October 10, 2024, Newsletter

Dear Friends,

Tangents:
Carolann is away from the office for a conference, I will be writing the newsletter on her behalf.

October 10, 1845: The United States Naval Academy was founded in Annapolis, Maryland
October 10,1889: Barnard College is founded in New York City after Columbia University refuses to accept women
October 10, 1963: American chemist and anti-nuclear weapons campaigner Linus Pauling wins the Nobel Peace Prize the same day the first nuclear test treaty comes into effect

Watch atoms fuse into world’s ‘smallest bubble’ of water in 1st-of-its-kind ‘nanoscale’ video
A new study captured never-before-seen footage of hydrogen and oxygen atoms combining to form a miniature water droplet out of “thin air.” The newly improved reaction could one day help astronauts make water in space.

‘Severe’ solar storm that hit Earth Thursday could be ‘global phenomenon’ with auroras as far south as California
A powerful solar outburst hit Earth Thursday, triggering a “severe” geomagnetic storm. Auroras could be visible as far south as California and Alabama, NOAA predicts. Read more.

Google’s Sycamore quantum computer chip can now outperform the fastest supercomputers, new study suggests
Experiments on Google’s 67-qubit Sycamore processor showed operations entering a new “weak noise phase” in which calculations were complex enough to outperform supercomputers, based on benchmark testing. Read more.

PHOTOS OF THE DAY

Dublin, Ireland
A male fallow deer in Dublin’s Phoenix park
Photograph: Brian Lawless/PA

Free as a Bird by Alberto Román Gómez (Spain)
The winner of the 10 years and under category contrasts a delicate stonechat bird with a hefty chain. Watching from the window of his father’s car at the edge of the Sierra de Grazalema nature park, Alberto found this young bird tricky to photograph as it was quickly flying back and forth, gathering insects. To Alberto, the stonechat displayed a sense of ownership, as if it were a young guardian overseeing its territory
Photograph: Alberto Román Góme/2024 Wildlife Photographer of the Year

​​​​​​​Old Man of the Glen by Fortunato Gatto (Italy)
The winner of the plants and fungi category focuses on a gnarled old birch tree adorned with pale ‘old man’s beard’ lichens. Gatto often visits the Glen Affric ancient pinewoods alone to lose himself in its intricate, chaotic, timeless beauty. The pale ‘old man’s beard’ lichens indicate that it’s an area of minimal air pollution. Analysis of pollen preserved in the layered sediments shows that the forest has stood here for at least 8,300 years
Photograph: Fortunato Gatto/2024 Wildlife Photographer of the Year
Market Closes for October 10^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1962, the Self-Employed Individual Retirement Tax Act of 1962 became federal law, creating the Keogh plan, the first retirement account that an individual could control and determine for themself.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.3%, or 77.36 to 24,302.26 in Toronto.
Canadian Natural Resources Ltd. contributed the most to the index gain, increasing 2.7%.
K92 Mining Inc. had the largest increase, rising 16.6%.
Today, 122 of 223 shares rose, while 99 fell; 5 of 11 sectors were higher, led by materials stocks.
Insights
* This year, the index rose 16%, heading for the best year since 2021
* So far this week, the index rose 0.6%
* The index advanced 25% in the past 52 weeks. The MSCI AC Americas Index gained 32% in the same period
* The S&P/TSX Composite is at its 52-week high and 30% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 1.4% in the past 5 days and rose 5.6% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 19.4 on a trailing basis and 16.9 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.8% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.84t
* 30-day price volatility fell to 9.22% compared with 9.24% in the previous session and the average of 10.76% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | 63.5098| 2.1| 44/7
Energy | 51.8787| 1.2| 34/7
Industrials | 11.5766| 0.4| 11/16
Consumer Staples | 3.7414| 0.4| 2/8
Health Care | 0.0168| 0.0| 1/3
Consumer Discretionary | -0.9257| -0.1| 3/8
Utilities | -2.7006| -0.3| 3/12
Communication Services | -3.2847| -0.5| 2/3
Real Estate | -4.9712| -0.9| 0/20
Information Technology | -8.7754| -0.4| 3/7
Financials | -32.7106| -0.4| 19/8
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Canadian Natural Resources | 20.2200| 2.7| -56.4| 18.6
Suncor | 12.6000| 2.6| 6.1| 31.0
Bank of Montreal | 11.2600| 1.8| 86.1| -4.4
CIBC | -4.8760| -0.9| -24.8| 28.4
Shopify | -4.9900| -0.5| -48.0| 10.3
RBC | -6.9210| -0.4| 47.4| 24.6
US
By Rita Nazareth
(Bloomberg) — Stocks fell after data showed hotter-than-expected inflation and a slowdown in the labor market, amplifying the debate on whether the Federal Reserve will opt for a smaller rate cut next month or a pause after a large September reduction.
Following a rally to all-time highs, the S&P 500 took a breather.
While Thursday’s economic figures were not perceived by Wall Street as catastrophic, they certainly highlighted the Fed’s challenge of bringing inflation back to the 2% target without cooling the jobs market too much.
And that has added to the debate about the Fed’s next steps.
For now, bond traders continued to bet the central bank will reduce the pace of cuts to 25 basis points in November.
Three Fed policymakers — John Williams, Austan Goolsbee and Thomas Barkin were unfazed by a higher-than-forecast consumer price index, suggesting officials can continue lowering rates.
The outlier was Raphael Bostic of the Atlanta Fed.
In an interview with the Wall Street Journal he revealed that, in projections released in September, he had called for one additional quarter-point cut this year.
The Fed has two remaining meetings in 2024.
“One slightly hotter-than-expected CPI reading doesn’t mean a new wave of inflation has been unleashed, but the fact that it accompanied a jump in weekly jobless claims may add to short-term market uncertainty,” said Chris Larkin at E*Trade from Morgan Stanley. “These weren’t good numbers — but that doesn’t mean they upended the larger outlook for solid economic growth and moderate inflation.”
In a note titled “The Fed’s quandary as inflation warmer while labor cooler,” Quincy Krosby at LPL Financial says the latest economic numbers were not the combination the Fed wants to see.
“If inflation data continues to indicate that prices are generally rising amid a backdrop of a cooler labor market, the Fed’s next meeting will undoubtedly involve a more heated discussion of which of the Fed’s mandates takes precedence,” she noted.
The S&P 500 fell 0.2%.
Most major groups retreated, though energy shares joined oil higher as the market awaited Israel’s response to Iran’s missile attack.
Megacaps were mixed, with Nvidia Corp. up and Apple Inc. down.
Tesla Inc. edged lower ahead of the launch of the company’s fully self-driving vehicle.
The yield on 10-year Treasuries was little changed at 4.07%.
The Bloomberg Dollar Spot Index wavered.

