February 10, 2023 Newsletter

Dear Friends,

Tangents: Happy Friday.  Super Bowl Sunday this weekend – exciting!
February 10, 1996: IBM supercomputer Deep Blue defeats Garry Kasparov at chess for the first time.
February 10, 1763: France ceded Canada to England under the Treaty of Paris, which ended the French and Indian War.  Go to article » 

You have one last chance to view the green comet this week, thanks to a close flyby with Mars: A rare green comet zipping by Earth for the first time since the Stone Age is about to pass right next to Mars this week, and the once-in-a-lifetime cosmic pairing could be visible through a simple pair of binoculars.
The comet, called C/2022 E3 (ZTF), will appear as a faint, fan-shaped smudge next to the Red Planet as it passes between the orbits of Earth and Mars on the evenings of Friday (Feb.10) and Saturday (Feb.11), according to EarthSky.org.  Full Story: Live Science (2/9)

The moon smells like gunpowder.

John Travolta recreates iconic ‘Grease’ routine.  The actor is channeling his beloved character Danny in a new Super Bowl ad.

Best pizza city in the USA?  If you ask me, it’s New York — without hesitation — and Chicago takes a very close second. However, the authors of “Modernist Pizza” surprisingly believe the best pies can be found on the West Coast.

‘Impossible’ new ring system discovered at the edge of the solar system, and scientists are baffled: Astronomers have discovered an entirely new ring system within the solar system, and it’s located at such a great distance from its dwarf planet parent that it should be impossible.  The ring surrounds Quaoar, which is around half the size of Pluto and located beyond Neptune. Full Story: Live Science (2/10)

Scientists reveal ‘invisible’ galaxy from the early universe, using space-time trick predicted by Einstein: Researchers have finally revealed the details of an extremely distant and dark galaxy that’s been nearly impossible to see — until now.  The young, star-forming galaxy is filled with dust and gas, and formed 2 billion years after the Big Bang, the researchers report — an era more than 11 billion years ago, when the universe was about one-sixth its current size. Full Story: Live Science (2/9)

PHOTOS OF THE DAY

Beijing, China
A plum tree blossoms as snow falls in the Xiangshui Lake scenic area
Photograph: VCG/Getty Images

Wenchuan county, China
A giant panda has a rest at the top of a tree in the Aba Tibetan and Qiang autonomous prefecture
Photograph: Rex/Shutterstock

The pristine US forest threatened by a pipeline – in pictures
The sun’s rays bathe the forest, which attracts more than 500,000 visitors a year. It was bought by German immigrant Isaac W Bernheim in 1929, who decided to dedicate it as a gift to the people of his new homeland
Photograph: Carla Rhodes
Market Closes for February 10^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1938  “Fannie Mae” was born, as the National Mortgage Association of Washington. Its mission: to buy and sell home mortgages insured by the Federal Housing Administration, to encourage lenders to continue making home loans.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite advanced slightly to 20,612.12 in Toronto.
The move follows the previous session’s decrease of 0.4%.
Enbridge Inc. contributed the most to the index gain, increasing 2.4%. Saputo Inc. had the largest increase, rising 5.3%.
Today, 90 of 236 shares rose, while 143 fell; 5 of 11 sectors were higher, led by energy stocks.
Insights
* So far this week, the index fell 0.7%, heading for the biggest decline since the week ended Dec. 16
* The index declined 4.3% in the past 52 weeks. The MSCI AC Americas Index lost 10% in the same period
* The S&P/TSX Composite is 7.2% below its 52-week high on April 5, 2022 and 15.3% above its low on Oct. 13, 2022
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.4 on a trailing basis and 13 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$3.27t
* 30-day price volatility fell to 8.43% compared with 8.70% in the previous session and the average of 11.91% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 71.8852| 2.0| 34/5
Industrials | 29.1396| 1.1| 12/14
Utilities | 10.2447| 1.2| 10/6
Consumer Staples | 8.2761| 1.0| 7/4
Communication Services | 1.8857| 0.2| 4/2
Health Care | -0.7616| -1.0| 1/5
Real Estate | -3.3037| -0.6| 6/17
Financials | -14.0235| -0.2| 10/19
Information Technology | -27.6580| -2.0| 1/12
Materials | -29.1230| -1.2| 4/45
Consumer Discretionary | -32.1945| -4.3| 1/14
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Enbridge | 17.4700| 2.4| 38.0| 2.3
Canadian Natural Resources | 12.3100| 2.0| 2.0| 7.6
Canadian National | 11.7200| 1.8| -4.6| -0.6
Brookfield Corp | -9.0710| -1.9| 41.2| 13.9
Shopify | -19.8800| -3.6| -33.0| 37.1
Magna Intl | -27.1800| -17.0| 403.9| -5.1
US
By Rita Nazareth
(Bloomberg) — The worst week in 2023 for the Treasury market saw investors coming to the grips with the idea that the Federal Reserve may indeed have to keep rates higher for longer as it wages a war against inflation.
Wall Street has recalibrated bets on the Fed’s peak rate to around 5.2%, from under 5% earlier this month, amid a barrage of hawkish remarks from US officials that followed a hot jobs print.
And that’s not all.
Traders who had been positioning for the central bank to hike only once more — in March —- are suddenly being confronted with wagers on at least three more rate increases.
That’s why Tuesday’s consumer price index is seen as a litmus test for the Fed’s ability to knock down inflation amid the most-aggressive tightening cycle in decades.
Core CPI will either point to the obvious need for the Fed to push further into restrictive territory or reflect the progress it’s made toward securing the anchor of inflation expectations, said Ian Lyngen at BMO Capital Markets.
“The new year’s bullishness has quickly faded as investors recalibrated forward expectations in the wake of the employment report,” Lyngen added. “As it presently stands, investors are biased for an upside surprise versus the consensus for core-CPI of +0.4% on a monthly basis.”
Treasury 10-year yields climbed to around 3.75%.
Interest-rate options activity Friday included a large, apparently new, position that will profit if the rate reaches 4% within a week’s time.
The rise in yields weighed heavily on the tech space, with the Nasdaq 100 underperforming major gauges.
The S&P 500 ended with a small gain Friday, but posted its worst week since December.
“It’s healthy to have these corrections along the way,” said Alec Young, chief investment strategist at MAPsignals.  “Expectations are much more realistic about the Fed.”

