December 5, 2023, Newsletter

Dear Friends,

Tangents:
December 5^th,1933:  The 21st Amendment ends Prohibition in the US, reflecting societal shifts towards regulation of alcohol.  This amendment shapes America’s legal and cultural landscape.
1996: Federal Reserve Chairman Alan Greenspan questioned whether the stock market was overvalued due to investors’ “irrational exuberance.” Go to article >>

Walt Disney, b.1901.
Jose Carreras, b. 1946.
Joan Didion, b.1934.

Strange object between Saturn and Uranus is transforming
A distant comet trapped in orbit between Saturn and Uranus is accompanied by a transforming disk of icy dust, new observations reveal. Read More.

Is Earth inside a giant void?
Our best observations can’t come up with a single answer for how quickly the universe is expanding. Maybe that’s because our galaxy is at the center of a giant void. Read More.

You can visit a real-life ‘Hobbit Hole’ in New Zealand
This hobbit movie set offers much to enjoy for “Lord of the Rings” fans.

Indian chess siblings become first brother and sister duo to earn grandmaster title
This 22-year-old chess player became only the third woman in India to earn a grandmaster title — but she’s not the first in her family to achieve such a feat.

Breach of key global warming threshold ‘inevitable’
At the current emissions level, there is a 50% chance that global warming will exceed 1.5 degrees Celsius consistently in about seven years, new research suggests. Read More.

Traumatic memories are processed differently in PTSD
People with PTSD feel like they’re reliving past experiences in the present. This may be tied to how the brain processes memories of those experiences. Read More.

PHOTOS OF THE DAY

Marseille, France
People walk along Vieux-Port at sunset.  Photograph: Nicolas Tucat/AFP/Getty Images.

London, UK
Alison Eager and Dan Corthorn perform a Christmas ballet, titled The Reunion, at Terminal 5 at Heathrow. The dance depicts the emotion of festive reconnections at the airport.  Photograph: Matt Alexander/PA.

Sydney, Australia
SHK Scallywag battles the waves during the Solas Big Boat Challenge, the last race before the Sydney to Hobart yacht race.  Photograph: Dean Lewins/EPA.
Market Closes for December 5^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1901: Walter Elias Disney was born in Chicago to Elias Disney, a carpenter, and Flora Call Disney, a homemaker.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 0.2%, or 34.28 to 20,375.93 in Toronto.
Canadian Pacific Kansas City Ltd. contributed the most to the index decline, decreasing 1.1%.
Tilray Brands Inc. had the largest drop, falling 8.7%.
Today, 159 of 227 shares fell, while 67 rose; 6 of 11 sectors were lower, led by materials stocks.
Insights
* This year, the index rose 5.1%, poised for the best year since 2021
* This quarter, the index rose 4.3%
* The index advanced 0.7% in the past 52 weeks. The MSCI AC Americas Index gained 14% in the same period
* The S&P/TSX Composite is 2.2% below its 52-week high on Feb. 2, 2023 and 9% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 1.7% in the past 5 days and rose 2.8% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 16 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$3.23t
* 30-day price volatility little changed to 12.20% compared with 12.21% in the previous session and the average of 13.84% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | -31.8737| -1.4| 3/49
Energy | -25.5434| -0.7| 2/38
Industrials | -13.7239| -0.5| 8/18
Utilities | -6.3918| -0.8| 0/15
Consumer Discretionary | -4.5112| -0.6| 4/10
Health Care | -1.8652| -3.2| 1/3
Communication Services | 1.4767| 0.2| 4/1
Consumer Staples | 2.0311| 0.2| 6/5
Real Estate | 2.5123| 0.5| 13/8
Financials | 9.1601| 0.1| 18/9
Information Technology | 34.4508| 2.0| 8/3
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Canadian Pacific Kansas | -7.4880| -1.1|n/a | -1.1
Brookfield Corp | -6.0820| -1.3|n/a | 13.5
Canadian National | -5.4440| -0.8|n/a | -1.0
RBC | 7.3190| 0.6|n/a | -2.6
Bank of Montreal | 7.6260| 1.3|n/a | -5.6
Shopify | 28.2500| 3.4|n/a | 116.1
US
By Rita Nazareth
(Bloomberg) — Treasuries resumed their rally on Tuesday as further labor-market slowdown reinforced speculation the Federal Reserve will be able to cut interest rates next year to prevent a recession.
Benchmark 10-year yields that briefly topped 5% in October broke below 4.2% on Tuesday, following data showing job openings hit the lowest since 2021.
Yet concerns about markets being too fast in anticipating Fed easing have surfaced — underscoring the risks for traders expecting a pivot.
It’s a bet that stands to pay off handsomely if rate cuts materialize — or backfire if policymakers opt to keep borrowing costs higher for longer.
In a week dominated by labor-market readings, the Job Openings and Labor Turnover Survey — known as JOLTS — trailed all estimates in a Bloomberg survey of economists.
The data came a few days before the key payrolls report — currently forecast to show employers added 187,000 jobs in November.
“Overall, the jobs update is in the driver’s seat,” said Ian Lyngen at BMO Capital Markets. “Treasuries extended the bullish price action. From here, there isn’t much on the macro horizon until tomorrow’s ADP report.”
Treasuries also joined an advance in global bonds after one of the European Central Bank’s most-hawkish officials said inflation is showing a “remarkable” slowdown.
The S&P 500 was little changed.
Banks fell after KeyCorp’s non-interest income outlook.
The mega-cap space outperformed — with Apple Inc. and Nvidia Corp. up at least 2.1%.
Bitcoin topped $43,000.
The Treasury market’s rally is approaching concerning levels, particularly at the back end of the curve, Gennadiy Goldberg at TD Securities told Bloomberg Surveillance on Friday.
Ten-year yields dropped eight basis points to 4.18% on Tuesday.
“We’ve been long since 4.70, and I’m certainly not complaining. But I do think you’re seeing a bit of an overstretch,” Goldberg noted. “If we got closer to 4%, I think I would take my foot off the gas pedal. I think you have to play this tactically.”
A Fed cut is more than likely going to be a response to something bad from an economic perspective, said Peter van Dooijeweert at Man Group.
“If the Fed’s going to be cutting rates next year, it’s likely a result of something not going well in the economy,” he noted.
Swap contracts that anticipate the outcome of Fed meetings slightly increased the degree of easing they foresee by the end of 2024, with the effective fed funds rate expected to fall to about 4.05% from 5.33% currently.
The contracts also imply about a 60% chance of a rate cut in March.
To Krishna Guha at Evercore, the jobs-opening data confirm the Fed has made substantial progress in normalizing the labor market — but will be viewed by policymakers as more consistent with “desired rebalancing” than “heightened downside risk.”  “In this context, we are wary about market rate-cut bets piling up too much,” Guha noted. “We find it hard to envisage a cut before June without a recession — and still see a three-cut baseline in a soft-landing scenario.”
The Fed is now likely at the end of a very aggressive monetary policy hiking cycle, according to Lauren Goodwin at New York Life Investments.
But a faster pace of hikes doesn’t necessarily mean that those impacts are felt more quickly.
“Historically, interest rate hikes have taken roughly 12 to 18 months to impact the economy, and 18 to 24 months to impact the labor market,” she noted. “The market doesn’t begin to price recession risk until unemployment claims rise and earnings deteriorate. We’ll be watching labor market data this week very closely as a result.”
BlackRock Inc. says market optimism over the scope of rate cuts next year may be going too far and recommends stepping back from longer-maturity bonds.
“We see the risk of these hopes being disappointed,” strategists including Wei Li and Alex Brazier wrote. “Higher rates and greater volatility define the new regime.”
Meantime, the cost of buying protection against currency swings is jumping as traders brace for a slew of data and central bank meetings that could shed light on the timing of a possible pivot to rate cuts next year. 

