December 3, 2024, Newsletter

Dear Friends,

Tangents:
December 3, 1989: Malta Summit ends Cold War.  U.S. President George H.W. Bush and Soviet leader Mikhail Gorbachev declared an end to the Cold War during the Malta Summit, reshaping global geopolitics.
December 3, 1997: South Korea struck a deal with the International Monetary Fund for a $55 billion bailout of its foundering economy. Go to article
December 3, 1984: Roy Lichtenstein’s Greene Street Mural is exhibited at Leo Castelli  Gallery.

Joseph Conrad, writer, b. 1857.

2,100-year-old temple from ancient Egypt discovered hidden in cliff face
The temple is located close to Luxor and was possibly dedicated to the lion-headed goddess Repit. Read More.

Chris Rock and Martin Short to host last ‘SNL’ episodes of 2024
Rock will host the December 14 episode, marking his fourth time hosting, while Short is set to host for the sixth time on December 21.

Belly fat linked to signs of Alzheimer’s 20 years before symptoms begin
As the size of a person’s belly grows, the memory center of the brain shrinks, well before any cognitive decline is apparent, according to new research.

1,500-year-old riches and more than 100 weapons found under Iron Age chieftain’s house
Archaeologists in Denmark have recovered dozens of lances, spears, swords and knives along with a set of chainmail from an Iron Age chieftain’s house. Read More.

12 strange reasons humans haven’t found alien life yet
Scientists have been searching for evidence of extraterrestrial life for decades. So, where are all the aliens? Here are 12 intriguing theories … Read More.

PHOTOS OF THE DAY

Tokyo, Japan
A man walks in Kiyosumi Garden. Japan has recorded the warmest autumn since records began 126 years ago, the weather agency said, helping push the country’s popular autumn foliage season into December
Photograph: Philip Fong/AFP/Getty Images

Miami Beach, US
The Great Elephant Migration art installation, which is traveling across the US promoting human-wildlife coexistence, is displayed during Miami art week in Florida
Photograph: Lynne Sladky/AP

