December 5, 2024 Newsletter

Dear Friends,

Tangents: Happy Friday Eve.

December 5, 1854: Aaron Allen of Boston patents the folding theatre chair.  This innovation improved space efficiency and enhanced audience comfort in public venues.
December 5, 1996: Federal Reserve Chairman Alan Greenspan questioned whether the stock market was overvalued due to investors’ “irrational exuberance.” Go to article

December 5, 1905: Mark Twain celebrates his seventieth birthday at Delmonico’s in NYC with 170 guests.

Christina Rosetti, poet, b. 1830.
Walt Disney, animator, b. 1901.
Joan Didion, writer, b. 1934.
Little Richard, singer, b. 1935.
Jose Carreras, singer, b.1946.

Milk chocolate vs. dark chocolate
While both can satisfy a sweet tooth, a new study shows a small quantity of dark chocolate is better than milk chocolate for insulin control and type 2 diabetes prevention.

This 74-year-old bird found a new partner and just laid another egg
The world’s oldest known wild bird left an egg-citing surprise for scientists.

PHOTOS OF THE DAY

Yorkshire, England
Christmas trees being harvested at Stockeld Park, Yorkshire’s largest Christmas tree plantation.
Photograph: Danny Lawson/PA

Trabzon, Turkey
An aerial view of Kadiralak Plateau during winter. The 1,300-metre altitude plateau, 9km from the centre of Trabzon’s Tonya district, hosts nature and photography enthusiasts in all seasons.
Photograph: Anadolu/Getty Images

