October 18, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday.

October 18, 1867 The United States took possession of Alaska from Russia.  Go to article >>
October 18, 1921: Charles Strite granted U.S. Patent for his invention, the automatic pop-up toaster.

Chuck Berry, b. 1926.
Martina Navratilova, b. 1956

Cleveland Guardians shock New York Yankees to cut series deficit to 2-1
With their stunning victory Thursday, the Cleveland Guardians will aim to even up the American League Championship Series in Game 4 later today.

17,000-year-old remains of blue-eyed baby boy unearthed in Italy

Watch bioluminescent algal blooms trigger electric-blue waves off San Diego coast in stunning new footage

Cryptic terrain’ and dark dust surrounds Mars’ icy south pole, new photos reveal

PHOTOS OF THE DAY

Los Angeles, California, US
Comet C/2023 A3 (Tsuchinshan-Atlas) streaks across the sky over Joshua Tree national park
Photograph: Qian Weizhong/VCG/Getty Images

Ginger nuts … a red squirrel forages for food at the Widdale Red Squirrel Reserve in the Yorkshire Dales National Park, UK
Photograph: Danny Lawson/PA

Common cranes fly above a reservoir at sunset near Balmazújváros, eastern Hungary
Photograph: Zsolt Czeglédi/EPA
Market Closes for October 18^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1937, the stock market tumbled on rumors that the Roosevelt administration was planning a crackdown on Wall Street. The Dow Jones Industrial Average lost over 7%, a major dip in the middle of the Great Depression.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the third day, climbing 0.5%, or 132.06 to 24,822.54 in Toronto.
Today, materials stocks led the market higher, as 9 of 11 sectors gained; 116 of 223 shares rose, while 105 fell.
Agnico Eagle Mines Ltd. contributed the most to the index gain, increasing 4.9%.
Iamgold Corp. had the largest increase, rising 16.6%.
Insights
* This year, the index rose 18%, heading for the best year since 2021
* So far this week, the index rose 1.4%, heading for the biggest advance since the week ended Sept. 13
* The index advanced 28% in the past 52 weeks. The MSCI AC Americas Index gained 35% in the same period
* The S&P/TSX Composite is at its 52-week high and 32.8% above its low on Oct. 27, 2023
* S&P/TSX Composite is trading at a price-to-earnings ratio of 19.8 on a trailing basis and 17.3 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$3.91t
* 30-day price volatility fell to 7.33% compared with 8.12% in the previous session and the average of 9.48% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | 98.0931| 3.2| 39/13
Financials | 15.2933| 0.2| 13/14
Information Technology | 13.7695| 0.7| 5/5
Energy | 10.5844| 0.2| 15/25
Consumer Discretionary | 3.4549| 0.4| 7/4
Utilities | 3.2350| 0.3| 10/5
Communication Services | 1.3326| 0.2| 2/3
Consumer Staples | 0.7308| 0.1| 5/6
Health Care | 0.0936| 0.1| 3/1
Real Estate | -1.9134| -0.4| 6/14
Industrials | -12.6125| -0.4| 11/15
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Agnico Eagle Mines Ltd | 19.4500| 4.9| 17.0| 63.8
Brookfield Corp | 15.1900| 2.0| -15.8| 46.5
Shopify | 13.1100| 1.4| -33.1| 10.7
Fairfax Financial | -4.7110| -1.8| -41.7| 41.4
RBC | -4.7460| -0.3| 122.0| 29.9
Canadian Pacific Kansas | -9.6480| -1.3| 4.6| 5.5
US
By Rita Nazareth
(Bloomberg) — Wall Street traders wading through a slew of corporate results and signs the world’s largest economy is holding up drove stocks to their longest weekly advance in 2024.
On the eve of the 37th anniversary of the “Black Monday” market crash, equities hit all-time highs amid gains in most major groups.
The S&P 500 was up for a sixth straight week.
The gauge’s equal-weighted version — one that gives Target Corp. as much clout as Microsoft Corp. — also rose to a record on hopes the rally will broaden out.
Netflix Inc. jumped 11% on solid earnings.
Apple Inc. climbed 1.2% as sales of its newest iPhones in China soared.
American Express Co. sank 3.2% after trimming its revenue forecast.
The bulk of the growth in S&P 500 earnings continues to come from mega caps, with the “Magnificent Seven” expected to show an 18% rise in third-quarter profits, according to Bloomberg Intelligence.
While the other firms are seen posting an only 1.8% increase in earnings, their results are projected to accelerate to double-digit gains in the first quarter of 2025.
“Earnings season is off to the races, and despite some mixed signals, appears to be in good shape,” said Liz Young Thomas, head of investment strategy at SoFi. “We’re in the early innings though, and coming up on the final days before the election and the next Fed meeting. Never a dull moment.”
With the odds tilting toward both Donald Trump winning the US presidential election and Republicans controlling Congress, investors have started ramping up assets which had thrived in the wake of the former president’s 2016 victory, according to Bank of America Corp. strategist Michael Hartnett.
Price action in the past week shows banks, small caps and the dollar are “front-running 2016 bull moves,” Hartnett wrote in a note.
US equities and the greenback surged in the immediate aftermath of Trump’s win over Hillary Clinton in November 2016.
The S&P 500 rose 0.4%, notching its 47th record in 2024.
The Nasdaq 100 climbed 0.7%.
