August 27, 2024, Newsletter

Dear Friends,

Tangents:

August 27, 1945: American troops began landing in Japan following the surrender of the Japanese government in World War II. Go to article >>.
August 27, 2008: Democratic politician Barack Obama becomes the first African American to be nominated for the presidency by either major party.

1979: Lord Mountbatten assassinated.
Georg Hegel, philosopher, b.1770.
Mother Teresa, b.1910
PeeWee Heman, actor, b.1952

How countries rewarded their Olympic champions
As the Paralympics get underway this week, CNN takes a look at some of the eye-popping rewards athletes earn for winning Olympic glory.

Video: French bulldog ignites kitchen fire
A family is trying to stay paw-sitive after their dog started a large kitchen fire. See the home camera footage.

Travelers score cheap first-class flights due to Qantas glitch
For a short period, first-class round-trip airline tickets from Australia to the US, which normally cost up to 28,000 Australian dollars (about $19,000!), were available from Qantas for a whopping 85% off

Bison Licking Insect Bite: A 14,000-year-old lifelike figure carved from a weapon
The small carving was made 14,000 years ago by a group of hunters. Read More.

Why do we shrink as we age?
Height loss could be an early sign of a more serious health condition. Read More.

Virus that causes COVID-19 uses a secret ‘back door’ to infect the brain
A mutation on the spike protein of the virus that causes COVID-19 could help it infect the brain by forcing it to use a cellular “back door.” Read More.

Boeing Starliner astronauts will spend at least 240 days stuck in space — is that a new record?
NASA astronauts Butch Wilmore and Sunita Williams will spend at least eight consecutive months aboard the International Space Station as their Boeing Starliner spacecraft returns to Earth empty. Is their extended spaceflight record-setting? Read More.

‘Unbreakable’ quantum communication closer to reality thanks to new, exceptionally bright photons
Scientists build a new light source for quantum communications by combining existing technologies together to create a stronger and more robust quantum signal. Read More.

PHOTOS OF THE DAY

Worcestershire, UK
A couple have their picture taken next to sunflowers at Becketts Farm in Wythall
Photograph: Jacob King/PA

Frankfurt, Germany
A man runs over rails to reach a train at Wehrheim station
Photograph: Michael Probst/AP

