August 26, 2024 Newsletter

Dear Friends,

Tangents: Happy Monday
Tonight is the last 8PM sunset of the year.

August 26, 1883: Krakatoa erupts; 36000 killed.
August 26^th, 1936: The Anglo-Egyptian Treaty establishes Egypt as a sovereign state after 50 year of British occupation.
In 1972, the summer Olympics opened in Munich, West Germany.
August 26^th, 2003: Investigators concluded that NASA’s overconfident management and inattention to safety doomed the space shuttle Columbia as much as damage to the craft did. Go to article >>

Christopher Columbus, explorer, b. 1451.

This is the world’s best-connected airport right now
Take a guess! This airport operates the most nonstop flights to hundreds of destinations worldwide — and it was only built in 2018.

The classic Volkswagen Beetle is all but extinct globally
But in Mexico, it’s a different story. Read why Beetle-fever lives on throughout the country.

$24 million
That’s how much this iconic Babe Ruth jersey fetched at auction on Sunday — making it the world’s most valuable sports collectible.

PHOTOS OF THE DAY

East Yorkshire, UK
A rider and horse during an English Civil War Society re-enactment event at Wressle Castle
Photograph: Danny Lawson/PA

Nanning, China
Tree roots abut the ancient city wall
Photograph: Costfoto/NurPhoto/Rex/Shutterstock

