November 14, 2023 Newsletter

Dear Friends,

Tangents:
Carolann is away from the office for a conference, I will be writing the newsletter on her behalf.

On November 14, 1969: Apollo 12 was launched. Despite being struck by lightning twice during the first minute of flight, it went on to perform the second successful human landing on the Moon. Read more…

Cutting 1 teaspoon of salt works as well as blood pressure meds
Limiting sodium intake can significantly reduce hypertension, studies show. You may be surprised that these foods contain a full day’s worth of salt.

Scuba diver discovers 30,000 Roman coins off Italian coast
The well-preserved bronze coins found off the coast of Sardinia could be linked to a shipwreck.

Iceland volcano: Huge ‘magma tunnel’ forms beneath town
Authorities in Iceland have warned that a volcanic eruption is imminent, with the town of Grindavík, close to the country’s famous Blue Lagoon resort, evacuated

Claims of the multiverse may be founded in bad math
Our universe seems to be perfectly suited for life. But anyone who claims that’s evidence of a multiverse is falling prey to a logical fallacy.

PHOTOS OF THE DAY

Beijing, China
Tower blocks illuminated in the central business district at sunset
Photograph: VCG/Getty Images

Porto Jofre, Brazil
Smoke billows from forest fires in the Pantanal wetland in Mato Grosso state. Several fires have been ravaging the Pantanal, the largest wetland on the planet. According to the specialists, these fires are primarily caused by human action, in particular the use of slash-and-burn techniques for agricultural expansion, and the situation at the end of the year has been exacerbated by an exceptional drought
Photograph: Rogerio Florentino/AFP/Getty Images

