February 10, 2022 Newsletter

Dear Friends,

Tangents: Happy Friday Eve.
1763 France ceded Canada to England under the Treaty of Paris, which ended the French and Indian War. Go to article »
1906: British battleship HMS Dreadnought launches after only 100 days, renders all other capital ships obsolete with its revolutionary design.

Here’s where you can stream Oscar-nominated movies.  Good news! There’s plenty of time to binge the major contenders before the Oscars in March.

40 SpaceX satellites are falling out of orbit due to a solar storm.  Elon Musk is heading back to the drawing board.

Disney+ announces ‘Obi-Wan Kenobi’ series premiere date.  Hey Star Wars fans! May the force be with you. 

PHOTOS OF THE DAY

Women and girls wearing kimonos walk through the Asakusa district during heavy snowfall. At leasts four highway sections are closed in the Tokyo area to prevent vehicles from becoming stranded
CREDIT: Yuichi Yamazaki/Getty Images

A vintage American car drives past a huge wave in Malecon during strong winds
CREDIT: AFP/Getty Images                      

Two visitors look at Amedeo Modigliani’s painting Woman With Blue Eyes, at the exhibition From Fauvism to Surrealism
CREDIT: Luis Tejido/EPA

Market Closes for February 10^th, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1938, “Fannie Mae” was born, as the National Mortgage Association of Washington (later the Federal National Mortgage Association) was created as a subsidiary of the Reconstruction Finance Corp. Its mission: to buy and sell home mortgages insured by the Federal Housing Administration, in order to create a liquid market for mortgage debt that would encourage lenders to continue making home loans.
Canada
By Stefanie Marotta
(Bloomberg) — Canadian equities reversed gains from earlier in the session — when the S&P TSX Composite Index flirted with a fresh record high — and closed lower as rising inflation in the U.S. weighed on technology and consumer stocks.
The S&P/TSX fell 0.3 percent at 21,531.72 in Toronto.
The move follows the previous session’s increase of 1.1%.
Shopify Inc. contributed the most to the index decline, decreasing 3%.
Canada Goose Holdings Inc. had the largest drop, falling 16%.
During the trading day, 162 of 240 shares fell, while 78 rose; 8 of 11 sectors were lower, led by information technology stocks.
Insights
* So far this week, the index rose 1.2 percent
* The index advanced 17 percent in the past 52 weeks. The MSCI AC Americas Index gained 13 percent in the same period
* The S&P/TSX Composite is 1.2 percent below its 52-week high on Nov. 16, 2021 and 20.1 percent above its low on Feb. 26, 2021
* The S&P/TSX Composite is up 2.1 percent in the past 5 days and rose 2.2 percent in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 19.2 on a trailing basis and 15 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.6 percent on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.44t
* 30-day price volatility rose to 13.22 percent compared with 13.19 percent in the previous session and the average of 12.76 percent over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
* Information Technology | -37.2158| -2.1| 5/11
* Materials | -22.6438| -0.9| 12/42
* Industrials | -15.0084| -0.6| 8/22
* Consumer Discretionary | -11.7218| -1.5| 2/12
* Consumer Staples | -9.7118| -1.2| 4/7
* Utilities | -5.5394| -0.6| 3/13
* Real Estate | -0.5822| -0.1| 11/13
* Health Care | -0.5008| -0.3| 3/5
* Communication Services | 0.2416| 0.0| 4/3
* Energy | 10.0254| 0.3| 19/13
* Financials | 20.1874| 0.3| 7/21
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
* Shopify | -27.3200| -3.0| -30.9| -34.8
* Sun Life Financial | -16.4300| -5.5| 196.3| -1.0
* Agnico Eagle Mines | -8.1570| -4.2| 54.4| -10.7
* TD Bank | 7.3750| 0.6| 12.4| 11.2
* Manulife Financial | 13.1900| 3.7| 580.3| 15.7
* Brookfield Asset Management | 39.9500| 5.5| 190.0| -0.5
US
By Stephen Kirkland and Vildana Hajric
(Bloomberg) — U.S. stocks sank and Treasury yields spike higher after the hottest inflation reading in four decades prompted a Federal Reserve official to call for accelerating rate hikes.
The two-year bond rate surged as much as 26 basis points in one of the fastest moves in a decade after data showed consumer prices surged more than 7% last month.
