 2.8160| 0.4| -18.2| 10.4
US
By Rita Nazareth
(Bloomberg) — Stocks gave back some of this year’s gains, with traders waiting to see if Jerome Powell will dampen the bullish reaction to his recent remarks amid bets the Federal Reserve will keep its firm grip on policy.
As equities came off overbought levels, Treasuries took a hit following the best start to a year for cross-asset returns since 1987.
The Fed’s boss will have an opportunity in an interview Tuesday to remind Wall Street that bets on rate cuts in 2023 are probably misplaced.
Fed funds futures show another 25 basis-point hike in March as a nearly done deal, while pegging a 75% chance of another one in May.
The odds for a June hike have also risen.
“Fed Chair Powell remains a big wild card every time he speaks,” said Chris Senyek at Wolfe Research. “Investors will be looking to see if he ‘walks back’ his very dovish tone from last Wednesday, particularly with respect to financial conditions and the US ‘disinflationary process.’ We still believe that the Fed will be ‘higher for longer’.”
Fed Bank of Atlanta President Raphael Bostic said January’s strong jobs report raises the possibility that the central bank will need to increase interest rates to a higher peak than policymakers had previously expected.
Geopolitical concerns also simmered on the background, with the US preparing to impose a 200% tariff on Russian-made aluminum and US-listed Chinese shares tumbling as Washington’s move to shoot down an alleged surveillance balloon from the Asian nation.
A rout in mega-caps like Apple Inc., Amazon.com Inc. and Google’s parent Alphabet Inc., which reported results last week, weighed on sentiment.
The group’s reality check came after the Nasdaq 100 approached bull-market territory.
Investors will continue to focus on earnings to figure out whether the recent rally was a “bear trap” driven by “fear of missing out,” noted Chris Larkin at E*Trade from Morgan Stanley.
“The major averages have become overbought after their strong January rallies,” said Matt Maley, chief market strategist at Miller Tabak + Co. “We are not trying to say that any short-term pullback will be followed by another strong
rally. In fact, we believe that a short-term pullback could — and probably will — turn into another leg lower in the bear market that began just over a year ago.”
JPMorgan Chase & Co. strategist Marko Kolanovic reiterated that stock investors should fade last week’s Fed-induced rally, arguing the US economy’s disinflationary process could just be “transitory.”
The S&P 500 now accurately reflects signs of better-than-expected economic growth and a drop in bond yields, according to Goldman Sachs Group Inc. strategists led by David Kostin.
At the same time, higher valuations, lackluster corporate earnings and elevated interest rates mean there’s little room for the rally to extend, they said, a view that was broadly echoed by their counterpart at Morgan Stanley, Michael Wilson.
To Solita Marcelli at UBS Global Wealth Management, the risk-reward trade-off for equities doesn’t look appealing.
She continues to recommend that equity investors position defensively and be prepared for additional volatility ahead.
“We remain bearish equities,” said Eric Johnston at Cantor Fitzgerald. “There has been a dramatic change in sentiment and positioning which has gotten much more bullish, making this a tailwind for our bearish view. And while this dramatic change has happened, the outlook for earnings, the Fed, and multiples is unchanged. All of the stock being bought now will just create that much more supply on the way down.”
Now with the path for further monetary tightening in focus, bond investors still broadly expect US inflation to ebb further.
The so-called breakeven rate on five-year five-year forwards — a proxy for inflation expectations — slumped to 2.18% on Friday from 2.31% a week prior.
It was little changed Monday.
A similar gauge for 10-year inflation-linked bonds, meantime, hovered near 2.25% Monday.
That compares to a recent peak of 2.6% in late-October, according to data compiled by Bloomberg.
Separately, a recent drop in the price of gasoline futures weighed on short-term breakevens.

“Amid the ongoing race between declining inflation and a flagging economy, every data set of positive news will soon be perceived as another barrier to recession,” said Silvercrest Asset Management’s Robert Teeter. “We look for continued improvements in inflation and a persevering economy to provide modest gains on the year, with portfolio performance subject to judicious stock selection.”
Meantime, the divergence between the Nasdaq 100 and 10-year Treasury yields is becoming extreme, which has been a negative signal for the index during the past 18 months, according to cross-asset sales trader Gurmit Kapoor. The tech-heavy benchmark has been particularly sensitive to the bond market, and has seen strong corrections during the past four occurrences when it decoupled from rates.
That doesn’t mean it’s all gloom and doom for tech stocks.
The share of investors willing to increase exposure to the industry over the next six months rose to 41% in the latest MLIV Pulse survey from 32% in September.
In corporate news, Dell Technologies Inc. is eliminating about 6,650 roles as it faces plummeting demand for personal computers, becoming the latest technology company to announce thousands of job cuts.
Tyson Foods Inc., the biggest US meat company, said fiscal first-quarter earnings plunged 70% from a year ago and missed expectations.
Elsewhere, the yen fell on the back of a Nikkei report that the Japanese government approached Bank of Japan Deputy Governor Masayoshi Amamiya about succeeding Haruhiko Kuroda at the helm of the central bank.
A selloff in emerging markets deepened, with currencies having their biggest two-day decline since March 2020.
Key events:
* US trade, Tuesday
* Fed Chair Jerome Powell interviewed by David Rubinstein at the Economic Club of Washington, Tuesday
* President Joe Biden delivers the State of the Union address before Congress, Tuesday
* US wholesale inventories, Wednesday
* New York Fed President John Williams is interviewed at Wall Street Journal live event, Wednesday
* US initial jobless claims, Thursday
* ECB President Christine Lagarde participates in EU leaders summit, Thursday
* Bank of England Governor Andrew Bailey appears before Treasury Committee, Thursday
* US University of Michigan consumer sentiment, Friday
* Fed’s Christopher Waller and Patrick Harker speak, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.6% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.9%
* The Dow Jones Industrial Average fell 0.1%
* The MSCI World index fell 1.1%
Currencies
* The Bloomberg Dollar Spot Index rose 0.6%
* The euro fell 0.6% to $1.0730
* The British pound fell 0.3% to $1.2024
* The Japanese yen fell 1.1% to 132.62 per dollar
Cryptocurrencies
* Bitcoin rose 0.5% to $23,008.57
* Ether rose 1.5% to $1,647.26
Bonds
* The yield on 10-year Treasuries advanced 11 basis points to 3.63%
* Germany’s 10-year yield advanced 10 basis points to 2.30%
* Britain’s 10-year yield advanced 19 basis points to 3.24%
Commodities
* West Texas Intermediate crude rose 1.4% to $74.41 a barrel
* Gold futures rose 0.3% to $1,881.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Vildana Hajric, Isabelle Lee and Michael Msika.
Have a lovely evening.

Be magnificent!
As ever,
Carolann

Choice of attention – to pay attention to this and ignore that – is to the inner life what choice of action is to the outer.
In both cases, a man is responsible for his choice and must accept the consequences. –W.H. Auden, 1907-1973.

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