November 9, 2023, Newsletter

Dear Friends,

Tangents: Happy Friday Eve.

November 9^th:
1520: Height of Stockholm Bloodbath – King Christian II of Denmark, Norway and Sweden executes Swedish nobles.
1938: Kristallnacht, “Crystal Night”, pogrom against Jews in Germany.
1965: East Coast blackout.
1989: Berlin Wall opened.  On Nov. 9, 1989, East Germany lifted restrictions on emigration or travel to the West, and within hours tens of thousands of East and West Berliners swarmed across the infamous Berlin Wall for a boisterous celebration.   Go to article >>

Carl Sagan, astronomer, b. 1934.

Underwater volcanic eruption gives birth to new island
A volcanic eruption off the Japanese island of Iwo Jima on Oct. 30 led to the formation of a 330-foot-wide island just north of the explosion site.  Read More.

Tracy Chapman wins Country Music Award for ‘Fast Car’ decades after song’s debut.
Chapman’s 1988 hit “Fast Car” won song of the year at the CMAs, thanks to a cover by Luke Combs that brought the tune back into the spotlight.

Picasso masterpiece depicting his young mistress sells for $139 million.
This iconic oil painting just became the second most valuable work by Picasso ever sold at auction.

PHOTOS OF THE DAY

Berlin, Germany
Roses are placed in gaps in the remains of the Berlin Wall during an event marking the 34th anniversary of the fall of the wall.
Photograph: Clemens Bilan/EPA.

Agra, India
The Taj Mahal is barely visible in heavy smog as the sun rises.  Photograph: Pawan Sharma/AFP/Getty Images

​​​​​​​London, UK
Gallery assistants study a detail of Gassed, a 1919 oil painting by the US artist John Singer Sargent, in the new Blavatnik art, film and photography galleries at the Imperial War Museum. The galleries will show about 500 works from the museum’s collection.  Photograph: Justin Tallis/AFP/Getty Images.
Market Closes for November 9^th,2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 2008, the U.S. government reached a Sunday-night deal to scrap its original $123 billion bailout of AIG. A new, $150 billion package imposed considerably less onerous terms on the insurer.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose 0.3% at 19,587.41 in Toronto.
The move follows the previous session’s decrease of 0.2%.
Suncor Energy Inc. contributed the most to the index gain, increasing 3.7%. Stelco Holdings Inc. had the largest increase, rising 12.5%.
Today, 117 of 227 shares rose, while 109 fell; 6 of 11 sectors were higher, led by energy stocks.
Insights
* This year, the index rose 1%, heading for the best year since 2021
* So far this week, the index fell 1.2%
* The index advanced 1.3% in the past 52 weeks. The MSCI AC Americas Index gained 15% in the same period
* The S&P/TSX Composite is 6% below its 52-week high on Feb. 2, 2023 and 4.8% above its low on Oct. 27, 2023
* The S&P/TSX Composite is little changed in the past 5 days and rose 1.8% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 14.9 on a trailing basis and 14 times estimated earnings of its members for the coming year
* 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$3.09t
* 30-day price volatility fell to 15.15% compared with 15.31% in the previous session and the average of 14.43% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 38.5026| 1.1| 26/14
Financials | 31.0801| 0.5| 22/6
Materials | 17.6300| 0.8| 25/26
Consumer Staples | 5.4494| 0.6| 9/2
Communication Services | 4.9255| 0.6| 4/1
Utilities | 4.1219| 0.5| 12/3
Consumer Discretionary | -0.5698| -0.1| 4/10
Health Care | -1.7478| -3.2| 0/4
Real Estate | -3.1454| -0.7| 1/20
Industrials | -11.0819| -0.4| 11/15
Information Technology | -27.9728| -1.8| 3/8
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Suncor Energy | 14.6400| 3.7|n/a | 4.5
Canadian Natural Resources | 13.2100| 2.0|n/a | 16.8
Manulife Financial | 9.5840| 3.0|n/a | 6.3
Enbridge | -2.5090| -0.4|n/a | -12.8
Canadian Pacific Kansas | -8.0060| -1.2|n/a | -0.4
Shopify | -26.4000| -3.7|n/a | 77.5
US
By Rita Nazareth
(Bloomberg) — Treasury yields surged, while stocks finished lower as Jerome Powell threw cold water on Wall Street’s dovish wagers.
Just eight days after his speech had fueled bets the Federal Reserve was done with rate hikes, Powell said officials won’t hesitate to tighten again if needed.
While that’s essentially what several Fed speakers have been saying, it’s the part that drew investors’ attention Thursday — especially after a rally in both equities and bonds.
The S&P 500 halted what would have been its longest advance since 2004, while two-year rates topped 5%.
A weak sale of 30-year notes also weighed on sentiment, raising concern about the market’s ability to absorb new debt.
Powell’s comments also made traders price in slightly higher odds of an additional Fed hike, while paring bets on a rate cut happening before July.
To Krishna Guha at Evercore, Powell’s “sterner tone” might reasonably be read as an effort to lean against further easing of financial conditions, hold rate cut expectations at bay and keep the option of hiking further if needed open.
While this ought to be risk-off at the margin, “we do not interpret this as representing a substantive shift in policy signaling as opposed to a tone-correction — and do not for instance see any serious effort to put a December hike back in play.”
His remarks were a reminder the Fed still has a “tightening bias,” said Michael Feroli at JPMorgan Chase & Co.
The substance of these remarks was not materially different from what he said last week — “though it reads hawkish compared to market expectations, which have become quite confident that the Fed is
done,” he added.
“Markets have had a strong move but have edged closer to overbought levels,” said Quincy Krosby, chief global strategist at LPL Financial. “Powell’s comments coupled with a disappointing auction is a logical excuse for the market to begin consolidating gains.”
To Jeffrey Roach at LPL Financial, the main reason markets are jittery is that Powell warned investors not to be misled by the “head fakes” of a few good months of data.
Still, Roach expects yields to come down ahead of next week’s inflation data — which should provide some “salve” for the markets as the headline number will likely be soft.
Meantime, the amount of money that investors are parking at a major Fed facility dropped below $1 trillion for the first time in more than two years.
Demand for the facility has been fading this year, especially as the Treasury ramped up fresh bill issuance, offering an alternative for short-term investors.
That buying has accelerated as traders bet that the Fed is near the end of its interest-rate hiking cycle.
Mark Spitznagel, the Universal Investments founder and chief investment officer whose firm is advised by Black Swan author Nassim Nicholas Taleb, said the stock market is likely to surge — then turn drastically when the Fed starts cutting interest rates.
“That’s when things are going to get really awful,” Spitznagel said in an interview this week in New York.
On the economic front, recurring applications for US unemployment benefits rose for a seventh straight week, adding to evidence that the labor market is cooling.
Last week’s soft monthly jobs report may have encouraged investors to start thinking about a less-hawkish Fed, according to Mike Loewengart at Morgan Stanley Global Investment Office.
“In addition to the Fed signaling rate cuts aren’t on the horizon, today’s modest jobless claims total suggests the road to a cooler economy and lower inflation is going to be a long one,” he noted. “Add in the pressure that sizable Treasury issuance puts on rates, and it becomes clear that patience remains the primary virtue in this market.”
Credit risk will replace interest-rate risk as the market’s “big fear” next year, according to Mohamed El-Erian.
“Savings have been run down, there is a cumulative impact of high interest rates,” El-Erian said in an interview on Bloomberg Television. “2024 is going to be a tougher year than 2023 was for the global economy.”
US companies have sold more than $6 billion of junk bonds this month as yields have dropped and risk assets have rallied across markets.
Month-to-date supply is the highest since early May.
Investors returned have returned to junk bonds after the Fed signaled it may be done with its most aggressive rate-hiking cycle in decades at its last meeting.
Elsewhere, Bitcoin rose toward the highest since May 2022 — just before the Terra USD stablecoin collapsed and ignited a daisy chain of failures across the crypto asset space.

