October 23, 2024 Newsletter

Dear Friends,

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

Before and after satellite images show lakes appearing across Sahara after deluge of rain soaks desert
Lakes appearing in the Sahara desert captured in satellite images after a cyclone dumped a years’ worth of rain on northern Africa in just a few days.

Tiny photosynthetic aliens could be lurking in hidden bubbles in Mars’ ice — and could soon be replicated on Earth
A new NASA-led study suggests that photosynthetic microbes could thrive in hidden bubbles of meltwater below patches of ice on Mars. This could be one of the easiest places to search for extraterrestrial life “anywhere in the universe,” the team says.

2,000-year-old temple from ‘Indiana Jones civilization’ found submerged off Italy
An ancient temple made by Arabian immigrants from the Nabataean culture has finally been found off the Italian coast near Naples.

Largest known prime number, spanning 41 million digits, discovered by amateur mathematician using free software
The largest known prime number has been discovered, smashing the previous record by more than 16 million digits.

1st wheel was invented 6,000 years ago in the Carpathian Mountains, modeling study suggests
It’s possible that the wheel was invented by copper miners in the Carpathian Mountains up to 6,000 years ago, according to a modeling study that uses techniques from structural mechanics.

Doctors no longer recommend ‘self-checks’ for breast cancer — here’s what to know
Breast self-exams used to be recommended as a part of routine breast cancer screening. Here’s why the guidelines changed and what experts recommend instead. Read more.

PICTURES OF THE DAY

Lancashire, UK
‘Starlings fighting for food in an autumn garden in Lytham St Annes.’
Photograph: Victor Burnside

Patagonia, Chile
‘This photo was taken on Grey Lake in Torres del Paine national park. I had no idea icebergs could be this beautiful blue.’
Photograph: John Whitehurst

