May 13, 2024, Newsletter

Dear Friends,

Tangents: Happy Monday.

May 13, 1950: The first Formula One World Championship season kicks off.
May 13, 2002: Jimmy Carter became the first present or former U.S. president to visit Cuba since Fidel Castro seized power in 1959. Go to article >>

Stevie Wonder, b.1950.

“Frasier,” the television sitcom set in Seattle but filmed in Los Angeles, in 2004 airs its last show after an 11-year run. The show debuts in 1993, just as Seattle is beginning to receive notoriety for grunge music, its coffee, and its dot-com business boom. Kelsey Grammer (Frasier) portrays a call-in psychiatrist at a fictitious radio station. The view from Frasier’s ritzy condo looks over a compressed downtown with an impossible view of the Space Needle. (Compiled from HistoryLink.org)

Papua New Guineans, genetically isolated for 50,000 years, carry Denisovan genes that help their immune system, study suggests
Genes inherited from Denisovans, extinct human relatives, may help Papua New Guineans in the lowlands fight off infection, while mutations to red blood cells may help highlanders live at altitude. Read More.

Stone with 1,600-year-old Irish inscription found in English garden
Investigations show the stone is inscribed with a message in ogham, an Irish alphabet used from the fourth century A.D.. Read More.

Earth from space: Majestic ‘yin-yang’ crater sits atop a dormant volcano in Turkey
The massive caldera of Turkey’s Mount Nemrut volcano is split in half, with one side made of solidified lava flows and the other half a deep crater lake. Covered in snow, the summit scene looks like the yin-yang symbol when viewed from above. Read More.

James Webb telescope detects 1-of-a-kind atmosphere around ‘Hell Planet’ in distant star system
Using the James Webb Space Telescope, scientists have discovered evidence of a carbon-rich atmosphere around the hellish world 55 Cancri e. This marks the best evidence yet of an atmosphere around a rocky exoplanet.
Read More.

Meta just stuck its AI somewhere you didn’t expect it — a pair of Ray-Ban smart glasses
Ray-Ban smart glasses will now use Meta AI virtual assistant software so that wearers can speak with their smart glasses and ask questions about what they’re looking at. Read More.

The iconic Porsche 911 is going hybrid
A hybrid model of Porsche’s signature model, with its gas engine assisted by at least one battery-powered electric motor, will officially be revealed in an online event later this month.

Hear Jerry Seinfeld’s advice to 2024 grads
The comedian was Duke University’s 2024 commencement speaker, offering graduates some unconventional advice.

Auroras light the sky during rare solar storm
See the dazzling Auroras created around the globe by a series of solar flares and coronal mass ejections from the sun.

PHOTOS OF THE DAY

Soberania national park, Panama
A keel-billed toucan (Ramphastos sulfuratus) pictured on Global Big Day 2024, a worldwide birdwatching event
Photograph: Bienvenido Velasco/EPA

