August 1, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday Eve.
Lammas: 1rst harvest, Wicca.

August 1, 1789: US Customs established.
August 1, 1981 The music video channel MTV made its debut. Go to article >>
August 1, 1990: World Wide Web established.
August 1, 1996: American author George R.R. Martin publishes “A Game of Thrones”, the first installment in his hugely popular fantasy series “A Song of Ice and Fire.”

Herman Melville, writer, b.1819.
Yves St. Laurent, designer, b. 1936.
Jerry Garcia, musician, b.1942.

All eyes on Simone Biles as she goes for women’s all-around gold
Simone Biles is hoping to take her second all-around victory at the Olympics alongside teammate and friend Suni Lee in the coming hours. Here’s when you can tune in.

Katie Ledecky leaves her competition in the dust
American swimmer Katie Ledecky won her first gold of the 2024 Games in spectacular fashion with a new Olympic record in the 1500m freestyle. Read how she became one of the greatest swimmers in history.

Maya Rudolph will return to ‘SNL’ to play Kamala Harris
It’s a tense election year, but there’s always room for political comedy. Maya Rudolph is set to reprise her portrayal of Vice President Kamala Harris when “Saturday Night Live” returns for its 50th season this fall.

Your coffee’s getting pricier – and climate change could keep it that way
Coffee roasters are signaling that prices could remain higher for longer, as factors like climate change reduce the global coffee supply.

Never-before-seen shapes up to 1,300 feet long discovered beneath Antarctic ice
The unusual patterns, found beneath West Antarctica’s Doston Ice Shelf, could help scientists to better understand how glaciers erode. Read More.

NASA Mars rover finds ‘first compelling detection’ of potential fossilized life on the Red Planet
A peculiar leopard-spotted rock, found beside an ancient, dried-out river in Mars’ Jezero crater, contains some tantalizing clues of ancient life, NASA said. Read More.

‘Defects’ in silicon chips could house qubits, hastening the arrival of a future quantum internet
Using manufacturing defects in silicon chips to house signal-amplifying qubits could help to usher in the much-anticipated quantum internet. Read More.

‘My jaw just dropped’: 500 million-year-old larva fossil found with brain preserved
The newly discovered Youti yuanshi larva fossil is so well-preserved that it provides a road map for arthropod evolution during the Cambrian period. Read More.

PHOTOS OF THE DAY

Xi’an, China
Iron flower fireworks made from hammered molten iron at the city’s botanical garden
Photograph: Costfoto/NurPhoto/Rex/Shutterstock

Edinburgh, UK
Edinburgh international festival opens with Where to Begin, an immersive outdoor experience
Photograph: Murdo MacLeod/The Guardian

