August 12, 2024 Newsletter

Dear Friends,

Tangents: Happy Monday.  UN World Youth Day.

August 12, 1981: IBM sintroduced its first personal computer, the model 5150.  Go to article >>

1676: King Philip assassinated.
1851: Sewing machine invented.

William Goldberg, author: b. 1931.
George Soros, financier, b. 1930.
Cecil B. DeMille, director, b.1881.

Celine Dion criticizes Trump campaign for unauthorized use of her music
Singer Celine Dion shared this cheeky statement after learning the Trump campaign has used her ballad “My Heart Will Go On” at multiple rallies.

Celine Dion criticizes Trump campaign for unauthorized use of her music
Singer Celine Dion shared this cheeky statement after learning the Trump campaign has used her ballad “My Heart Will Go On” at multiple rallies.

New England Patriots win first game without Bill Belichick in 24 years
The New England Patriots won their first game in 24 years without legendary coach Bill Belichick in charge, beating the Carolina Panthers 17-3 in their opening preseason game.

Disney dropped huge theme park announcements
The company announced a slew of theme park projects to be developed in the coming years, including an ominous land dedicated to Disney villains. 

‘Lord, make them die an awful death’: Prisoner’s dark pleas found etched into Roman-era prison
An archaeologist has identified the rare remains of a Roman prison in Corinth, Greece. Read More.

Fossils from Greenland’s icy heart reveal it was a green tundra covered in flowers less than 1 million years ago
Greenland was almost completely ice-free at some point in the last one million years, fossilized flowers from a core sample taken from the center of the island reveal. Read More.

Cannabis use linked to head and neck cancer risk
A new study that looked at 20 years of medical data from millions of people found a link between cannabis use and specific cancers. Read More.

Google DeepMind can beat humans at table tennis
Google’s DeepMind has been used to train a robot arm to play table tennis, and it beat human players. Read More.
PHOTOS OF THE DAY
New York, US
The northern lights illuminate the sky during a Perseid meteor shower
Photograph: Anadolu/Getty Images
London, UK
People swim in the Sky Pool, which is suspended 35 metres above ground between two apartment buildings
Photograph: James Manning/PA

