December 4, 2023, Newsletter

Dear Friends,

Tangents: Happy Monday.

December 4^th, 1952: The Great Smog envelops London, causing thousands of deaths.  This environmental disaster leads to the Clean Air Act.
December 4, 1980: The rock group Led Zeppelin announced it was disbanding after the death in September of drummer John Bonham. Go to article >>

‘Impossible’ orange auroras appear in sky after solar storm
Rarely seen orange auroras, which technically shouldn’t exist, were recently photographed in the sky above Scotland after an explosive solar storm smashed into Earth. Read More.

Huge planet discovered around tiny star puzzles scientists
The massive planet LHS 3154b orbits a star much smaller than Earth’s sun, and its discovery could upend everything we think we know about how solar systems form. Read More.

Members of KISS say goodbye at final concert
The iconic American rock band ended 50 years of touring with a final concert on Saturday in New York City.

Ghostly new figures appear in the waters of the Caribbean
These striking sculptures were recently installed in Grenada’s world-famous underwater museum.

Tiny-house vacations inspired this woman to downsize for good
This woman enjoyed her vacations in tiny lodgings so much that she bought a tiny home of her own! See photos of the inside and learn how much it cost
PHOTOS OF THE DAY

Lidečko, Czech Republic
People take part in a St Nicholas procession, a pre-Christmas tradition that has survived for centuries in a few villages in the eastern part of the country.  Photograph: Petr David Josek/AP.

Derbyshire, UK
Snow at Winnats Pass near Castleton. Drivers were warned they faced treacherous conditions in parts of the UK after another night of sub-zero temperatures.  Photograph: Dave Higgens/PA.

