August 6, 2024, Newsletter

Dear Friends,

Tangents:
Hiroshima Day.
On Aug. 6, 1945, the United States dropped an atomic bomb on Hiroshima, Japan, that instantly killed an estimated 66,000 people in the first use of a nuclear weapon in warfare.  Go to article >>

Alfred Lord Tennyson, poet, b. 1809.
Lucille Ball, comic actress, b.1911.
Andy Warhol, artist, b.1928.

17th-century pirate ‘corsair’ shipwreck discovered off Morocco’s Barbary Coast
The wreck is the first time the remains of a pirate corsair have been found in the region known as the Barbary Coast. Read More.

Dancing Girl: A pint-size statue from the Indus Valley Civilization with a larger-than-life presence
The statue was created by the Indus Valley Civilization, a Bronze Age culture that once inhabited what is now Pakistan. Full Story: Live Science (8/5)

Sapphires form inside the fiery hearts of volcanoes, not deep in the mantle like we thought
A new study of sapphires found in volcanic fields in Germany reveals that these beautiful blue stones form where magma and rocks from Earth’s crust mix. Read More.

We finally know where the moon’s atmosphere comes from
“We give a definitive answer that meteorite impact vaporization is the dominant process that creates the lunar atmosphere.” Read More.

Why do you feel less hungry when it’s hot out?
We know that people in colder environments eat more calories. But why does our hunger abate in the heat? Read More.

Drop the beat: Breaking is making its Olympics debut in Paris
The breaking competition this Friday and Saturday will feature athletes from more than a dozen countries. Here’s how their performances will be scored.

Eat the beet: Why you should get 5 fruit and vegetable servings a day
Fruits and vegetables are without question an important part of nutrition — but a new study shows how important they are to chronic disease prevention.

China moon samples reveal water molecules in major discovery
Finding water on the moon is, on its own, nothing new. But experts say one of China’s groundbreaking discoveries could help understand how water is stored on the lunar surface.

How did ancient Egyptians stack the stones of the oldest pyramid?
Scientists are floating a new theory on how Egypt’s first pyramid was built more than 4,000 years ago.

New tech will trap CO2 from cargo ships and store it in the ocean
A US startup wants to equip cargo ships with reactors that turn carbon dioxide from the engines into ocean salts. Here’s how the process could significantly reduce ships’ CO2 emissions.

PHOTOS OF THE DAY

New Jersey, US
Mammatus clouds pass over the lower Manhattan skyline as the sun sets over New York City
Photograph: Gary Hershorn/Getty Images

