December 8, 2022 Newsletter

Dear Friends,

Tangents: Happy Friday eve.

On Dec. 8, 1941, the United States entered World War II as Congress declared war against Japan one day after the attack on Pearl Harbor. Go

Harry and Meghan Netflix documentary released today.  Everyone has been waiting for the Duke and Duchess of Sussex to spill the royal tea. Well, part one of the documentary dropped today — and it’s causing anxiety within the walls of Buckingham Palace.

Rare complete plesiosaur fossil found in Australia.

The best movies of 2022, according to Variety and the Ringer.

This was the most-searched term on Google in 2022:  No hints! Take a guess and click here to see if you’re correct.

PHOTOS OF THE DAY

Lyon, France
Time by Philippe Roca and Marko Komar is displayed on Saint-Jean Cathedral during the city’s festival of lights
Photograph: Denis Balibouse/Reuters

Ottawa, Canada
The country’s parliament building is lit up as part of the Lights Across Canada show
Photograph: Sean Kilpatrick/AP

Avon Beach, England
A paddleboarder makes their way through sea mist at sunrise
Photograph: Andrew Matthews/PA
Market Closes for December 8^th, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1941, as the news that the Japanese had bombed Pearl Harbor filtered through the market, the predecessor to the S&P 500 dropped 4.4%, one of its worst one-day declines ever.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite declined slightly to 19,969.19 in Toronto.
Bank of Montreal contributed the most to the index decline, decreasing 2.2%.
Athabasca Oil Corp. had the largest drop, falling 6.2%.
Today, 132 of 236 shares fell, while 100 rose; 7 of 11 sectors were lower, led by energy 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
* So far this week, the index fell 2.5%, heading for the biggest decline since the week ended Sept. 23
* The index declined 5.3% 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 2.7% in the past 5 days and rose 1.6% 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$3.18t
* 30-day price volatility fell to 15.21% compared with 15.29% in the previous session and the average of 17.48% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -14.7291| -0.4| 14/23
Financials | -13.0563| -0.2| 15/14
Communication Services | -8.1726| -0.8| 1/6
Information Technology | -3.6430| -0.3| 4/10
Real Estate | -2.2215| -0.4| 5/17
Materials | -1.4943| -0.1| 19/30
Health Care | -0.2596| -0.3| 2/5
Utilities | 3.7139| 0.4| 8/8
Consumer Discretionary | 8.1893| 1.1| 11/3
Industrials | 13.1892| 0.5| 15/11
Consumer Staples | 14.4642| 1.7| 6/5
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Bank of Montreal | -13.1000| -2.2| 3.7| -7.7
RBC | -5.7610| -0.5| -38.0| -2.2
CIBC | -4.7290| -1.3| 0.0| -21.1
TD Bank | 7.7130| 0.7| -46.2| -7.3
Canadian Pacific | 7.8750| 1.1| -11.4| 19.9
Couche-Tard | 8.0220| 2.4| 9.9| 17.7
US
By Rita Nazareth
(Bloomberg) — Stocks climbed after a five-day slide, with traders awaiting key inflation figures for clues on whether Federal Reserve officials will be able to notch down their aggressive tightening campaign.
The rebound in the S&P 500 followed a rout that put the gauge on the cusp of breaching an important technical indicator: its average price of the past 100 days.
Investors also assessed news that the US Federal Trade Commission is seeking to block Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc.
Treasuries fell, with 10-year yields hovering near 3.5%.
Oil hit a one-year low after earlier rallying on a pipeline outage.
Friday’s producer price index for November is one of the final pieces of data Fed policymakers will see before their Dec. 13-14 policy meeting.
The PPI in October cooled more than expected.
In the run-up to the numbers, a separate report showed some signs the labor market is cooling, with continuing jobless claims climbing to the highest since early February.
“Investors will have a lot to digest these next few days as they get a clearer picture of where we stand in the fight against inflation before the Fed decision,” said Mike Loewengart at Morgan Stanley Global Investment Office.
“The market is largely expecting the slowdown in rate hikes to begin next week, but whether the pivot will be enough to steer the economy into a soft landing remains the question.”
Strategists from Morgan Stanley to JPMorgan Chase & Co. have warned investors against piling back into risk on hopes the Fed is getting close to pivoting to easier policy.
“Presumably if the Fed is pivoting this time around, it’s not for a good reason. It’s a deteriorating fundamental picture,” Joyce Chang, chair of global research at JPMorgan, told Bloomberg Television. “I mean, is that really a reason to
be buying risk? I think it’s premature to say that there is a Fed pivot.”
Investor optimism that inflation has peaked is misguided as a potential spike in energy costs in 2023 could keep prices elevated and interest rates high, according to Goldman Sachs’ Peter Oppenheimer.
The bear market that mauled growth stocks this year now threatens the value stocks in the industrial, financial and energy stocks where investors sought refuge this year, according to Morgan Stanley’s chief investment officer Mike Wilson.
“The problem with the value stocks now is they’re probably just as vulnerable to the economic slowdown as the over-earning growth stocks were six or 12 months ago,” Wilson said. 
At a time when virtually all of Wall Street is on guard against a recession, Jim Paulsen at Leuthold Group said stocks are about to rally at least 25% in the next year.
He predicts the S&P 500 will hit 5,000 in the coming 12 months — a far more bullish call than any provided by the strategists Bloomberg regularly surveys.
“The lows are in, and I think we are starting a new bull market,” Paulsen said. “The Fed is not the only policy driver in the room. There are others and a lot of those have already started to ease.”
Besides the 100-day moving average, the S&P 500 is trading near a key support at 3,900, a level that has provided the pivot point for reversals on multiple occasions this year.
As the equity market rebounded, the Cboe Volatility Index fell to around 22.
Yet derivatives strategists at JPMorgan Chase & Co. say the VIX has further room to advance.
They expect the fear gauge to average at 25 next year, and see the gauge trading above that level in the first half of the year amid elevated monetary-policy concern before subsiding below the line in the latter part of 2023 when the central bank is expected to pivot its stance.

