August 22, 2023 Newsletter

Dear Friends,

Tangents:
August 22, 1485: The Battle of Bosworth Field takes place, marking the end of the Wars of the Roses and the beginning of the Tudor dynasty in England.
On August 22, 1902, President Theodore Roosevelt became the first United States chief executive to ride in an automobile in public.  Go to article >>
August 22,1942: Battle of Stalingrad.
Bill and Melinda Gates confirm on August 22, 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 then-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. (Compiled from HistoryLink.org).

Claude Debussy, composer, b. 1862.
Henri Cartier-Bresson, photographer, b.1908.

Can hot drinks help you cool down?
It may sound counterintuitive, but can a steaming drink cool you down on a scorching day?  Read More.

New ‘potentially interstellar’ comet will be visible to the naked eye next month before leaving our solar system forever.
Comet Nishimura has a hyperbolic orbit, which suggests that it may have come from outside the solar system and will likely be catapulted into interstellar space after sling-shotting around the sun. Read More.

Russia’s Luna-25 lander just crash-landed on the moon, space agency confirms.   Luna-25, Russia’s first moon mission in 47 years, was the vanguard of a planned series of lunar probes.
Full Story: Live Science (8/21)

Bizarre, alien-like creature discovered deep in Atlantic Ocean has 20 gangly arms.   The bizarre Antarctic feather star was once believed to be one species. Now, scientists have figured out that it’s actually eight.  Full Story: Live Science (8/18)

Millions in India cheer on teenage chess prodigy.  India is gripped today as an 18-year-old chess prodigy known as Pragg battles for the title of World Chess Champion.

Loch Ness monster fans prepare for biggest creature hunt in 50 years.  “Monster hunters” are planning a coordinated effort to scour the waters of Scotland in the hope of uncovering answers about the famed creature.

PHOTOS OF THE DAY

Svalbard and Jan Mayen, Norway
A view of waves from a porthole of the Norwegian-flagged research ship PolarXplorer.  Photograph: Anadolu Agency/Getty Image

Outer space
An image from the James Webb telescope shows the Ring Nebula in unprecedented detail.  Photograph: Shutterstock

Thrace, Greece
Firefighters and volunteers tackle a wildfire near the village of Palagia.  Photograph: Dimitris Alexoudis/EPA
Market Closes for August 22^nd, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1787: John Fitch launched the first successful steamboat run in U.S. waters. But he never got costs under control, so Robert Fulton—who launched his own steamboat 20 years later—is instead remembered as the father of the steamboat.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 0.5%, or 93.66 to 19,691.21 in Toronto.
The index dropped to the lowest closing level since June 26.
Royal Bank of Canada contributed the most to the index decline, decreasing 1.3%.
Lightspeed Commerce Inc. had the largest drop, falling 3.7%.
Today, 121 of 227 shares fell, while 103 rose; 7 of 11 sectors were lower, led by financials stocks.
Insights
* This month, the index fell 4.5%
* The index declined 1.4% in the past 52 weeks. The MSCI AC Americas Index gained 5.4% in the same period
* The S&P/TSX Composite is 5.5% below its 52-week high on Feb. 2, 2023 and 10.2% above its low on Oct. 13, 2022
* The S&P/TSX Composite is down 1% in the past 5 days and fell 4.2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 12.9 on a trailing basis and 13.9 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.5% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.13t
* 30-day price volatility rose to 10.88% compared with 10.84% in the previous session and the average of 10.72% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -70.3648| -1.2| 7/22
Energy | -20.6921| -0.6| 11/28
Consumer Staples | -5.6599| -0.7| 3/8
Communication Services | -3.7276| -0.5| 0/5
Industrials | -1.6033| -0.1| 16/10
Consumer Discretionary | -1.5493| -0.2| 7/7
Health Care | -0.6227| -1.0| 1/3
Real Estate | 0.1512| 0.0| 11/10
Utilities | 0.3366| 0.0| 7/9
Information Technology | 3.3694| 0.2| 8/3
Materials | 6.6984| 0.3| 32/16
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
RBC | -14.8900| -1.3| -7.1| -6.0
TD Bank | -12.6900| -1.2| 9.5| -5.8
Brookfield Corp | -9.2760| -2.1| 1.3| 2.1
Barrick Gold | 2.7030| 1.0| -30.5| -7.4
Franco-Nevada | 2.8470| 1.1| -0.9| 1.5
Teck Resources | 3.8210| 2.3| 38.2| 8.2
US
By Rita Nazareth
(Bloomberg) — Stocks failed to gain further traction a day after the rally in big tech, with traders bracing for Nvidia Corp.’s results — which are set to test Wall Street’s fervor around the artificial-intelligence hype.
The S&P 500 extended its August slide.
Banks dropped as S&P Global Ratings joined Moody’s Investors Service in cutting some US lenders amid a “tough” climate.
Macy’s Inc. sank 14% as credit-card delinquencies accelerated, raising a red flag about consumer health.
Nvidia fell 2.8% after touching an all-time high on the eve of its quarterly report.
The chipmaker’s earnings are seen by many as setting the tone for markets alongside Jerome Powell’s speech on Friday.
In a sign of how significant Nvidia’s results will be, the options market is bracing for a move of about 10% following the results.
With Nvidia accounting for over 3% of the S&P 500, the stock action will possibly have broader implications.
Of the 10 largest companies in the gauge, Nvidia is the only stock for
which the prices of call options — which are desirable if the stock goes up — are higher than put options, according to data from Nations Indexes.
The recent rally in mega-caps gave tech bulls some reasons to be encouraged about the group ahead of the seasonally  challenging September/October timeframe, but it also put a lot of pressure on Nvidia to come through with an exceptional earnings report, said Matt Maley at Miller Tabak + Co.
“The expectations are getting extremely high,” Maley noted.  “This does not mean that their earnings report will not be the catalyst for a nice push higher for the tech stocks once again, but the higher the expectations get, the tougher they become to be exceeded. With the continued rise in bond yields, it is going to be essential for Nvidia to report spectacular earnings and guidance again if this correction in the tech sector is going to come to an end any time soon.”
Analysts are predicting that second-quarter revenue may exceed the forecast that Nvidia gave three months ago.
That prediction was far better than expected at the time — helping propel the chipmaker’s market value above $1 trillion.
The only limit to the growth may be whether the giant chipmaker was able to get enough supply to meet seemingly insatiable demand for AI data-center gear.
Nvidia shares have more than tripled in 2023, leading gains in the S&P 500, which has risen 15%.
The Philadelphia Semiconductor Index has rallied 40% in the span.
Action in the Treasury market subsided on Tuesday, with 10-year rates little changed.
Benchmark yields hit an almost 16-year high Monday as the resilient economy has investors positioning for the Federal Reserve to keep borrowing costs elevated.
The surge in US yields has been the primary reason stocks have declined over the past several weeks, with investors “pushing out” the date of expected rate cuts as they begin to accept the Fed may keep rates “higher for longer,” according to Tom Essaye, founder of “The Sevens Report” newsletter.
“It’s not the height of rates that matters as much as how long they stay high,” Essaye noted. “If we see Powell hint at higher for longer on Friday, we will need to brace for more equity market volatility.”
To Alex Coffey at TD Ameritrade, while we may have seen the last rate hike of the current tightening cycle, that doesn’t mean we’re soon going to see cuts — and it “doesn’t necessarily mean that Jerome Powell is going to say it.”
Powell is set to speak Friday at the Kansas City Fed’s Jackson Hole Economic Policy Symposium.
Investors will look to the highly anticipated speech for clues on the outlook for interest rates, which the Fed last month lifted to a range of 5.25% to 5.5%, the highest level in 22 years.
There may be some conversation about the neutral interest-rate — or r-star — which is the “goldilocks” interest rate that neither stimulates nor drags on economic activity, according to Lauren Goodwin at New York Life Investments.
“A suggestion that investment and therefore potential economic growth may be moving higher, as a result of the climate transition or digital infrastructure required for artificial intelligence, could be perceived as hawkish, since it would suggest that the policy rate could stabilize at a higher level,” Goodwin added.
Meantime, Krishna Guha at Evercore ISI said Powell will likely focus on the short to medium term outlook — and avoid making a call on the r-star.
“Expect a balanced assessment with no abrupt hawkishness, but no Mission Accomplished: the Fed has not come this far to let inflation slip out of its grasp,” Guha said. “If we are right, yields could end the week lower, not higher — boosting equities.”

