June 26, 2024, Newsletter

Dear Friends,

Tangents: Exactly 6 months from today to Boxing Day!

June 26, 1936: The world’s first practical helicopter lifts off.  The twin-rotor Focke-Wulf Fw 61 was first tested in Bremen, Germany.
June 26, 1948: The Berlin Airlift began in earnest as the United States, Britain and France began ferrying supplies to the isolated western sector of Berlin after the Soviet Union cut off land and water routes. Go to article >>

Fifty years ago today, the first official barcode was scanned at a grocery store in Troy, Ohio. The symbol of parallel lines has since become the most prevalent tracking tool for products around the world, though many dispute who deserves the credit for its eventual success.

Abner Doubleday, invented baseball, b.1819.
Pearl S. Buck, writer, b.1892.

Self-healing ‘living skin’ can make robots more humanlike — and it looks just as creepy as you’d expect
A combination of cultured cells and silicone could help robots appear more human in future thanks to realistic skin elasticity. And they can smile like us too. Read More.

China rover returns historic samples from far side of the moon — and they may contain secrets to Earth’s deep past
China’s Chang’e-6 lunar module has returned from the moon’s far side with samples in a historic mission. Its success is a key step toward understanding our planet’s early history, and a milestone in the race with the U.S. to reach the moon’s south pole. Read More.

US man gets kidney transplant while awake
Being able to transplant kidneys using only local anesthetic could shorten patients’ hospital stays and make the procedure accessible to more people, doctors say. Read More.

Lab-grown ‘mini-brains’ may have just confirmed a leading theory about autism
Excessive brain growth in the womb has been directly tied to autism in toddlers in new research involving lab-grown “mini-brains.” Full Story: Live Science (6/26)

Stunning photos show 44,000-year-old mummified wolf discovered in Siberian permafrost
Scientists perform necropsy on an ancient wolf pulled from Russian permafrost that may still have prey in its stomach. Read More.

Scientists discovered the oldest termite mounds on Earth — and they’re 34,000 years old. The world’s oldest termite mounds have been collecting carbon from the atmosphere for thousands of years.
Full Story: Live Science (6/26)

‘I’m amazed I lived to tell the tale’: Award-winning photographer on a life spent in the wild
Acclaimed photographer Greg du Toit has spent the past two decades photographing lions, rhinos and elephants. These are some of his most striking wildlife collections shown around the world.

Michael Phelps rips World Anti-Doping Agency for inconsistent enforcement of rules
Legendary Olympian Michael Phelps on Tuesday described an inconsistent application of anti-doping rules that is driving frustration among clean athletes at the Olympic Games.

Satellite launches to keep an eye on space weather
Forecasters will soon be able to see real-time mapping of lightning activity on Earth and keep a closer eye on solar storms unleashed by the sun, thanks to a new weather satellite.

The meme-ification of Anthony Bourdain.

PHOTOS OF THE DAY

Sharqia, Egypt
Children play in the fields as they join their farming families at the start of the rice planting season
Photograph: Ahmed Gamal/NurPhoto/Rex/Shutterstock

Seoul, South Korea
People cool themselves off in a fountain
Photograph: Ahn Young-joon/AP

