February 13, 2023 Newsletter

Dear Friends,

Tangents: Happy Monday.
Wasn’t that an amazing Super bowl yesterday – what a game!

February 13, 1258: Baghdad, a city of 1 million, falls to the Mongols as the Abbasid Caliphate is destroyed, tens of thousands are slaughtered, ending the Islamic Golden Age.
February 13, 1945: Allied planes began bombing the German city of Dresden during World War II. Go to article » 
1741: First magazine published in the US.

Peter Gabriel, singer, b. 1950.

The wildlife photographer of the year took quite an image. (h/t Ellen Kominers)

Which automaker will have the last stick shift standing? (h/t Scott Duke Kominers)

Lasers reveal ruins of 5th-century fortress in Spanish forest: Archaeologists in Spain got the surprise of a lifetime when they discovered the ruins of a powerful fifth-century fortress surrounded by a huge defensive wall in a dense forest, instead of the Iron Age fort they had been looking for, they reported in a new study.  The team found the stronghold on a hilltop in northwestern Spain by using lidar — light detection and ranging — to peer beneath a forest covering the ruins.  Full Story: Live Science (2/10)

James Webb telescope finds Milky Way’s long-lost twin 9 billion years in the past: A sparkling cannibal galaxy discovered by the James Webb Space Telescope appears to be a “very early” mirror image of the Milky Way, and it could help astronomers understand how our galaxy took shape, a new study has revealed.
Located 9 billion light-years from Earth, the galaxy is named the “Sparkler” after the dwarf galaxies and two dozen globular clusters — swarms of millions of stars bound together by gravity — that shine around it.
Full Story: Live Science (2/10)

PHOTOS OF THE DAY

Super Bowl LVII
Rihanna takes the stage for the half-time show
Photograph: Ezra Shaw/Getty Images

Lake Czarne, Poland
The small-sized water reservoir lake is characterised by its unusual heart shape
Photograph: Lech Muszyński/EPA

