January 16, 2024, Newsletter

Dear Friends,

Tangents:
January 16,1920: Prohibition began as the 18th Amendment to the U.S. Constitution took effect.  Go to article >>
From The Associated Press:  A look at what else happened in history on January 16.

Robert Service, poet, b.1874.
Ah The clock is always slow: It is later than you think. -Robert Service.

4,000-year-old wall found around oasis in Saudi Arabia likely defended ‘against raids from nomads’
Ancient people in what is now Saudi Arabia built a 9-mile-long wall along the Khaybar Oasis, which still exists today.  Read More.

‘We do not understand how it can exist’: Astronomers baffled by ‘almost invisible’ dwarf galaxy that upends a dark matter theory
Astronomers have discovered a super diffuse dwarf galaxy, named Nube, which gives off barely any visible light and seemingly defies explanation. Read More.

New solar cell technology could ditch batteries in gadgets for good by harvesting ambient room light
Solar cells that can be recharged using indoor low-light could be used to power devices like TV remotes and computer mice. Read More.

ate Moss at 50: A supermodel through the decades
British supermodel Kate Moss turns 50 today, and after decades in the fashion industry, it’s not hard to see why she remains one of Vogue’s favorite cover stars.

Award-winning close-up photos show the hidden wonders of nature
View the mesmerizing images recognized at the latest Close-up Photographer of the Year competition.

PHOTOS OF THE DAY

​​​​​​​Kitzbühel, Austria
Snow covers the town and hillsides before the first training session for the men’s downhill competition
Photograph: Johann Groder/APA/AFP/Getty Images

Holmes Chapel, UK
A train crosses the Twemlow viaduct. The UK is in the grip of a cold spell, with Arctic air sweeping in from the north, causing widespread frost, strong winds and substantial snowfall in the northern regions
Photograph: Nathan Stirk/2024 Getty Images