I think I saw a mouse
Photograph: Debby Thomas/Comedy Pet Awards 2024

​​​​​​​Las Vegas, Nevada
The aurora borealis lights up the night sky over the desert
Photograph: David Becker/Zuma Press/Rex/Shutterstock
Market Closes for May 13^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1999, Barbie went high-tech in one of the most disastrous deals in modern history. Toy company Mattel acquired The Learning Co., a maker of educational software, for $3.51 billion. After 16 months and $342 million in restructuring charges, Mattel sold it on to Gores Technology Group for no cash up front, assumption of debt and a percentage of future profits, bringing the total loss to about $4 billion.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 0.2%, or 49.76 to 22,259.17 in Toronto.
Cameco Corp. contributed the most to the index decline, decreasing 3.8%.
Torex Gold Resources Inc. had the largest drop, falling 5.0%.
Today, 123 of 223 shares fell, while 96 rose; 7 of 11 sectors were lower, led by materials stocks.
Insights
* The index advanced 9% in the past 52 weeks. The MSCI AC Americas Index gained 26% in the same period
* The S&P/TSX Composite is 0.9% below its 52-week high on May 10, 2024 and 19.1% above its low on Oct. 27, 2023
* The S&P/TSX Composite is unchanged in the past 5 days and rose 1.6% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.6 on a trailing basis and 15.1 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.54t
* 30-day price volatility fell to 9.49% compared with 9.59% in the previous session and the average of 8.70% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | -23.1009| -0.8| 10/39
Industrials | -13.3472| -0.4| 13/13
Energy | -12.3356| -0.3| 21/20
Information Technology | -7.7606| -0.5| 4/6
Utilities | -3.5162| -0.4| 7/7
Consumer Staples | -1.6328| -0.2| 6/5
Real Estate | -0.6219| -0.1| 12/8
Health Care | 0.7247| 1.2| 2/2
Consumer Discretionary | 1.6870| 0.2| 8/5
Communication Services | 2.8629| 0.4| 3/1
Financials | 7.2901| 0.1| 10/17
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Cameco | -8.0180| -3.8| 14.2| 17.2
Canadian Pacific Kansas | -7.6290| -1.0| -49.0| 7.0
Manulife Financial | -5.8110| -1.3| 57.1| 20.0
Sun Life Financial | 3.1080| 1.1| 77.0| 0.8
Dollarama | 4.0720| 1.8| -20.2| 26.1
RBC | 18.7000| 1.4| 2.7| 6.7
US
By Rita Nazareth
(Bloomberg) — Wall Street kicked off the week on a cautious note, with traders positioning for key inflation data that will help shape the outlook for Federal Reserve policy and global financial markets.
Stocks, bonds and the dollar saw small moves just a few days ahead of the key consumer price index.
The gauge is projected to show moderation while still remaining too high to warrant rate cuts. On Monday, a Fed Bank of New York survey highlighted an increase in expectations for inflation.
Some prominent trading desks are warning that investors should gear up for a potential break in the calm that’s come over stocks.
The options market is betting the S&P 500 will move 1% in either direction after Wednesday’s CPI, according to Andrew Tyler at JPMorgan Chase & Co.
“The key risk is a hotter CPI print,” Tyler said. “But upcoming macro data creates a two-tailed risk — with one tied to stronger-than-expected growth fueling inflation concerns and the other being weaker growth fueling either recession or ‘stagflation’ concerns.”
US stocks and bonds are facing upside risk this week as traders keep building long positions, said Goldman Sachs Group Inc.’s Scott Rubner.
Commodity trading advisors’ equity and fixed-income demand is notable, with a so-called “green sweep” showing up in most of Goldman’s models.
This means investors  will keep piling in even if the market goes down.
The S&P 500 hovered near 5,220. Heavily shorted companies got a lift as GameStop Corp. soared after a cryptic X post from Keith Gill, known as “Roaring Kitty,” who gained notoriety during the 2021 meme-stock frenzy.
US 10-year yields fell one basis point to 4.48%.
The all-important inflation data arrive just as a three-week rally had the S&P 500 knocking on the door of its record highs, noted Chris Larkin at E*TRADE from Morgan Stanley.
“An extension of the rally could depend on whether investors still feel positive about rate cuts after this week’s numbers.”
Before Wednesday’s CPI, economists will parse producer prices data on Tuesday to assess the impact of categories that feed into the Fed’s preferred inflation gauge — the personal consumption expenditures price index.
Fed Chair Jerome Powell is also scheduled to speak Tuesday.
“Squeeze risks for rate-sensitive laggards on a CPI miss outweigh downside risks on a CPI beat,” said Ohsung Kwon at Bank of America Corp.
“With further hikes ruled out, we think equities may be able to tolerate higher inflation. An in-line print should also be net positive, removing the inflation overhang at least in the near term.”
Stalled-out progress on inflation is probably going to trigger a decline in US equities in the coming months, according to Stifel Nicolaus & Co.’s Barry Bannister.
The S&P 500 will likely drop roughly 10% in the second or third quarter to around 4,750, he noted.
A “merely in-line” US inflation report this week “would likely be enough for further risk-asset gains,” according to HSBC strategists led by Duncan Toms.
The stock market “setup” has left it at a critical juncture, according to Matt Maley at Miller Tabak + Co.
The fact that equities saw a material decline in April, followed by a nice bounce leaves them vulnerable to a “double top” — which is one of the most-bearish signals in technical analysis.
“If this week’s inflation data creates a substantial reversal, it’s going to be a very negative development,” Maley said. “If, however, this week’s data creates a further rally — one that pushes the major indices meaningfully above their 2024 highs — it’s going to be extremely bullish.”
If recent hot prints prove to be a blip in a disinflationary process, one or two cuts starting in the fall may be reasonable, according to Jason Pride and Michael Reynolds at Glenmede.  
But that timeline may undergo further revisions if inflation stays sticky, they say.
It’s difficult to justify buying stocks now due to elevated interest rates, weakening growth and meager potential returns, according to JPMorgan’s Marko Kolanovic.
“We don’t see enough of a return to warrant taking on equity risk at this juncture,” he noted.
“The macro outlook is uncertain and for equities, we are entering into a seasonally tricky time of the year, with a challenging combination of inflation at risk of staying too high, profit margin pressures, and elevated positioning.”
Lofty US equity valuations suggest investors have already priced in a lot of stock market enthusiasm, but that doesn’t mean they should start selling, according to Goldman Sachs Group Inc.
The S&P 500 already is higher than Goldman’s year-end target of 5,200, but the fundamental backdrop for share prices remains “very good,” Ben Snider, senior strategist on Goldman’s US portfolio strategy team, said in an interview. He’s optimistic about stocks down the road because of strong earnings from US companies and confidence in the path of disinflation.
Investors ready to trim or ditch their stock exposure because they are worried the S&P 500 is losing steam after a double-digit run up since October should look to history for reasons to stay committed to their US equity allocations.
Since the 1930s, missing out on the 10 best days per decade for the benchmark would have yielded a 66% gain — a fraction of the roughly 23,000% return staying invested through those days would have generated, according to data from Bank of America Corp.
More importantly, those best days have come after the worst days for stocks, when selling was likely most tempting, the bank’s analysis showed.
In a week that also sees the release of retail sales, guidance from giants Walmart Inc. and Home Depot Inc. will provide some insight into consumer sentiment amid signs of rising joblessness.
Historically, consumer confidence has moved inversely to the two-year/10-year US Treasury yield spread, according to Lisa Shalett at Morgan Stanley Wealth Management.
“With curves likely to steepen when rate cuts start, which we forecast by September, it’s unclear whether consumers will view good news as good news or whether cuts will come too late — when consumer moods have worsened as excess savings have been depleted and when a recoupling of the relationship indicates recession, not a soft landing,” she noted.
Still, analysts are ratcheting up earnings forecasts for the current quarter at the swiftest pace in two years, suggesting that the worst of Corporate America’s profit slump may be firmly in the rear-view mirror.
With nearly 90% of S&P 500 companies having reported for this earnings season, upbeat first-quarter results have pushed Wall Street to boost profit projections for the three months through June, Bloomberg Intelligence data show.