​​​​​​​Walton-on-the-Naze, Essex
Families have loved the handsome resort since it was first developed in the 1820s
Market Closes for August 27^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1878, Thomas Alva Edison began experimenting with electric light at his laboratory in Menlo Park, N.J., a key moment in his drive to create incandescent light.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.4% at 23,259.96 in Toronto.
The move was the biggest loss since Aug. 7 and follows the previous session’s increase of 0.3%.
Bank of Montreal contributed the most to the index decline and had the largest move, decreasing 6.5%.
Today, 154 of 226 shares fell, while 69 rose; 9 of 11 sectors were lower, led by energy stocks.
Insights
* This month, the index rose 0.6%
* The index advanced 17% in the past 52 weeks. The MSCI AC Americas Index gained 27% in the same period
* The S&P/TSX Composite is 0.7% below its 52-week high on Aug. 26, 2024 and 24.4% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 1% in the past 5 days and rose 2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.7 on a trailing basis and 15.9 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.9% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.71t
* 30-day price volatility fell to 13.95% compared with 14.21% in the previous session and the average of 13.70% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -55.6809| -1.3| 2/38
Materials | -19.3518| -0.7| 6/44
Information Technology | -10.0341| -0.5| 3/7
Industrials | -5.8834| -0.2| 6/22
Financials | -3.5851| 0.0| 17/10
Communication Services | -1.7507| -0.2| 1/4
Health Care | -1.1377| -1.7| 0/4
Utilities | -0.9606| -0.1| 8/7
Consumer Discretionary | -0.3646| 0.0| 3/10
Consumer Staples | 4.7758| 0.5| 5/6
Real Estate | 4.9598| 1.0| 18/2
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Bank of Montreal | -39.3900| -6.5| 105.4| -14.5
Suncor | -12.2200| -2.4| 37.2| 29.3
Canadian Natural Resources | -11.8400| -1.6| 145.0| 14.4
Couche-Tard | 5.3850| 1.4| -13.4| 1.8
TD Bank | 5.4480| 0.6| -45.8| -6.3
Bank of Nova Scotia| 13.9200| 2.5| 20.4| 4.2
US
By Rita Nazareth
(Bloomberg) — Stocks hovered near all-time highs, with traders awaiting Nvidia Corp.’s results for clues on whether the artificial-intelligence euphoria that’s powered the bull market has more room to run.
Just a day ahead of the giant chipmaker’s earnings, investors are getting ready to see whether the AI darling will at least match Wall Street’s lofty estimates.
Given its massive influence on broader indexes, Goldman Sachs Group Inc.’s trading desk has once called Nvidia “the most important stock on planet
Earth.” A member of the “Magnificent Seven” group of mega caps, the company has been responsible for over a third of the Nasdaq 100’s gain this year.
Investors are gearing up for big swings in Nvidia’s shares after the $3.2 trillion company led by Jensen Huang reports earnings on Wednesday.
Trading in the options market implies a nearly 10% move in either direction on the day following the results.
The stock has rallied about 160% this year and 1,000% from its October 2022 bear-market low.
“Nvidia’s earnings report may actually have more impact on the overall market than Jerome Powell’s Jackson Hole speech last week,” said Anthony Saglimbene at Ameriprise Financial. “Move over, Powell. It’s Jensen Huang’s turn to move markets.”
To Chris Senyek at Wolfe Research, Nvidia’s results will set the tone for markets before the key US payrolls report on Sept. 6. “We remain bullish, but risks are now skewed to the downside over the very near-term. From a seasonal perspective, we enter a weaker period that is even more amplified in election years,” Senyek said.
The S&P 500 edged up to around 5,625.
The Nasdaq 100 rose 0.3%.
A closely watched gauge of chipmakers added 1.1%.
Nvidia climbed 1.5%.
Software firm Salesforce Inc., which also reports results on Wednesday, fell 0.4%.
Super Micro Computer Inc. slid 2.6% after Hindenburg Research said it’s short the maker of server equipment.
The Russell 2000 of small caps dropped 0.7%.
Treasury 10-year yields rose one basis point to 3.83%.
A $69 billion US sale of two-year notes was well-received.
Oil fell as technical measures signaled a three-day rally driven by the threat of a halt to Libyan supplies was overdone.
With questions swirling around Federal Reserve policy, the state of the economy and the US presidential race, at least one thing seems clear on Wall Street: spending on AI is still key.
Concerns about the returns of those investments recently contributed to a tech selloff, although that dip was readily bought.
AI hardware and chip companies have led the bounce in the Nasdaq 100 from its August low, with Nvidia up about 30%.
Nvidia accounts for more than 6% of the S&P 500’s market cap in terms of its index weight, so “it’s increasingly a bigger component of where the trend and momentum of the market goes,”
Matt Stucky of Northwestern Mutual Wealth Management told Bloomberg Surveillance.
If the giant chipmaker fails to deliver, or even just meets expectations, “I think it’s more of a risk-off environment,” he said, “not necessarily fuel for rotation.”
Analysts, on average, are predicting that the giant chipmaker will project revenue growth of more than 70% for the current quarter. Some are estimating an even larger surge.
Nvidia’s results and forecast also will serve as a barometer for AI spending across much of the technology industry.
While there have been reports that some versions of Nvidia’s new Blackwell chip lineup are delayed, most analysts believe there’s sufficient demand for current products to make those snags immaterial.
The company hasn’t yet commented on the matter.
“Nvidia is likely to solidly beat consensus and raise third-quarter guidance, with sales surpassing estimates by a single-digit percentage,” said Kunjan Sobhani at Bloomberg Intelligence. “Yet concerns about the Blackwell chip delay could weigh on the upside to expectations for fiscal 2025, making management’s comments — especially a reassuring 2025 outlook — critical.”
Despite the potential for near-term volatility in tech, the AI growth story remains intact, according to Mark Haefele at UBS Global Wealth Management.
“Nvidia’s results this week as well as Apple’s upcoming iPhone launch will be key catalysts to watch. Without taking any single-name views, we maintain our positive outlook for quality AI beneficiaries in the semiconductor and software industries,” Haefele said.
It’s difficult to recall a period in the past where the earnings of one company have been so focused on by the market, but that is where we stand now on Nvidia and to a lesser extent Broadcom Inc., according to Ryan Grabinski at Strategas.
“Their respective earnings results will be a significant catalyst for the broader market in either direction,” he said. “A miss from Nvidia — which has an EPS contribution of 4.6% — could swing estimates materially. Broadcom, which reports next week, contributes 1.6%. A less material EPS contribution, but just as important for ‘AI enthusiasm’.”
Throughout its history, Nvidia has been in a 38% average drawdown, according to data compiled by Bespoke Investment Group strategists.
“Our goal here is not to suggest that Nvidia is doomed, but rather to temper expectations,” Bespoke said. “A repeat of the 1,000%+ gain already experienced by Nvidia is virtually impossible, and extreme pullbacks in a volatile stock like this can happen at any time.”
As the earnings season winds down, BI notes that AI mentions in second-quarter earnings appear to have slipped quarter over quarter — but that’s likely because companies Nvidia and Salesforce have yet to report.
“Recession references among S&P 500 companies’ management and in analyst questions ticked up quarter over quarter for the first time since 2Q22,” said the BI strategists led by Gina Martin Adams. “Still, macroeconomic topics have taken a back seat to AI and the consumer.”
On the economic front, data showed US consumer confidence rose to a six-month high in August as more upbeat views of the economy and inflation offset waning optimism about the labor market.
While the S&P 500 is now nearly back to its all-time high in the wake of Powell’s recent dovish message, underlying risk premia are still somewhat larger than before the July correction began and the previously all-conquering “AI” narrative still is yet to fully recover, according to Jonas Goltermann at Capital Economics.
“Provided that the US economy manages a soft landing, as we continue to anticipate, and enthusiasm around AI rebounds further, we forecast the S&P 500 will hit 6,000 by the end of the year,” he said.
Bank of America Corp. clients pulled money from US stocks for the first time in three weeks, paring their exposure in the asset class that continued to hover near a record.
The offloading was seen across seven of the 11 industry groups but was most prominent in technology stocks, which saw their first outflow in three weeks.
Though the recent rally in Treasuries helped bring the stock-bond relative value comparison back near the long-term average, equities still suffer limited appeal on yields, according to BI’s Adams.
The S&P 500 equity risk premium — the spread between the earnings yield on stocks and the yield on the 10-year Treasury — has edged back into positive territory, Adams noted.
However, right at its long-term average, it is still too low to support the notion of strong forward returns like it did in the 2010-19 bull market, she noted.
“Due to the combination of higher bond yields and stocks near all-time highs, the equity risk premium suggests merely average future returns for stocks — a far cry from the double- digit annualized returns that characterized the post-financial crisis era — but still positive nonetheless,” the strategist concluded.