London, UK
‘While waiting to go to a late-night concert (Tinariwen) at the Royal Albert Hall at the end of August this year, the sky lit up with this amazing sunset. I thought this group of figures on the memorial gave the image an apocalyptic feel.’
Photograph: Jim Turner
Market Closes for October 23^rd, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1868, memberships, or “seats,” at the New York Stock Exchange went on sale for the first time. The price for a seat peaked at around $4 million in 2005, before NYSE went public and moved to a licensing model the following year.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the third day, dropping 0.6%, or 143.09 to 24,573.62 in Toronto.
The move was the biggest since falling 0.9% on Sept. 6.
Shopify Inc. contributed the most to the index decline, decreasing 2.3%.
Seabridge Gold Inc. had the largest drop, falling 6.4%.
Today, 170 of 223 shares fell, while 52 rose; 9 of 11 sectors were lower, led by energy stocks.
Insights
* This year, the index rose 17%, heading for the best year since 2021
* This month, the index rose 2.4%
* The index advanced 29% in the past 52 weeks. The MSCI AC Americas Index gained 37% in the same period
* The S&P/TSX Composite is 1.4% below its 52-week high on Oct. 21, 2024 and 31.5% above its low on Oct. 27, 2023
* The S&P/TSX Composite is little changed in the past 5 days and rose 2.8% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 19.6 on a trailing basis and 17.2 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$3.92t
* 30-day price volatility rose to 7.29% compared with 7.17% in the previous session and the average of 9.03% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -54.3533| -1.3| 3/38
Information Technology | -33.3623| -1.6| 2/8
Materials | -27.9546| -0.9| 9/43
Industrials | -11.7723| -0.4| 8/19
Utilities | -7.4033| -0.8| 2/13
Consumer Staples | -7.1999| -0.7| 0/11
Financials | -5.6251| -0.1| 13/14
Real Estate | -1.3851| -0.3| 6/13
Health Care | -0.5017| -0.6| 1/3
Communication Services | 1.1984| 0.2| 4/1
Consumer Discretionary | 5.2948| 0.6| 4/7
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
Shopify | -22.0700| -2.3| -43.0| 6.8
Cameco | -10.7000| -4.5| 30.4| 31.0
Constellation Software | -9.2700| -1.5| -37.5| 31.8
Agnico Eagle Mines Ltd | 3.6040| 0.9| 10.7| 68.8
RBC | 4.2510| 0.3| 57.7| 29.3
Restaurant Brands | 4.3840| 2.0| -45.1| -1.8
US
By Rita Nazareth
(Bloomberg) — Big tech climbed in late hours as Tesla Inc.
kicked off the “Magnificent Seven” earnings season with solid results.
Bond yields rose on bets the Federal Reserve will take a measured approach on rate cuts.
Following a stock-market selloff on Wednesday, Wall Street pointed to a rebound led by its most-influential group.
A $300 billion exchange-traded fund tracking the tech-heavy Nasdaq 100 (QQQ) gained after the close of regular trading.
Tesla jumped 9% as Elon Musk’s electric-vehicle giant also indicated it expects another strong quarter of deliveries, saying it anticipates higher volumes for the full year.
“Earnings season is heating up. We believe there is continued upside ahead for stocks, especially now that we are entering a seasonally strong period of the year for markets,” said David Laut at Abound Financial.
After last week’s rally to fresh all-time highs, equities have taken a breather, with investors fretting over a number of near-term risks.
The next three weeks capture big tech earnings, October’s payrolls report, and the US election, followed by the Fed meeting.
“Despite the possibility of more volatility as we get deeper into earnings season and close in on the November election, the market’s longer-term outlook remains solid,” said Daniel Skelly at Morgan Stanley’s Wealth Management.
“And even though this week’s move is a reminder that even the strongest trends have setbacks, so far, this has been a run-of-the-mill pullback for the major indexes.”
The S&P 500 fell 0.9%.
The Nasdaq 100 dropped 1.6%.
The Dow Jones Industrial Average slipped 1%.
International Business Machines Corp. declined as its revenue underwhelmed.
T-Mobile US Inc. raised its forecast for subscribers after a strong quarter.
Treasury 10-year yields rose three basis points to 4.23%.
The dollar rose.
The yen hit the lowest in almost three months, reviving concern that Japan may intervene.
The loonie slid after the Bank of Canada stepped up the pace of easing.
To Jonathan Krinsky at BTIG, equities are finally noticing the moves in bonds and the dollar.
That’s a stark contrast to the action in the last couple of weeks, with the bullish narrative being that bonds were re-pricing to where they should be based on the stronger-than-anticipated economy, he noted.
“While that might be fair in the big picture, markets are always concerned with the velocity of the move rather than the overall level, and the fact that stocks didn’t flinch in the face of those moves suggested complacency,” Krinsky said.
“Whether this is the start of the pre-election jitters or not, we continue to see downside risk for equities broadly over the coming weeks, with an SPX pullback into the 5,500-5,650 zone a decent probability.”
The price of options that protect against an extended slump in Treasuries has soared to the highest this year amid concerns that losses may deepen.
Meantime, swap prices reflect less than a 100% certainty that the central bank reduces rates at each of its two remaining policy meetings this year.
The bond market is also trimming bets on the degree of Fed rate reductions over the next year.
“The price of options to hedge against Treasury losses is soaring,” said Andrew Brenner at NatAlliance Securities.
“In the US, it is about the election and potential sweep. That is what is being built into the rate structure, which is giving the vigilantes the green light. It will reverse, but it might take a severe employment number or a surprise in the election.”
“We would caution investors from reading too much into the recent rise in bond yields,” said Tiffany Wilding at Pacific Investment Management Co.
“Over the past six major Fed rate- cutting cycles, the change in the 10-year Treasury yield a month after the first cut has not provided a consistent signal about the magnitude of further cuts or whether the Us economy falls into recession.”
In fact, yields rose in the month after the first cut more often than not, she noted.
“Equity market performance in the first month after the Fed starts cutting has been a similarly bad predictor of future economic performance (and market returns),” Wilding said.
“Equities, more often than not, have tended to rise in the month after a cutting cycle begins, despite more significant divergence as time goes on.”
Looking at the same starkly different cycles of 1995 and 2007, equity returns (proxied by the rate-sensitive Russell 2000 of small caps) in the month after the first cut were positive in both cycles (at 4.6% and 6.9%, respectively), Wilding said.
However, equity market performance was down 4.4% in the year after the 2007 cut, while it was up 21% in the year following the 1995 adjustment.
“Even with the recent move in 10-year Treasury yields, we remain bullish on US large caps,” said Nicholas Colas at DataTrek Research.
“History says to discount the idea that rates will blow out because of deficit worries, at least over the near term. Instead, we see higher yields as a sign that economic growth remains robust and corporate earnings growth should continue over the coming quarters.”
“All else equal, the more rate cuts that are removed for next year the less of an outlier reading it becomes for the market to achieve 15% earnings growth,” said Ryan Grabinski at Strategas.
“However, additional rates cuts do not change the challenges the S&P faces with achieving that growth rate.”
Sales growth continues to show signs of slowing, and if analysts were suggesting rate cuts would reduce interest expense, that argument is beginning to recede, Grabinski said.
“Nearly 14% EPS margins continue to look more and more difficult to achieve,” he added.
“The question is when does something give.”
To Jose Torres at Interactive Brokers, the equity market is extremely fragile considering the headwinds that are lurking right around the corner.
“Earnings expectations are buoyant for next year, which increases the importance of forward guidance rather than past results,” he said.
“When considering that valuations are around 22 times next year’s profits, any disappointment in the outlook for the bottom line can significantly impact stock market performance.”