Dr. Dre and Snoop perform at the LA28 Olympic Games Handover Celebration.
Photograph: Emma McIntyre/Getty Images for LA28
Market Closes for August 12^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1920, Charles Ponzi was arrested in Boston for fraud. He repaid each $1,000 invested with $1,500 just 90 days later, but only by taking more money from newcomers, or, as a judge later put it, “robbing Peter to pay Paul.”
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the third day, climbing 0.4%, or 87.63 to 22,398.93 in Toronto. The index advanced to the highest closing level since Aug. 1.
Today, materials stocks led the market higher, as 3 of 11 sectors gained; 126 of 226 shares rose, while 98 fell.
Barrick Gold Corp. contributed the most to the index gain, increasing 9.4%. Osisko Mining Inc. had the largest increase, rising 62.9%.
Insights
* The index advanced 9.8% in the past 52 weeks. The MSCI AC Americas Index gained 19% in the same period
* The S&P/TSX Composite is 3.5% below its 52-week high on July 31, 2024 and 19.8% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 0.8% in the past 5 days and fell 1.2% 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 15.4 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$3.55t
* 30-day price volatility little changed to 14.62% compared with 14.63% in the previous session and the average of 11.82% over the past month
================================================================
| Index Points | | Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | 95.0434| 3.5| 46/5
Energy | 69.5321| 1.7| 36/5
Consumer Staples | 2.2302| 0.2| 5/6
Health Care | -0.2020| -0.3| 1/3
Consumer Discretionary | -1.0241| -0.1| 5/8
Communication Services | -2.0388| -0.3| 2/3
Real Estate | -3.1454| -0.6| 1/18
Utilities | -3.7745| -0.4| 6/9
Industrials | -5.9290| -0.2| 10/18
Information Technology | -28.6250| -1.5| 2/8
Financials | -34.4353| -0.5| 12/15
================================================================
| | |Volume VS| YTD |Index Points| | 20D AVG | Change Top Contributors | Move |% Change | (%) | (%)
================================================================
Barrick Gold | 27.4800| 9.4| 100.7| 9.2
Canadian Natural Resources | 19.1800| 2.7| -19.4| 13.1
Agnico Eagle Mines Limited/Limitee | 12.5300| 3.5| 12.9| 45.1
RBC | -10.6800| -0.7| -43.7| 11.0
Constellation Software| -15.9000| -2.8| -23.6| 20.5
Bank of Nova Scotia | -18.7300| -3.4| 55.4| -4.7
US
By Rita Nazareth
(Bloomberg) — Stocks struggled for direction ahead of US inflation data, with the latest geopolitical developments curbing the appetite for risk.
Just a week after the panic selling that shook trading around the globe, the S&P 500 was flat. With Wall Street still reeling from last Monday’s wild gyrations, many investors are refraining from making big bets as they await more signals about the health of the world’s largest economy. Oil hit $80 and bonds gained as the US believes an Iranian attack against Israel is increasingly likely.
To Solita Marcelli at UBS Global Wealth Management, it’s a good time for investors to “take stock” of how far key markets have moved. “Volatility could return this week,” she said. “If inflation is too low, this may heighten concerns that the US may be heading for a recession. If inflation is too high, it could encourage fears that the Federal Reserve may be unable to cut rates quickly enough to protect the economy. Geopolitical risks also remain elevated.”
The S&P 500 hovered around 5,345. Most major groups fell, though tech, energy and utilities gained. The Russell 2000 of small caps extended its August slide to 8.5%. The Cboe Volatility Index — the VIX — edged mildly higher — after an unprecedented spike last week.
Cboe Global Markets Inc. acknowledged that thin trading premarket played a role in the VIX’s violent move last Monday — but said its surge was justified by the mounting angst over the contagion risk emanating from a crash in Japanese currency and
stocks, which led to the yen carry-trade unwinding.
“When the world feels uneasy, people feel less inclined to take risks,” said Callie Cox at Ritholtz Wealth Management. “But fear can be a healthy dynamic for a market that thrives on clearing low hurdles. When it turns out that bad news isn’t as bad as people think, they pile back in.”
To Keith Lerner at Truist Advisory Services, following past volatility shocks, we tend to see wide swings in both directions, and the repair process typically takes time.
“Indeed, after such a sharp move down, there tends to be a battle between fear and greed,” Lerner said. “There is fear of more downside, which causes some investors to continue to sell on any bounce, and then greed on the other side, where those
investors who were waiting for a pullback wade in.”
Notably, to gain further confidence, investors will be waiting for some of the higher profile reports/events like Fed Chair Jerome Powell’s speech in Jackson Hole and Nvidia Corp.’s results this month. In the interim, each economic report will likely be overly scrutinized, he said.
US inflation probably picked up modestly in July, but not enough to derail the Federal Reserve from a widely anticipated interest-rate cut next month.
The consumer price index on Wednesday is expected to have risen 0.2% from June for both the headline figure and the so-called core gauge that excludes food and energy. Yet the annual metrics should continue to rise at some of the slowest paces
seen since early 2021. The producer price index — due a day before the CPI — will be scrutinized for categories that feed through to the Fed’s preferred inflation gauge.
“Investors will be looking for the numbers to land in a sweet spot,” said Chris Larkin at E*TRADE from Morgan Stanley.
After last week’s turmoil, markets will be focused on Wednesday’s US CPI to see if the Fed will have a freer or more constrained hand in refocusing on the labor market and front- loading rate cuts sufficiently to secure a “soft landing,” according to Krishna Guha at Evercore.
