April 16, 2024, Newsletter

Dear Friends,

Tangents:
April 16, 2003: The Treaty of Accession admits 10 new countries to the European Union, including Poland, Cyprus, and the Czech Republic.
April 16, 2003: Michael Jordan played his last NBA game as his Washington Wizards ended their season with a loss to the Philadelphia 76ers.  Go to article >>

Charlie Chaplin, b.1889.
Margarethe, former Queen of Denmark, b.1940.

Most massive stellar black hole in the Milky Way discovered ‘extremely close’ to Earth
Astronomers found the most massive stellar-mass black hole in the galaxy after spotting a star “wobbling” nearby. The baby monster is the 2nd-closest black hole to Earth ever detected. Read More.

32 astonishing ancient burials, from ‘vampire’ decapitations to riches for the afterlife
Archaeologists have discovered lavish and grisly burials the world over. Read More.

Top total solar eclipses to look out for over the next decade
Want to experience totality again? Here are the next seven total solar eclipses across the world, from Alaska to Australia. Read More.

2,000-foot-wide ‘potentially hazardous’ asteroid has just made its closest approach to Earth
The 2,000-foot-wide asteroid 2013 NK4 just made its closest approach to Earth in recorded history, sailing by at about eight lunar distances. You can still see the massive rock with a backyard telescope.
Full Story: Live Science (4/15)

Tired of your laptop battery degrading? New ‘pulse current’ charging process could double its lifespan.
Using pulse current charging, or a constant current divided with a few short breaks, lithium-ion batteries hold up better over hundreds of charging cycles and can last twice as long. Read More.

Olympic torch lit in Greece ahead of Paris 2024 Games
The flame for the 2024 Paris Olympics was lit in Olympia earlier today — the birthplace of the ancient Olympics! See images from the ceremony.

Beyoncé is sending Levi’s and Western boot sales soaring
Country fashion is having a moment, thanks to the fanfare surrounding Beyoncé’s new album “Act II: Cowboy Carter.”

Meet the winners of this year’s Boston Marathon
A marathon victory is no easy feet. Here are the winners from Monday’s race.

PHOTOS OF THE DAY

London, England
Gallery assistants view a painting called The Martyrdom of Saint Ursula during a press preview of The Last Caravaggio exhibition at the National Gallery
Photograph: Tolga Akmen/EPA

