April 11, 2023 Newsletter

Dear Friends,

Tangents:
April 11, 1900: The US Navy acquires its first submarine, designed by Irish immigrant John P. Holland.  Propelled by gasoline while on the surface and by electricity when submerged, the Holland served as a model for modern submarine design.
April 11, 1945 American soldiers liberated the Buchenwald concentration camp in Germany. Go to article >
1968: Civil Rights Act signed into law.

Solving the mystery of Australian “fairy circles.” (h/t Scott Duke Kominers)
Water is wealth.

‘Hidden’ rings of Uranus revealed in dazzling new James Webb telescope images.  Astronomers using the James Webb Space Telescope (JWST) have zoomed in on the faint and dusty rings around Uranus — and they are magnificent.  Uranus is not often thought of as a ringed world, mainly because the icy planet is far too distant and faint to be seen from Earth with the naked eye.
Full Story: Live Science (4/10)

Mysterious ‘cryptic’ molecules made by zombie cells may drive aging, scientists say
“Zombie cells” that lurk in the body and contribute to age-related diseases make small, strange molecules not seen in normal cells.
The exact function of these “cryptic” molecules remains a mystery, but now, scientists think they may know why zombies build them in the first place.  Full Story: Live Science (4/10)

‘Star Wars’ gets ready to celebrate (finally) a return to the movies.  Before you get your hopes up, a new movie about that far-away galaxy is not in the works. But, Disney is planning a 40th-anniversary release of “Return of the Jedi” for those interested in seeing the classic in theaters again.

PHOTOS OF THE DAY

Kamchatka, Russia
A house and car covered in volcanic dust following the eruption of Shiveluch volcano
Photograph: Institute Of Volcanology And Seismology/Reuters

The week in wildlife
A duck and ducklings on a sunny spring day in St James’s Park in London
Photograph: Xinhua/Rex/Shutterstock

