August 24, 2023 Newsletter

Dear Friends,

Tangents: Happy Friday Eve.

Today is Schäferlauf, Shepherd’s Race, in Germany.

August 24, 79: Mont Vesuvius erupts, burying the Roman cities of Pompeii and Herculaneum under volcanic ash and preserving them for centuries.

August 24, 1981: Mark David Chapman was sentenced in New York to 20 years to life in prison for the murder of rock musician John Lennon.Go to article >>

Tropical rainforests could get too hot for photosynthesis and die if climate crisis continues, scientists warn.
Data collected by the International Space Station has revealed a small fraction of leaves in the world’s tropical rainforests are already exceeding peak temperatures. Read More

Vast Gothic cemetery brimming with grave goods and ornate silver jewelry discovered in Poland
Goths living in northern Poland between the first and fifth centuries were talented silversmiths and produced jewelry that was as high-quality as items from the Roman Empire. Read More.

India lands on moon! Chandrayaan-3 becomes world’s 1st spacecraft to land near lunar south pole
India landed its Chandrayaan-3 spacecraft near the moon’s south pole yesterday (Aug. 23), making history for the nation and for lunar exploration in general. Read More.

The human Y chromosome has finally been fully sequenced, 20 years after the 1st draft
One of the smallest chromosomes in humans, the male sex chromosome is the final one to be fully sequenced. Read More.

‘Polar bear capital of the world’ soon to be overrun with record number of bears due to shifting sea ice
The Canadian town of Churchill has already had more than four times as many polar bear visitors this year compared with the same time last year, and many more could soon be on the way. Read More.
PHOTOS OF THE DAY

Ludwigsburg, Germany
A sculpture depicting Fred Flintstone at a pumpkin exhibition in the garden of Ludwigsburg Castle.  Photograph: Thomas Kienzle/AFP/Getty Images

Northumberland, UK
Holy Island causeway forms the final stretch of the King Charles III England coast path. The new stretch connects Bamburgh with the Scottish border, completing a continuous path between Bridlington in the East Riding of Yorkshire and the Scottish border, a distance of 245 miles (395km). It is the latest part of the 2,700-mile national trail to be opened and the longest section so far.
Photograph: Owen Humphreys/PA

British Columbia, Canada
Figurines among the ashes of a home after the Bush Creek wildfire destroyed dozens of homes and other buildings in Scotch Creek, Lee Creek and Celista in the North Shuswap Lake region.
Photograph: Jesse Winter/Reuters
Market Closes for August 24^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1927, Harry M. Markowitz was born in Chicago. Markowitz in the early 1950s devised the intricate mathematics that proved the value of diversification, laying the groundwork for modern portfolio theory. He shared the Nobel Prize in economics in 1990 for his work.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.5% at 19,775.83 in Toronto.
The move was the biggest since falling 1.9% on Aug. 15 and follows the previous session’s increase of 1%.
Toronto-Dominion Bank contributed the most to the index decline, decreasing 3.2%.
Tilray Brands Inc. had the largest drop, falling 9.2%.
Today, 162 of 227 shares fell, while 59 rose; 9 of 11 sectors were lower, led by energy stocks.
Insights
* This month, the index fell 4.1%
* So far this week, the index was little changed
* The index declined 1.2% in the past 52 weeks. The MSCI AC Americas Index gained 5% in the same period
* The S&P/TSX Composite is 5.1% below its 52-week high on Feb. 2, 2023 and 10.6% above its low on Oct. 13, 2022
* The S&P/TSX Composite is little changed in the past 5 days and fell 3.9% in the past 30 days
* The index’s dividend yield is 3.4% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.14t
* 30-day price volatility fell to 10.46% compared with 10.88% in the previous session and the average of 10.72% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -31.9866| -0.9| 4/36
Industrials | -25.3998| -0.9| 6/20
Information Technology | -24.0373| -1.6| 2/9
Materials | -14.7525| -0.6| 14/33
Financials | -12.7271| -0.2| 11/18
Consumer Discretionary | -7.6952| -1.1| 0/13
Utilities | -3.1218| -0.4| 4/11
Real Estate | -2.9441| -0.6| 3/18
Health Care | -1.7373| -2.9| 0/4
Consumer Staples | 7.8958| 0.9| 10/0
Communication Services | 12.5668| 1.7| 5/0
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
TD Bank | -34.4700| -3.2| 59.2| -8.0
Shopify | -12.6800| -2.0| -22.5| 60.2
Canadian Natural Resources | -7.9050| -1.3| -16.1| 8.5
Couche-Tard | 6.3470| 1.7| 60.1| 19.1
BCE | 8.5560| 2.4| 124.9| -5.5
RBC | 22.9700| 2.0| -29.4| -3.7
US
By Rita Nazareth
(Bloomberg) — A rally in big tech fizzled out as bond yields rose, with traders wading through remarks from a slew of Federal Reserve officials and awaiting Jerome Powell’s speech on Friday for clues on the outlook for interest rates.
The S&P 500 dropped more than 1%, while the Nasdaq 100 fell twice as much.
Treasury two-year yields, which are more sensitive to imminent policy moves, hovered near 5%.
The mega-cap space came under pressure, with Tesla Inc. and Apple Inc. each dropping at least 2.6%.
Nvidia Corp., the company at the forefront of the artificial-intelligence race, almost wiped out a rally that topped 6%.
“It’s sort of like sell the news,” said Max Wasserman, founder of Miramar Capital. “Nvidia had great numbers, blow-away numbers, but the market already reflected that. Investors may be realizing that we’ve had such a big run in the market, so let’s take a little profit before the Fed throws cold water on it. And if it doesn’t, they’ll come right back in.”
Traders are keeping a close eye on the annual gathering of top central bankers in Jackson Hole, Wyoming — where Powell is scheduled to deliver a speech at 10:05 a.m. Washington time Friday.
The Fed chief will likely use his platform to outline how officials will assess whether rates should go higher and determine when it’s time to start cutting them.
A survey conducted by 22V Research shows that 78% of investors expect Powell to focus on data dependency.
The next most-popular choice was financial conditions, which received 12% of votes.
Only 21% of investors expect the market reaction to be “risk-off”, 43% bet it will be mixed or negligible and 37% are expecting a “risk-on” response.
“If Powell focuses on data dependency, that ought to help 10-year yields stabilize,” said Dennis DeBusschere, founder of the New York-based research firm.
That would also provide a “tailwind” to the growth-versus-value trade, he noted.