Corporate Highlights:
* Apple Inc. has closed in on an agreement with OpenAI to use the startup’s technology on the iPhone, part of a broader push to bring artificial intelligence features to its devices, according to people familiar with the matter.
* Intel Corp. is in advanced talks with Apollo Global Management over a deal that would have the investment firm providing more than $11 billion in funding for a chip manufacturing plant in Ireland, the Wall Street Journal said.
* Johnson & Johnson sold $4 billion of bonds to help finance its $13.1 billion acquisition of Shockwave Medical Inc., the latest blue-chip firm to seize on thriving debt markets to fund purchases.
* Nasdaq Inc. is considering a sale of Solovis, a provider of portfolio-management software and services, as the exchange operator seeks to slim down following its largest-ever acquisition, according to people familiar with the matter.
* Walgreens Boots Alliance Inc. is reaching out to potential buyers of the £7 billion ($8.8 billion) Boots drugstore chain in the UK, according to people familiar with the matter.
* UBS Group AG Chief Executive Officer Sergio Ermotti said that he intends to stay at the helm of the Swiss bank until the task of absorbing Credit Suisse is complete, meaning his second stint leading the global wealth manager could stretch to almost four years.
* Anglo American Plc rejected a second approach from BHP Group that valued the miner at $43 billion, as pressure builds on the 107-year old company to lay out a compelling vision to survive on its own.

Key events this week:
* Germany CPI, ZEW survey expectations, Tuesday
* Bank of England Economist Huw Pill speaks, Tuesday
* US PPI, Tuesday
* Fed Chair Jerome Powell and ECB Governing Council member Klaas Knot speak, Tuesday
* China rate decision, Wednesday
* Eurozone industrial production, GDP, Wednesday
* US CPI, retail sales, business inventories, empire manufacturing, Wednesday
* Minneapolis Fed President Neel Kashkari speaks, Wednesday
* Japan GDP, industrial production, Thursday
* US housing starts, initial jobless claims, industrial production, Thursday
* Philadelphia Fed President Patrick Harker speaks, Thursday
* Cleveland Fed President Loretta Mester speaks, Thursday
* Atlanta Fed President Raphael Bostic speaks, Thursday
* China property prices, retail sales, industrial production, Friday
* Eurozone CPI, Friday
* US Conf. Board leading index, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 was little changed as of 4 p.m. New York time
* The Nasdaq 100 rose 0.2%
* The Dow Jones Industrial Average fell 0.2%
* The MSCI World index was little changed
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro rose 0.2% to $1.0789
* The British pound rose 0.2% to $1.2555
* The Japanese yen fell 0.3% to 156.22 per dollar
Cryptocurrencies
* Bitcoin rose 3.1% to $63,160.48
* Ether rose 1.1% to $2,955.24
Bonds
* The yield on 10-year Treasuries declined one basis point to 4.48%
* Germany’s 10-year yield was little changed at 2.51%
* Britain’s 10-year yield was little changed at 4.17%
Commodities
* West Texas Intermediate crude rose 1.2% to $79.22 a barrel
* Spot gold fell 1% to $2,337.33 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jessica Menton, Alexandra Semenova, Natalia Kniazhevich, Vince Golle and Craig Stirling.

Have a lovely evening.

Be magnificent!
As ever,

Carolann
Making the simple complicated is commonplace; making the complicated simple, awesomely simple – that’s creativity. –Charles Mingus, 1922-1979.

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