​​​​​​​London, UK
Larry the cat sits next to the Christmas tree in Downing Street
Photograph: Jonathan Brady/PA
Market Closes for December 3, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 2017, CVS Health agreed to buy Aetna for about $69 billion in cash and stock in a move to transform the pharmacy company and capture more of what consumers spend on healthcare. By 2024, CVS, under pressure from poor performance, considered a plan to break itself back apart.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose 0.2% at 25,635.73 in Toronto.
The move follows the previous session’s decrease of 0.2%.
Agnico Eagle Mines Ltd. contributed the most to the index gain, increasing 4.0%.
Fortuna Mining Corp. had the largest increase, rising 9.9%.
Today, 138 of 219 shares rose, while 77 fell; 7 of 11 sectors were higher, led by materials stocks.
Insights
* This year, the index rose 22%, heading for the best year in at least 10 years
* This quarter, the index rose 6.8%
* The index advanced 25% in the past 52 weeks. The MSCI AC Americas Index gained 31% in the same period
* The S&P/TSX Composite is 0.3% below its 52-week high on Dec. 2, 2024 and 27.4% above its low on Dec. 13, 2023
* The S&P/TSX Composite is up 0.9% in the past 5 days and rose 5.7% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 20.4 on a trailing basis and 17.7 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.7% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$4.03t
* 30-day price volatility fell to 8.39% compared with 8.66% in the previous session and the average of 8.46% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | 78.5867| 2.7| 46/3
Energy | 24.1383| 0.5| 28/13
Consumer Staples | 7.6274| 0.8| 9/0
Consumer Discretionary | 6.7782| 0.8| 6/5
Communication Services | 4.1661| 0.6| 4/1
Health Care | 0.9703| 1.3| 3/1
Real Estate | 0.0454| 0.0| 8/11
Utilities | -2.6850| -0.3| 6/9
Industrials | -13.0389| -0.4| 13/14
Information Technology | -23.8967| -0.9| 5/5
Financials | -37.2864| -0.4| 10/15
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
Agnico Eagle Mines Ltd | 16.2200| 4.0| 29.0| 66.6
Canadian Natural Resources | 13.5800| 1.9| 341.8| 10.9
Wheaton Precious Metals | 7.8240| 2.9| 27.5| 35.9
Shopify | -10.1800| -0.8| 3.3| 52.6
Constellation Software | -19.3800| -2.9| 68.4| 41.5
Bank of Nova Scotia | -23.1900| -3.4| 188.6| 19.5
US
By Rita Nazareth
(Bloomberg) — A rally that drove stocks to a series of all-time highs showed signs of exhaustion, with investors awaiting this week’s key jobs report and Jerome Powell’s remarks for clues on whether Federal Reserve officials will cut interest rates in December.
Wall Street traders also refrained from making riskier bets amid intense volatility in South Korean assets as President Yoon Suk Yeol said he will lift a martial law decree, just hours after his dramatic move imposing it.
US equities struggled to make headway, following an over $11 trillion surge in the S&P 500 this year that drove the gauge near overbought levels.
With a negligible gain on Tuesday, the index notched its 55th record in 2024.
Positioning in S&P 500 futures is “completely one-sided,” according to Citigroup Inc.’s Chris Montagu.
“Things are getting extremely crowded on one side of the boat — the bullish side,” said Matt Maley at Miller Tabak + Co.
“Valuation levels are a lousy timing tool. However, sentiment and positioning are better tools. So it’s not out of the question that today’s extreme readings on these issues could create a surprising pick up in volatility before year-end.”
Just a few days ahead of the US payrolls report, data showed job openings picked up while layoffs eased, suggesting demand for workers is stabilizing.
Fed Bank of San Francisco President Mary Daly said a rate cut this month isn’t certain, but remains on the table.
“The question for investors isn’t ‘will the Fed cut again.’  but rather ‘will the next cut be in December or January’,” said Lauren Goodwin at New York Life Investments. “Our base case is that the Fed cuts 25 basis points in December, but we have much higher confidence that another cut is coming in December or January as the data evolves.”
The S&P 500 was little changed.
The Nasdaq 100 added 0.3%.
The Dow Jones Industrial Average slid 0.2%.
Treasury 10-year yields advanced four basis points to 4.23%.
Oil rose as the US imposed more sanctions targeting Iranian crude and OPEC+ made progress on a deal to keep output off the market.
Bank of America Corp. clients continued to pile into US equities last week as post-election enthusiasm persisted, with purchases made by hedge funds and retail investors.
Net inflows by the bank’s clients totaled $800 million in a holiday-shortened week ended Nov. 29, quantitative strategists led by Jill Carey Hall said Tuesday.
The foundation for US stocks is still firm, but it’s starting to show minor signs of cracking as 2025 approaches, according to Gina Martin Adams and Michael Casper at Bloomberg Intelligence.
Their latest market-health checklist summarizes the state of 17 timely indicators in three categories — technicals, earnings trends and bonds/macroeconomic signals — and shows two red flags at this time — in revision momentum and economic regime.
There are eight mixed (yellow) signals and seven all-clear (green) ones.
“Technical cues are less than perfect given shifting leadership to smaller-cap stocks, but the price trend is still very strong,” they said. “Earnings cues have weakened a touch as comparisons get more challenging and margin forecasts wobble.  Macroeconomic indicators remain decidedly muddled, as all cues in our economic regime model show sputtering momentum.”
History suggests a Fed easing cycle could offer resolute support for stocks, and clearly more if it’s accompanied by steady economic conditions, according to Nathaniel T. Welnhofer at BI.
Since 1971, the S&P 500 posted an annualized return of 14.9%, and since the late 1970s, the Russell 2000 gained 17.2% in periods when the central bank cut rates, he said.
The results were much stronger during rate-cutting cycles in non-recessionary periods: Large caps averaged a 25.2% annualized return vs. 11% in recessionary periods, while small caps averaged 19.6% and 16.5%, respectively.
“If the Fed stops easing early, the pace of gains for stocks will likely depend more on the state of the economy,” Welnhofer added.
The S&P 500 has posted a 0% return on average in the three months just after the end of easing cycles, but is down 9.9% when the economy was in recession, compared with 3.3% when it wasn’t.
“The US economy continues to hum along, the Fed is on its path to lower interest rates, and earnings growth remains strong,” said Bret Kenwell at eToro.
Kenwell notes that’s a scenario that could continue favoring the small-cap space — with the Russell 2000 being the top-performing major index since the US presidential election.
The gauge gained more than 10% in November alone — the second time it has done so this year after accomplishing the feat in July. Going back to 1979, when the Russell 2000 posted a monthly gain of that magnitude, it was higher 90% of the time six months later with an average gain of 11.4%.
“While the statistics are favorable for small caps moving forward, so are the fundamentals,” he said. “Even the recent spike in 10-year Treasury yields has done little to deter small-cap investors.”
“US stocks are likely to continue grinding higher into next year. In our view, the exuberance synonymous with frothy financial markets is far from widespread,” said Solita Marcelli at UBS Global Wealth Management.
“While we expect bouts of volatility and corrections in the year ahead, we continue to believe that the S&P 500’s next leg up to our December 2025 target of 6,600 will be fueled by solid economic growth, the Fed’s easing, and AI advancement.”
Within the US equity market, she favors technology, utilities and financials.
A New York University professor known for his expertise on valuations says the “Magnificent Seven” mega-caps are a buy during corrections as most of them will keep generating money.
“As a value investor, I have never seen cash machines as lucrative as these companies are,” Aswath Damodaran, a finance professor at NYU’s Stern School of Business, said in a Bloomberg Television interview. “And I don’t see the cash machine slowing down.”
There will be corrections and “I’d suggest that when that happens you find a way to add at least one, maybe two or three of these companies, because these are so much part of what drives the economy and the market,” he added.