Corporate Highlights:
* Apple Inc. risks having to pay a €13 billion ($14 billion) tax bill to Ireland after an adviser to the European Union’s top court said the iPhone maker’s victory in an earlier challenge should be thrown out.
* Walt Disney Co. reported better-than-expected profits and vowed to cut $2 billion in expenses as it faces pressure from activist investor Nelson Peltz.
* AMC Entertainment Holdings Inc. plans to sell as much as $350 million of shares.
* Arm Holdings Plc gave a disappointing sales forecast amid a slump in smartphone sales and uncertain timing for new licensing deals.
* Lyft Inc. reported revenue and profit that beat analysts’ estimates in the third quarter, but introduced a new performance metric that compared it unfavorably to larger rival Uber Technologies Inc.
* Rogers Communications Inc. beat estimates after posting strong wireless sales during the back-to-school period and a revenue increase in its media and cable businesses.
* Manulife Financial Corp.’s earnings got a lift from its business in Asia, where insurance sales in Hong Kong to mainland Chinese visitors continue to improve after the loosening of pandemic travel restrictions.

Key events this week:
* ECB President Christine Lagarde participates in fireside chat, Friday
* US University of Michigan consumer sentiment, Friday
* Dallas Fed President Lorie Logan and her Atlanta counterpart Raphael Bostic speak, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.8% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.8%
* The Dow Jones Industrial Average fell 0.6%
* The MSCI World index fell 0.5%
Currencies
* The Bloomberg Dollar Spot Index rose 0.5%
* The euro fell 0.4% to $1.0664
* The British pound fell 0.5% to $1.2218
* The Japanese yen fell 0.3% to 151.37 per dollar
Cryptocurrencies
* Bitcoin rose 2.7% to $36,560
* Ether rose 7.9% to $2,036.35
Bonds
* The yield on 10-year Treasuries advanced 14 basis points to 4.63%
* Germany’s 10-year yield advanced three basis points to 2.65%
* Britain’s 10-year yield advanced three basis points to 4.27%
Commodities
* West Texas Intermediate crude rose 0.3% to $75.55 a barrel
* Spot gold rose 0.4% to $1,957.49 an ounce
This story was produced with the assistance of Bloomberg Automation.

–With assistance from Emily Graffeo, Sagarika Jaisinghani, Garfield Reynolds, Sidhartha Shukla, Suvashree Ghosh and Michael Mackenzie.
Have a lovely evening everyone.

Be magnificent!
As ever,

Carolann
A man is not old until regrets take the place of dreams. -John Barrymore, 1882-1942.

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