Heightened trader concern over an economic recession has recently pushed up the Cboe equities put/call ratio — the relative trading volume of loss-protecting contracts versus bullish ones — to elevated levels.
That suggests there’s “too much pessimism,” according to Ed Yardeni, president of his namesake research firm. “It favors a year-end rally rather than a year-end crash.”
Meantime, Citigroup Inc.’s ultra-wealthy clients are plowing money into fixed income.
Family offices and rich clients have been snapping up bonds lately, said David Bailin, chief investment officer at Citi Global Wealth Investments, which manages about $800 billion of customer assets.
Bonds “deserve immediate attention” given expectations that 2023 will be one of the weakest years for global growth in the past four decades, the group said in a report Thursday.
Key events this week:
* US PPI, wholesale inventories, University of Michigan consumer sentiment, Friday.
Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.8% as of 4 p.m. New York time
* The Nasdaq 100 rose 1.2%
* The Dow Jones Industrial Average rose 0.5%
* The MSCI World index rose 0.7%
Currencies
* The Bloomberg Dollar Spot Index fell 0.3%
* The euro rose 0.5% to $1.0556
* The British pound rose 0.3% to $1.2239
* The Japanese yen was little changed at 136.67 per dollar
Cryptocurrencies
* Bitcoin rose 2.2% to $17,203.9
* Ether rose 3.8% to $1,278.78
Bonds
* The yield on 10-year Treasuries advanced seven basis points to 3.48%
* Germany’s 10-year yield advanced four basis points to 1.82%
* Britain’s 10-year yield advanced five basis points to 3.09%
Commodities
* West Texas Intermediate crude fell 0.7% to $71.52 a barrel
* Gold futures rose 0.2% to $1,800.70 an ounce
This story was produced with the assistance of Bloomberg Automation.

–With assistance from Cecile Gutscher, Akshay Chinchalkar and Isabelle Lee.

Have a lovely evening.

Be magnificent!
As ever,

Carolann

Maybe all one can do is hope to end up with the right regrets. –Arthur Miller, 1915-2005.

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