August 22, 2022 Newsletter

Dear Friends,

Tangents:
On this day in 1485, British monarch Richard III was butchered at the Battle of Bosworth Field.

August 22, 1986: Kerr-McGee Corp. agreed to pay the estate of Karen Silkwood $1.38 million, settling a 10-year-old nuclear contamination lawsuit. Go to article »

Bill and Melinda Gates confirm on this day  in 1999 their intention to reorganize and expand philanthropic activities as the Bill & Melinda Gates Foundation, superseding two other Gates foundations. The new foundation by the Microsoft co-founder and his wife is the nation’s second largest, with an initial endowment of up to $17 billion. Within six months,  it becomes the richest with an additional $5 billion gift. The couple later divorces, but the foundation continues. (Compiled from HistoryLink.org).

HBO’s new ‘Game of Thrones’ spinoff is here.  The prequel series “House of the Dragon” made a roaring debut with dragons aplenty. Here’s what you need to know if you’re tuning in. 

Chipotle hilariously responds to people who steal drinks in water cups.  If you’ve asked for a water cup at Chipotle and then “accidentally” filled it with lemonade, they’re on to you.

12 of the best places to visit this coming fall.  Ah, fall foliage is almost here. If you’re thinking about traveling this autumn, consider visiting one of these beautiful destinations.

Nevada mega sculpture revealed after 50 years of work.

Why everything on Netflix looks the same.

PHOTOS OF THE DAY

Women walk through the cave of Saint George during the Ashenda festival, celebrated in the Tigray and Amhara regions
CREDIT: Amanuel Sileshi/AFP/Getty Images

The night sky is illuminated at the 18th international fireworks festival. Italy won first prize and Germany came second
CREDIT: Anadolu Agency/Getty Images

A tiger at the Wildlife Friends Foundation Thailand. The conservation and animal rescue centre has spearheaded the country’s largest rescue of tigers by taking in and then rehoming 11, as well as two bears from Phuket zoo, which were left behind after its closure. The zoo was forced to shut down due to financial pressures caused by Covid lockdowns
CREDIT: Narong Sangnak/EPA