St. Louis Fed Chair James Bullard said the central bank should raise rates by 100 basis points over the next three meetings.
That sent risk assets tumbling, with the S&P 500 sliding 1.8% and the tech-heavy Nasdaq 100 dropping 2.3%.
Bullard’s plan involves spreading the increases over three meetings, shrinking the Fed’s balance sheet starting in the second quarter and then deciding on the path of rates in the second half based on updated data.
He said he was undecided on whether the March meeting should begin with 50 basis points and raised the possibility of the Fed at some point considering a move between scheduled meetings.
“There is a difference between what any one FOMC participant says and what the committee does,” said Chris Low, chief economist at FHN Financial. “But the odds of a 50bp hike in March or May are higher if the market expects it. Bullard is well aware of this and likely intended to push the fed funds futures market to reprice in support of the urgency he feels after this morning’s CPI report. If he can make us think it, the Fed is much more likely to do it.”
Overnight index swaps priced about 80% odds of a 50 basis-point liftoff in March, with an additional 25 basis points priced for May and June. Just under six-and-a-half quarter-point moves were priced into the December Fed meeting.
The Fed slashed the upper band of its target funds rate to 0.25% at the onset of the pandemic in 2020, matching the lowest level on record, and has kept it there since to foster an economic recovery.
The sea of liquidity helped boost stocks, propelling the S&P 500 to successive records through 2021 and into the first days of January.
But fears of monetary tightening has sent stocks lower this year, leaving the S&P 500 down about 5% year to date. 
Here’s what others said about the inflation data Thursday:
“Right now, investors are not only worried about what the Fed does on interest rates, but then what impact that will have on growth.”
Inflation’s hot, but “investors will move toward looking at cash flows and what companies are going to be doing, and I think that’s supportive of the markets.” — Chris Gaffney, president of world markets at TIAA Bank.  “All else equal, more fuel to the inflation fire should harden the Fed’s resolve to begin raising interest rates at its next meeting in March and introduce quantitative tightening in the months thereafter.” — Jason Pride, chief investment officer of private wealth at Glenmede.
“High energy prices and supply issues are stoking inflation but these issues should eventually fade. Of greater concern is that wage pressures are building and the central bank will not want to risk a wage price spiral. Looking ahead though, real consumer spending on discretionary goods and services is likely to cool naturally, as higher energy costs begin to bite.” – Jai Malhi, global market strategist at JPMorgan Asset Management.
“Overall, we remain constructive on equities over bonds with a preference for cyclical and value stocks, commodities and commodity-linked equities. One theme that ticks all those boxes is dividend-paying European and U.K. equities which have lagged their U.S. peers and offer the potential for catch-up gains on a total return basis.” — John Leiper, chief investment officer at Titan Asset Management
Here are the main market moves:
Stocks
* The S&P 500 fell 1.8% as of 4 p.m. New York time
* The Nasdaq 100 fell 2.3%
* The Dow Jones Industrial Average fell 1.5%
* The MSCI World index fell 1.1%
Currencies
* The Bloomberg Dollar Spot Index rose 0.2%
* The euro was little changed at $1.1431
* The British pound rose 0.1% to $1.3554
* The Japanese yen fell 0.5% to 116.05 per dollar
Bonds
* The yield on 10-year Treasuries advanced 11 basis points to 2.05%
* Germany’s 10-year yield advanced seven basis points to 0.28%
* Britain’s 10-year yield advanced nine basis points to 1.52%
Commodities
* West Texas Intermediate crude rose 0.5% to $90.12 a barrel
* Gold futures fell 0.5% to $1,827.70 an ounce
–With assistance from Andreea Papuc, Robert Brand and Jennifer Bissell-Linsk.
Have a lovely evening.

Be magnificent!
As ever,

Carolann

Right is right, even if everyone is against it; and wrong is wrong, even if everyone is for it. -William Penn, 1644-1718.

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