Hangzhou, China
People browsing in a bookshop
Photograph: AFP/Getty Images

​​​​​​​Frankfurt, Germany
A regional train passes fields in Wertheim, near Frankfurt, early in the morning
Photograph: Michael Probst/AP
Market Closes for August 6^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1979: Paul Volcker took office as chair of the Federal Reserve Board. Over the following decade, Volcker broke the back of inflation by pushing interest rates as high as 20%.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the third day, dropping 1.1%, or 248.27 to 21,979.36 in Toronto.
The index dropped to the lowest closing level since July 2.
Toronto-Dominion Bank contributed the most to the index decline, decreasing 1.7%.
Algoma Steel Group Inc. had the largest drop, falling 7.0%.
Today, 168 of 226 shares fell, while 53 rose; 9 of 11 sectors were lower, led by materials stocks.
Insights
* In the past year, the index had a similar or greater loss 16 times. The next day, it declined 10 times for an average 0.6% and advanced six times for an average 0.6%
* The index advanced 8.6% in the past 52 weeks. The MSCI AC Americas Index gained 16% in the same period
* The S&P/TSX Composite is 5.3% below its 52-week high on July 31, 2024 and 17.6% above its low on Oct. 27, 2023
* The S&P/TSX Composite is down 3.5% in the past 5 days and fell 0.4% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 17.7 on a trailing basis and 15 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$3.53t
* 30-day price volatility fell to 13.93% compared with 14.01% in the previous session and the average of 11.24% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | -80.4847| -2.9| 2/50
Financials | -69.9927| -1.0| 2/25
Industrials | -39.2428| -1.3| 8/19
Information Technology | -19.7024| -1.2| 3/7
Consumer Staples | -13.0749| -1.3| 1/10
Energy | -11.1262| -0.3| 12/27
Consumer Discretionary | -10.2968| -1.3| 1/12
Utilities | -3.3412| -0.4| 8/6
Health Care | -1.3330| -2.1| 0/4
Real Estate | 0.1489| 0.0| 13/6
Communication Services | 0.1530| 0.0| 3/2
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
TD Bank | -16.5900| -1.7| 40.5| -9.7
Canadian Pacific Kansas | -15.1200| -2.1| 77.1| 2.0
Wheaton Precious Metals | -13.4900| -5.3| 81.4| 15.8
Intact Financial | 2.5060| 0.8| 64.5| 22.0
Restaurant Brands | 3.4050| 1.6| 21.7| -4.6
BCE | 3.8250| 1.3| 90.7| -7.6
US
By Rita Nazareth
(Bloomberg) — A renewed wave of dip buying spurred a rebound in stocks after a roughly $6.5 trillion selloff that shook markets around the globe.
All major groups in the S&P 500 rose, with the gauge finishing 1% higher as dip buyers emerged to scoop up bargains left after a plunge that sent major benchmarks to “oversold” territory.
During Monday’s big rout, hedge funds that make both bullish and bearish equity wagers snapped up individual US stocks at the fastest pace since March, reversing a months-long selling spree,  according to Goldman Sachs Group Inc.’s prime brokerage.
A day later, Wall Street’s “fear gauge” — the VIX — sank the most since 2010.
A semblance of calm returned to markets, following a pullback fueled by weak economic data, underwhelming tech results, stretched positioning and poor seasonal trends.
Buying US shares after a slump of the scale witnessed over the past month has usually been profitable, according to Goldman Sachs.
Since 1980, the US benchmark has generated a median return of 6% in the three months that followed a 5% decline from a recent high.
“The market by any metric is ‘oversold’ and due for a bounce,” said Quincy Krosby at LPL Financial. “The lingering question now is whether the concerns that pushed the market into a cascade of selling are alleviated. Pockets of volatility are expected to continue.”
As demand for haven assets waned globally, Treasuries fell — with the rise in yields helping smooth a $58 billion auction of three-year notes in afternoon trade.
Traders are also moderating expectations of deep Federal Reserve rate cuts this year.
Swaps point to around 105 basis points of easing, compared to as much as 150 basis points on Monday.
“The Fed worries about systemic risk in financial markets, not disappointed investors,” said David Donabedian at CIBC Private Wealth US.
“Thus, the Fed is unlikely to change its course of action due to a stock market correction. Are we headed for a near term recession, or are markets overreacting? We believe slower growth is unfolding, not a recession.”
The S&P 500 rose to 5,240.
Nvidia Corp. jumped 3.8% to lead gains in chipmakers.
Both the “Magnificent Seven” gaige of mega caps and the Russell 2000 of small firms added 1.2%.
In late trading, Airbnb Inc. gave a disappointing outlook.
Amgen Inc. reported sales that beat estimates and said it planned to increase capital spending on its obesity drug.
Treasury 10-year yields jumped 10 basis points to 3.89%.
The Japanese yen slipped after a recent surge that saw an unwind of popular carry trades. Bitcoin climbed.
Oil bounced back from a seven-month low.
The wall of worry the market built up over the past few days drove the S&P 500 to the brink of a correction, with a drawdown of about 8.5% from the highs.
While such sharp declines in equity prices are concerning, historic data show “dips, pullbacks and corrections of 10% or more” are a normal and healthy part of any bull market, according to George Smith at LPL Financial.
Roughly 94% of the years since 1928 have experienced a pullback of at least 5%, and 64% of years have had at least one 10% correction, he noted.
“We believe that how common these occurrences are should provide comfort to equity investors, allowing them to be patient, stay invested, and most importantly, to not panic,” Smith said.
There have been 354 such days since 1928 when the S&P 500 was down 3% or more, and the average (and median) three-month, six month and one year forward returns are all higher than long-term averages, Smith at LPL noted.
“Excesses are burned off. It doesn’t feel good, but it’s a healthy part of the process,” said Ben Kirby at Thornburg Investment Management.
Donabedian at CIBC says volatility may persist for a while.
But ultimately, he believes the secular bull market will continue.
“Corrections happen. Even in the best of times, stock prices do not go up in a straight line,” he noted.
“As easier monetary policy takes hold in the months ahead, it may also unleash a more balanced tone to equity returns, and the search for value beyond the Magnificent Seven.”
To Lauren Goodwin at New York Life Investments, evidence against the prevailing “soft landing” view has forced the market to catch up to reality, but there’s not enough evidence to merit panic selling and an emergency acceleration of interest rate cuts.
“We would characterize the recent market pullback as a textbook correction, after months of low volatility so far in 2024,” said Carol Schleif at BMO Family Office.
“The lack of volatility before the past few weeks is unusual, and our current correction is actually quite normal, especially during August, which historically is a volatile time for markets given lighter trading volumes and the summer doldrums.”
Schleif warns that while the equity market came to correction territory, it’s typically wise to let a bit of dust settle before putting new money to work as there is risk of “catching a falling knife.”
“Get used to the volatility,” said Savita Subramanian at Bank of America Corp. “The best hedge is owning high quality stocks (we use earnings and dividend stability as our key measure).
Market tranches based on quality have a well-behaved relationship with the VIX – the highest quality stocks tend to outperform as the VIX rises while the lowest quality stocks tend to lag the most.”
Long-term investors don’t need to worry about short-term gyrations, said Michael Sansoterra at Silvant Capital Management.
“It’s good to have these washouts on occasion,” he said. “They keep investors honest.”

Key events this week:
* China trade, forex reserves, Wednesday
* US consumer credit, Wednesday
* Germany industrial production, Thursday
* US initial jobless claims, Thursday
* Fed’s Thomas Barkin speaks, Thursday
* China PPI, CPI, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 1% as of 4 p.m. New York time
* The Nasdaq 100 rose 1%
* The Dow Jones Industrial Average rose 0.8%
* The MSCI World Index rose 1.1%
* Bloomberg Magnificent 7 Total Return Index rose 1.2%
* The Russell 2000 Index rose 1.2%
Currencies
* The Bloomberg Dollar Spot Index rose 0.3%
* The euro fell 0.2% to $1.0931
* The British pound fell 0.7% to $1.2691
* The Japanese yen fell 0.3% to 144.64 per dollar
Cryptocurrencies
* Bitcoin rose 3.9% to $56,496.85
* Ether rose 1.8% to $2,479.86
Bonds
* The yield on 10-year Treasuries advanced 10 basis points to 3.89%
* Germany’s 10-year yield advanced one basis point to 2.20%
* Britain’s 10-year yield advanced five basis points to 3.92%
Commodities
* West Texas Intermediate crude rose 0.1% to $73.03 a barrel
* Spot gold fell 0.9% to $2,388.03 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Robert Brand, Aya Wagatsuma, Rheaa Rao and Isabelle Lee.
Have a lovely evening.

Be magnificent!

As ever,

Carolann
The bravest sight in the world is to see a great man struggling against adversity. –Lucius Annaeus Seneca, 4 BCE-65 CE.

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