After an indiscriminate risk rally that defied Fed hawkishness, sober-minded traders are upping their hedging game at long last.
The cost of contracts protecting against a 10% decline in the largest exchange-traded fund tracking the S&P 500 is now 1.7 times more than options that profit from a 10% rally.
This so-called put-to-call skew is hovering at the highest level since August 2022, when a two-month rally abruptly reversed.
Meantime, global equity funds had outflows of $7.4 billion in the week through Feb. 8, according to a Bank of America Corp. note that cited EPFR Global data.
Cash funds also saw redemptions at $10.1 billion, while $7.4 billion entered bonds.
On the economic front, US consumer sentiment climbed to a more than one-year high in early February as more upbeat views of current conditions outweighed lingering concerns about the outlook.
In corporate news, Lyft Inc. tumbled the most on record after forecasting dramatically lower profits than expected and saying it will cut prices in an attempt to attract and keep customers.
Expedia Group Inc. executives gave an optimistic outlook for travel demand in the current quarter, reassuring investors after the company’s fourth-quarter results were weaker than expected.
America’s largest banks are unlikely to return share buybacks to prior levels anytime soon given tougher-than-usual Fed stress tests, according to Wells Fargo analyst Mike Mayo.
The assumptions in this year’s test, published by the Fed on Thursday, “seem tougher, and they are made so as the economy nears a recession,” he said.
Elsewhere, oil gained as Russia plans to cut its oil output by 500,000 barrels a day next month, following through on a threat to retaliate against western energy sanctions and sending oil prices sharply higher.
The yen strengthened as much as 1.4% against the dollar after news reports that Kazuo Ueda would be picked to become the Bank of Japan’s next governor.
Investors initially interpreted the decision as likely a hawkish choice.
Those gains were trimmed after Ueda spoke to reporters and said the BOJ’s stimulus should stay in place.
“Why do we care? Because the BOJ is locked into ultra-dovish policy,” said Chris Low at FHN Financial. “It is the only major central bank fighting to keep inflation high rather than trying to lower it. Now we’ll have to see how long he sticks to the old policy.”
Traders also kept an eye on the latest geopolitical developments.
US fighter jets shot down an object flying at 40,000 feet over Alaska after officials determined it “posed a reasonable threat to the safety of civilian flight,” according to National Security Council spokesman John Kirby.
The US is poised to add Chinese companies to an export blacklist over what the administration argues are links to a military-backed global balloon espionage program, according to people familiar with the matter.
Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.2% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.6%
* The Dow Jones Industrial Average rose 0.5%
* The MSCI World index fell 0.3%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro fell 0.6% to $1.0680
* The British pound fell 0.5% to $1.2055
* The Japanese yen rose 0.1% to 131.41 per dollar
Cryptocurrencies
* Bitcoin fell 0.6% to $21,726.05
* Ether fell 0.7% to $1,529.27
Bonds
* The yield on 10-year Treasuries advanced nine basis points to 3.74%
* Germany’s 10-year yield advanced six basis points to 2.36%
* Britain’s 10-year yield advanced 11 basis points to 3.40%
Commodities
* West Texas Intermediate crude rose 2.3% to $79.84 a barrel
* Gold futures fell 0.2% to $1,875.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Vildana Hajric, Isabelle Lee and Michael MacKenzie.

Have a wonderful weekend everyone.

Be magnificent!
As ever,

Carolann

There is no such thing as a minor lapse of integrity. –Tom Peters, b. 1942.

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