Corporate Highlights:
* Intel Corp.’s search for a new chief executive officer will focus heavily on outsiders, with the chipmaker considering candidates such as Marvell Technology Inc. head Matt Murphy and former Cadence Design Systems Inc. CEO Lip-Bu Tan, according to people familiar with the situation.
* AT&T Inc. predicted sustained profit growth over the next three years, including double-digit gains in 2027, a payoff from its investments in mobile-phone and fiber-optic networks.
* BlackRock Inc. agreed to buy HPS Investment Partners in an all-stock deal valued at roughly $12 billion, a purchase that will propel the world’s largest asset manager into the highest ranks of private credit.
* SpaceX is in talks to sell insider shares in a transaction valuing the rocket and satellite maker at about $350 billion, according to people familiar with the matter.
* Bank of Nova Scotia missed earnings estimates on higher-than-expected expenses and taxes.
* Honeywell International Inc. and Bombardier Inc. reached a deal on the development of aviation technology and settled a long-running legal dispute.
* MARA Holdings Inc. bought the North Texas wind farm in Hansford County from a joint venture between National Grid Plc and the Washington State Investment Board,
* Zscaler Inc., a security software company, gave a forecast for adjusted second-quarter earnings that missed expectations.
* Children’s Place Inc. posted profit that missed the average analyst estimate.

Key events this week:
* S&P Global Eurozone Services PMI, PPI, Wednesday
* US factory orders, US durable goods, Wednesday
* Fed’s Jerome Powell and Alberto Musalem speak, Wednesday
* Fed’s Beige Book, Wednesday
* Eurozone retail sales, Thursday
* US initial jobless claims, Thursday
* Eurozone GDP, Friday
* US jobs report, consumer sentiment, Friday
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 rose 0.3%
* The Dow Jones Industrial Average fell 0.2%
* The MSCI World Index rose 0.3%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro was little changed at $1.0508
* The British pound rose 0.1% to $1.2671
* The Japanese yen was little changed at 149.48 per dollar
Cryptocurrencies
* Bitcoin rose 0.3% to $95,676.48
* Ether fell 0.2% to $3,609.05
Bonds
* The yield on 10-year Treasuries advanced four basis points to 4.23%
* Germany’s 10-year yield advanced two basis points to 2.05%
* Britain’s 10-year yield advanced three basis points to 4.24%
Commodities
* West Texas Intermediate crude rose 2.8% to $69.98 a barrel
* Spot gold rose 0.1% to $2,642.46 an ounce

This story was produced with the assistance of Bloomberg Automation.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
The greatest use of life is to spend it for something that will outlast it. -William James, 1842-1910.

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 (Text Only)
Toll Free: 1.877.430.5895
Fax: 778.430.5828
www.carolannsteinhoff.com