Wall Street’s Reaction:
* Bret Kenwell at eToro:
Today’s CPI report will lower enthusiasm around rate cuts next month, and if some of these other catalysts increase uncertainty, it could act as a short-term excuse for markets to pull back — particularly with the S&P 500 at all-time highs.
* David Donabedian at CIBC Private Wealth US:
The Fed said the last mile getting toward their inflation target is going to be tough, and that is what we are seeing. But we still expect the Fed to cut rates by a quarter point in November, and likely a similar cut at the December meeting.
* Jim Baird at Plante Moran Financial Advisors:
If anything, the report was good enough to solidify the case for another quarter-point cut. Inflation hasn’t receded so rapidly to justify an accelerated pace of policy easing, but the upside surprise also wasn’t sufficient to raise serious questions about the underlying disinflationary trend.
* Mark Hamrick at Bankrate:
The Federal Reserve isn’t yet in position to declare ‘mission accomplished’ in the battle against inflation, and the ride to the 2% target continues to be bumpy at times. Mindful of its dual mandate prioritizing maximum employment and stable prices, it will be eager to see the next monthly jobs report in early November before the next announcement on rates. A safe bet for now is rate reductions of one-quarter of 1% at the final two meetings of the year.
* Will Compernolle at FHN Financial:
The CPI surprised to the upside in September, rising faster than the consensus expectation in both the headline index and the core. The core increase wasn’t hot enough to rule out a November rate cut, however.
* Skyler Weinand at Regan Capital:
The Fed has shown that they’re willing to let inflation potentially run hotter than normal in favor of full employment.
Only a rise towards 4% inflation or a few hot inflation prints in a row would alter the Fed’s course of continued rate cuts over the next year.
* Chris Zaccarelli at Independent Advisor Alliance:
Given that the most recent jobs report was so strong, it was possible that a big upside surprise to inflation could have caused the Fed to pause at the next meeting and leave rates unchanged. However, given that this month’s report was a little higher than expected it is still likely that the Fed will go ahead and cut by 25 bps next month and – if nothing in the labor market or inflation readings materially changes by the end of the year –another 25 bps in December.
* Richard Flynn at Charles Schwab UK:
The market reacted negatively to recent indications from policymakers that the next cut would be 0.25%, however, history tells us that consecutive dramatic rate cuts tend to come about when the economy is in distress, so while we expect a cut next month, investors may be wise to hope for a gradual drop.

Corporate Highlights:
* Delta Air Lines Inc. forecast profit and sales short of Wall Street’s estimates for the final months of the year, suggesting a slow recovery from a challenging summer travel season.
* Domino’s Pizza Inc. trimmed its 2024 projection for sales growth and new locations as slower consumer spending hits the restaurant industry.
* Pfizer Inc. company officials threatened legal action against two former top executives who had been working with Starboard Value to push for changes at the drugmaker, the activist investor alleged Thursday in a letter to the company’s board.
* GXO Logistics Inc., the supply-chain services provider that spun off from trucking company XPO Inc. in 2021, is exploring a sale, according to people familiar with the matter.
* Eli Lilly & Co. is ramping up its legal campaign against companies that were temporarily allowed to make and sell copycat versions of its blockbuster drugs used for weight loss until a US shortage ended last week.
* Toronto-Dominion Bank will pay almost $3.1 billion in fines and other penalties and face a cap on its US retail banking assets, after pleading guilty to failing to prevent money laundering by drug cartels and other criminals.

Key events this week:
* JPMorgan, Wells Fargo kick off earnings season for the big Wall Street banks, Friday
* US PPI, University of Michigan consumer sentiment, Friday
* Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.2% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.1%
* The Dow Jones Industrial Average fell 0.1%
* The MSCI World Index fell 0.1%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro was little changed at $1.0936
* The British pound was little changed at $1.3058
* The Japanese yen rose 0.5% to 148.55 per dollar
Cryptocurrencies
* Bitcoin fell 1.1% to $59,720.89
* Ether rose 0.5% to $2,365.4
Bonds
* The yield on 10-year Treasuries was little changed at 4.07%
* Germany’s 10-year yield was little changed at 2.26%
* Britain’s 10-year yield advanced three basis points to 4.21%
Commodities
* West Texas Intermediate crude rose 3.6% to $75.91 a barrel
* Spot gold rose 0.8% to $2,629.53 an ounce

This story was produced with the assistance of Bloomberg Automation.

Have a lovely evening everyone.

Be magnificent!

Shab
” There is only one corner of the universe you can be certain of improving, and that’s your own self.”– Aldous Huxley

Shab Mohammadpour
Assistant to Carolann Steinhoff
Queensbury Securities Inc.

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