Another topic that has surfaced on Wall Street over the past few days is whether Powell will address the abstract, almost elusive number that many refer to as r-star.
That’s a sort of “goldilocks” rate that neither stimulates nor restricts economic growth.
Former Treasury Secretary Larry Summers and Bill Dudley, previously the New York Fed chief, are among those who have said markets are still underestimating the so-called neutral interest-rate.
Any hint at an upward revision would likely ripple across global markets, forcing a reevaluation on where the fair value for Treasury yields is likely to land.
Yet Krishna Guha at Evercore ISI said Powell will likely focus on the short-to-medium-term outlook — and avoid making a call on the r-star.
“Expect a balanced assessment with no abrupt hawkishness, but no ‘Mission Accomplished’,” Guha added. “The Fed has not come this far to let inflation slip out of its grasp.”
In the run-up to Powell’s address, Fed Bank of Boston President Susan Collins told Yahoo! Finance that rate increases may be necessary, adding that she wasn’t prepared to signal the peak point.
Meantime, her Philadelphia counterpart Patrick Harker sees interest rates on hold for the rest of this year, and thinks policymakers have likely undertaken sufficient tightening, telling CNBC that “we’ve probably done enough.”
Speaking earlier in an interview on Bloomberg Television, former St. Louis Fed President James Bullard said a pickup in economic activity this summer could delay plans for the Fed to wrap up interest-rate increases.

* Andrew Brenner, head of international fixed income at NatAlliance Securities:
“The question is whether we see the Powell ‘higher for longer’ or the Powell ‘being defensive on rate cuts’. Not sure how much there is of a difference, but markets will move in the direction that hurts the biggest positions.”
* Jose Torres, senior economist at Interactive Brokers:
“Market players are cautiously awaiting tomorrow’s Jackson Hole presentation, while praying that the event doesn’t act as a deja vu by sparking volatility. During last year’s Jackson Hole meeting, Powell increased his emphasis on fighting inflation and opined that below-trend economic growth is needed to curtail price gains. The presentation is clearly on everyone’s mind.  Excitement about Nvidia’s earnings quickly tilted to a focus on the potential of a hawkish Powell.”
* Max Wasserman, founder of Miramar Capital:
“Regardless of what the Fed says, we know they’re roughly at the eighth or ninth inning of a ball game in raising interest rates. They’re near the end of it. But when the market’s valued at this level, this richly, a little noise can knock something
down.”
* Jim Baird, chief investment officer at Plante Moran Financial Advisors:
“In the context of the Fed’s dual mandate, the combination of elevated inflation and full employment continues to justify a bias toward tight monetary policy. How tight is tight enough?  All eyes are now on Jackson Hole for greater clarity on that point.”
* John Vail, chief global strategist at Nikko Asset Management:
“I had thought Powell would be quite hawkish, but after the weak PMIs yesterday, he may be less so, but still will likely express concerns about inflation not falling fast enough and that the market should not expect any cuts through at least the first part of 2024.”

Corporate Highlights
* Boeing Co. and its biggest supplier, Spirit AeroSystems Holdings Inc., fell after the plane-maker disclosed improperly drilled holes in a component that helps maintain cabin pressure within the 737 Max jet.
* Snowflake Inc. sank after giving a sales outlook for the current quarter in line with expectations, suggesting that companies are still cautious about expanding their cloud software budgets.
* Dollar Tree Inc. slipped as its earnings forecast fell short of analyst estimates as the company contends with challenges such as higher wages and a less profitable sales mix, one year after introducing a higher price point.
* T-Mobile USA Inc. is cutting 7% of its staff, part of an effort to rein in costs as the company spends heavily to attract new subscribers in an increasingly competitive market.
Key events this week:
* Japan Tokyo CPI, Friday
* US University of Michigan consumer sentiment, Friday
* Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 1.3% as of 4 p.m. New York time
* The Nasdaq 100 fell 2.2%
* The Dow Jones Industrial Average fell 1.1%
* The MSCI World index fell 0.9%
Currencies
* The Bloomberg Dollar Spot Index rose 0.4%
* The euro fell 0.5% to $1.0805
* The British pound fell 1% to $1.2594
* The Japanese yen fell 0.7% to 145.86 per dollar
Cryptocurrencies
* Bitcoin fell 2.1% to $26,042.57
* Ether fell 2% to $1,650.27
Bonds
* The yield on 10-year Treasuries advanced five basis points to  4.2%
* Germany’s 10-year yield was little changed at 2.51%
* Britain’s 10-year yield declined four basis points to 4.43%
Commodities
* West Texas Intermediate crude was little changed
* Gold futures fell 0.1% to $1,945.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson, John Viljoen, Namitha Jagadeesh, Sagarika Jaisinghani, Vildana Hajric and Isabelle Lee.
Have a lovely evening.

Be magnificent!

As ever,

Carolann
Moral indignation is jealousy with a halo. –H.G. Wells, 1866-1946.

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