“But do not panic if CPI is on the hotter side,” Guha noted. “This is now a labor-data first Fed, not an inflation- data first Fed, that is less data-point dependent, more forward- looking. We think if coming labor data stays soft, the Fed will still be forward-leaning on cuts.”
During the most-recent turmoil, investors slashed equity allocations at the sharpest pace since the onset of the pandemic, according to Deutsche Bank AG. An analysis of previous growth scares suggests that stock correlations and volatility will “will only gradually recede back to ‘normal,’” said Goldman Sachs Group Inc.’s David Kostin.
If economic worries abate, “then the recent selloff represents an opportunity to buy stocks with healthy fundamentals at valuation discounts,” he wrote.
Morgan Stanley’s Michael Wilson says a double whammy of economic uncertainty and a weak period for corporate earnings forecasts is likely to cap stock market gains.
The strategist — among the most notable bearish voices on US equities until last year — said he expects the S&P 500 to trade in a range of 5,000 to 5,400 points as macroeconomic data flash no clear signals over the short term.
The risk-reward for stock markets remains mixed over the summer months against the backdrop of weakening business activity and negative earnings revisions, according to JPMorgan Chase & Co. strategists led by Mislav Matejka.
“Fed will start cutting, but this might not drive a sustained leg higher, as the cuts might be seen as reactive, and behind the curve,” they wrote.
Investors will have a brief window to buy the dip in US stocks at the end of this month as selling pressure from systematic funds eases while companies boost share buybacks, according to Scott Rubner at Goldman Sachs Group Inc.
“This will be my last bearish equity markets call for August as we are ending the worst of the equity supply and demand mismatch for August,” Rubner wrote in a note to clients.
More near-term dips can’t be excluded if activity data surprise negatively, but investors should buy stocks on weakness as fundamentals are still supportive of risk assets, HSBC strategists say.
The team led by Max Kettner sees signs of stabilization after a significant volatility shock, with focus returning to fundamentals as the dust settles.
At least one indicator suggests that last Monday’s drama looks more like a minor meltdown than a harbinger of worse things to come.
Consider the Cboe Volatility Index and the option-adjusted spread on the Bloomberg US Corporate Bond Index. Based on a long-term relationship between the two, the VIX’s close near 39 a week ago was supposed to correspond to a reading of 3.5% in
corporate bond spreads. Yet they ended much lower, near 1.32%.
The mismatch between the two suggests the recent downdraft was technical and not indicative of economic doom, according to Bloomberg Intelligence strategists Christopher Cain and Michael Casper. In fact, such abnormal disconnects in the past have led to above-average returns for stocks over the next three-to-six months.
Tom Essaye at The Sevens Report says he doesn’t think fundamentals have deteriorated enough to warrant de-risking and reducing equity or risk exposure — but he also wants to caution against dismissing the recent uptick in volatility.
“Much of what I read over the weekend characterized this recent volatility as just a typical pullback in an upward- trending market,” Essaye. “Because of that, I continue to advocate for defensive sector exposure and minimum volatility funds.”
Corporate Highlights:
* Bank of Nova Scotia is making good on plans to invest more capital in the US with a $2.8 billion deal for a minority stake in KeyCorp, which was among the US regional banks hit hardest in last year’s tumult.
* Johnson & Johnson has cleared a key hurdle for advancing a $6.5 billion plan to resolve thousands of lawsuits by people who say its baby powder gave them cancer, according to people familiar with the matter.
* B. Riley Financial Inc. tumbled amid a new round of write-downs and a widening US investigation into whether it gave investors an accurate picture of its financial health.
* JetBlue Airways Corp. has kicked off a $2.75 billion bond-and- loan sale backed by its loyalty program as the carrier seeks to raise reserves and fund general corporate purposes.
* Eli Lilly & Co. sold $5 billion of bonds on Monday to help fund its $3.2 billion acquisition of gut-drug maker Morphic Holding Inc., after recession fears triggered a turbulent week.
* Vestas Wind Systems A/S issued a profit warning for its full- year results in a blow to the company’s effort to turn around steep losses in recent years.
Key events this week:
* Germany ZEW survey expectations, Tuesday
* US PPI, Tuesday
* Fed’s Raphael Bostic speaks, Tuesday
* Eurozone GDP, industrial production, Wednesday
* US CPI, Wednesday
* China home prices, retail sales, industrial production, Thursday
* US initial jobless claims, retail sales, industrial production, Thursday
* Fed’s Alberto Musalem and Patrick Harker speak, Thursday
* US housing starts, University of Michigan consumer sentiment, Friday
* Fed’s Austan Goolsbee speaks, Friday
Some of the main moves in the market:
Stocks
* The S&P 500 was little changed as of 4 p.m. New York time
* The Nasdaq 100 rose 0.2%
* The Dow Jones Industrial Average fell 0.4%
* The MSCI World Index was little changed
Currencies
* The Bloomberg Dollar Spot Index rose 0.1%
* The euro rose 0.1% to $1.0931
* The British pound was little changed at $1.2768
* The Japanese yen fell 0.4% to 147.16 per dollar
Cryptocurrencies
* Bitcoin rose 0.9% to $59,061.29
* Ether rose 4.1% to $2,662.51
Bonds
* The yield on 10-year Treasuries declined four basis points to 3.90%
* Germany’s 10-year yield was little changed at 2.23%
* Britain’s 10-year yield declined three basis points to 3.92%
Commodities
* West Texas Intermediate crude rose 3.6% to $79.64 a barrel
* Spot gold rose 1.6% to $2,471.42 an ounce
This story was produced with the assistance of Bloomberg
Automation.

–With assistance from John Viljoen and Matthew Burgess.

Have a lovely evening.

Be magnificent!
As ever,

Carolann
Intuition is perception via the unconscious. -Carl Jung, 1875-1961.

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