Essex, UK
‘This was one of those still, hot summer evenings where everything was calm and there was a beautiful warm golden light at sunset. Photo taken in Coggeshall.’
Photograph: James Farndell
Market Closes for August 1^st, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1973, IBM was fined $150,000 a day by a federal judge for contempt of court in a high-profile antitrust case in which the company refused to turn over sensitive documents requested by the U.S. government.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 1.7% at 22,723.21 in Toronto.
The move was the biggest since falling 2.3% on Feb. 13 and follows the previous session’s increase of 1.3%.
Today, financials stocks led the market lower, as 8 of 11 sectors lost; 183 of 226 shares fell, while 40 rose.
Shopify Inc. contributed the most to the index decline, decreasing 4.6%.
First Majestic Silver Corp. had the largest drop, falling 13.4%.
Insights
* In the past year, the index had a similar or greater loss four times. The next day, it declined three times for an average 0.3% and advanced 1.5% once
* So far this week, the index fell 0.4%, heading for the biggest decline since the week ended June 14
* The index advanced 11% in the past 52 weeks. The MSCI AC Americas Index gained 18% in the same period
* The S&P/TSX Composite is 2.1% below its 52-week high on July 31, 2024 and 21.6% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 0.5% in the past 5 days and rose 3.9% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.3 on a trailing basis and 15.5 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.67t
* 30-day price volatility rose to 12.08% compared with 10.60% in the previous session and the average of 11.05% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -116.4260| -1.6| 1/26
Energy | -76.4201| -1.9| 2/39
Information Technology| -71.1762| -3.9| 0/10
Materials | -57.5349| -2.0| 5/45
Industrials | -54.8795| -1.7| 4/24
Consumer Staples | -16.0573| -1.6| 4/7
Consumer Discretionary| -3.6510| -0.5| 4/9
Utilities | -0.5652| -0.1| 6/9
Health Care | 0.1225| 0.2| 2/2
Real Estate | 2.8960| 0.6| 8/11
Communication Services| 6.1036| 0.9| 4/1
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
Shopify | -33.1300| -4.6| 93.3| -21.8
Canadian Pacific Kansas | -27.8300| -3.7| 53.6| 6.4
Constellation Software | -24.3400| -4.1| 50.6| 27.2
Waste Connections | 4.3270| 1.0| 80.0| 25.3Enbridge | 7.1300| 0.9| 79.7| 9.3
TC Energy | 7.9020| 1.9| -48.7| 15.4
US
By Rita Nazareth
(Bloomberg) — Stocks fell sharply and bonds rallied as a fresh dose of weak economic data led traders to reconsider whether Jerome Powell’s Federal Reserve is wise to hold off cutting interest rates before September.
Thursday’s price action was another episode of extreme day-to-day volatility that has featured rapid rotations into and out of asset classes and sectors, with investors choosing Treasuries as the latest haven trade.
The Nasdaq 100 saw its biggest one-day reversal since May 2022.
In late hours, Intel Corp. tumbled on a bearish forecast.
Amazon.com Inc. also fell on underwhelming results.
Swings across asset markets are widening as investors struggle to assess the economy and earnings at a time when the Fed’s posture is seen one day as stimulative and the next bespeaking concern about future growth.
US 10-year yields broke below 4% — with swap traders now fully pricing in three rate cuts this year.
In the run-up to the jobs report, data showed unemployment claims hit an almost one-year high and manufacturing shrank.
“Markets are approaching panic mode as many economic factors converge, supporting a drift away from risk assets,” said Jose Torres at Interactive Brokers.
“The headwinds for this market are just too stormy, especially considering that equities are priced for perfection. What are we seeing in the economy: imperfection.”
Jerome Powell signaled Wednesday officials are on course to cut rates in September unless inflation progress stalls — citing risks of further jobs weakening.
Monthly employment data due Friday will probably add fuel to the debate.
Unemployment is now close to triggering a recession indicator developed by former Fed economist Claudia Sahm that has a perfect track record over the last half-century — the “Sahm rule.”
To Neil Dutta at Renaissance Macro Research, the “ongoing deterioration” in economic data has become clear and “until the Fed begins cutting, they are going to look behind the curve.”
“The labor market has been flashing warning signals over the past several months,” said Chris Senyek at Wolfe Research.
“History suggests Powell is walking a very fine line on potentially waiting too long to start cutting rates before it’s too late.”
The S&P 500 dropped 1.4%. The Nasdaq 100 sank 2.4%.
The Russell 2000 of small caps tumbled 3%. Wall Street’s “fear gauge” — the VIX — hit its highest since April.
Treasury 10-year yields fell six basis points to 3.97%.
The pound slid after the Bank of England cut rates and signaled further cautious reductions ahead.
“Disappointing economic data rattled some nerves today,” said Callie Cox at Ritholtz Wealth Management.
“Combine that with a Fed chair that didn’t seem to be worried about unemployment in yesterday’s comments, and suddenly investors think the soft landing may start to look more like a crash. I’m not so sure about that, though. The job market is slowing, but a
slowdown isn’t necessarily a crash.”
“There is a scenario where a rate cut would be viewed negatively for stocks and that is if the rate cut is coupled with the Federal Reserve voicing concern about the economy,” said George Ball at Sanders Morris.
“While that is not a likely scenario, it is not altogether implausible.” At Capital Economics, Thomas Ryan says further decline in manufacturing raises the risk that US growth will lose momentum in the third quarter — and the plunge in the employment index
will add to concern that the “Fed has left it too late to begin loosening policy.”
“The one thing that would cause the Fed to cut more dramatically is if we had a material deterioration in the job market, which is something we are watching closely,” said Chris Zaccarelli at Independent Advisor Alliance.
Powell was asked Wednesday about the “Sahm rule” after he and his colleagues decided to leave their benchmark rate unchanged at the highest levels in more than two decades. He said what policymakers “think we’re seeing is a normalizing labor market,” though if “it starts to show signs that it’s more than that, then we’re well positioned to respond.”
“Our first thought on hearing this was, yes, employment has been normalizing,” said Chris Low at FHN Financial.
“But some indicators, including the unemployment rate may be moving past optimal, toward levels consistent with excessive labor slack. Or, in plain English, these indicators are dangerously close to falling short of being consistent with maximum employment —
which is the Fed’s mandate.”
Economists are expecting moderation in job growth in the government’s July employment report due Friday.
Forecasters anticipate the unemployment rate remained steady at 4.1%.
A survey conducted by 22V Research shows 42% of investors think the market reaction to Friday’s jobs data will be “risk-off,” 36% said “negligible/mixed” and only 22% “risk-on.”
“Investors are paying the most attention to payrolls,” said Dennis DeBusschere founder of 22V. “However, the unemployment rate is a close second. Our survey consensus for the unemployment rate is 4.2%.”
The cooling economy has raised market speculation that there will be three rate cuts to come before the year is out, according to Fawad Razaqzada at City Index and Forex.com.
“In fact, there is now a greater risk tomorrow’s US non-farm payrolls report missing the mark, if today’s labor market indicators are anything to go by,” he said. “Should NFP disappoint, then the calls for the Fed to act will get louder.”
The Fed has been clear on needing more proof of soft inflation prints to cut, but labor-market slowing could lead the Fed to cut rates more aggressively, putting a November cut into play in addition to September and December, according to Oscar Munoz and Gennadiy Goldberg at TD Securities.
“Rates have moved sharply lower in recent days due to a combination of a more dovish Fed, moderating data, and geopolitical risks,” they said. “As such, a weaker reading could reinforce the move lower in rates, exacerbating the bull-steepening trend.”
Fixed-income ETFs took in a historic amount of cash last month as investors pile into the bond market, positioning for the start of a Fed rate-cutting cycle.
Bond funds saw inflows of roughly $39 billion in July, the most on record, according to data from Strategas.
To Vail Hartman at BMO Capital Markets, the data won’t be as relevant to expectations for the timing of the first rate cut as it will be to the perceived likelihood the Fed ultimately needs to deviate from the “fine tuning” 25 basis-point quarterly cuts assumption as implied by its projections.
“Said differently, payrolls won’t lead the market to seriously rethink whether a September rate cut is too soon — but the information could easily skew the market-implied path of policy rates toward a more dramatic cutting campaign,” said Hartman.
The Fed is indeed a hot topic this week for global investors trying to time rate cuts. It’s also — unusually — a prominent feature on Corporate America’s post-earnings conference calls.
The words “Federal Reserve” were on track to be mentioned about 380 times on second-quarter calls with analysts, according to a Bloomberg analysis of transcripts of S&P 500 and Stoxx 600 companies.
That would be the highest tally ever in the database’s records going back to 2001, if the current pace holds.
A contrarian stock indicator from Bank of America Corp. rose last month, reflecting Wall Street sentiment at elevated levels.
Although the gauge remains in “neutral” territory rather than at outright “buy” or “sell” thresholds, ultra bearish attitudes toward equities are no longer a tailwind for upside like last year.
As a risk-on momentum in US stocks showed signs of easing in July, several computer-based systematic strategy funds trimmed their equity exposure. But they may not be done selling just yet.
Commodity trading advisers, or CTAs, cut their equity positions to a two-month low in July, according to Bank of America Corp. Those funds typically use a combination of price-trend signals and volatility to determine allocation.
As the stock-market advance hit a snag, CTAs unwound their positions as well.
But to BofA Securities senior equity derivatives research analyst Chintan Kotecha, those CTAs that remain long US stocks should continue to cut their positions, at least in the near-term, as the rally shows signs of stalling.

