December 28, 2023, Newsletter

Dear Friends,

Tangents: Happy Friday Eve.

2005 Former top Enron Corp. accountant Richard Causey pleaded guilty to securities fraud and agreed to help pursue convictions against Enron founder Kenneth Lay and former CEO Jeffrey Skilling. Go to article >>

Maggie Smith, b. 1934.
Denzel Washington, b. 1954.

Airport falls silent as priest blesses planes
The chaplain at Dublin Airport took advantage of the empty runway on Christmas day to perform his annual “Blessing of the Planes.” Read more about the ceremony that dates back to 1947.

5 easy ways to keep your brain sharp
Here are the top five things we learned this year from the “Chasing Life” podcast with CNN’s Chief Medical Correspondent Dr. Sanjay Gupta. This season examined the brain in its many states — including the organized brain, the menopausal brain and the depressed brain.

Steve Ballmer is set to make $1 billion a year for doing nothing
Ballmer, the sixth-richest person in the world, is set to collect that much in dividends for simply owning Microsoft stock in 2024.

The universe is filled with a ‘gravitational wave background.’
All of this suggests that the seeds of life may be far more prevalent in space than we previously thought. And if there are aliens out there, they can join us in appreciating a new component of the universe that was discovered this year: the gravitational wave background.
Gravitational waves are ripples in the fabric of space-time first predicted by Einstein. Now, after a rigorous 15-year search, astronomers think they’ve detected a slight but ever-present background of waves unleashed by the extreme interactions between supermassive black holes. These invisible waves are moving through Earth, and through you, even now. Read More.

The James Webb telescope has broken cosmology
In a final landmark this year, Dec. 25 marked the two-year anniversary of the powerful James Webb Space Telescope’s (JWST) launch. The last two years have been overflowing with fascinating discoveries and spectacular images of the cosmos, but one of JWST’s most important findings confirms a problem that has vexed cosmologists for more than a decade: The universe is expanding, but none of our models can agree on how fast. As Live Science staff writer Ben Turner wrote in honor of the telescope’s birthday, “something is awry in our expanding cosmos” and JWST’s incomparable vision is only making things worse. Read More.

RIP TOM SMOTHERS

PHOTOS OF THE DAY

Ha Long Bay, Vietnam
Tourist boats sailing in the north-eastern province of Quang Ninh. Ha Long Bay is losing its famous turquoise hue as pollution and overdevelopment threaten wildlife and its picture-perfect image
Photograph: Nhac Nguyen/AFP/Getty Images

Kunming, China
People feed black-headed gulls in south-west Yunnan province
Photograph: Rex/Shutterstock