Market Closes for August 22^nd, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1940, President Franklin D. Roosevelt signed into law the Investment Company Act of 1940. It limited the amount of money a mutual fund could borrow, restricted its ability to invest in securities underwritten by its brokers and reduced the potential for conflicts of interest
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 0.7%, or 136.46 to 19,974.92 in Toronto.
The index dropped to the lowest closing level since Aug. 10.
Toronto-Dominion Bank contributed the most to the index decline, decreasing 1.9%.
Canopy Growth Corp. had the largest drop, falling 13.7%.
Today, 171 of 238 shares fell, while 63 rose; 8 of 11 sectors were lower, led by financials stocks.
Insights
* This month, the index rose 1.4%
* The index declined 1.8% in the past 52 weeks. The MSCI AC Americas Index lost 8.5% in the same period
* The S&P/TSX Composite is 10.1% below its 52-week high on April 5, 2022 and 9.9% above its low on July 14, 2022
* The S&P/TSX Composite is down 1% in the past 5 days and rose 5.2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.5 on a trailing basis and 12.4 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$3.22t
* 30-day price volatility fell to 13.28% compared with 13.58% in the previous session and the average of 15.98% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
* Financials | -89.9920| -1.4| 2/27
* Industrials | -24.3171| -0.9| 3/26
* Information Technology | -18.8721| -1.7| 0/14
* Consumer Discretionary | -13.6913| -1.9| 2/10
* Communication Services | -9.0261| -0.9| 0/7
* Real Estate | -7.9069| -1.5| 0/23
* Health Care | -2.1654| -3.0| 1/6
* Utilities | -1.5229| -0.1| 7/9
* Consumer Staples | 0.3919| 0.0| 4/7
* Materials | 11.3256| 0.5| 19/30
* Energy | 19.3265| 0.5| 25/12
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
* TD Bank | -20.9300| -1.9| 25.2| -11.5
* Royal Bank of Canada | -13.8600| -1.1| -26.6| -4.9
* Magna International | -9.8160| -6.5| 54.3| -26.2
* Suncor Energy | 4.4800| 1.1| 15.6| 35.4
* TC Energy | 5.7900| 1.3| -58.8| 10.6
* Nutrien | 8.0920| 1.8| -24.9| 25.7
US
By Rita Nazareth
(Bloomberg) — A sobering tone took over Wall Street after a rally that added $7 trillion to the stock market, with traders bracing for hawkish rhetoric from Federal Reserve officials at the Jackson Hole retreat later this week.
Equities saw their worst rout in two months, following a surge that drove the S&P 500 to its best start to a third quarter since 1932.
The Nasdaq 100 underperformed as Treasury 10-year yields topped 3%.
The meme-stock frenzy continued to unravel, with other speculative corners of the market like Bitcoin and profitless tech firms also getting clobbered.
The CBOE Volatility Index, or VIX, soared.
As the dollar gained, the euro succumbed to a two-decade low.
The furious runup in US shares from June lows hit a wall as the earnings season wrapped up, with the threat of an economic recession still looming large amid warnings from Fed officials that the fight against inflation is far from over. That stance will likely be reinforced when Jerome Powell speaks Friday at the prestigious event in Wyoming’s Grand Teton mountains, which has been used by Fed chairs as a venue for making key policy announcements.
“He may try to send a clear message that even if they have a slower pace of rate hikes, that won’t signal a lower peak rate or that they will be quick to cut rates,” wrote Ed Moya, senior market analyst at Oanda. “After this week, Wall Street should not be surprised if Fed fund futures start pricing in rate hikes for next year. This could be the week many return from vacation and double-down on their bear-market rally calls.”
In fact, while the recent surge in stocks has triggered chatter about a new bull run, history shows there may be more turbulence ahead. Looking back to the last six bear markets since the 1970s, four of them have experienced an average of six or seven short-lived up trends, according to Glenmede.
The study also showed that the 17% surge from June lows was consistent with historical bear-market rallies.
“There may be further downside to the ongoing bear market, justifying an underweight to risk assets,” wrote Jason Pride, the firm’s chief investment officer of private wealth.
Investors are also waking up to the imminent acceleration of the Fed’s balance-sheet reduction.
So-called quantitative tightening kicks into top gear next month, and will add to pressure on riskier assets which have benefited from ample liquidity.
Strategists at Bank of America Corp. last week said that the winding down of the central bank’s balance sheet poses a risk to equity prices.
Meantime, hedge funds are rapidly positioning for higher rates in a key corner of the derivatives market.
The group has collectively placed a big short across futures referencing the official successor to London interbank offered rate known as the Secured Overnight Financing Rate.
This wager stands to benefit should Powell effectively rule out a dovish pivot this week.
The debate for most investors has shifted from a focus on the odds of a recession to how the Fed will impact markets, according to Lindsey Bell, chief money and markets strategist at Ally, who bets volatility will likely increase as investors look for catalysts.
“With real rates still rising and prospects for 2023 rate cuts fading in the bond market, stock valuations look extremely stretched, especially if as we suspect, policy-driven economic slowing will prove an obstacle to currently optimistic 2023 earnings estimates,” Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, said in a note. “Stocks are overbought. Sit it out for now.”
Stocks and bonds are set to tumble once more even though inflation has likely peaked, according to the latest MLIV Pulse survey, as rate hikes reawaken the great 2022 selloff.
Ahead of the Jackson Hole symposium, 68% of respondents see the most destabilizing era of price pressures in decades eroding corporate margins and sending equities lower.
As investors wonder whether the selloff will get worse from here, Lori Calvasina at RBC Capital Markets says “it seems premature to call an end to the rebound just yet” even with stocks set up for “some choppiness” in the second half of 2022.  “Deeply depressed levels of investor sentiment, which continue to show signs of healing, have kept us out of the bearish camp,” she added.
Elsewhere, gold dropped for a sixth day as a stronger dollar and higher bond yields are bad for bullion as it pays no interest and is priced in the US currency.
Oil clung to $90 at the conclusion of a volatile session after Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said “extreme” volatility and lack of liquidity mean the futures market is increasingly disconnected from fundamentals and OPEC+ may be forced to cut production.
What to watch this week:
* US new home sales, S&P Global PMIs, Tuesday
* Minneapolis Fed President Neel Kashkari speaks at a Q&A session, Tuesday
* US durable goods, MBA mortgage applications, pending home sales, Wednesday
* US GDP, initial jobless claims, Thursday
* Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
* ECB’s July minutes, Thursday
* Fed Chair Powell speaks at Jackson Hole, Friday
* US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 2.1% as of 4 p.m. New York time
* The Nasdaq 100 fell 2.7%
* The Dow Jones Industrial Average fell 1.9%
* The MSCI World index fell 1.8%
Currencies
* The Bloomberg Dollar Spot Index rose 0.6%
* The euro fell 0.9% to $0.9943
* The British pound fell 0.5% to $1.1766
* The Japanese yen fell 0.4% to 137.45 per dollar
Bonds
* The yield on 10-year Treasuries advanced six basis points to 3.03%
* Germany’s 10-year yield advanced eight basis points to 1.31%
* Britain’s 10-year yield advanced 10 basis points to 2.51%
Commodities
* West Texas Intermediate crude fell 0.6% to $90.23 a barrel
* Gold futures fell 0.8% to $1,748.40 an ounce
–With assistance from Andreea Papuc, Robert Brand, Vildana Hajric, Cormac Mullen and Isabelle Lee.
Have a lovely evening.

Be magnificent!
As ever,

Carolann

And the trouble is, if you don’t risk anything, you risk even more. –Erica Jong, b.1942.

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