December 7, 2022 Newsletter

Dear Friends,

Tangents:
On Dec. 7, 1941, Japanese warplanes attacked the home base of the U.S. Pacific fleet at Pearl Harbor in Hawaii, drawing the United States into World War II. More than 2,300 Americans were killed.  Go to article »

When astronauts snapped an image of Earth 50 years ago, no one knew it would become one of the world’s most widely reproduced photographs. The striking portrait of our planet, known as the “Blue Marble,” was taken on this day in 1972 — and still fills us with awe decades later.

1932: German-born Swiss physicist Albert Einstein is granted an American visa.

Dancing conductor goes viral: A man won a raffle to conduct an orchestra, and his hilarious performance didn’t miss a beat. Watch the video here.

Ancient mummy portraits and rare Isis-Aphrodite idol discovered in Egypt: Archaeologists have discovered ancient mummies buried with stunning, lifelike portraits of the deceased. The mummies were interred in a cemetery at the ancient city of Philadelphia in Egypt, the Egyptian Ministry of Tourism and Antiquities announced on Dec 1.  Full Story: Live Science (12/6)

Emperor king’s top secret assassination letter finally decrypted after 500 years: Researchers have finally cracked a complex code used in a top secret letter from 1547 that the Holy Roman Emperor and King of Spain, Charles V, wrote when he was fearing for his life.  In the encrypted letter, which was sent to one of his ambassadors in France, Charles V writes about tensions with the French king Francis I, who he thought might be plotting to assassinate him.  Full Story: Live Science (12/6)

Reminder that the Cold Moon, the final full moon of 2022, officially begins tonight (Dec. 7) at 11:09 p.m. ET!
And there’s something else going on with the Red Planet: Overnight, from Dec. 7 to Dec. 8, Mars will be “in opposition” to Earth, meaning it is on the opposite side of Earth as the sun. That means the sun, Earth and Mars will all align on an invisible 180-degree line, just like the Sun, Earth and moon do during a full moon.
Read more about the Cold Moon here.
PHOTOS OF THE DAY

Edinburgh, Scotland
Cybermen patrol the National Museum of Scotland before the opening of the Doctor Who Worlds of Wonder exhibition
Photograph: Murdo MacLeod/The Guardian