Tel Aviv, Israel
Youths play on a beach
Photograph: Jack Guez/AFP/Getty Images

​​​​​​​New York, US
A model walks the runway in a dress from the Dior pre-autumn 2024 women’s collection at Brooklyn Museum
Photograph: Caitlin Ochs/Reuters
Market Closes for April 16^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1998, Cendant stock crashed 46%. The once-popular growth stock had disclosed “potential accounting irregularities” resulting from its binge-buying of other companies.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the fifth day, dropping 0.4%, or 97.33 to 21,642.87 in Toronto.
The index dropped to the lowest closing level since March 6.
Royal Bank of Canada contributed the most to the index decline, decreasing 1.4%.
First Majestic Silver Corp. had the largest drop, falling 8.2%.
Today, 129 of 224 shares fell, while 87 rose; 9 of 11 sectors were lower, led by financials stocks.
Insights
* The index advanced 5.2% in the past 52 weeks. The MSCI AC Americas Index gained 21% in the same period
* The S&P/TSX Composite is 3.3% below its 52-week high on April 9, 2024 and 15.8% above its low on Oct. 27, 2023
* The S&P/TSX Composite is down 3.2% in the past 5 days and fell 0.9% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.1 on a trailing basis and 14.8 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.1% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.45t
* 30-day price volatility rose to 8.43% compared with 8.31% in the previous session and the average of 8.75% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -51.7734| -0.8| 10/17
Materials | -16.8727| -0.7| 18/29
Industrials | -15.9054| -0.5| 12/15
Energy | -9.7595| -0.2| 21/17
Utilities | -8.9890| -1.2| 1/13
Consumer Staples | -7.8008| -0.9| 4/7
Real Estate | -2.5895| -0.5| 3/18
Communication Services | -1.8449| -0.3| 1/4
Consumer Discretionary | -0.6443| -0.1| 8/5
Health Care | 0.8129| 1.2| 3/1
Information Technology | 18.0450| 1.0| 6/3
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
RBC | -18.4900| -1.4| 64.8| -0.7
Barrick Gold | -14.6000| -5.0| 92.1| -4.8
Enbridge | -14.5600| -2.1| 107.5| -4.5
Shopify | 3.4620| 0.4| 42.6| -8.0
Suncor Energy | 6.0440| 1.3| -26.4| 22.3
Constellation Software | 8.2260| 1.7| 34.9| 11.1
US
By Rita Nazareth
(Bloomberg) — The world’s biggest bond market was hammered anew, with the two-year yield briefly hitting 5% as Jerome Powell signaled policymakers are in no rush to cut interest rates.
The Federal Reserve chief said it will likely take longer to have confidence on inflation — adding that it’s appropriate to give restrictive policy time to work.
Treasury yields climbed to fresh 2024 highs, though bonds pared some losses as dip buyers emerged.
The dollar saw its best five-day gain since October 2022.
Equities fell.
To Jeffrey Roach at LPL Financial, Powell’s comments signal the Fed will likely stay on hold for longer than originally planned.
“If you were looking for bits of easing or dovish talk from Powell, you did not miss it. He didn’t give it,” said Andrew Brenner at NatAlliance Securities.
The S&P 500 dropped to around 5,050.
Bank of America Corp. sank as charge-off for soured loans topped estimates, while Morgan Stanley climbed as traders delivered solid revenue.
UnitedHealth Group Inc. led gains in the Dow Jones Industrial Average after its results.
Treasury 10-year yields rose six basis points to 4.66%.
Powell’s remarks represent a shift in his message following a third straight month in which a key measure of inflation exceeded analyst forecasts.
It also shows officials see little urgency to cut rates and suggests that any reductions in 2024 may come relatively late in the year, if at all.
“The outlook for inflation has not deteriorated as much as the bond market seems to think,” said Neil Dutta at Renaissance Macro Research. “If three months of poor inflation data gets them to do push back, what will three months of better inflation do? All Powell is doing is following the market, taking three months of bad inflation data and assuming it forward.”
To Jamie Cox at Harris Financial Group, the Fed has a “free pass” to sit on rates longer while the labor market remains strong, consumption is unaffected, and the typical consequences of hiking rates quickly aren’t apparent in the economy.
“Markets need to focus on the fact that rates are sufficiently restrictive, instead of how many cuts are in the pipeline,” Cox added.
Policymakers around the world are struggling to confront a surging greenback and lofty US interest rates, according to Mohamed El-Erian.
“Authorities are a little bit frozen around the world as to how do you react to a generalized dollar strengthening?” El-Erian, the president of Queens’ College, Cambridge and a Bloomberg Opinion columnist, told Bloomberg Television Tuesday.  “How do you react to a generalized increase in interest rates in the US?”
Fed Vice Chair Philip Jefferson said Tuesday that while there has been considerable progress in lowering inflation, the Fed’s task of sustainably restoring 2% inflation is “not yet done.” His San Francisco counterpart Mary Daly reiterated late Monday there’s no urgency to adjust interest rates, pointing to solid economic growth, a strong labor market and still-elevated inflation.
After starting the year by pricing in as many as six rate cuts in 2024, or 1.5 percentage points of easing, traders are now doubtful there will even be a half point of reductions.
Most Wall Street economists have dialed back forecasts as well, setting up a dour scenario for US yields including a possible repeat of maturities breaching 5% as they did last October.
Amid all the anxiety, the widely watched MOVE index, an options-based measure of expected volatility in Treasuries, spiked to the highest since January.
State Street Global Advisors is standing by a contrarian call for the Fed to cut interest rate as soon as June despite a string of hot economic data that has spurred most traders to push back bets to later in the year.
The asset manager remains convinced the central bank will start monetary easing well before the US presidential election in November to avoid being seen influencing the result, according to Chief Investment Officer Lori Heinel.
The inflation backdrop still supports this move given policy works with a long lag and the quality of recent data prints has been low, she said.
Exposure to stocks is now so high that any weakness is likely to set off a bigger slump once investors start to cut back on their long positions, according to top Wall Street strategists.
There are $52 billion of long positions on the S&P 500 and 88% of them are in a loss, a situation that Citigroup strategist Chris Montagu sees as a risk for the market.
A BofA survey showed that investors have raised their allocation to equities to net 34% overweight — the biggest since January 2022 — in a poll conducted from April 5-11 among 224 participants with $638 billion in assets under management.
A separate note showed BofA clients were net sellers of US equities for a third consecutive week.
Clients pulled a net $800 million from US stocks in the five-day period through April 12 as the S&P 500 Index slumped for the week, quantitative strategists led by Jill Carey Hall said Tuesday in a note.
“A stock-market correction is unfolding right now triggered by Middle East tensions, rising bond yields and worries about delayed Fed rate cuts,” said James Demmert at Main Street Research. “Stocks have been due for a pullback for quite some time.”
BlackRock Inc.’s Robert Kapito says the stock market is poised to benefit as investors deploy their outsized holdings of cash.
There’s almost $9 trillion sitting in money market funds and the same amount in cash alternatives at banks, Kapito, president of the world’s largest asset manager, said at the Asia Pacific Financial and Innovation Symposium in Melbourne on Tuesday.
“Rising bond yields are a sign that the global economy and corporate profits are strong and resilient,” said Demmert at Main Street Research. “While this economic and corporate strength may result in fewer than expected or even no rate cuts for the foreseeable future, that isn’t something that will ruin this new bull market.”
“In the early phase of a new business cycle, it’s earnings — not the Fed – that drive stocks. Earnings have been far better than expected and we envision a similar outcome as earnings season is once again in full swing,” he concluded.