​​​​​​​Great Massingham, UK
A Norfolk field rewilded by the landowner, with the soil being ploughed and harrowed before being left for nature to run its course, is covered in poppies
Photograph: Joe Giddens/PA
Market Closes for June 26^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1950, Wall Street tumbled 4.7%, a day after North Korea invaded the South, sparking the Korean War. Panicky investors redeemed nearly one-eighth of all mutual fund assets by year-end, missing out on the greatest decade in modern stock-market history when the S&P 500 gained 19.4% annually.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite advanced slightly to 21,793.90 in Toronto.
The move follows the previous session’s decrease of 0.3%.
Shopify Inc. contributed the most to the index gain, increasing 1.4%.
First Quantum Minerals Ltd. had the largest increase, rising 7.4%.
Today, 97 of 226 shares rose, while 127 fell; 5 of 11 sectors were higher, led by materials stocks.
Insights
* This quarter, the index fell 1.7%
* This month, the index fell 2.1%, heading for the biggest decline since October 2023
* The index advanced 11% in the past 52 weeks. The MSCI AC Americas Index gained 25% in the same period
* The S&P/TSX Composite is 3.4% below its 52-week high on May 21, 2024 and 16.6% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 1.3% in the past 5 days and fell 2.4% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 17.6 on a trailing basis and 14.9 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.1% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.47t
* 30-day price volatility fell to 11.05% compared with 11.07% in the previous session and the average of 10.49% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | 34.7329| 1.3| 35/16
Industrials | 17.5871| 0.6| 20/8
Information Technology | 6.1293| 0.3| 2/8
Energy | 2.7936| 0.1| 18/22
Health Care | 0.0515| 0.1| 2/2
Consumer Discretionary | -1.7102| -0.2| 4/9
Real Estate | -5.7739| -1.3| 1/19
Communication Services | -6.0062| -0.9| 0/5
Utilities | -6.1605| -0.7| 4/11
Consumer Staples | -10.4748| -1.1| 6/5
Financials | -25.7525| -0.4| 5/22
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Shopify | 10.1400| 1.4| -38.4| -13.1
Enbridge | 9.8060| 1.4| -41.6| 1.5
First Quantum Minerals | 6.6850| 7.4| -15.0| 81.0
RBC | -5.2400| -0.4| -31.2| 8.0
Manulife Financial | -8.7850| -1.9| -23.4| 21.1
Couche-Tard | -12.0900| -3.0| 57.0| -1.2
US
By Rita Nazareth
(Bloomberg) — Big tech fell in late trading after Micron Technology Inc.’s outlook failed to meet the lofty expectations for the industry that has driven the bull market.
A $285 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) slipped after Micron said fiscal fourth-quarter sales will be $7.4 billion to $7.8 billion.
While the average analyst estimate was $7.58 billion, some projections were above $8 billion.
Fellow chipmaker Nvidia Corp., which has been on a roller-coaster ride, also dropped after the close of regular trading.
The recent market attempt to broaden out of the mega cap group was short-lived, with a bevy of measures still showing how market breadth remains weak — boosting uncertainty about the rally’s staying power.
Bifurcation between S&P 500 performance and breadth has reached one of the worst levels in three decades, according to Bloomberg Intelligence.
“The stock market is way too reliant on big tech — period and end of story,” said David Bahnsen at The Bahnsen Group.
“Whether or not the past week’s volatility in tech is the start of something deeper or if that reckoning is still forthcoming remains to be seen, but excessive investor sentiment, euphoria and overdone momentum always ends the same.”
The S&P 500 hovered near 5,480. FedEx Corp. surged on a bullish forecast and buyback plans.
The KBW Bank Index edged lower ahead of results of the Federal Reserve’s annual stress tests.
Amazon.com Inc. reached a $2 trillion valuation in a surge that took the e-commerce giant deeper into record territory.
Treasury 10-year yields topped 4.3%.
A $70 billion sale of five-year notes showed signs of good demand.
The dollar hit the highest since November.
The yen’s slide to the weakest since 1986 is boosting risk of intervention.
“The market’s ‘Engine Warning Light’ is on as we head into the hot summer months,” said Craig Johnson at Piper Sandler.
“Investors in the tech-heavy indices are experiencing F.O.M.O, while investors in the rest of the market feel R.O.M.O (regret of missing out) as overall market breadth remains weak outside a handful of mega-cap stocks.”
The S&P 500 is on track to deliver a strongly positive performance for the first six months of the year, fueled by a rally in the market’s largest names. Dividing the 500 Index stocks by capitalization quintiles shows a steady stairstep
pattern of performance: the larger the stock, the better it did, according to Jack Ablin at Cresset.
“Much of the divergence is attributable to a ‘higher for longer’ interest rate environment,” Ablin noted. “Investors reckon that mega cap tech companies – thanks to their ability to generate cash – are less reliant on borrowing and, those
companies that need to borrow have much easier access to capital than do their smaller brethren. So, where are markets headed in the second half of 2024?”
Ablin expects US equity markets to broaden later this year as the possibility of lower rates comes into focus.
“That means high-quality companies, particularly those with persistent dividend growth, will likely continue to lead their lower-quality counterparts in an incremental restrictive borrowing environment,” he added.
Bloomberg Intelligence’s sector rotation model says its time for a new leadership to emerge — and favors energy, health care and financials as the best-supported sectors to lead the index in the second half.
“Tech and the tech-adjacent communications sector have the strongest price momentum — but waning earnings dominance and lofty relative multiples pushed both groups down our ranks, wrote BI strategists led by Gina Martin Adams.
Mark Haefele at UBS Global Wealth Management, says that while Nvidia’s volatility has driven sentiment, the structural investment case for artificial intelligence remains intact on positive AI adoption and monetization trends.
He also holds a constructive outlook for broader equities amid solid fundamentals.
“We maintain our positive view on the AI story, but believe rightsizing tech exposure is key to navigate volatility while maintaining strategic exposure to the technology that we think is set to drive growth in the coming years,” he added.
For the second-quarter earnings season, the “Magnificent Seven” mega caps are still expected to account for the bulk of the growth for the overall S&P 500, according to Ryan Grabinski at Strategas.
“What remains encouraging to us is that the estimates for the remaining 493 are improving starting in the third quarter as growth rates for both the top of the market and the rest of the market normalize,” he noted.
“Should this broadening come to fruition, it would be an encouraging sign for the sustainability of the bull market.”
The S&P 500 is on pace to enter the second half with a gain of about 15% since the start of 2024. And July has ranked as the strongest month of the year for the S&P 500 both since its inception and more recently over the past two decades, according to data compiled by Bespoke Investment Group.
“What is more interesting is that zeroing in on the past 20 years, July’s outperformance is the eye of the storm,” Bespoke noted. “July is sandwiched between June, August, and September — which all rank as the three worst months of the year averaging declines of 0.17%, 0.10%, and 0.7%, respectively.”