Lumajang, Indonesia
A rice field damaged by lava from the eruption of Mount Semeru
Photograph: Juni Kriswanto/AFP/Getty Images
Chennai, India
Fishing boats pulled up on Marina beach as cyclone Mandous approaches
Photograph: Arun Sankar/AFP/Getty Images
Market Closes for December 7^th, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1880, Ferdinand de Lesseps’ Compagnie Universelle du Canal Interoceanique, organized to finance construction of the Panama Canal, went public in Paris at 500 francs, then equivalent to $100, a share. De Lesseps bribed the French press with more than $300,000 in slush money, so the newspapers were enthusiastic—and the public went wild, as more than 100,000 people bought into the IPO. Within eight years the company collapsed and the shares became worthless.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite declined slightly to 19,973.22 in Toronto.
Toronto-Dominion Bank contributed the most to the index decline, decreasing 1.0%.
Canopy Growth Corp. had the largest drop, falling 10.0%.
Today, 106 of 236 shares fell, while 127 rose; 6 of 11 sectors were lower, led by financials stocks.
Insights
* This year, the index fell 5.9%, poised for the worst year since 2018
* This quarter, the index rose 8.3%, heading for the biggest advance since the second quarter of 2020
* The index declined 5.6% in the past 52 weeks. The MSCI AC Americas Index lost 17% in the same period
* The S&P/TSX Composite is 10.1% below its 52-week high on April 5, 2022 and 11.7% above its low on Oct. 13, 2022
* The S&P/TSX Composite is down 2.3% in the past 5 days and rose 2.2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.2 on a trailing basis and 12.6 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$3.19t
* 30-day price volatility little changed to 15.29% compared with 15.30% in the previous session and the average of 17.71% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -22.8970| -0.4| 13/16
Energy | -16.9744| -0.5| 9/28
Information Technology | -7.2948| -0.6| 5/9
Health Care | -3.8788| -4.5| 1/6
Communication Services | -3.1712| -0.3| 2/5
Industrials | -0.5978| 0.0| 15/12
Utilities | 1.2435| 0.1| 9/6
Real Estate | 3.6540| 0.7| 17/5
Consumer Staples | 6.0917| 0.7| 9/2
Consumer Discretionary | 8.5596| 1.2| 10/4
Materials | 18.3078| 0.8| 37/13
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
TD Bank | -11.2000| -1.0| 10.8| -8.0
Nutrien | -5.7510| -1.5| -1.4| 9.5
Shopify | -5.7180| -1.3| -7.9| -69.9
Agnico Eagle Mines | 4.8370| 2.2| 8.1| 5.4
Barrick Gold | 6.8260| 2.5| -5.7| -4.2
Dollarama | 8.2530| 5.2| 77.1| 32.7
US
By Rita Nazareth
(Bloomberg) — The stock market came under pressure once again, with Treasuries signaling growing concern about a recession next year amid an aggressively tight Federal Reserve policy.
In a session marked by unnerving swings in both directions, the S&P 500 suffered a fifth straight loss.
Oil erased its 2022 gains on easing demand for fuels.
Economic jitters were palpable among bond traders, with a key segment of the US curve reaching a four-decade extreme.
Treasury 30-year yields sank to the lowest since September.
To Nicholas Colas at DataTrek Research, the spread between two and 10-year rates is extremely wide — and is “clearly spooking” equity traders.
That’s a signal that markets believe the Fed policy is “very, very restrictive,” he noted.
Curve inversions have a track record of preceding economic downturns by 12 to 18 months.
“The last time we were here was at the start of the ‘Volcker recession,’” and his Fed was already cutting rates,” Colas said. “Now we have a Fed that is still talking about ‘higher for longer’ rates. Markets are essentially saying there
will be another man-made economic contraction soon: the ‘Powell recession’.”
Ark Investment Management’s Cathie Wood said the bond market appears to show that the Fed is making a “serious mistake” with its monetary policy.
Deflation is a much bigger risk than inflation, she noted in a series of Tweets.
Bond-market gauges of inflation expectations have declined in recent weeks.
The 10-year breakeven rate for Treasury inflation-protected securities is hovering around 2.3%, down from 2.6% in late October.
A measure of labor cost growth reinforced the narrative that’s been benefiting Treasuries for the past month — that inflation has peaked.
Meantime, mortgage rates fell for a fourth week in a row, the longest such stretch of declines since May 2019, as the Fed has signaled it will soon slow down the pace of tightening.
“Investors are worrying both that the economy may be too strong and that it may be too weak at the same time,” said Ed Yardeni, president of his namesake research firm. “The yield-curve spread between the 10-year and two-year Treasuries suggests that the Fed’s monetary policy tightening cycle is almost over. That’s either because a recession is imminent or because inflation is likely to keep falling, maybe without a recession.”
Those concerns are keeping the tug of war between equity bulls and bear in full force, with the latter having the upper hand.
The S&P 500 this week breached a key uptrend line from its October lows, a sign that stocks still face more obstacles before there’s confirmation this year’s downtrend is broken.
To Savita Subramanian at Bank of America Corp., investors should stay invested in stocks despite growing warnings that the S&P 500 may sink to new lows in the first half of next year.
“Not having exposure to stocks and sticking all your money in bonds and cash is a mistake at this point,” she said. “I do think that we are going to go down and then up. The problem is, that is an increasingly consensus view. So I think the bigger risk heading into the first half is actually not being invested in equities.”
Also keeping a lid on risk assets Wednesday were comments from President Vladimir Putin, who warned that the threat of nuclear war in the world is rising, reiterating that Russia will defend itself and its allies “with all means if necessary.”
Key events this week:
* ECB President Christine Lagarde speaks, Thursday
* US initial jobless claims, Thursday
* US PPI, wholesale inventories, University of Michigan 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 0.5%
* The Dow Jones Industrial Average was little changed
* The MSCI World index fell 0.4%
Currencies
* The Bloomberg Dollar Spot Index fell 0.3%
* The euro rose 0.4% to $1.0511
* The British pound rose 0.7% to $1.2212
* The Japanese yen rose 0.4% to 136.44 per dollar
Cryptocurrencies
* Bitcoin fell 1% to $16,829.49
* Ether fell 1.9% to $1,232.13
Bonds
* The yield on 10-year Treasuries declined 12 basis points to 3.41%
* Germany’s 10-year yield declined two basis points to 1.78%
* Britain’s 10-year yield declined three basis points to 3.04%
Commodities
* West Texas Intermediate crude fell 2.6% to $72.34 a barrel
* Gold futures rose 1% to $1,799.90 an ounce
This story was produced with the assistance of Bloomberg Automation.

Have a lovely evening.

Be magnificent!
As ever,

Carolann

Your time is limited, so don’t waste it living someone else’s life. -Steve Jobs, 1955-2011.

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