Other Corporate Highlights
* Nike Inc. dropped for a ninth straight session — a record streak of losses — as concern over China’s sluggish consumer recovery builds and elevated merchandise stockpiles continue to weigh on profitability across the activewear industry.
* Charles Schwab Corp. saw its 11th straight day of losses, the longest such streak since 2004.
** The financial company said it’s planning to cut jobs and close or downsize offices to achieve at least $500 million in annual cost savings.
* Dick’s Sporting Goods Inc. sank after cutting its profit outlook for the full year as the retailer deals with slowing growth and more theft at its stores.
* The selloff in AMC Entertainment Holdings Inc., sparked by a Delaware Supreme Court ruling that the company’s stock conversion can go forward, extended into a second day.
* Lowe’s Cos. climbed after topping Wall Street estimates for quarterly profit and comparable sales, easing fears of a meltdown in home improvement.
* Activision Blizzard Inc. rose as Microsoft Corp.’s $69 billion acquisition offer got a new chance at winning approval from UK regulators after the tech giant submitted a substantially different deal to the country’s antitrust watchdog.
Key events this week:
* Eurozone S&P Global Services & Manufacturing PMI, consumer confidence, Wednesday
* UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
* US new home sales, S&P Global Manufacturing PMI, Wednesday
* US initial jobless claims, durable goods, Thursday
* Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
* Japan Tokyo CPI, Friday
* US University of Michigan consumer sentiment, Friday
* Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.3% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.2%
* The Dow Jones Industrial Average fell 0.5%
* The MSCI World index was little changed
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro fell 0.5% to $1.0846
* The British pound fell 0.2% to $1.2731
* The Japanese yen rose 0.2% to 145.89 per dollar
Cryptocurrencies
* Bitcoin fell 1.2% to $25,803.82
* Ether fell 2.7% to $1,626.53
Bonds
* The yield on 10-year Treasuries declined one basis point to 4.32%
* Germany’s 10-year yield declined six basis points to 2.64%
* Britain’s 10-year yield declined eight basis points to 4.64%
Commodities
* West Texas Intermediate crude fell 0.5% to $80.35 a barrel
* Gold futures rose 0.2% to $1,926.60 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Tassia Sipahutar, John Viljoen, Namitha Jagadeesh, Farah Elbahrawy, Elena Popina, Vildana Hajric and Felice Maranz.

Have a lovely evening.

Be magnificent!

As ever,

Carolann
We generate fears while we sit.  We overcome them by action. –Dr. Henry Link, 1889-1952.

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