​​​​​​​Hohhot, China
Migratory birds fly at Qiandao Lake scenic spot in Daheihe Country Park in Hohhot, Inner Mongolia.
Photograph: Costfoto/NurPhoto/REX/Shutterstock
Market Closes for December 5, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1901, cartoon pioneer Walter Elias Disney was born in a rough neighborhood of Chicago to a carpenter and a homemaker. Twenty-two years later, the Walt Disney Co. was founded.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the third day, climbing 0.2%, or 38.86 to 25,680.04 in Toronto.
Royal Bank of Canada contributed the most to the index gain, increasing 1.9%.
TransAlta Corp. had the largest increase, rising 9.3%.
Today, 109 of 219 shares rose, while 106 fell; 7 of 11 sectors were higher, led by energy stocks.
Insights
* This year, the index rose 23%, heading for the best year in at least 10 years
* This quarter, the index rose 7%
* So far this week, the index was little changed
* The index advanced 26% in the past 52 weeks. The MSCI AC Americas Index gained 32% in the same period
* The S&P/TSX Composite is at its 52-week high and 27.6% above its low on Dec. 13, 2023
* The S&P/TSX Composite is up 0.5% in the past 5 days and rose 5.3% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 20.6 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$4.04t
* 30-day price volatility fell to 8.21% compared with 8.36% in the previous session and the average of 8.48% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 29.8780| 0.7| 32/7
Financials | 23.4140| 0.3| 16/10
Utilities | 7.4979| 0.8| 8/7
Consumer Staples | 2.2100| 0.2| 4/6
Information Technology | 1.2130| 0.0| 3/7
Communication Services | 0.5743| 0.1| 3/2
Health Care | 0.1144| 0.2| 2/2
Real Estate | -2.6000| -0.5| 8/10
Industrials | -4.3077| -0.1| 12/15
Consumer Discretionary | -6.2856| -0.7| 2/9
Materials | -12.8531| -0.4| 19/31
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
RBC | 32.8400| 1.9| 57.0| 34.0
Bank of Montreal | 28.5300| 4.2| 146.9| 6.6
CIBC | 26.2500| 4.4| 168.4| 46.6
Barrick Gold | -8.1100| -2.7| -2.4| -0.6
Brookfield Corp | -11.5100| -1.3| 20.9| 58.5
TD Bank | -69.0700| -7.1| 235.8| -13.5
US
By Rita Nazareth
(Bloomberg) — Stocks lost steam near all-time highs, with Wall Street traders gearing up for key jobs data that will help determine whether the Federal Reserve will cut or hold interest rates in December.
Equities dropped a day after the S&P 500 hit its 56^th record this year.
Short-term Treasuries underperformed, with the market standing at critical technical levels.
Bitcoin pared a rally that earlier drove the digital asset past $100,000, buoyed by President-elect Donald Trump’s pick of a crypto proponent to be the next head of the US securities regulator.
In the run-up to the US payrolls report, data showed jobless claims rose to a one-month high during a week that included the Thanksgiving holiday.
Economists estimate that nonfarm payrolls rose by 220,000 in November, rebounding after two hurricanes and a now-ended strike lowered October numbers.
The unemployment rate is seen unchanged at 4.1%.
“We’ll get a fuller picture from tomorrow’s monthly jobs report, but for now, the story continues to be a labor market that occasionally appears to bend, but avoids breaking,” said Chris Larkin at E*Trade from Morgan Stanley.
The S&P 500 slipped 0.2%.
The Nasdaq 100 slid 0.3%.
The Dow Jones Industrial Average fell 0.6%.
The Russell 2000 dropped 1.3%.
Applied Materials Inc. sank on an analyst downgrade.
Tesla Inc. rallied as Bank of America Corp. raised its price target.
Meme stocks like GameStop Corp. and AMC Entertainment Holdings Inc. climbed after a cryptic X post from Keith Gill, the online persona known as Roaring Kitty.
Treasury 10-year yields were little changed at 4.18%.
Swap trading shows the implied odds of a quarter-point Fed cut this month around 65%.
A measure of France’s bond risk fell amid hopes lawmakers will strike a deal on next year’s budget sooner than many investors had expected.
Oil inched lower in a choppy session after OPEC+ deferred supply increases for three months, but still plans to add barrels next year to a market that’s expected to be oversupplied.
A survey conducted by 22V Research shows that 45% of investors believe Friday’s US payrolls data will be “mixed/negligible,” 32% said it will be “risk-off,” and 23% “risk-on.”
“Investors are paying the most attention to payrolls again, but attention to wages has been increasing,” said Dennis DeBusschere at 22V. “Our take is service inflation looks to be settling at a pace above what is consistent with the Fed hitting its 2% inflation target over time. That may indicate labor market inflation pressures, which makes wage inflation data more important to monitor.”
Leading indicators point to a roughly as-expected reading in the payrolls report, with headline job growth potentially coming in somewhere in the 180,000-240,000 range, albeit with a big band of uncertainty given the current global backdrop, according to Matthew Weller at Forex.com and City Index.
“With an interest-rate cut largely priced in at this point, the risks may be skewed slightly toward a bounce in the greenback if the jobs report revives the odds of a December pause,” Weller noted. “Though any market moves might be limited as the Fed’s policy decision is more around when rather than if it will pause rate cuts in the near future.”
A stronger headline would be warmly welcomed by markets, supporting a theme of normalization rather than a deterioration on the jobs front, according to Oscar Munoz and Gennadiy Goldberg at TD Securities.
“We expect a stronger reading to initially lead to a significant bear-flattening reaction, but see a likelihood that the initial knee-jerk is pared back after markets assess the details,” they noted. “We remain buyers of duration on dips and will look to higher yields as a possible entry point to reestablishing longs.”
One of the more popular trades within the fixed income markets this year has been the expectation of a steeper Treasury yield curve, with investors either expecting the short-end of the curve to fall and/or the back end to either stay put or even rise, according to Lawrence Gillum at LPL Financial.
However, stronger economic data has priced out the need for the Fed to aggressively cut short-term interest rates and now with recent commentary suggesting the Fed is in no hurry to cut rates, the front end of the curve has stalled at current levels and has kept the long end range-bound.
“If the Fed pauses too long or if they suggest the ‘neutral’ rate is higher than market expectations, markets may become concerned about the deleterious impact of high interest rates, which may actually cause long-term interest rates to fall, further tightening the spread between short and long-term interest rates,” he noted.
On average, the 10-year yield is higher than the fed funds rate by about 1%, so the yield curve will eventually go back to its upward sloping shape but that may not happen until the middle of next year, Gillum concluded.
Since the US central bank began easing rates in mid-September, two-, five- and 10-year Treasury yields have risen from around 3.5% to above 4%.
The selloff has been accompanied by traders reducing the chances of sweeping cuts amid resilient economic data, with a little more than three quarter-percentage point cuts over the coming 12 months to around 3.7%.
A string of stronger-than-estimated data points sent the US version of Citigroup’s Economic Surprise Index soaring this year.
The gauge measures the difference between actual releases and analyst expectations.
“While the 10-year US Treasury yield may see upward pressure from economic strength and potential policy impacts, yields on shorter-dated notes could still fall, although perhaps not as far as in Europe, as policymakers there have more work to do,” according to Janus Henderson Investors’ 2025 market outlook.
Janus also noted that the global economy is somewhat late in the cycle — warranting caution — yet the data continue to defy expectations, and growth is steady.
What does this mean for investors?
“At the highest level, the combination of rate cuts and other potential accommodative policy in the U.S. and stimulus in China should lend support to the global economy.
Still, there are forces at play that make it imperative to apply caution when adding risk,” Janus said. “Broadly speaking, markets have been quick to price in the cycle’s extension, leaving valuations vulnerable to downgrades if risks increase.”