Corporate Highlights:
* DoorDash Inc. reported a stronger-than-expected profit forecast for the current quarter as the delivery company experiences resilient customer demand and growth from categories beyond restaurant orders.
* Eli Lilly & Co. expects its blockbuster weight-loss drug to officially come out of shortage in the US in the coming days, the company’s chief executive officer said, threatening the billion-dollar industry of copycat versions of the in-demand drugs.
* Moderna Inc.’s post-pandemic future was thrown into question Thursday after it disclosed multiple setbacks that disappointed investors.
* Biogen Inc. raised its profit outlook after cost-cuts and faster sales of new drugs boosted second-quarter earnings.
* Wendy’s Co. trimmed its annual sales guidance following a retreat from US customers in the second quarter, the latest sign that inflation-battered diners are cutting out burger outings.
* Hershey Co. cut its sales and earnings outlook for the year as shoppers continue to reduce purchases of higher priced chocolates and candies.
* WW International Inc., better known as WeightWatchers, is laying off employees and cutting costs as blockbuster obesity drugs have decimated its business.
* R1 RCM Inc. will be acquired by TowerBrook Capital Partners and Clayton, Dubilier & Rice for $8.9 billion in an all-cash deal.

Some of the main moves in markets:
Stocks
* The S&P 500 fell 1.4% as of 4 p.m. New York time
* The Nasdaq 100 fell 2.4%
* The Dow Jones Industrial Average fell 1.2%
* The MSCI World Index fell 1.5%
* The Russell 2000 Index fell 3%
Currencies
* The Bloomberg Dollar Spot Index rose 0.3%
* The euro fell 0.3% to $1.0789
* The British pound fell 0.9% to $1.2739
* The Japanese yen rose 0.2% to 149.70 per dollar
Cryptocurrencies
* Bitcoin fell 1.9% to $63,353.96
* Ether fell 2.9% to $3,127.53
Bonds
* The yield on 10-year Treasuries declined six basis points to 3.97%
* Germany’s 10-year yield declined six basis points to 2.24%
* Britain’s 10-year yield declined nine basis points to 3.88%
Commodities
* West Texas Intermediate crude fell 1.2% to $76.94 a barrel
* Spot gold fell 0.2% to $2,442.91 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Lu Wang.
Have a lovely evening.

Be magnificent!

As ever,

Carolann
Dream as if you’ll live forever.  Live as if you’ll die today.  –James Dean, 1931-1955.

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