​​​​​​​Dubai, United Arab Emirates
Members of the Indigenous Pareci people of central Brazil attend day five of the Cop28 summit.  Photograph: Sean Gallup/Getty Images.
Market Closes for December 4^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1989, M. Danny Wall, head of the U.S. Office of Thrift Supervision, resigned as the top regulator of savings-and-loan institutions after two years of struggling to tame an industry crisis.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.2% at 20,410.21 in Toronto, ending a 4-day gain.
The loss follows the previous session’s increase of 1.1%.
Shopify Inc. contributed the most to the index decline, decreasing 1.5%. Endeavour Silver Corp. had the largest drop, falling 7.5%.
Today, 132 of 227 shares fell, while 92 rose; 4 of 11 sectors were lower, led by materials stocks.
Insights
* This year, the index rose 5.3%, poised for the best year since 2021
* This quarter, the index rose 4.4%
* The index declined 0.4% in the past 52 weeks. The MSCI AC Americas Index gained 12% in the same period
* The S&P/TSX Composite is 2.1% below its 52-week high on Feb. 2, 2023 and 9.2% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 1.9% in the past 5 days and rose 3% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 16.1 on a trailing basis and 14.8 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.3% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.24t
* 30-day price volatility fell to 12.21% compared with 12.25% in the previous session and the average of 13.92% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | -36.6996| -1.6| 8/44
Energy | -21.5297| -0.6| 14/26
Information Technology | -11.7614| -0.7| 3/8
Utilities | -2.1421| -0.3| 7/7
Industrials | 0.5235| 0.0| 11/15
Health Care | 1.0294| 1.8| 3/1
Real Estate | 2.4228| 0.5| 16/4
Consumer Discretionary | 3.3740| 0.4| 6/8
Consumer Staples | 5.5791| 0.6| 7/4
Communication Services | 7.5792| 1.0| 5/0
Financials | 8.9595| 0.1| 12/15
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Shopify | -12.7000| -1.5|n/a | 108.9
Canadian Natural Resources | -10.0000| -1.4|n/a | 20.1
Cenovus Energy | -6.3060| -2.8|n/a | -11.5
TC Energy | 4.0300| 1.1|n/a | -4.4
TD Bank | 4.3630| 0.4|n/a | -6.2
Couche-Tard | 5.5010| 1.4|n/a | 31.1
US
By Rita Nazareth
(Bloomberg) — Wall Street kicked off the week with losses, with both stocks and bonds down in a signal that traders’ aggressive pricing of Federal Reserve rate cuts may have gone too far.
A slew of key jobs readings over the next few days will be closely watched for clues on the Fed’s next steps — with the potential to reignite volatility that has recently shown signs of anemia.
Technically “overbought” conditions and bullish positioning have left markets vulnerable to corrections after the historic rallies in both equities and Treasuries last month.
“We’ve had the great rally and now it’s just kind of a ‘chillax’,” Tony Dwyer at Canaccord Genuity told Bloomberg Television.
To Morgan Stanley’s Michael Wilson, US stocks are headed for a rocky end to the year.
The strategist said December could bring “near-term volatility in both rates and equities” before more constructive seasonal trends as well as the “January effect” support equities next month.
JPMorgan Chase & Co.’s Mislav Matejka said markets expecting a soft landing leave no room for error.
“Perhaps one should be contrarian yet again,” Matejka said.
The S&P 500 fell from the highest since March 2022, while the Nasdaq 100 dropped 1% amid a rout in mega-caps.
US two-year yields rose nine basis points to 4.63%.
The dollar gained.
Bitcoin hovered near $42,000 as frenzied speculation in cryptocurrencies gathered pace.
“The biggest near-term risk for the markets could simply be that after a phenomenal one-month rally, a period of consolidation may be a necessary breather,” said Jason Draho at UBS Global Wealth Management. “A lot of good news is priced in, and investors seeing little imminent downside risk does make the markets vulnerable to even small disappointments.”
To Paul Nolte at Murphy & Sylvest Wealth Management, the question now is: Will the Fed follow through on the market’s expectations?
“We had a massive increase in interest rates that just haven’t totally hit the economy yet,” said Dana D’Auria at Envestnet Inc. “The market has a decent chance of slowing down next year. Does it mean it’s a massive crash? No, not necessarily. But I don’t advocate chasing after stocks and not being balanced in the way that you go to the market.”
Whether the economy settles in for a soft landing or spirals into something worse, both scenarios suggest lower rates are coming.
Nearly 125 basis points of easing are priced in through next year’s December Fed meeting — equal to about five quarter-point cuts.
“Markets are approaching the limits of what can plausibly be priced without attaching material odds of a recession in the near term,” Goldman Sachs Group Inc. strategists including Praveen Korapaty, wrote.
To Chris Larkin at E*Trade from Morgan Stanley, traders may be wondering if the market has gotten a little too complacent.
The percentage of S&P 500 stocks trading above their 50-day moving averages has surged to 84% — indicating broad participation during the recent rally, according to data compiled by Bespoke Investment Group.
Meantime, the closely watched bull-bear spread from the American Association of Individual Investors survey recently showed the most-bullish stance for the group since July, nearing levels not seen since
April 2021.
The S&P 500 posted an average daily move of 0.3% in either direction last week, its tamest swings in half a year, as the market lost some momentum toward the end of its second-best November since 1980. The CBOE Volatility Index, also known as the VIX, approached this year’s lowest levels last Friday after Fed Chair Jerome Powell gave his clearest signal yet that officials have finished raising interest rates.
“All eyes will be on Friday’s monthly jobs report to see if it confirms the cooling trend we saw most of last month,” Larkin said. “If it doesn’t, it may renew concerns the Fed’s 2024 pivot to rate cuts could be delayed.”
While warnings are piling up that the market is overheating, “don’t fight the tape” still seems to be the motto for many traders in this last stretch of the year.
“If the S&P 500 begins to trend lower, market makers will have to mechanically buy the dip,” say Tier1Alpha strategists.
“Conversely, if the market trends higher, dealers will have to sell futures in order to maintain a delta-neutral position.”
If history is any guide, December is unlikely to bring heavy selling.
Since 1950, it’s the third-best month of the year for the S&P 500, averaging a 1.4% gain, data compiled by the Stock Trader’s Almanac show.
After emerging from the prior 23 corrections since World War II, the S&P 500 rose an average 9.8% over a 127 calendar-day period before succumbing to another decline of 5% or more, according to Sam Stovall at CFRA.
And when it did, the subsequent decline averaged 11%.
“As with all averages, these can also be a bit misleading, since two observations saw the market slip into another 5%+ decline immediately after recovering from the prior correction,” he noted. “However, while a handful of bear markets followed the successful conclusion of corrections, the vast majority were pullbacks and additional corrections.”
“The strength of the market in November has propelled us into December on an optimistic note, but looking ahead to January, a continued rally would depend on results from economic data,” said Mark Hackett at Nationwide. “Two strong, contrasting opinions from bulls and bears both have merit, but the truth likely lies somewhere in the middle.”
To Seema Shah at Principal Asset Management, 2024 should see many of the concerns and questions of recent years finally resolved.
“The long-awaited economic downturn should arrive and depart without leaving much destruction, and inflation should continue to decelerate,” she noted. “Most importantly, the Fed is likely to open the door to rate cuts, reducing the attractiveness of cash.”
Elsewhere, oil declined for the third straight session amid persistent skepticism that the latest OPEC+ supply cuts will tighten the market.
Gold retreated from its record high.
Copper, zinc and nickel also fell.