Corporate Highlights:
* Exxon Mobil Corp. is looking to sell a package of conventional oil assets in the Permian Basin as the company focuses on growing shale production after buying Pioneer Natural Resources Co. earlier this year.
* Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg alleged that Facebook was “pressured” by the US government to censor content related to Covid-19 during the global pandemic and that he regrets the company’s decision to accede to the demands.
* JD.com Inc. plans to buy back as much as $5 billion of its shares, moving to appease investors worried about a potentially worsening Chinese consumer downturn.
* Cava Group Inc. tumbled after the Mediterranean restaurant chain’s largest individual shareholder and a group of executives filed to sell shares.
* Eli Lilly & Co. is now selling vials of its blockbuster weight-loss drug Zepbound to patients for as little as $399 a month as it works to overcome supply shortages of wildly popular shots.

Key events this week:
* Nvidia earnings, Wednesday
* Fed’s Raphael Bostic and Christopher Waller speak, Wednesday
* Eurozone consumer confidence, Thursday
* US GDP, initial jobless claims, Thursday
* Fed’s Raphael Bostic speaks, Thursday
* Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
* Eurozone CPI, unemployment, Friday
* US personal income, spending, PCE; consumer sentiment, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.2% as of 3:59 p.m. New York time
* The Nasdaq 100 rose 0.3%
* The Dow Jones Industrial Average was little changed
* The MSCI World Index rose 0.2%
* Bloomberg Magnificent 7 Total Return Index fell 0.3%
* The Russell 2000 Index fell 0.7%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro rose 0.2% to $1.1184
* The British pound rose 0.6% to $1.3262
* The Japanese yen rose 0.4% to 143.98 per dollar
Cryptocurrencies
* Bitcoin fell 2.1% to $62,090.96
* Ether fell 3.9% to $2,584.56
Bonds
* The yield on 10-year Treasuries advanced one basis point to 3.83%
* Germany’s 10-year yield advanced four basis points to 2.29%
* Britain’s 10-year yield advanced nine basis points to 4.00%
Commodities
* West Texas Intermediate crude fell 2.2% to $75.75 a barrel
* Spot gold rose 0.3% to $2,525.17 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Robert Brand and Toby Alder.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
Beauty awakens the soul to act. –Dante Alighieri, 1265-1321.

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