February, 20, 2024, Newsletter

Dear Friends,

Tangents:
February 20, 1913: Works to build Australia’s capital city commence.  Canberra is an entirely planned city and was chosen as the Australian capital as a compromise between rivals Sydney and Melbourne.

1965: The Ranger 8 spacecraft crashed on the moon after sending back thousands of pictures of the lunar surface.  Go to article >>

Brightest black hole ever discovered devours a sun’s-worth of matter every day
A distant quasar that was initially mistaken for a star is actually one of the brightest and fastest-growing black holes ever seen. Read More.

CRISPR ‘will provide cures for genetic diseases that were incurable before,’ says renowned biochemist Virginijus Šikšnys
Live Science spoke with biochemist Virginijus Šikšnys, whose work helped establish CRISPR as a gene-editing system. Read More.

‘More unzipping of the landscape’: Arctic permafrost could crumble into rivers, unleashing devastating feedback loop
Permafrost thaw could result in new rivers forming across the Arctic, potentially unleashing 35 million car journeys’ worth of carbon every year. Read More.

PHOTOS OF THE DAY

Wakefield, UK
Daniel Arsham’s Unearthed Bronze Eroded Melpomene is installed for his Relics in the Landscape exhibition at the Yorkshire Sculpture Park
Photograph: Danny Lawson/PA

Nanjing, China
People enjoy the sight of plum blossom trees in flower in the country’s eastern Jiangsu province
Photograph: AFP/Getty Images