Antarctic
Penguins stand on a piece of floating ice in the Gerlache strait, which separates the Palmer archipelago from the Antarctic peninsula
Photograph: Juan Barreto/AFP/Getty Images
Market Closes for January 16^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1991, the Persian Gulf war began when the U.S. launched its aerial bombardment of Baghdad and Kuwait, known as Operation Desert Storm.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.5% at 20,948.09 in Toronto. The move was the biggest since falling 1.1% on Dec. 20 and follows the previous session’s increase of 0.3%.
Barrick Gold Corp. contributed the most to the index decline, decreasing 8.8%.
Parex Resources Inc. had the largest drop, falling 15.7%.
Today, 145 of 225 shares fell, while 76 rose; 6 of 11 sectors were lower, led by energy stocks.
Insights
* The index advanced 2.7% in the past 52 weeks. The MSCI AC Americas Index gained 19% in the same period
* The S&P/TSX Composite is 0.9% below its 52-week high on Jan.12, 2024 and 12.1% above its low on Oct. 27, 2023
* The S&P/TSX Composite is little changed in the past 5 days and rose 2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 16.5 on a trailing basis and 15.2 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$3.33t
* 30-day price volatility fell to 10.56% compared with 10.77% in the previous session and the average of 10.79% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -71.8775| -1.9| 2/37
Materials | -51.4296| -2.3| 10/42
Financials | -9.0209| -0.1| 14/13
Utilities | -2.5537| -0.3| 5/10
Real Estate | -0.5316| -0.1| 11/9
Consumer Discretionary | -0.4039| -0.1| 5/8
Health Care | 0.4839| 0.8| 1/3
Industrials | 4.2873| 0.1| 12/14
Consumer Staples | 4.9236| 0.6| 5/5
Communication Services | 5.3847| 0.7| 5/0
Information Technology | 6.9584| 0.4| 6/4
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Barrick Gold | -25.5300| -8.8| 137.0| -10.0
Canadian Natural Resources | -20.7600| -3.1| -53.1| -1.2
TD Bank | -13.2900| -1.3| -11.9| -6.0
Couche-Tard | 3.2780| 0.8| 38.9| 1.0
RBC | 3.4320| 0.3| 142.1| -0.9
Shopify | 5.1400| 0.6| -14.1| 6.4
US
By Rita Nazareth
(Bloomberg) — Wall Street pared its bets on Federal Reserve rate cuts on speculation the dovish bid emboldening stock and bond bulls has gone too far.
Equities fell, while Treasury yields climbed with the dollar as Fed Governor Christopher Waller appeared to push back against expectations for as many as six rate cuts this year.
While Waller wasn’t outright hawkish, his remarks weren’t massively dovish either — prompting a recalibration of rate wagers.
Fed swaps show the probability of easing as soon as March dropping to about 65% from almost 80% Friday.
Waller said the Fed should take a cautious approach when it begins cutting rates, adding he sees no reason to move as quickly as in the past — pointing to previous economic shocks that have precipitated rapid rate cuts.
To Kathy Jones at Charles Schwab, when you get either a data point or a comment like Waller’s, that seems to imply: ‘Well, maybe not so fast’.”
“We view his comments emphasizing no need to rush as indicating that he does not expect to push for a March cut — and read his arguments in general as more consistent with our baseline of a first cut in May or June,” said Krishna Guha, vice chairman at Evercore ISI.
US 10-year yields topped 4%, the greenback rose the most since March and the S&P 500 lost steam.
Morgan Stanley slid amid a warning on lower margins in wealth, while Goldman Sachs Group Inc. rose as profit beat estimates.
Boeing Co. sank on an analyst downgrade.
Apple Inc. slipped as the US Supreme Court refused to consider its appeal in an antitrust suit challenging the App Store.
Ipek Ozkardeskaya, a senior analyst at Swissquote, says the first quarter of this year will be marked by the realization that it’s too early for the central banks to cut rates.
“With today’s info in hand, the Fed is intent on cutting three times this year — and would only cut more if the economic situation deteriorated and the unemployment rate started heading towards 4.5-5%, I believe,” said Peter Boockvar, author of the Boock Report.
That would be up from 3.7% in December.
To Art Hogan at B Riley Wealth, it’s more important to focus on the why the Fed is cutting rates instead of the when.
“If the wheels are coming off the economic cart and the Fed feels the need to rush in to stimulate, that would be sub-optimal,” Hogan noted. “The good rate cuts would come as the path of inflation continues toward the Fed’s target, and they find themselves to be overly restrictive.”
Bond bulls have overtaken bears in the latest MLIV Pulse survey amid bets on Fed cuts this year.
Those expecting 10-year yields to drop over the next month represented 57% of respondents, an increase from 51% in November, and the highest percentage since MLIV Pulse started asking the question in August 2022.
Optimism over lower rates has spurred investors to up their exposure to US stocks to the highest in over two years, according to a Bank of America Corp. fund-manager survey.
There is “record optimism on rate cuts” and 79% of survey respondents expect the global economy to experience either a soft or no landing in 2024, BofA’s team led by Michael Hartnett wrote in a note.
UBS Group AG is the latest bank to lift its outlook for US equities, ratcheting up its 2024 forecast for the S&P 500 Index by 6% on Tuesday, to 5,150, following the Fed’s dovish policy shift in December.
The move comes roughly a month after the Swiss lender set its year-ahead call for the US equity benchmark at 4,850. RBC Capital Markets boosted its outlook last week, while Goldman Sachs did so in December, a month after setting it.
Meantime, earnings estimates have been slashed so much over the past three months that Wall Street strategists now expect most companies will easily beat analyst forecasts this season.
There’s however little reason to cheer, as Morgan Stanley strategists noted that a 7% cut to fourth-quarter profit estimates means US companies are poised to report almost no growth compared to the year before.
That’s “creating a lowered bar and a higher probability” of yet another mid-single-digit earnings-per-share beat rate, Michael Wilson said.
“While markets may experience modest downside volatility through the results season after the strong rally in November and December, we think upside remains in US equities amid looser monetary policy and durable corporate profits,” said Solita Marcelli at UBS Global Wealth Management. “Any selloff should be fairly mild, in our view, and could represent an opportunity to increase exposure to stocks.”