​​​​​​​Srinagar, Kashmir
A man rows his boat in Dal Lake amid foggy conditions
Photograph: Tauseef Mustafa/AFP/Getty Images
Market Closes for November 14^th,2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1986, the U.S. government announced it settled with top Wall Street arbitrageur Ivan Boesky on charges of securities fraud. The deal helped unravel a massive insider-trading scheme involving Michael Milken of Drexel Burnham Lambert.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the fourth day, climbing 1.6%, or 314.58 to 20,023.73 in Toronto.
The move was the biggest since rising 2.9% on Nov. 2.
Today, financials stocks led the market higher, as 10 of 11 sectors gained; 186 of 227 shares rose, while 37 fell.
Shopify Inc. contributed the most to the index gain, increasing 4.3%.
Ballard Power Systems Inc. had the largest increase, rising 10.4%.
Insights
* In the past year, the index had a similar or greater gain two times. The next day, it declined 0.5% once and advanced 1% once
* This year, the index rose 3.3%, heading for the best year since 2021
* The index advanced 0.5% in the past 52 weeks. The MSCI AC Americas Index gained 13% in the same period
* The S&P/TSX Composite is 3.9% below its 52-week high on Feb. 2, 2023 and 7.1% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 2.3% in the past 5 days and rose 2.9% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 15.1 on a trailing basis and 14.2 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.3% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.12t
* 30-day price volatility rose to 14.36% compared with 13.98% in the previous session and the average of 14.44% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 130.4662| 2.2| 27/1
Materials | 57.2205| 2.7| 47/5
Industrials | 36.0902| 1.4| 22/4
Information Technology | 30.5346| 1.9| 9/2
Utilities | 23.2136| 3.0| 15/0
Real Estate | 19.0814| 4.4| 21/0
Consumer Discretionary | 13.4671| 1.8| 11/3
Communication Services | 12.5266| 1.6| 4/1
Consumer Staples | 3.0307| 0.3| 7/4
Health Care | 1.6542| 3.1| 4/0
Energy | -12.7003| -0.3| 19/17
================================================================
| | |Volume VS | YTD
| Index | | 20D AVG | Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Shopify | 30.9900| 4.3|n/a | 91.0
Brookfield Corp | 26.9400| 6.0|n/a | 10.6
RBC | 22.0400| 1.9|n/a | -6.4
CAE | -2.9780| -4.4|n/a | 10.2
Suncor Energy | -4.9410| -1.2|n/a | 7.1
Constellation | | | |
Software | -5.2140| -1.2|n/a | 47.5
US
By Rita Nazareth
(Bloomberg) — Stocks climbed while bond yields tumbled as an unexpected inflation slowdown bolstered bets the Federal Reserve’s aggressive hiking cycle is now over — and the next move will be a rate cut next year.
The S&P 500 rose nearly 2%, the most since April.
Tesla Inc. led gains in megacaps and Nvidia Corp. rallied for a 10^th straight session.
Regional banks jumped almost 6%.
The Russell 2000 index of small caps added over 5%.
Goldman Sachs Group Inc.’s basket of the most-shorted stocks beat the broader market in a sign some traders are preparing to cover bearish wagers.
Two-year yields plunged over 20 basis points.
The dollar fell the most since June 2022.
While Wall Street’s rally could risk further easing of financial conditions — and ultimately complicate the Fed’s job — bets on a “pivot” next year have increased.
Fed swaps indicate the odds of another hike have fallen to almost zero — with the market pricing in a 50 basis-point rate cut by July.
“The last of investors not convinced the Fed is done are likely ‘throwing in the towel’,” said Bryce Doty at Sit Fixed Income Advisors. “The next Fed action is more likely to be a cut next summer than another rate increase.”
To Chris Larkin at E*Trade from Morgan Stanley, while the cooler-than-expected numbers will likely encourage some investors to start planning for 2024 rate cuts, the Fed will probably continue to fight that narrative. “They’ve run a long race, and they won’t quit just because the finish line appears to be a little closer,” Larkin noted.
To Chris Zaccarelli at Independent Advisor Alliance, whether or not the economy can stay out of recession remains to be seen, but the market should continue to rally as investors begin to accept the view that higher rates are off the table.
The drop in inflation suggests that recent monetary policy has been doing its job, which makes the prospect of a “soft landing” ever more likely, according to Richard Flynn at Charles Schwab UK.
The news reinforces the probability that officials will “hold off” from further rate hikes, he noted.
“With the US economy holding up, the inflation data are ‘soft-landing nirvana’ for the equity markets,” said Neil Dutta, head of economics at Renaissance Macro Research.
An intact disinflationary process means that the Fed can “sit tight for now” — which would lower the risk of an “overly restrictive policy”, according to Lauren Goodwin at New York Life Investments. Still, she cautions investors who are getting
“Too enthusiastic” as “financial conditions are now easing again, which keeps the Fed on guard and highly data dependent.” The Fed’s challenge is that the market tries to jump to the “endgame” — risking a larger or sooner easing in financial conditions than the Fed itself would like to see, said Krishna Guha at Evercore ISI. “So expect Fed officials to maintain a very cautious and relatively hawkish tone.”
Citadel founder Ken Griffin said the Fed risks a hit to its reputation if it cuts interest rates too quickly.
Cathie Wood, the head of ARK Investment Management, said that deflation is already underway in the US across industries and will force the central bank to kick off a big interest-rate cutting cycle.
Fed officials welcomed the latest data showing receding US inflation, while adding that there’s still a way to go before it reaches the central bank’s 2% target.
“Our base case remains that the Fed will not raise rates further,” said Brian Rose at UBS Global Wealth Management. “However, inflation is still too high and the labor market still too tight for the Fed to declare victory and announce an end to the rate-hiking cycle.” In Rose’s view, such an announcement is likely to be at least three months away unless the data takes a sudden turn toward the weaker side. Once an announcement is made, markets may quickly focus on the timing of the first rate cut, leading to lower bond yields and a weaker US dollar, he noted.
Equities have rallied in November on bets the Fed is done with rate hikes, with the S&P 500 up more than 7% in the span — and heading toward its best month since October 2022.
In the past 22 years, when the S&P 500 was up 5% or more by mid-November, the remainder of that year was positive every single time, according to data compiled by Bloomberg.
Go back 50 years, and that setup was positive 26 out of 30 times, with the decline in the four exceptions being 1% or less.
Meantime, investors turned the most bullish on bonds since the global financial crisis amid “big conviction” that rates will move lower in 2024, according to the latest Bank of America Corp. fund manager survey.
The poll showed investors were dumping cash to hold the biggest overweight position in bonds since 2009.
Pacific Investment Management Co. — among the many whose expectations for a rally this year were disappointed — is renewing the call for 2024.
Bonds “have rarely been as attractive as they appear today” relative to stocks, Pimco managers Erin Browne, Geraldine Sundstrom and Emmanuel Sharef said in a report predicting “prime time” for the asset class in 2024.