Corporate Highlights:
* Mark Zuckerberg is selling Meta Platforms Inc. stock for the first time in two years after the social media giant rapidly rebounded from a tumultuous 2022.
* Hawaiian Holdings Inc. agreed to be acquired by Alaska Air Group Inc. for $1.9 billion in cash and debt, in the latest attempt to consolidate the US aviation industry.
* Five9 Inc. has been exploring a potential sale, people with knowledge of the matter said, a little more than two years after the call center software provider scrapped a multibillion-dollar takeover by Zoom Video Communications Inc.
* Carvana Co., an online used-car dealer, was upgraded to neutral at JPMorgan amid improvements in “productivity, costs, and culture.”
* Lululemon Athletica Inc., an athletic-apparel brand, was cut to equal-weight at Wells Fargo, which said the valuation is “no longer cheap.”
* Virgin Galactic Holdings Inc. slumped after Richard Branson told the Financial Times that he doesn’t plan further investments in the space tourism company he founded.
* Spotify Technology SA is reducing its workforce by 17% in the company’s steepest cuts this year, part of an aggressive effort to shrink costs and drive profitability.
* Twilio Inc. will cut 5% of its workforce in its third major headcount reduction.
* Roche Holding AG agreed to pay as much as $3.1 billion for Carmot Therapeutics Inc., a developer of the new type of weight-loss treatments that’s sparked a pharma industry gold rush.

Key events this week:
* Japan Tokyo CPI, Tuesday
* China Caixin services PMI, Tuesday
* Eurozone S&P Global Services PMI, PPI, Tuesday
* US ISM Services, Job openings, Tuesday
* Eurozone retail sales, Wednesday
* Germany factory orders, Wednesday
* US ADP private payrolls, trade balance, Wednesday
* CEOs of the biggest banks on Wall Street, including JPMorgan, Citigroup, Goldman Sachs, Morgan Stanley and Bank of America, expected to testify on regulatory oversight to the Senate banking committee, Wednesday
* Bank of Canada monetary policy meeting, Wednesday
* Bank of England issues biannual stability report on UK financial system, holds news conference, Wednesday
* China trade, forex reserves, Thursday
* Eurozone GDP, Thursday
* Germany industrial production, Thursday
* US wholesale inventories, initial jobless claims, Thursday
* Germany CPI, Friday
* Japan household spending, GDP, Friday
* Reserve Bank of Australia’s head of financial stability Andrea Brischetto speaks at Sydney Banking and Financial Stability conference, Friday
* US jobs report, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.5% as of 4 p.m. New York time
* The Nasdaq 100 fell 1%
* The Dow Jones Industrial Average fell 0.1%
* The MSCI World index fell 0.4%
Currencies
* The Bloomberg Dollar Spot Index rose 0.5%
* The euro fell 0.5% to $1.0834
* The British pound fell 0.6% to $1.2632
* The Japanese yen fell 0.3% to 147.28 per dollar
Cryptocurrencies
* Bitcoin rose 5.2% to $41,798.5
* Ether rose 2.1% to $2,230.34
Bonds
* The yield on 10-year Treasuries advanced seven basis points to 4.27%
* Germany’s 10-year yield was little changed at 2.35%
* Britain’s 10-year yield advanced five basis points to 4.19%
Commodities
* West Texas Intermediate crude fell 1.1% to $73.28 a barrel
* Spot gold fell 2.1% to $2,028.10 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Mia Gindis, Alex Longley, Edward Bolingbroke, Michael Msika, Cecile Gutscher, Sagarika Jaisinghani, Elena Popina, Jessica Menton, Carly Wanna, Michael Mackenzie, Liz Capo McCormick, Suzanne Woolley, Vildana Hajric, Julia Fanzeres and Simon White.

Have a lovely evening.

Be magnificent!
As ever,

Carolann
Frugality may be termed the daughter of prudence, the sister of temperance,
and the parent of liberty. -Dr. Samuel Johnson, 1709-1784.

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