December 8, 2023, Newsletter

Dear Friends,

Tangents: Happy Friday.

Today is:
Feast Day of the Immaculate Conception, Christian calendar.  The Solemnity of the Immaculate Conception, also called Immaculate Conception Day, celebrates the sinless lifespan and Immaculate Conception of the Blessed Virgin Mary on 8 December, nine months before the feast of the Nativity of Mary, celebrated on 8 September.
First Day of Hanukkah, Judaism.  Chanukah is a Jewish festival commemorating the recovery of Jerusalem and subsequent rededication of the Second Temple at the beginning of the Maccabean Revolt against the Seleucid Empire in the 2nd century BCE.
Bodhi Day, Buddhism.  Also called Buddha’s Enlightenment Day, it commemorates when Siddhartha Gautama attained awakening — or enlightenment — some 2,600 years ago, becoming the Buddha.

December 8^th, 1991: Creation of Commonwealth of Independent States.  The international organization was formed by Belarus, Ukraine, and the Russian Federation as a political forum for members of the former Soviet Union.
December 8, 1993: President Bill Clinton signed into law the North American Free Trade Agreement.  Go to article >>

Horace, b. 65 BCE.
Mary, Queen of Scots, b. 1542.
James Thurber, b. 1894.
Diego Rivera, b. 1886.
Jim Morrison, b. 1943

2023 will be ‘the warmest year in recorded history’
After the warmest autumn ever, researchers are confident 2023 will be the hottest year on record before it has even finished.  Read More.

Temple linked to Hercules and Alexander the Great found
Archaeologists have discovered two temples, one buried atop the other, in the ancient megacity of Girsu in Iraq. One temple is linked to Hercules and Alexander the Great.  Read More.

Volcano riding a tectonic plate linked to major earthquakes
A seamount sitting on a subducting tectonic plate off the coast of Japan and plowing its way into Earth’s mantle may be at the root of several magnitude 7 earthquakes in the past 40 years.  Read More.

Ancient water pool found deep beneath Sicily mountains
Fresh water that trickled down into Earth’s crust 6 million years ago became trapped thousands of feet beneath the Hyblaean Mountains in Sicily, forming an aquifer that has not budged since. Full Story: Live Science (12/7)

Philanthropist MacKenzie Scott donated $2.15 billion to hundreds of charities this past year
She made her donations to a wide range of causes, saying “every one of whom could use more allies.”

New details on mysterious Milky Way region called ‘The Brick’
A perplexing dust cloud, nicknamed “The Brick,” is at the center of our galaxy. An unexpected new finding may help unlock its mysteries.

Anderson Cooper and Laura Coates host CNN Heroes: An All-Star Tribute
Watch this video to meet the Top 10 CNN Heroes of the year! These individuals will be honored live on Sunday at 8 p.m. ET.

Jon Rahm planning to leave PGA Tour for LIV Golf
The reigning Masters champion, currently ranked No. 3 in the world, is leaving the PGA Tour for the Saudi-backed LIV Golf series, according to reports.

Adele reveals the ‘real reason’ why she’s only released four albums
The sensational singer recently explained why she’s only released four albums in her 17-year career.
PHOTOS OF THE DAY

London, UK
A woman looks up at 2,500 pieces of coal in Coalescence, by the artist Paul Cocksedge, in the Painted Hall of Greenwich’s Old Royal Naval College.  Photograph: Carl Court/Getty Images.

Paris, France
View from the top of one of the spires of Notre-Dame cathedral which is being restored after a fire in 2019. The one-year countdown to it’s re-opening has begun.  Photograph: Christophe Ena/EPA

​​​​​​​Waning Sun by Alex Wides, Senja, Norway
A 300-degree panorama featuring the setting sun and an intense northern lights display. The photographer writes: ‘Embarking on a three-month journey from Italy to the great north, you anticipate witnessing incredible sights, but this trip surpassed all my expectations. Arriving at Senja Island we encountered the most powerful northern lights of the year, exactly as predicted. The horizon is glowing with the light of the setting sun – in September it sets at 11pm – painting the sky in vibrant shades of green, purple, and red.’ Photograph: Alex Wides/NLPOTY23