Corporate Highlights:
* Lockheed Martin Corp.’s delay in delivering F-35 jets with computer hardware and software upgrades is likely to persist until August or September, according to a Pentagon official.
* Seafood restaurant chain Red Lobster is mulling a Chapter 11 bankruptcy filing as it looks to restructure its debt, according to people with knowledge of the matter.
* PNC Financial Services Group Inc. missed estimates for net interest income in the first quarter, a sign that the Pittsburgh-based lender has continued to grapple with muted loan growth.
* The Bank of New York Mellon Corp. reported first-quarter revenue that topped estimates as the oldest US lender benefited from higher market values and increased client activity.
* UnitedHealth Group Inc. beat Wall Street’s profit expectations and affirmed its outlook for the year, despite the costs associated with a cyberattack on one of its subsidiaries that has roiled the health-care industry.
* Johnson & Johnson’s first-quarter drug sales narrowly outpaced Wall Street expectations as the company beat profit estimates, a step towards boosting profitability after the spinoff of its consumer division.
* LVMH sales growth slowed at the start of the year as wealthy consumers reined in spending on pricey Louis Vuitton handbags and Hennessy Cognac.
* Adidas AG raised its profit target for the year amid strong demand for classic sneakers like the Samba and a boost from \sales of its diminishing stockpile of Yeezy footwear

Key events this week:
* Eurozone CPI, Wednesday
* Fed issues its Beige Book, Wednesday
* Cleveland Fed President Loretta Mester speaks, Wednesday
* Fed Governor Michelle Bowman speaks, Wednesday
* BOE Governor Andrew Bailey speaks, Wednesday
* Taiwan Semiconductor earnings, Thursday
* US Conf. Board leading index, existing home sales, initial jobless claims, Thursday
* Fed Governor Michelle Bowman speaks, Thursday
* New York Fed President John Williams speaks, Thursday
* Atlanta Fed President Raphael Bostic speaks, Thursday
* BOE Deputy Governor Dave Ramsden and ECB Governing Council member Joachim Nagel speak, Friday
* Chicago Fed President Austan Goolsbee speaks, 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 was little changed
* The Dow Jones Industrial Average rose 0.2%
* The MSCI World index fell 0.8%
Currencies
* The Bloomberg Dollar Spot Index rose 0.3%
* The euro was little changed at $1.0622
* The British pound fell 0.1% to $1.2431
* The Japanese yen fell 0.2% to 154.64 per dollar
Cryptocurrencies
* Bitcoin fell 0.6% to $62,747.05
* Ether fell 0.8% to $3,058.86
Bonds
* The yield on 10-year Treasuries advanced six basis points to 4.66%
* Germany’s 10-year yield advanced five basis points to 2.49%
* Britain’s 10-year yield advanced six basis points to 4.30%
Commodities
* West Texas Intermediate crude fell 0.1% to $85.30 a barrel
* Spot gold rose 0.3% to $2,390.07 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Farah Elbahrawy, Sagarika Jaisinghani, Esha Dey, Natalia Kniazhevich, Alexandra Semenova, Carter Johnson and Anya Andrianova.

Have a lovely evening.

Be magnificent!

As ever,

Carolann
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. –Marcus Aurelius, 121 AD-180 AD.

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