Tokyo, Japan
People take in the view at Odaiba marine park
Photograph: Philip Fongphilip Fong/AFP/Getty Images
Market Closes for August 26^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1919, the Coca-Cola Co. successfully sold shares to outsiders for the first time, as a syndicate of banks and brokers from around the country bought 417,000 shares to resell to retail investors at an initial offering price of $40. An earlier attempt at a stock offering in 1892 had failed.
Canada:
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.3%, or 62.89 to 23,348.97 in Toronto.
Canadian Natural Resources Ltd. contributed the most to the index gain, increasing 2.5%.
Ces Energy Solutions Corp. had the largest increase, rising 4.5%.
Today, 149 of 226 shares rose, while 68 fell; 9 of 11 sectors were higher, led by energy stocks.
Insights
* This month, the index rose 1%
* The index advanced 18% in the past 52 weeks. The MSCI AC Americas Index gained 27% in the same period
* The S&P/TSX Composite is at its 52-week high and 24.9% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 1% in the past 5 days and rose 2.3% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.7 on a trailing basis and 15.9 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.9% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.7t
* 30-day price volatility little changed to 14.21% compared with 14.22% in the previous session and the average of 13.53% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 46.1267| 1.1| 35/5
Financials | 7.3209| 0.1| 15/10
Industrials | 6.4572| 0.2| 17/11
Materials | 4.5023| 0.2| 27/22
Consumer Discretionary | 4.4746| 0.6| 10/3
Utilities | 2.7870| 0.3| 11/4
Communication Services | 2.4448| 0.3| 4/1
Real Estate | 2.4191| 0.5| 15/3
Consumer Staples | 1.5206| 0.2| 8/3
Health Care | -0.1952| -0.3| 2/2
Information Technology | -14.9613| -0.8| 5/4
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
Canadian Natural Resources | 18.2800| 2.5| 182.5| 16.3
Suncor | 9.7030| 2.0| 48.0| 32.5
Canadian Pacific Kansas | 3.7150| 0.5| -26.6| 6.3
Agnico Eagle Mines Limited/Limitee | -2.7220| -0.7| -49.1| 52.9
TD Bank | -4.5820| -0.5| -59.4| -6.8
Shopify | -15.2100| -1.8| -22.1| -2.0
US:
By Rita Nazareth
(Bloomberg) — The world’s largest technology companies dragged down stocks after a rally that put the market on the brink of its all-time highs, with Nvidia Corp.’s earnings due in just a few days.
A gauge of the “Magnificent Seven” mega caps slid 1.2%.
An equal-weighted version of the S&P 500 — one that gives Target Corp. as much clout as Microsoft Corp. — briefly hit record highs on hopes the bull market will broaden out of big tech after Jerome Powell signaled Friday the Fed will cut rates soon.
The Dow Jones Industrial Average of blue chips closed at a peak.
“Powell sealed the deal for a September cut at Jackson Hole — leaving intact our thesis for continued broadening/rotation,” said Ohsung Kwon at Bank of America Corp. “But don’t sleep on Nvidia earnings, a consistent driver of S&P returns and still a risk to markets if they disappoint.”
Strong flows from corporate buybacks, systematic funds and retail investors are expected to push stocks higher in the coming weeks, according to Goldman Sachs Group Inc.’s Scott Rubner.
He estimates there will be $17 billion of “unemotional demand between robots and corporates every day this week.”
Rubner also sees a so-called “green sweep” for commodity trading advisers, or CTAs, over the coming week, which means those funds will likely be buying stocks however the market trades.
Traders continued to keep a close eye on US policymakers, with Fed Bank of San Francisco President Mary Daly telling Bloomberg Television she believes it’s appropriate to begin cutting rates.
Her Richmond counterpart Thomas Barkin says he still sees upside risks for inflation, though he supports “dialing down” rates in the face of a cooling labor market.
The S&P 500 fell to around 5,615 amid thin trading volume.
The tech-heavy Nasdaq 100 fell 1%. The Russell 2000 of smaller firms closed little changed.
Treasury 10-year yields rose two basis points to 3.82%.
Oil advanced after Libya’s eastern government said it will halt exports, building on tensions in the Middle East after Israeli strikes on Hezbollah targets in southern Lebanon.
“The dovish commentary from Powell supports the narrative that inflation is trending lower, and the Fed would soon be cutting rates, underpinning ‘SMID-cap’ (small-mid) stocks,” said Craig Johnson at Piper Sandler.
The market has been on a healthier track over the past few weeks, moving away from the overly strong reliance on a few big tech names that we saw in the first seven months this year, according to Mark Hackett at Nationwide.
With that said, we are currently in what can best be described as a “market pause,” he noted.
“September is historically the worst month on the calendar, so investors should expect some volatility, especially if key indicators like the PCE inflation data, Nvidia earnings, or upcoming payroll disappoint, he said.
To Chris Larkin at E*TRADE from Morgan Stanley, in order to push to fresh highs this week, stocks may need to avoid any major surprises from earnings — especially Nvidia — “which has been driving a good deal of the sentiment in the tech sector.”
Expectations heading into the giant chipmaker’s earnings on Wednesday are high, with analysts anticipating another strong consensus beat that could prompt the chipmaker to raise its profit guidance.
Trading in the options market suggest investors see potential for a 9% move in either direction on the day following the report, Citigroup Inc.’s Vishal Vivek said last week.
“Move over, Powell. It’s Jensen Huang’s turn to move markets,” said Anthony Saglimbene at Ameriprise, referring to Nvidia’s chief. “In our view, Nvidia’s earnings report this week may actually have more impact on the overall market than
Powell’s Jackson Hole speech last week.”
Its report this week will wrap up results for the “Magnificent Seven,” which combined are on track to post 34% year-over-year growth in earnings for the second quarter — compared to 6% for the rest of the S&P 500, according to Jason
Pride and Michael Reynolds at Glenmede.
This comes after a nearly year-long period in which the cohort of mega caps posted earnings growth of more than 40% — while the rest of the index saw outright declines.
“The back half of this year is likely to be the beginning of a process that gives way to broader fundamental improvement,” they said. “Broader earnings growth participation should favor small caps and investment processes that avoid the pitfalls of market concentration.”
“At current valuations, stocks are expensive and any further upside will depend on improving earnings,” said Richard Saperstein at Treasury Partners. “Abundant liquidity coupled with declining inflation and an accommodative central bank will provide the backdrop for higher stock prices.”
S&P 500 returns following the initial Fed rate cut tend to be positive — unless the economy falls into recession, according to Keith Lerner at Truist Advisory Services, who also notes that’s not his base-case scenario.
“Small caps are likely to do better in the near term — but longer term we still prefer large caps,” Lerner said. “Small caps are a greater beneficiary of lower short-term rates, and valuations are cheap.
However, historical trends after first Fed rate cut are mixed, earnings trends are still weak, and a cooling economy is historically a headwind for the asset class.”
“Growth stocks are losing bullish momentum right now in both outright price and relative strength to the S&P 500 while the opposite is true for value stocks which hit fresh all-time highs last week and are stabilizing relative to the S&P 500,”
said Tom Essaye at The Sevens Report.
“More evidence is needed but a value-over-growth trade is emerging.”
While it’s hard to stand in front of a market trending higher that is about to get rate cuts, we continue to think equities will show some consolidation around the area of prior highs, said Jonathan Krinsky at BTIG.
“No rush to push all your chips in right here, especially as we enter one of the worst seasonal stretches of the year,” Krinsky noted. “Small caps remain above their key breakout level, but we are more interested in the potential turn in the
relative trend. Rate cuts should help this trade, assuming the eco data holds up.”
US inflation figures in the coming week will reinforce that long-awaited interest-rate cuts are coming soon, while a reading on consumer spending is seen indicating that the central bank has been successful at keeping the expansion intact.
Economists see the personal consumption expenditures price index excluding food and energy — the Fed’s preferred measure of underlying inflation — rising 0.2% in July for a second month.
That would pull the three-month annualized rate of so-called core inflation down to 2.1%, a smidgen above the central bank’s 2% goal.