Corporate Highlights:
* Michael Dell is taking steps to donate Dell Technologies Inc. shares worth as much as $1.74 billion.
* Starbucks Corp.’s chief Laxman Narasimhan says China is normalizing at half the expected pace.
* JPMorgan Chase & Co. retained 90% of First Republic’s clients after buying the bank in a government-led auction earlier this year.
* Citizens Financial Group Inc. has held discussions with potential partners to grow its private credit business, according to a person with knowledge of the matter.
* Elon Musk’s artificial intelligence company xAI is seeking to raise $1 billion in funding from equity investors, according to a new filing.
* Johnson & Johnson expects operational sales growth between 5% to 6% in 2024 as its top-selling psoriasis drug starts to face generic competition outside the US.
* CVS Health Corp. plans to change how its more than 9,000 pharmacies get paid with a new reimbursement model designed to simplify drug pricing.
* Robinhood Markets Inc. said November crypto notional trading volumes were about 75% above October levels.
* Rockstar Games, part of Take-Two Interactive Software Inc. released the first trailer for the newest version of Grand Theft Auto on Monday, giving fans a glimpse of what’s likely to rank as one of the industry’s top-selling titles. The game will be released in 2025.
* London Stock Exchange Group Plc suffered a third outage in a few months as trading in about 2,000 smaller shares was halted, adding to the bourse operator’s recent woes.

Key events this week:
* 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 was little changed as of 4 p.m. New York time
* The Nasdaq 100 rose 0.2%
* The Dow Jones Industrial Average fell 0.2%
* The MSCI World index fell 0.2%
Currencies
* The Bloomberg Dollar Spot Index rose 0.2%
* The euro fell 0.4% to $1.0795
* The British pound fell 0.3% to $1.2593
* The Japanese yen was little changed at 147.19 per dollar
Cryptocurrencies
* Bitcoin rose 4.1% to $43,768.51
* Ether rose 1.3% to $2,264.85
Bonds
* The yield on 10-year Treasuries declined eight basis points to 4.18%
* Germany’s 10-year yield declined 11 basis points to 2.25%
* Britain’s 10-year yield declined 17 basis points to 4.02%
Commodities
* West Texas Intermediate crude fell 0.9% to $72.35 a barrel
* Spot gold fell 0.5% to $2,019.49 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee, Vildana Hajric, Sagarika Jaisinghani and Thyagaraju Adinarayan.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
There is nothing noble in being superior to your fellow man.  True nobility is being superior to your former self. –Ernest Hemingway, 1899-1961.

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