Tokyo, Japan
A seal wearing heart-shaped rings swims in a fish tank for a special Valentine’s Day event at Aqua Park Shinagawa
Photograph: Yoshio Tsunoda/Aflo/Rex/Shutterstock
Market Closes for February 13^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1990, junk-bond giant Drexel Burnham Lambert sought bankruptcy protection, only days after Chief Executive Fred Joseph had told The Wall Street Journal, “I see daylight.  The worst is behind us.”
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.4%, or 90.11 to 20,702.23 in Toronto.
Toronto-Dominion Bank contributed the most to the index gain, increasing 0.6%.
Russel Metals Inc. had the largest increase, rising 6.2%.
Today, 160 of 236 shares rose, while 74 fell; 10 of 11 sectors were higher, led by financials stocks.
Insights
* The index declined 3.9% in the past 52 weeks. The MSCI AC Americas Index lost 7.3% in the same period
* The S&P/TSX Composite is 6.8% below its 52-week high on April 5, 2022 and 15.8% above its low on Oct. 13, 2022
* The S&P/TSX Composite is up 0.4% in the past 5 days and rose 1.7% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.5 on a trailing basis and 13.3 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.1% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.28t
* 30-day price volatility rose to 8.45% compared with 8.43% in the previous session and the average of 11.53% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 36.3061| 0.6| 24/5
Industrials | 14.6636| 0.5| 20/6
Consumer Discretionary | 11.9458| 1.7| 15/0
Information Technology | 9.0411| 0.7| 11/3
Consumer Staples | 7.6812| 0.9| 10/1
Energy | 7.0773| 0.2| 18/20
Utilities | 4.7313| 0.5| 14/2
Real Estate | 3.0958| 0.6| 18/5
Communication Services | 2.9578| 0.3| 5/1
Health Care | 0.7878| 1.0| 5/2
Materials | -8.1829| -0.3| 20/29
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
TD Bank | 6.8890| 0.6| -62.1| 6.7
Enbridge | 5.4520| 0.7| -33.4| 3.1
Bank of Nova Scotia| 4.8520| 0.8| -41.6| 11.8
Waste Connections | -1.8640| -0.6| -40.5| 0.1
Cenovus Energy | -2.4810| -1.0| -30.7| 1.0
Nutrien | -7.2540| -1.9| -10.9| 6.1
US
By Isabelle Lee and Cristin Flanagan
(Bloomberg) — US stocks ended Monday with broad gains after a survey showing Americans have drastically reduced their expectations for household income growth suggested that Tuesday’s consumer price data might not be as bad as once feared.
The S&P 500 added 1.1%, with every sector save energy in the green.
The tech-heavy Nasdaq 100 rose 1.6% following its first weekly loss of 2023.
The Dow Jones Industrial Average gained the most since January.
A New York Federal Reserve consumer survey showed that one-year inflation expectations were little changed in January, which was “modestly reassuring” for Vital Knowledge’s Adam Crisafulli.  “The household income piece was positive (for stocks) in that it points to wage disinflation expectations,” he wrote, noting it was the largest one-month drop in the nearly 10-year history of the series.
Oil prices, a key inflation component, fell on a report that the Biden administration plans to sell more crude oil from the Strategic Petroleum Reserve.
West Texas Intermediate crude futures dropped below $80 a barrel.
Yet two-year Treasury yields rose to a new high for the year after climbing 23 basis points last week following the much stronger-than-expected January employment data.
Traders are reassessing how high US interest rates will rise this year, with inflation and jobs data looming later this week.
This has fueled bets for the Fed rate to peak at 5.2% in July, up from less than 5% a month ago.
Equity indexes climbed Monday despite warnings from prominent strategists.
JPMorgan Chase & Co.’s Marko Kolanovic said that investors should be in bonds since “a recession is currently not priced into equity markets.”
The team led by Morgan Stanley’s Michael Wilson argued that US stocks are ripe for a selloff after prematurely pricing in a pause in Fed rate hikes.
“While equity and credit markets have priced a soft landing based on peaking short-term rates and inflation, we view recent action as another bear market rally, turbocharged by a surge in US dollar liquidity, weak positioning and short covering,” wrote Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. “Furthermore, the rosy view is unconfirmed by other capital markets, with economic data reflecting complex crosscurrents from the extraordinary COVID reopening.”
Yet Alexandra Wilson-Elizondo, head of multi-asset retail investing at Goldman Sachs Asset Management, thinks the market rally could have legs over the next few months.
“We’ve strongly believed that the handoff from goods disinflation to services was going to take time and that the Fed would have to remain in restrictive territory to do that,” she said in a phone interview. “And so we’ve maintained a cautious positioning in our portfolios, but we looked to real fundamental catalysts for those relative value trades such as the China reopening.”
Art Hogan, chief market strategist at B. Riley, said that equities’ positive moves Monday were due to investors seeing the glass as “half full.”
“There are more tailwinds than headwinds in this market right now,” he said in a phone interview. “There’s a lot more going right than going wrong and investors are reacting that way — at least today in front of the CPI report.”
But Irene Tunkel, chief US equity strategist at BCA Research, says that concerns about inflation will soon be replaced by concerns about economic growth.
“The market is already celebrating a soft-landing, they’re celebrating the end of inflation,” she said in a phone interview. “But I don’t think that we are out woods yet because I think there is a narrow window between inflation turning and growth slowing in a more sort of acute way.”
In Europe, optimism over resilient economic growth pushed European equities higher.
The Stoxx 600 index was lifted by construction, industrial goods and consumer stocks while energy and real estate underperformed.
India’s inflation rate of 6.5% breached the top end of the central bank’s target for the first time in three months.
The yen weakened past 132 per dollar after whipsawing Friday following news reports that Kazuo Ueda would be picked to become the Bank of Japan’s next governor.  
Japan’s government is set to officially announce the nomination of the new BOJ governor on Tuesday.
Traders are also keeping a keen eye on geopolitical developments after the Pentagon shot down an unidentified object that it tracked over Michigan, according to US officials familiar with the matter.
This was the fourth time in eight days a balloon or high-flying craft has been shot down over the US or Canada.
Key events:
* US CPI, UK jobless claims, Eurozone GDP, New York Fed President John Williams gives the keynote speech at New York Bankers Association event Tuesday
* Japan’s new BOJ governor nomination Tuesday
* US retail sales, UK CPI Wednesday
* US jobless claims, Australia unemployment, Cleveland Fed President Loretta Mester speaks at Global Interdependence Center event Thursday
* France CPI, Russia GDP Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 1.1%, more than any closing gain since Feb. 7 as of 4 p.m. New York time
* The Nasdaq 100 rose 1.6%, more than any closing gain since Feb. 7
* The Dow Jones Industrial Average rose 1.1%, more than any closing gain since Jan. 6
* The MSCI World index fell 0.3%, falling for the third straight day, the longest losing streak since Jan. 19
Currencies
* The Bloomberg Dollar Spot Index fell 0.2%, more than any closing loss since Feb. 7
* The euro surged 0.4%, more than any closing gain since Feb. 1
* The British pound surged 0.6%, more than any closing gain since Jan. 17
* The Japanese yen fell 0.7% to 132.30 per dollar
Cryptocurrencies
* Bitcoin fell 0.3% to $21,681.76
* Ether fell 1.4% to $1,490.24
Bonds
* The yield on 10-year Treasuries declined three basis points to 3.71%
* Germany’s 10-year yield was little changed at 2.37%
* Britain’s 10-year yield was little changed at 3.40%
Commodities
* West Texas Intermediate crude fell 0.5% to $79.29 a barrel
* Gold futures fell 0.6% to $1,864 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Peyton Forte and Vildana Hajric.

Have a lovely evening.

Be magnificent!
As ever,

Carolann

When scattering seeds of kindness, do it by hand and not by machine. –George Ade, 1866-1944.

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