The Dow Jones Industrial Average was little changed.
The Russell 2000 of smaller firms barely budged Friday, but was up almost 2% this week.
Treasury 10-year yields fell one basis point to 4.08%.
The Bloomberg Dollar Spot Index slid 0.2%.
Oil saw its largest weekly decline in more than a year as the US revived a push to end the conflict in the Middle East and China’s crude demand slipped. Gold topped $2,700.
In a note titled “Rotation Nation,” Mike O’Rourke at JonesTrading said most of this week has been about the rally broadening out.
While tech advanced, the group is lagging behind several other S&P 500 industries.
He says the deceleration of inflation since mid-2024 has opened the door for rate cuts.
And now economic strength has added accelerant to the mix.
“Investors no longer need to crowd into the size and safety of the Magnificent Seven,” O’Rourke said. “Ironically, that crowding has the ‘Magnificent Seven’ collectively trading at more than twice the P/E multiple of the other 493 S&P 500 names. While the ‘Magnificent Seven’ leaders generally remain strong, the rotation has been real.”
Even as the S&P 500 jumped from one record to the next this year, indicators that gauge investor sentiment found that mood was subdued, given uncertainties about the Federal Reserve, geopolitics and the US election.
This week, however, optimism has returned, though its timing is flashing a bearish signal for stocks.
Ned Davis Research’s Daily Trading Sentiment Composite returned to its optimistic zone on Tuesday, and history says every time this happened in an election year, stocks had a middling run through Election Day — on Nov. 5 this year.
On the other hand, when sentiment was pessimistic as of mid-October, the benchmark index posted a 2.5% median gain over a similar period.
“The bottom line is that the recent return to optimism could weigh on the market heading into a tight election,” said Ed Clissold, chief US strategist at Ned Davis. However, if rising political uncertainty from here dampens optimism, that would set the stage for a post-election rally, he added.
“We believe the environment remains constructive for US equities,” said David Lefkowitz at UBS Global Wealth Management.
“Earnings growth is broadening out. While the election outcome adds a layer of uncertainty, we don’t think any potential policy changes stemming from the election will significantly alter the environment. Valuations are high in absolute terms, but we think they are reasonable in light of the macro environment.”
To Quincy Krosby at LPL Financial, it is highly unlikely that investors and traders alike will feel the anxiety of missing out if the technology sector delivers weaker than expected numbers and softer guidance.
“A pullback as we inch closer to overbought technical conditions could offer a modicum of support as we enter a crucial week for earnings and move closer to what big tech reports and even more important, what big tech sees ahead,” she said.
Chris Senyek at Wolfe Research says strong earnings revisions for the “Magnificent Seven” year-to date raise the bar to beat higher expectations relative to the other S&P 500 firms.
“We believe that this group will likely need to beat by a larger margin than last quarter to return to the market’s leadership,” he said. “Along a similar vein, we believe reasonable expectations for the “Other 493” provides a lowered bar for upside surprises and supports our call for market performance to continue to ‘broaden out’ into year-end.”
“Will S&P 493 beat the ‘Magnificent Seven’? That’s a tough call considering how well the ‘Magnificent Seven’ companies historically have expanded their revenues, earnings and profitability,” said Ed Yardeni, founder of his namesake research firm.
However, the “Magnificent Seven” stocks have been volatile and susceptible to bouts of price weakness primarily due to concerns about their valuations and slowing rates of growth, he said.
Their rolling one-year performance has nearly matched or fallen below those of the S&P 500 and S&P 493 more than a few times in the past, when investors lightened their positions and rotated into the S&P 493 — specifically during late 2016, 2018-19, and 2021-23, according to Yardeni.
“While the Magnificent Seven has led the way since mid-2023, the S&P 493 is now beginning to catch up,” he concluded.
“The sustainability of the equity bull market is improving,” says David Donabedian at CIBC Private Wealth US.
“Just look at the fundamentals. Third-quarter earnings are solid. Economic data continues to point towards growth. This week retail sales were above expectation, telling us consumers are still spending. And positive market performance is broadening out.”
Looking into next week’s earnings, Tesla Inc. faces questions on its earnings call next week on production targets and regulatory challenges after the unveiling of its much-hyped Cybercab failed to enthuse investors and quell concerns over its recent vehicle sales.
Boeing Co. will also have to mollify investors increasingly concerned over production delays, labor strife and depleted financial resources.
Reports from United Parcel Service Inc., Norfolk Southern Corp. and Southwest Airlines Co. should reveal the combined impact of Hurricane Helene and the three-day East Coast dockworker strike on the recent quarter.