​​​​​​​St Joseph, US
Ice builds up along a pier on Lake Michigan. The Great Lakes shorelines have historically been ice-covered at this time of year, but this winter’s warmer weather has led to the lowest ice cover on the lakes since record-keeping began in 1973
Photograph: Scott Olson/Getty Images
Market Closes for February 20^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 1961: The New York Stock Exchange delisted five stocks in one day.  All were railroad or sugar companies based in Cuba, after their assets had been expropriated by the new government of Fidel Castro.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.2% at 21,217.53 in Toronto.
The move follows the previous session’s increase of 0.2%.
Shopify Inc. contributed the most to the index decline, decreasing 3.0%.
Methanex Corp. had the largest drop, falling 10.5%.
Today, 140 of 225 shares fell, while 82 rose; 7 of 11 sectors were lower, led by information technology stocks.
Insights
* This month, the index rose 0.9%
* The index advanced 3.4% in the past 52 weeks. The MSCI AC Americas Index gained 21% in the same period
* The S&P/TSX Composite is 0.5% below its 52-week high on Feb. 16, 2024 and 13.5% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 0.7% in the past 5 days and rose 1.5% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 16.5 on a trailing basis and 16.6 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$3.37t
* 30-day price volatility fell to 12.21% compared with 12.30% in the previous session and the average of 9.85% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Information Technology | -35.9384| -1.8| 1/9
Industrials | -20.9728| -0.7| 6/20
Energy | -11.8831| -0.3| 10/31
Materials | -7.1386| -0.3| 23/26
Consumer Discretionary | -3.2621| -0.4| 3/10
Real Estate | -2.2301| -0.4| 6/15
Health Care | -0.3029| -0.5| 2/2
Utilities | 2.0435| 0.2| 7/8
Communication Services | 5.1040| 0.7| 3/2
Consumer Staples | 17.2759| 1.9| 5/6
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Shopify | -27.9700| -3.0| 34.8| 3.0
Canadian National | -7.9160| -1.1| 113.6| 3.9
Suncor Energy | -4.1650| -1.0| 164.1| 3.9
CIBC | 5.7530| 1.4| 17.8| -1.5
RBC | 5.9810| 0.5| 29.7| -1.1
Couche-Tard | 15.7200| 3.7| 70.1| 9.0
US
By Rita Nazareth
(Bloomberg) — Big tech dragged the stock market away from its all-time highs, with Wall Street awaiting Nvidia Corp.’s earnings on Wednesday for confirmation the chipmaker can meet the lofty expectations set by the artificial-intelligence boom.
While the ongoing earnings season has so far reaffirmed the view that Corporate America is holding up well, the reporting period has been mixed for the “Magnificent Seven” mega-caps.
Ahead of the chipmaker’s numbers, some traders decided to lock in profits — with the market also weighing a report that Microsoft Corp. is developing a networking card as an alternative to the one supplied by Nvidia.
The bar is high for the company at the heart of the AI revolution — which boasts the best performance in the S&P 500 this year after more than tripling in 2023.
Nvidia’s revenue is expected to be buoyed by soaring demand in its data-center business.
AI should remain strong, especially with Meta Platforms Inc. and Tesla Inc. loading up on graphics processing units, Susquehanna said.
To Matt Maley at Miller Tabak + Co., while bets are that Nvidia will report solid earnings and forecasts, one thing to keep in mind is that the stock has not always responded well to fabulous results.
“Sometimes their expectations are SO high that we get a ‘sell the news’ reaction,” Maley said. “We don’t know which reaction we’ll get this week, so we wouldn’t be surprised if investor and traders sit on their hands until they report this Wednesday evening.”
In the run-up to its results, Nvidia sank over 4%.
The Nasdaq 100 dropped almost 1%, while the S&P 500 fell below 5,000.
A gauge of chipmakers slid 1.6%.
Walmart Inc. climbed after reporting strong earnings.
Treasury 10-year yields were little changed at 4.27%.
The dollar wavered.
“We’re seeing a material correction in the AI high flyers today,” wrote Louis Navellier, chief investment officer at asset manager Navellier & Associates. “A correction was overdue, though the AI theme is hardly broken…but it certainly is a defensive day.”
While the artificial-intelligence frenzy has boosted stocks that have been linked to the technology, Nvidia is one of the few firms to have demonstrated significant revenue growth from AI.
Because of its uncontested leadership in AI-training chips, Nvidia’s market capitalization has ballooned to around $1.7 trillion, briefly topping the values of both Amazon.com Inc. and Alphabet Inc.
While other big techs have hardly performed badly in 2024, juxtaposed with Nvidia’s surge they appear to be relegated to the slow lane.
The rally has been fueled in part by Nvidia handily beating analysts’ estimates — something it’s done several quarters in a row.
The company may now have to do that again.
But analysts estimate that sales more than tripled in the fourth quarter, and they’re projecting a growth increase nearly as big in the latest period.
“In our view, this is the market event to watch this week,” said Anthony Saglimbene at Ameriprise. “While one company doesn’t usually make or break a market, the growing influence of Nvidia on the overall bullish stock narrative, key tech companies, and broader indexes warrants close attention.”
Beyond its results, investors will be particularly keen to know how Nvidia’s chief Jensen Huang sees demand developing across the rest of the year, according to Matthew Weller at Forex.com and City Index.
“Any signs that the AI boom may be slowing could lead to a big bearish reversal in the stock, so traders are justifiably on tenterhooks ahead of the release,” Weller said.
While 2023 was the beginning of the biggest tech transformation since the first days of the Internet in the 90’s, “investors needed to see enterprise spend ramping to justify these valuations and show the growth path ahead for 2024 and beyond,” said Dan Ives at Wedbush Securities.
Nvidia’s rapid expansion supports an argument bulls have been making to justify lofty valuations for tech giants: that the companies will deliver bigger profits than contemplated in current estimates, thereby making them cheaper than they appear.
Despite surging to new highs this month — and taking the entire stock market with it — Nvidia’s forward price-to-earnings ratio is only back to where it was before its last earnings report in November, and about a third lower than it was before the fourth-quarter earnings last year.
The stock has managed to grow its way into a cheaper valuation thanks to cheaper profits.
Nvidia investors may have almost $200 billion in market value riding on this week’s earnings report, according to options positioning.
Prices for short-term calls and puts imply a 10.6% move in the chipmaker’s shares on Thursday, the session after its earnings report, according to data compiled by Bloomberg.
That would sway Nvidia’s market capitalization by some $180 billion, one of the largest single-session moves on record, still trailing records set by Meta Platforms — holder of both the biggest one-day drop and largest single-session gain.
The stock of the Santa Clara, California-based company has also become one of the most-loved on Wall Street.
It has 60 buys, five holds and only a single sell rating among analysts tracked by Bloomberg.
Even with Tuesday’s losses, the S&P 500 is still up over 4% this year, buoyed in part by optimism around artificial intelligence and signs of a resilient economy.
UBS Group AG raised its year-end forecast for the S&P 500 for the second time since December, as Wall Street strategists struggle to keep pace with the market’s strength to start 2024.
The update comes a few days after Goldman Sachs Group Inc. also boosted its view on US equities for the second time since late last year.
“Despite our bullish outlook, it appears we were not bullish enough,” the UBS strategists wrote in a note to clients.
While the market sold off on robust consumer- and produce-price data last week, “our work indicates these demand-driven readings are constructive for future returns.”
Craig Johnson at Piper Sandler notes that February’s performance so far has been exceptionally stronger than its historical seasonality.
For now, the S&P 500 is also heading toward its fourth straight monthly advance.
“We suspect the back half of the month will be a time for bulls to rest and trim some profits,” he said. “We anticipate plenty of in-flight turbulence during the coming weeks as the S&P levels off around 5,000.”
To Jay Woods at Freedom Capital Markets, the stock index showed signs of getting tired and was due for a pause.
“It did just that but remains secure in its uptrend,” he noted. “Any pullback towards 4,900 should be considered routine and normal.”
US stocks will keep outperforming Treasuries over the next month, according to majority of respondents in the latest MLIV Pulse survey.
The percentage of equity bulls is the second-highest since the question about the relative performance of stocks and bonds was first asked in August 2022.
Stocks are expected to keep beating bonds well past the earnings season and heading into the Federal Reserve’s March meeting.