Market Closes for December 8^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary: 📈 On this day in 1988, BusinessWeek radio broadcaster S.G. “Rudy” Ruderman pleaded guilty to two counts of mail fraud as part of the 1980s insider-trading saga. The plea followed two-and-a-half years of allegations against Ruderman of trading in and out of stocks based on favorable or negative mentions in BusinessWeek.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.3%, or 53.03 to 20,331.54 in Toronto.
Canadian Natural Resources Ltd. contributed the most to the index gain, increasing 1.8%. Ero Copper Corp. had the largest increase, rising 6.3%.
Today, 122 of 227 shares rose, while 101 fell; 5 of 11 sectors were higher, led by financials stocks.
Insights
* This year, the index rose 4.9%, poised for the best year since 2021
* This quarter, the index rose 4%
* So far this week, the index fell 0.6%
* The index advanced 1.8% in the past 52 weeks. The MSCI AC Americas Index gained 16% in the same period
* The S&P/TSX Composite is 2.5% below its 52-week high on Feb. 2, 2023 and 8.8% above its low on Oct. 27, 2023
* S&P/TSX Composite is trading at a price-to-earnings ratio of 15.9 on a trailing basis and 14.7 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$3.21t
* 30-day price volatility fell to 11.85% compared with 11.90% in the previous session and the average of 13.45% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 41.5227| 0.7| 23/4
Energy | 38.1798| 1.1| 35/4
Information Technology | 11.9579| 0.7| 9/2
Real Estate | 1.7499| 0.4| 13/8
Health Care | 0.5621| 1.0| 2/2
Consumer Staples | -2.2002| -0.3| 6/5
Utilities | -3.1040| -0.4| 4/11
Consumer Discretionary | -4.6146| -0.6| 4/10
Communication Services | -8.9790| -1.1| 1/4
Industrials | -10.1077| -0.4| 9/16
Materials | -11.9347| -0.5| 16/35
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Canadian Natural Resources | 11.6800| 1.8| 66.1| 12.8
RBC | 9.5640| 0.8| 57.2| -1.6
Bank of Montreal | 7.4760| 1.3| 29.2| -3.4
Canadian Pacific Kansas | -3.7760| -0.6| -40.6| -1.9
Agnico Eagle Mines | -6.0880| -2.5| 3.0| -1.0
Barrick Gold | -7.2390| -2.5| -7.6| -1.6
US
By Rita Nazareth
(Bloomberg) — A pair of solid economic readings shook markets on Friday, with stocks closing higher on speculation the US will be able to skirt a recession.
Now the flip side to that story is that bond traders ended up being forced to trim their bets on rate cuts in 2024 — sending yields soaring.
All around Wall Street, the prevailing view is: While economic strength makes many investors less apprehensive about a hard landing, it also implies the Federal Reserve might have to hold rates higher for longer.
For Treasuries, that means an unwinding of the massive dovish trade that pointed to a Fed pivot as early as March.
For equities, jobs and consumer resilience bodes well when it comes to Corporate America.
“Just when you think the economy is finally softening, it continues to show signs of strength,” said Chris Zaccarelli at Independent Advisor Alliance. “We remain bullish on the market because we are bullish on the economy.”
Following a slew of figures underscoring a slowdown on the jobs front, Friday’s jobs report showed an unexpected pickup.
Nonfarm payrolls increased 199,000 last month, the unemployment rate fell to 3.7% and monthly wage growth topped estimates.
A separate report showed US consumer sentiment rebounded sharply in early December — topping all forecasts — as households dialed back their year-ahead inflation expectations by the most in 22 years.
The S&P 500 saw its sixth straight week of gains — its longest winning streak since November 2019.
Wall Street’s “fear gauge” — the VIX — hovered near pre-pandemic levels.
US two-year yields jumped 12 basis points to 4.72%.
Swap contracts now show a 40% probability of a March rate cut — from over 50% prior to the economic data.
To Callie Cox at eToro, the strong jobs data could be a “heat check for Wall Street” after markets rallied significantly on the rate-cut trade.
Hopes have gone a little too far, she noted.
“The US economy continues to perform well,” said John Leiper at Titan Asset Management. “The aggressive decline in US Treasury yields we saw last month, which already looked a little overdone, is going into reverse with bond yields jumping. With markets pricing out rate cuts next year, higher-for-longer is back in vogue.”
Softening inflation and employment data in the past month have convinced investors that the Fed is done raising interest rates and ignited bets that cuts of at least 125 basis points of cuts were in store over the next 12 months. Traders scaled back those wagers to about 110 basis points of easing.
“People saying recession need to have their heads examined,” said Neil Dutta at Renaissance Macro Research.
Traders are preparing for another busy week, with readings for the US consumer price index and retail sales, a compressed schedule of Treasury auctions — and the Fed’s final meeting of the year on the docket.
Fed officials are widely expected to keep borrowing costs at the highest level in two decades on Wednesday.
Chair Jerome Powell has repeatedly pushed back against growing bets of rate cuts early next year, stressing that policymakers will move cautiously but retain the option to hike again.
While labor market strength implies fewer rate cuts, investors should applaud the jobs report as it suggests the Fed is delivering a “Goldilocks” scenario of lower inflation without recession — which is the best outcome for risk assets, said Ronald Temple at Lazard.
“The Fed has been stymied by better-than-expected data releases,” said Quincy Krosby at LPL Financial. “As long as inflation continues to edge lower, the Fed will likely remain on hold. But if today’s report is a harbinger of continued consumer spending, the Fed may have to issue a considerably more hawkish message and telegraph that they still cannot declare victory on their campaign to quell inflation.”
Former Treasury Secretary Lawrence Summers said the Fed should hold off on a shift toward lowering interest rates until there’s decisive evidence showing that inflation is back under control or that the economy is entering a slump. While a soft landing, where prices come under control without a recession, is looking “more in play,” it’s not an outcome to be confident about at this point, he added.
To Brian Rose at UBS, given that the market is already pricing in a lot of rate cuts in 2024, the Fed will possibly avoid sounding “overly dovish.”
The Fed is likely to keep policy restrictive until mid-2024 — at which point inflation should have subsided sufficiently to warrant a modest easing cycle, according to Ronald Temple at Lazard.
“While labor market strength implies fewer rate cuts, investors should applaud the report as it suggests the Fed is delivering a ‘goldilocks’ scenario of lower inflation without recession — which is the best outcome for risk assets,” he noted.
A key gauge of stock-market worry will climb in 2024 after tumbling this year to the lowest since before the pandemic struck, and the magnitude depends on the strength of the economy, according to JPMorgan Chase & Co. strategists.
The CBOE Volatility Index will “generally trade higher in 2024 than in 2023, and the extent of the increase depends on the timing and severity of an eventual recession” and potential wider swings that could curb selling of short-term volatility, the bank’s Americas equity derivatives strategists, led by Bram Kaplan, wrote in a note Friday.
Stock markets will suffer in the first quarter of 2024 as a rally in bonds would signal sputtering economic growth, according to Bank of America Corp.’s Michael Hartnett.
The narrative of “lower yields = higher stocks” would flip to “lower yields = lower stocks,” Hartnett wrote.
Sentiment indicators are also no longer supportive of further gains in risk assets, Hartnett said. BofA’s custom bull-and-bear signal surged to 3.8 from 2.7 in the week through Dec. 6, its biggest weekly jump since February 2012.
A reading below 2 is generally considered to be a contrarian buy signal.
Money-market funds attracted their largest inflows since March, while US equities had an eighth straight week of inflows, BofA said, citing EPFR Global data.
David Bailin, Citi Global Wealth’s chief investment officer and head of investments, says stocks are ripe for further gains in 2024 as inflation trends lower, the economy remains resilient and earnings rebound — increasing the opportunity cost for investors still sitting on the sidelines, clinging to their cash.
“I’m not sure what investors are waiting for,” he said.  “The US economy is going to stay strong and, eventually, money-market rates are going to come down, so why are people not buying core 60/40 portfolios?”
Elsewhere, oil rebounded as technical levels provided support and the US sought to refill its Strategic Petroleum Reserve, but still remained on course for the longest weekly losing streak since 2018 on concerns about a global glut.