Corporate Highlights:
* Shares of Lamb Weston Holdings Inc. surged after activist investor Jana Partners said it had built up a 5% stake in the company in a bid to push the french-fry supplier to explore strategic alternatives.
* Procter & Gamble Co. posted a second straight quarter of sluggish sales growth, dragged down by minimal price increases and weakness in key areas such as skin and baby care.
* SLB warned oil explorers’ spending growth has waned in recent months as they take a cautious approach amid lower crude prices.
* Ally Financial Inc. shares fell after the auto lender gave a more pessimistic outlook for loan charge-offs and lowered its net interest margin forecast as consumers struggle with expensive debts.
* Verizon Communications Inc., the biggest wireless carrier in the US, will buy some of US Cellular Corp.’s spectrum licenses for $1 billion as the tower operator sheds parts of its portfolio.
* Warren Buffett sold another slug of Bank of America Corp. stock after the lender repurchased enough of its own shares to nudge his stake back above 10% — a regulatory threshold that requires rapid disclosure.
* CVS Health Corp. named David Joyner as its new chief executive officer, ending a tumultuous tenure for Karen Lynch at the pharmacy giant.
* BMW AG is recalling nearly 700,000 vehicles in China due to coolant pump defects, a fresh setback for the German carmaker that’s reeling from other vehicle faults.

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.4% as of 4 p.m. New York time
* The Nasdaq 100 rose 0.7%
* The Dow Jones Industrial Average was little changed
* The MSCI World Index rose 0.4%
* S&P 500 Equal Weighted Index rose 0.3%
* Bloomberg Magnificent 7 Total Return Index rose 0.5%
* The Russell 2000 Index fell 0.2%
Currencies
* The Bloomberg Dollar Spot Index fell 0.2%
* The euro rose 0.3% to $1.0864
* The British pound rose 0.2% to $1.3042
* The Japanese yen rose 0.4% to 149.54 per dollar
Cryptocurrencies
* Bitcoin rose 2.5% to $68,591.88
* Ether rose 2% to $2,649.62
Bonds
* The yield on 10-year Treasuries declined one basis point to 4.08%
* Germany’s 10-year yield declined three basis points to 2.18%
* Britain’s 10-year yield declined three basis points to 4.06%
Commodities
* West Texas Intermediate crude fell 1.8% to $69.39 a barrel
* Spot gold rose 1% to $2,719.59 an ounce

This story was produced with the assistance of Bloomberg Automation.

Have a wonderful weekend everyone.

Be magnificent!

As ever,

Carolann
The world turns aside to let any man pass who knows where he is going. -Epictetus, c. 50-135 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 (Text Only)
Toll Free: 1.877.430.5895
Fax: 778.430.5828
www.carolannsteinhoff.com