Corporate Highlights:
* Walmart Inc. also said it agreed to buy smart-TV maker Vizio Holding Corp. for about $2.3 billion.
* Macy’s Inc. said it received nine nominations to its board from Arkhouse Management Co., the activist investor leading an effort to acquire the department-store company.
* Home Depot Inc. reported a fifth straight comparable sales decline, underscoring a drop in demand for house improvement due to high mortgage rates and a slowdown in construction.
* The Biden administration is in talks to confer more than $10 billion in subsidies to Intel Corp., people familiar with the matter said, in what would be the largest award yet under a plan to bring semiconductor manufacturing back to US soil.
* The US plans to award $1.5 billion to GlobalFoundries Inc., the largest domestic maker of made-to-order semiconductors, as part of the Biden administration’s effort to strengthen the nation’s chip production.
* Capital One Financial Corp. agreed to buy Discover Financial Services in a $35 billion all-stock deal to create the largest US credit card company by loan volume, giving the combined entity a stronger foothold to compete with Wall Street’s behemoths.
* KeyCorp Chief Executive Officer Chris Gorman touted his company’s contained exposure to commercial real estate lending, an area of concern for investors in regional US banks amid heightened interest rates and property vacancies.

Key Events This Week:
* Eurozone consumer confidence, Wednesday
* Nvidia, HSBC earnings, Wednesday
* Federal Reserve releases minutes from its January meeting, Wednesday
* Atlanta Fed President Raphael Bostic speaks, Wednesday
* Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, CPI, Thursday
* US initial jobless claims, US existing home sales, Thursday
* ECB issues account of January meeting, Thursday
* Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari speak, Thursday
* China property prices, Friday
* Germany IFO business climate, GDP, Friday
* ECB publishes 1- and 3-Year inflation expectations survey, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.6% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.8%
* The Dow Jones Industrial Average fell 0.2%
* The MSCI World index fell 0.3%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro rose 0.3% to $1.0810
* The British pound rose 0.2% to $1.2624
* The Japanese yen was little changed at 149.98 per dollar
Cryptocurrencies
* Bitcoin rose 0.2% to $51,993.67
* Ether rose 0.3% to $2,976.66
Bonds
* The yield on 10-year Treasuries was little changed at 4.27%
* Germany’s 10-year yield declined four basis points to 2.37%
* Britain’s 10-year yield declined seven basis points to 4.04%
Commodities
* West Texas Intermediate crude fell 1.3% to $78.18 a barrel
* Spot gold rose 0.4% to $2,024.69 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jessica Menton, Tatiana Darie, Carly Wanna and Kasia Klimasinska.

Have a lovely evening.

Be magnificent!
As ever,

Carolann
Genius is eternal patience. -Michelangelo, 1475-1564.

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
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www.carolannsteinhoff.com