Corporate Highlights:
* Interactive Brokers Group Inc. took a $48 million hit after a New York Stock Exchange trading disruption this month and is considering its options to recover the money, including possible legal action.
* Whirlpool Corp. surged after Reuters reported that Robert Bosch GmbH is considering an offer for the appliance maker.
* A mechanic who worked on Boeing Co.’s 787 aircraft alleged he observed improper manufacturing at a subcontractor for the Dreamliner program, according to a statement from attorneys representing him as a whistleblower.
* A top McDonald’s Corp. executive reiterated that the company’s previous US test of plant-based meat didn’t work out and added that the burger chain’s diners don’t go to its restaurants for salads. Beyond Meat Inc. has partnered with McDonald’s to produce the McPlant burger.
* Moderna Inc. shares sank after new data showed the efficacy of its RSV shot fell sharply in the second year and was lower than that of rival vaccines.
* General Mills Inc., the maker of Cheerios, gave a disappointing sales outlook as shoppers continue to pull back amid climbing supermarket prices.
* Southwest Airlines Co. reduced its estimate for unit revenue in the second quarter, a sign of ongoing challenges at the carrier as it fends off an activist push for a management overhaul.
* Volkswagen AG is taking another swing in its long struggle to catch up with Tesla Inc., plowing $5 billion into a tie-up with the US company’s closest would-be rival, Rivian Automotive Inc.
* Airbus SE has been warning airlines that some of their aircraft deliveries due in the next two years risk being delayed, an indication that supply-chain glitches at the world’s largest plane maker might extend well beyond the current year.

Key events this week:
* China industrial profits, Thursday
* Eurozone economic confidence, consumer confidence, Thursday
* US durable goods, initial jobless claims, GDP, Thursday
* Nike releases earnings, Thursday
* Japan Tokyo CPI, unemployment, industrial production, Friday
* US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday
* Fed’s Thomas Barkin speaks, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.2% as of 4 p.m. New York time
* The Nasdaq 100 rose 0.3%
* The Dow Jones Industrial Average was little changed
* The MSCI World Index was little changed
Currencies
* The Bloomberg Dollar Spot Index rose 0.4%
* The euro fell 0.3% to $1.0680
* The British pound fell 0.5% to $1.2623
* The Japanese yen fell 0.7% to 160.80 per dollar
Cryptocurrencies
* Bitcoin fell 1.5% to $60,968.31
* Ether was little changed at $3,408.48
Bonds
* The yield on 10-year Treasuries advanced seven basis points to 4.31%
* Germany’s 10-year yield advanced four basis points to 2.45%
* Britain’s 10-year yield advanced five basis points to 4.13%
Commodities
* West Texas Intermediate crude fell 0.2% to $80.64 a barrel
* Spot gold fell 0.9% to $2,298.61 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Alexandra Semenova.

Have a lovely day.

Be magnificent!
As ever,

Carolann
There is a crack in everything.  That’s how the light gets in. -Leonard Cohen, 1934-2016.

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