Corporate Highlights:
* Donald Trump’s victory at the Iowa caucuses lifted Digital World Acquisition Corp., the blank-check firm working on taking his media company public.
* A federal judge blocked JetBlue Airways Corp.’s $3.8 billion acquisition of Spirit Airlines Inc., saying the combination would stifle competition and raise fares for consumers.
* Microsoft Corp. Chief Executive Officer Satya Nadella said while he wants consistency and good governance at partner OpenAI, he’s not worried about the company’s nonprofit structure and doesn’t want greater control over his partner.
* Dish Network Corp. parent EchoStar Corp. proposed swapping more than $5 billion of debt due in the coming years for new notes, the second such offer in less than a week as the company looks to address looming maturities.
* PNC Financial Services Group Inc. reported profits that missed analyst estimates, as it continued to grapple with declining deposits and tepid loan growth.
* Deutsche Bank AG is preparing staff for a tough bonus season.  Variable pay “will reflect performance in 2023,” Chief Financial Officer James von Moltke said.
* First Quantum Minerals Ltd. will cut spending, pause its dividend and put smaller mines up for sale in a sweeping effort to free up cash after it was ordered to shutter its $10 billion copper operation in Panama.

Key events this week:
* China GDP, property prices, retail sales and industrial production, Wednesday
* Eurozone CPI, Wednesday
* US retail sales, industrial production, business inventories, Wednesday
* Fed issues Beige Book survey of regional economic conditions, Wednesday
* New York Fed President John Williams speaks, Wednesday
* ECB President Christine Lagarde and ECB Governing Council members Klaas Knot and Boris Vujcic speak at Davos, Wednesday
* US housing starts, initial jobless claims, Thursday
* Republican presidential primary debate in New Hampshire, Thursday
* ECB President Christine Lagarde participates in Davos panel discussion, Thursday
* ECB publishes account of December policy meeting, Thursday
* Atlanta Fed President Raphael Bostic speaks, Thursday
* Canada retail sales, Friday
* Japan CPI, tertiary index, Friday
* US existing home sales, University of Michigan consumer sentiment, Friday
* ECB President Christine Lagarde and IMF Managing Director Kristalina Georgieva speak in Davos, Friday
* San Francisco Fed President Mary Daly speaks, Friday
Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.4% as of 4 p.m. New York time
* The Nasdaq 100 was little changed
* The Dow Jones Industrial Average fell 0.6%
* The MSCI World index fell 0.7%
Currencies
* The Bloomberg Dollar Spot Index rose 0.8%
* The euro fell 0.7% to $1.0872
* The British pound fell 0.7% to $1.2632
* The Japanese yen fell 1% to 147.25 per dollar
Cryptocurrencies
* Bitcoin rose 1.4% to $43,280.61
* Ether rose 2.7% to $2,587.85
Bonds
* The yield on 10-year Treasuries advanced 12 basis points to 4.06%
* Germany’s 10-year yield advanced three basis points to 2.26%
* Britain’s 10-year yield was little changed at 3.80%
Commodities
* West Texas Intermediate crude fell 1.1% to $71.88 a barrel
* Spot gold fell 1.4% to $2,028.26 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Farah Elbahrawy, Liz Capo McCormick, Michael Mackenzie, Esha Dey, Edward Bolingbroke, Heather Burke, Kasia Klimasinska and Emily Graffeo.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
Everything that has a beginning has an ending.  Make your peace with that and all will be well. –Napoleon Bonaparte, 1769-1821

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
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www.carolannsteinhoff.com