The week in wildlife
A blue tit sits on a fence in a garden in south-west London
Photograph: Wiktor Szymanowicz/Rex/Shutterstock
Market Closes for April 11^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1792 emerged one of the earliest narratives of a U.S. stock market crash. Henrietta M. Colden, a leading New York investor, wrote: “The most opulent men in this City are wholly ruined….The Speculators are daily boxing in the Streets, Cursing and abusing each other like pick pockets, & trying every fraud to prey on each others distresses.”
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the third day, climbing 0.7%, or 146.03 to 20,421.85 in Toronto.
The move was the biggest since rising 0.9% on April 3.
Toronto-Dominion Bank contributed the most to the index gain, increasing 1.6%. First Quantum Minerals Ltd. had the largest increase, rising 6.0%.
Today, 193 of 232 shares rose, while 37 fell; 9 of 11 sectors were higher, led by energy stocks.
Insights
* The index declined 6.3% in the past 52 weeks. The MSCI AC Americas Index lost 7.9% in the same period
* The S&P/TSX Composite is 7.5% below its 52-week high on April 21, 2022 and 14.3% above its low on Oct. 13, 2022
* The S&P/TSX Composite is up 0.7% in the past 5 days and rose 3.3% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.3 on a trailing basis and 13.5 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$3.24t
* 30-day price volatility rose to 12.87% compared with 12.70% in the previous session and the average of 11.98% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 37.7690| 1.1| 32/6
Financials | 36.5853| 0.6| 23/6
Materials | 34.5185| 1.3| 44/6
Industrials | 17.2302| 0.6| 22/5
Utilities | 9.0775| 1.0| 14/2
Consumer Discretionary | 5.8730| 0.8| 15/0
Consumer Staples | 4.6447| 0.5| 10/1
Real Estate | 3.2884| 0.7| 17/4
Communication Services | 1.4453| 0.2| 3/2
Health Care | -1.0624| -1.6| 4/2
Information Technology | -3.3309| -0.3| 9/3
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
TD Bank | 16.5900| 1.6| 26.7| -7.3
Nutrien | 9.2560| 2.7| -24.0| -0.2
Enbridge | 8.4450| 1.1| -16.2| 0.9
National Bank of | | | |
Canada | -1.5240| -0.7| -63.1| 6.4
Thomson Reuters | -2.1120| -1.1| -23.8| 12.5
Shopify | -7.5630| -1.5| -10.3| 28.3
US
By Carly Wanna and Emily Graffeo
(Bloomberg) — US stocks lacked conviction, trading in a narrow range as investors braced for inflation data that could signal if the Federal Reserve will once again lift interest-rates.
The tech-heavy Nasdaq 100 slumped 0.7%, sliding for the fifth session of the past six, as traders mulled the likelihood of another rate increase in May.
The S&P 500 skidded in the final minutes of the session reversing a 0.4% gain to end the day little changed. This year’s outperformers — namely mega-cap tech stocks — weighed on the benchmark.
Yields on US government notes rose with the policy-sensitive two-year at 4.03%.
Cracks in 2023’s equity advance are appearing, as hedge funds and other speculators amass the deepest short position since November 2011 when the US sovereign credit rating was cut.
Bank of America Corp. data showed investors were selling US stocks across the board for the past two weeks as investors position ahead of Wednesday’s closely watched inflation print.
“If inflation runs hotter than expected, it’ll undermine the idea that the Fed will be cutting rates aggressively by year-end, and that will leave markets susceptible to a pullback,” Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter wrote.
Friday will also kick off what’s forecast to be the worst earnings season since the depths of the pandemic crisis as some of the biggest banks in the US report.
Alicia Levine, head of investment strategy and equity advisory solutions at BNY Mellon Wealth Management, told Bloomberg Television that “earnings have to move lower.”
“Earnings estimates have barely budged in the last five weeks,” Levine said. ”That doesn’t really pass the reality test.”
The Fed appears on track to keep raising rates despite recent bank strains, with resilient labor markets and higher oil prices holding sway for policymakers focused on their price-stability mandate.
Markets are pricing in a strong likelihood the Fed will raise borrowing by a quarter-point May 3 to contain inflation, after US payrolls rose at a firm pace last month and the unemployment rate dropped. Wednesday’s report on consumer prices, expected to show a 0.4% monthly increase in the core consumer price index, could cement the Fed’s rate path.
A scenario where the central bank halts rate hikes in May, which markets had briefly entertained last month as fragility in banks raised recession fears, looks increasingly remote.
After May, though, swaps are pricing in a pivot to easier policy.
Traders predict rates will peak around 5%, with the Fed  then cutting by roughly 50 basis points before the end of 2023.
New York Fed President John Williams said that one more increase to the target rate was a “reasonable starting place,” on Tuesday.
The central bank’s newest member, Chicago Fed President Austan Goolsbee, counseled “prudence and patience” on monetary policy though he stopped short of calling for the government agency to pause.
“The Fed mantra has been once we get to the terminal rate, and that’s where the data dependency moves things around, but once we get to the terminal rate, we’re staying there for a while,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.
“If the bond market is right, then the equity market probably has not fully reflected those recession-type conditions to likely hit earnings beyond what we’ve already seen,” Sonders said in a phone call. “This idea that the Fed cannot just pause but pivot, and that’s great for the stock market, to me that doesn’t make sense.”
For now, some asset managers say markets could be range-bound as the chances of an upcoming economic slump are weighed.
“We’re focusing on three areas to determine if the baton passes from rate hikes to recession,” said Saira Malik, chief investment officer at Nuveen pointing to the upcoming inflation report, a potential pause in rate increases after May, as well as recent recession indicators, including manufacturing and jobs data. “Even though the Fed may pause, we’re not in the camp that we will see rate cuts in 2023.”
Meanwhile, the International Monetary Fund trimmed its global growth forecasts citing the recent banking sector turmoil and Russia’s invasion of Ukraine.
Bitcoin advanced for the fourth day, blowing past the key $30,000 level for the first time in ten months.
Oil gained, with West Texas Intermediate trading above $80 a barrel.
Gold rose to trade around $2,000 an ounce while the dollar fell.
Key events this week:
* Minneapolis Fed’s Neel Kashkari and Philadelphia Fed’s Patrick Harker speak at separate events, Tuesday
* Canada rate decision, Wednesday
* US FOMC minutes, CPI, Wednesday
* Richmond Fed’s Thomas Barkin speaks, Wednesday
* China trade, Thursday
* US PPI, initial jobless claim, Thursday
* US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
* Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday

Some of the main market moves:
Stocks
* The S&P 500 was little changed as of 4:00 p.m. New York time
* The Nasdaq 100 fell 0.7%
* The Dow Jones Industrial Average rose 0.3%
* The MSCI World index rose 0.4%
Currencies
* The Bloomberg Dollar Spot Index fell 0.2%
* The euro rose 0.5% to $1.0914
* The British pound rose 0.4% to $1.2427
* The Japanese yen was little changed at 133.70 per dollar
Cryptocurrencies
* Bitcoin rose 3.3% to $30,102.75
* Ether rose 0.4% to $1,893.2
Bonds
* The yield on 10-year Treasuries advanced one basis point to 3.43%
* Germany’s 10-year yield advanced 13 basis points to 2.31%
* Britain’s 10-year yield advanced 11 basis points to 3.54%
Commodities
* West Texas Intermediate crude rose 2.2% to $81.46 a barrel
* Gold futures rose 0.8% to $2,019.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Vildana Hajric and Lu Wang.
Have a lovely evening.

Be magnificent!

As ever,

Carolann
In the hour of adversity be not without hope, for crystal rain falls from black clouds. –Nizami Ganjavi, c.1141-1209.

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