​​​​​​​Bormio, Italy
Norway’s Aleksander Aamodt Kilde speeds down the course during a men’s World Cup downhill race
Photograph: Marco Trovati/AP
Market Closes for December 28^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Some of the most successful investors I know have no technique that can be defined, beyond knowledge, realism, and industry: no theory, no generalizations. –John Train, The Money Masters.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.4% at 20,929.38 in Toronto.
The move was the biggest since falling 1.1% on Dec. 20 and follows the previous session’s increase of 0.6%.
Canadian Natural Resources Ltd. contributed the most to the index decline, decreasing 1.6%.
Energy Fuels Inc/Canada had the largest drop, falling 7.1%.
Today, 135 of 225 shares fell, while 88 rose; 6 of 11 sectors were lower, led by energy stocks.
Insights
* This year, the index rose 8%, poised for the best year since 2021
* This quarter, the index rose 7.1%, heading for the biggest advance since the second quarter of 2021
* This month, the index rose 3.4%
* So far this week, the index was little changed
* The index advanced 8.5% in the past 52 weeks. The MSCI AC Americas Index gained 27% in the same period
* The S&P/TSX Composite is 0.8% below its 52-week high on Dec. 27, 2023 and 12% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 0.4% in the past 5 days and rose 4.5% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 16.5 on a trailing basis and 15.2 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.2% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.32t
* 30-day price volatility rose to 10.80% compared with 10.66% in the previous session and the average of 11.46% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -49.7368| -1.4| 2/39
Materials | -37.2161| -1.6| 6/46
Financials | -12.2402| -0.2| 13/14
Industrials | -2.8941| -0.1| 15/11
Utilities | -1.3064| -0.2| 9/5
Real Estate | -0.1807| 0.0| 14/6
Consumer Discretionary | 0.9423| 0.1| 9/4
Health Care | 1.6787| 2.7| 3/1
Consumer Staples | 1.7679| 0.2| 9/2
Communication Services | 4.1044| 0.5| 4/1
Information Technology | 8.5665| 0.5| 4/6
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Canadian Natural Resources | -10.9100| -1.6| -61.7| 15.0
Brookfield Corp | -6.1990| -1.2| -52.0| 24.9
Barrick Gold | -5.7700| -1.9| -66.2| 3.1
Fairfax Financial | 2.2950| 1.2| -34.7| 52.7
Bank of Nova Scotia| 2.7820| 0.5| 4.2| -3.2
Shopify | 9.6910| 1.1| -65.2| 122.6
US
By Rita Nazareth
(Bloomberg) — A banner year for stocks is drawing to an end, with the market near all-time highs amid the artificial- intelligence exuberance and dovish Federal Reserve wagers.
In the run-up to the final closing bell of 2023, the Nasdaq 100 wavered — while still set for its best year since 1999 after a $7 trillion surge.
The S&P 500 came close to a record, and was 1% below the average full-year gain predicted in a recent survey with analysts, who forecast the index would end 2024 at 4,833.
“If the stock market can break through that record high in any significant way as we move through January, it’s going to be very bullish on a technical basis,” said Matt Maley at Miller Tabak + Co. “Whenever the market is rallying strongly at the beginning of a new year — when a lot of people are adjusting their investment-game plans — it tends to exacerbate the rally.”
In a rates-obsessed world, the stock market saw a massive reversal this year after suffering its worst annual selloff since 2008.
As traders ramped up bets the Fed is done with its hiking campaign — and will start easing policy in 2024 — global bonds were set for their biggest two-month gain on record.
The S&P 500 traded just a few points away from its all-time high of 4,796.56 — extending its 2023 advance to 25%.
Treasuries dropped after a weak $40 billion sale of seven-year notes.
The dollar rose against most of its developed-market peers.
The yen climbed as Bank of Japan Governor Kazuo Ueda continued to prepare the ground for the nation’s first rate increase since 2007.
From Nvidia Corp. to Microsoft Corp., the seven-largest US tech stocks were responsible for 64% of the gauge’s rally this year through last week as the AI frenzy took off.
The Nasdaq 100 is up over 50% this year.
The ‘Magnificent Seven’ — which also includes Amazon.com Inc., Apple Inc., Google parent Alphabet Inc., Meta Platforms Inc. and Tesla Inc. — are expected to post 22% earnings growth next year, twice the S&P 500’s advance, data compiled by Bloomberg Intelligence show.
The key is how much of that is already baked into share prices, especially with expectations for a soft landing building.
“Companies that have a defined and clear AI strategy with easy-to-follow metrics will likely continue to do well in 2024,” said Michael Landsberg at Landsberg Bennett Private Wealth Management. “Companies that have a hard time explaining their AI value proposition will not see a repeat of 2023, where most large tech was buoyed by the excitement and not necessarily the details of AI.”
Investors have flocked to big tech in part on bets that they are best positioned to capitalize on AI due to their vast scale and financial strength.
Those bigger profits have brought valuations down from nosebleed levels — but they’re still lofty.
The Nasdaq 100 is priced at about 25 times profits projected over the next 12 months, according to data compiled by Bloomberg.
While that’s down from a peak of 30 in 2020, it’s well above the average of 19 times over the past two decades.
Although there has been a relatively high number of stocks with gains of over 100%, there haven’t been many outperforming the S&P 500, Bespoke Investment Group noted.
In a typical year, on average, 48.7% of the benchmark’s members post larger gains than the index itself.
In 2023, less than 30% of its members are outpacing the index.
“This leads one to question whether the leaders (or laggards) continue to lead (lag) in the year ahead,” the Bespoke strategists said. “Looking at the past, the picture is not exactly favorable for that sort of rotation in either direction.”
The market is “sitting on big gains” and most participants just want the year to end to register those gains, according to Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter.
“But I’ve been in this industry long enough to know that when everyone seems to be leaning on one side of the proverbial canoe, it pays to move to the middle.”
Warnings about a market that’s flashing overbought signals have been raising concern about a pullback, with some market observers saying that traders have gone too far, too fast in pricing in a dovish Fed pivot.
While the recent ebbing of inflation is positive for the Fed, some other figures showing economic resilience could fuel consumer spending — working against the central bank’s aim to slow the pace of growth.
That poses risks for the bond market heading into the new year.
Falling yields have also driven the dollar lower in 2023, with the greenback on pace for its worst year since the onset of the pandemic.
Much of the decline materialized in the fourth quarter on growing wagers that the Fed will sharply loosen policy next year.
The drop in Treasury yields has effectively relaxed financial conditions in the US and “are hardly compatible with sustainably low inflation,” said Ipek Ozkardeskaya, a senior analyst at Swissquote.
“The rally in the sovereign space looks overdone — hence the rally in stocks and the selloff in the US dollar look overstretched,” she wrote in a note.
About a week ahead of the all-important US jobs report, traders were unfazed by data showing initial jobless claims rose to 218,000.
Economists forecast a still-healthy 170,000 increase in December payrolls, consistent with resilient labor demand that has been key in powering the economy.
Elsewhere, oil retreated for the fourth time in five sessions as rising inventories at the key US storage hub in Cushing, Oklahoma, partly offset a drop in national stockpiles to paint a mixed picture for demand.

Some of the main moves in markets:
Stocks
* The S&P 500 was little changed as of 4 p.m. New York time
* The Nasdaq 100 was little changed
* The Dow Jones Industrial Average rose 0.1%
* The MSCI World index was little changed
Currencies
* The Bloomberg Dollar Spot Index rose 0.1%
* The euro fell 0.4% to $1.1064
* The British pound fell 0.5% to $1.2730
* The Japanese yen rose 0.3% to 141.40 per dollar
Cryptocurrencies
* Bitcoin fell 2% to $42,525.5
* Ether fell 0.4% to $2,350.53
Bonds
* The yield on 10-year Treasuries advanced five basis points to 3.84%
* Germany’s 10-year yield advanced five basis points to 1.94%
* Britain’s 10-year yield advanced six basis points to 3.49%
Commodities
* West Texas Intermediate crude fell 3% to $71.91 a barrel
* Spot gold fell 0.5% to $2,066.51 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson, Robert Brand, Jessica Menton, Elena Popina, Ishika Mookerjee, Jeran Wittenstein and Carmen Reinicke.

Have a lovely evening.

Be magnificent!
As ever,

Carolann
You will make all kinds of mistakes; but as long as you are generous and true, and also fierce, you cannot hurt the world or even seriously distress her. –Sir Winston Churchill, 1874-1965.

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