Corporate Highlights:
* Boeing Co. will likely continue to burn cash next year as it grapples with the challenges of ramping up production again following a prolonged labor strike and regulatory scrutiny over its factory processes.
* AT&T Inc. gained more mobile subscribers in the third quarter than analysts expected, continuing the winning streak from the previous period.
* Hilton Worldwide Holdings Inc. lowered its profit outlook, as the addition of new hotels to its global system failed to offset slower travel demand.
* Coca-Cola Co. dropped as investors weighed how much longer the soft-drink purveyor could raise prices without getting customers to buy more of its beverages.
* Spirit Airlines Inc. is in talks with Frontier Group Holdings Inc. about filing for bankruptcy to facilitate a takeover by the rival discount carrier, according to people with knowledge of the matter.
* Capital One Financial Corp.’s proposed $35 billion acquisition of Discover Financial Services is being investigated by New York Attorney General Letitia James, who said the deal would have “significant impact” on consumers in the state.
* Deutsche Bank AG said it will have to set aside more money than expected for souring debt, the second time this year it had to adjust its guidance.
* Kering SA warned that its annual profit will fall to the lowest level since 2016 as a slump in Chinese demand for luxury goods hampers a turnaround of the French fashion group’s biggest label, Gucci.

Key events this week:
* US new home sales, jobless claims, S&P Global Manufacturing and Services PMI, Thursday
* UPS, Barclays earnings, Thursday
* Fed’s Beth Hammack speaks, Thursday
* US durable goods, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.9% as of 4 p.m. New York time
* The Nasdaq 100 fell 1.6%
* The Dow Jones Industrial Average fell 1%
* The MSCI World Index fell 0.9%
* Bloomberg Magnificent 7 Total Return Index fell 2.1%
* The Russell 2000 Index fell 0.8%
Currencies
* The Bloomberg Dollar Spot Index rose 0.2%
* The euro fell 0.1% to $1.0786
* The British pound fell 0.4% to $1.2933
* The Japanese yen fell 1% to 152.58 per dollar
Cryptocurrencies
* Bitcoin fell 1.6% to $66,416.63
* Ether fell 4.7% to $2,509.01
Bonds
* The yield on 10-year Treasuries advanced three basis points to 4.23%
* Germany’s 10-year yield declined one basis point to 2.30%
* Britain’s 10-year yield advanced three basis points to 4.20%
Commodities
* West Texas Intermediate crude fell 1.1% to $70.98 a barrel
* Spot gold fell 1.2% to $2,716.54 an ounce

This story was produced with the assistance of Bloomberg Automation.

Have a lovely evening.

Be magnificent!
As ever,

Shab
” Rise with the hour for which you were made.” — Georgia Douglas Johnson

Shab Mohammadpour
Assistant to Carolann Steinhoff
Queensbury Securities Inc.

340A – 730 View Street
Victoria BC  V8W 3Y7
Tel: 778-430-5851
Fax: 778-430-5828