Corporate Highlights:
* The Apple Inc. executive in charge of product design for the iPhone and smartwatch is stepping down, bringing a shake-up to the company’s most critical product lines.
* Endeavor Energy, the largest closely-held oil and gas company in the Permian basin, is exploring a sale that could value it between $25 billion and $30 billion, according to Reuters.
* Honeywell International Inc. agreed to acquire the security business of Carrier Global Corp. for an enterprise value of about $5 billion, which marks the biggest deal since 2015 for the maker of jet engines and gas detectors.
* Starbucks Corp. said it reached out to the union representing hundreds of its stores, a potential step toward ending an impasse that has frayed the coffee giant’s relationship with some of its frontline employees.
* Alphabet Inc.’s Google said that the European Union’s threat to break up its profitable ad tech arm was “flawed” as it formally took aim at the bloc’s allegations of anticompetitive conduct.
* Broadcom Inc., a chip supplier for Apple Inc. and other big tech companies, expects the rapid expansion of artificial intelligence computing to help offset its worst slowdown since 2020.
* Lululemon Athletica Inc.’s fourth-quarter revenue guidance trailed Wall Street estimates, a rare miss for the retailer whose performance routinely exceeds investor expectations.
* Microsoft Corp. and OpenAI Inc.’s partnership, which recently went through a governance meltdown, is facing yet more scrutiny after the UK antitrust watchdog said it’s considering if it should be called in for a full blown investigation.
* Commodity trading giant Trafigura Group paid $5.9 billion in annual dividends to its employee shareholders, more than triple a year earlier, after churning out another record profit in the 12 months through September.
* Anglo American Plc unveiled plans to drastically cut production in a bid to reduce costs amid logistical and operational snarls.

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.4% as of 4 p.m. New York time
* The Nasdaq 100 rose 0.4%
* The Dow Jones Industrial Average rose 0.4%
* The MSCI World index rose 0.3%
Currencies
* The Bloomberg Dollar Spot Index rose 0.2%
* The euro fell 0.3% to $1.0764
* The British pound fell 0.4% to $1.2548
* The Japanese yen fell 0.6% to 144.99 per dollar
Cryptocurrencies
* Bitcoin rose 2.3% to $44,379.44
* Ether fell 0.2% to $2,364.96
Bonds
* The yield on 10-year Treasuries advanced eight basis points to 4.23%
* Germany’s 10-year yield advanced nine basis points to 2.28%
* Britain’s 10-year yield advanced seven basis points to 4.04%
Commodities
* West Texas Intermediate crude rose 2.7% to $71.20 a barrel
* Spot gold fell 1.3% to $2,002.83 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Edward Bolingbroke, Sagarika Jaisinghani, Michael Mackenzie and Carly Wanna.
Have a wonderful weekend everyone.

Be magnificent!
As ever,

Carolann
Let us not look back to the past with anger, nor towards the future with fear, but look around with awareness. – James Thurber, 1894-1961.

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