Corporate Highlights:
* Elliott Investment Management has increased its equity stake in Southwest Airlines Co. to 9.7%, nearing the amount needed to call a special shareholder meeting at which the activist hopes to replace most of the carrier’s board.
* Apple Inc. has sent out invitations for a product launch event at its headquarters on Sept. 9, when it’s set to announce details of the iPhone 16 and other new devices.
* Applied Materials Inc. said the US Department of Justice has requested information on its applications for federal grants, adding another layer to government investigations into its operations.
* Paramount Global is moving ahead with asset disposals to raise cash, people familiar with the matter said, amid the ongoing takeover saga involving the media company.
* McKesson Corp. agreed to buy a controlling stake in an arm of Florida Cancer Specialists & Research Institute, a privately held operator of clinics.
* PDD Holdings Inc.’s shares tumbled after Temu’s owner warned that revenue growth will inevitably dwindle, highlighting the challenges of sustaining its pace of expansion against aggressive rivals like ByteDance Ltd.

Key events this week:
* China industrial profits, Tuesday
* Germany GDP, Tuesday
* US Conference Board consumer confidence, Tuesday
* Nvidia earnings, Wednesday
* Fed’s Raphael Bostic and Christopher Waller speak, Wednesday
* Eurozone consumer confidence, Thursday
* US GDP, initial jobless claims, Thursday
* Fed’s Raphael Bostic speaks, Thursday
* Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
* Eurozone CPI, unemployment, Friday
* US personal income, spending, PCE; consumer sentiment, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.3% as of 4 p.m. New York time
* The Nasdaq 100 fell 1%
* The Dow Jones Industrial Average rose 0.2%
* The MSCI World Index fell 0.3%
* Bloomberg Magnificent 7 Total Return Index fell 1.2%
* The Russell 2000 Index was little changed
Currencies
* The Bloomberg Dollar Spot Index rose 0.3%
* The euro fell 0.3% to $1.1160
* The British pound fell 0.2% to $1.3185
* The Japanese yen fell 0.1% to 144.58 per dollar
Cryptocurrencies
* Bitcoin fell 1.4% to $63,359.76
* Ether fell 3.2% to $2,681.56
Bonds
* The yield on 10-year Treasuries advanced two basis points to 3.82%
* Germany’s 10-year yield advanced two basis points to 2.25%
* Britain’s 10-year yield declined five basis points to 3.91%
Commodities
* West Texas Intermediate crude rose 3% to $77.09 a barrel
* Spot gold rose 0.2% to $2,518.29 an ounce

This story was produced with the assistance of Bloomberg Automation.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
A truly great man is known by three signs…generosity in the design, humanity in the execution, moderation in success. –Otto von Bismarck, 1815-1898.

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