Corporate Highlights:
* American Airlines Group Inc. raised its profit expectations for the final months of the year, the latest signal of strong travel demand heading into the crucial winter holidays.
* Southwest Airlines Co. raised its estimates for unit revenue in the fourth quarter, citing resilient travel demand along with the realization of benefits from execution of its revenue management actions.
* A federal judge rejected Boeing Co.’s plea deal that sought to let the plane maker avoid criminal prosecution over to two fatal 737 Max crashes, in a surprise twist that threatens to prolong the company’s recovery from past scandals.
* Dollar General Inc. narrowed its full-year guidance, underscoring the discounter’s challenges in attracting bargain-hunting shoppers who have seen their purchasing power eroded by higher prices.
* Kroger Co. narrowed its annual outlook and reiterated confidence in its acquisition of rival Albertsons Cos. Being approved by regulators.
* Eli Lilly & Co. is spending another $3 billion to build out its US manufacturing footprint as it ramps up production of its blockbuster diabetes and weight-loss drugs.
* Toronto-Dominion Bank suspended its medium-term financial targets amid a review of company strategy as the incoming chief executive officer seeks to move the lender past a historic money-laundering settlement with US authorities.
* Bank of Montreal’s credit issues, which have plagued the lender all year and caused yet another earnings miss Thursday, have now been “contained,” Chief Executive Officer Darryl White said.
* Canadian Imperial Bank of Commerce beat estimates after another quarter of stronger-than-expected credit quality, with its US business showing signs that it’s getting over its  problems in commercial real estate.

Key events this week:
* Eurozone GDP, Friday
* US jobs report, consumer sentiment, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.2% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.3%
* The Dow Jones Industrial Average fell 0.6%
* The MSCI World Index was little changed
* The Russell 2000 Index fell 1.3%
* Bloomberg Magnificent 7 Total Return Index rose 0.7%
Currencies
* The Bloomberg Dollar Spot Index fell 0.4%
* The euro rose 0.7% to $1.0584
* The British pound rose 0.4% to $1.2752
* The Japanese yen rose 0.3% to 150.07 per dollar
Cryptocurrencies
* Bitcoin rose 1.3% to $99,151.39
* Ether fell 0.4% to $3,827.9
Bonds
* The yield on 10-year Treasuries was little changed at 4.18%
* Germany’s 10-year yield advanced five basis points to 2.11%
* Britain’s 10-year yield advanced three basis points to 4.28%
Commodities
* West Texas Intermediate crude fell 0.1% to $68.45 a barrel
* Spot gold fell 0.7% to $2,631.51 an ounce

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

Be magnificent!
As ever,

Carolann
If I had a flower for every time I thought of you…I could walk through my garden forever. –Alfred Lord Tennyson, 1809-1892.

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