Corporate Highlights:
* Home Depot Inc. narrowed its guidance for a decline in this year’s profit and revenue as home-improvement demand wanes.
* Boeing Co. extended its successful order haul on the second day of the Dubai Air Show, winning a deal from Ethiopian Airlines for more narrow- and widebody aircraft while rival Airbus SE continued to chase an increasingly elusive deal with Emirates.
* Alphabet Inc.’s Google gives Apple Inc. a 36% share of the revenue earned via advertising from searches in the Safari browser to be the default search engine on Macs, iPhones and iPads, chief executive officer Sundar Pichai confirmed.
* Billionaire and former hedge fund manager Leon Cooperman has taken a late stake in Manchester United, the football club that’s nearing the end of a yearlong bidding war.
* Glencore Plc will buy a majority stake in Teck Resources Ltd.’s coal business, ending a months-long saga that transfixed the mining industry and setting the stage for the commodity giant to exit the coal business itself.
* Siemens Energy AG has secured a €15 billion ($16.2 billion) deal with the German government, its biggest shareholder Siemens AG and a consortium of banks, as the troubled manufacturer weathers massive losses at its wind-turbine unit.

Key events this week:
* China retail sales, industrial production, fixed-asset investment, Wednesday
* Japan GDP, industrial production, Wednesday
* UK CPI, Wednesday
* US retail sales, business inventories, PPI, Empire manufacturing, Wednesday
* Target earnings, Wednesday
* China new home prices, Thursday
* US initial jobless claims, industrial production, Thursday
* Walmart earnings, Thursday
* US President Joe Biden and Chinese President Xi Jinping expected to speak at APEC leaders summit, Thursday
* Cleveland Fed President Loretta Mester, New York Fed President John Williams and Fed vice chair for supervision Michael Barr speak, Thursday
* Bank of England deputy governor Dave Ramsden and ECB President Christine Lagarde speak at event, Thursday
* US housing starts, Friday
* US Congress faces a midnight deadline to pass a federal spending measure, Friday
* ECB President Christine Lagarde speaks, Friday
* Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins and San Francisco Fed President Mary Daly speak, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 1.9% as of 4 p.m. New York time
* The Nasdaq 100 rose 2.1%
* The Dow Jones Industrial Average rose 1.4%
* The MSCI World index rose 2%
Currencies
* The Bloomberg Dollar Spot Index fell 1.2%
* The euro rose 1.7% to $1.0882
* The British pound rose 1.8% to $1.2501
* The Japanese yen rose 1% to 150.25 per dollar
Cryptocurrencies
* Bitcoin fell 3.3% to $35,274.04
* Ether fell 4.1% to $1,975.61
Bonds
* The yield on 10-year Treasuries declined 20 basis points to 4.44%
* Germany’s 10-year yield declined 11 basis points to 2.60%
* Britain’s 10-year yield declined 16 basis points to 4.15%
Commodities
* West Texas Intermediate crude was little changed
* Spot gold rose 0.9% to $1,963.56 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Vildana Hajric, Jan-Patrick Barnert, Allegra Catelli and Edward Bolingbroke.

Have a wonderful evening everyone.

Be magnificent!
As ever,

Shabnam
“Time brings all things to pass.”– Aeschylus

Shabnam Mohammadpourmarzbali
Assistant to Carolann Steinhoff
Queensbury Securities Inc.,
St. Andrew’s Square,
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7

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