February 22, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday Eve.
February 22, 1819: Spain ceded Florida to the United States.  Go to article >>
February 22, 1948: Czechoslovakia becomes a communist state following a coup d’etat.

George Washington, b. 1732.
Arthur Schopenhauer, b.1788.
Edna St. Vincent Millay, b.1892.

‘A wonderful spectacle’: Photographer snaps rare solar eruption as ‘magnetic noose’ strangles the sun’s south pole
A recent solar flare unleashed a massive plasma plume from the sun’s south pole, where these stellar eruptions rarely happen. The unusual phenomenon is a sign of the impending solar maximum. Read More.

‘Completely surreal’: Metal detectorist unearths 1,500-year-old gold ring in Denmark
An amateur metal detectorist in Denmark has unearthed a rare gold ring that may have belonged to a previously unknown royal family with ties to the Kingdom of France. Read More.

Gut bacteria linked to colorectal cancer in young people
Certain gut bacteria reside in colorectal tumors, but the species differ depending on a patient’s age, offering hope that our gut tenants could serve as early warning signs of cancer in young people. Read More.

PHOTOS OF THE DAY

Venice, Italy
A woman poses for a portrait at sunrise in St Mark’s Square during the city’s carnival
Photograph: Stefano Mazzola/Getty

Huai’an, China
This woman is better sheltered than her dog in the eastern Jiangsu province
Photograph: AFP/Getty

​​​​​​​Vatican City
Scaffolding around the 17th-century, 95ft-tall bronze canopy by Gian Lorenzo Bernini as planned restoration works start in St Peter’s Basilica
Photograph: Andrew Medichini/AP
Market Closes for February 22^nd, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1973, the New York Stock Exchange couldn’t have picked a worse time to kick off its first-ever nationwide TV advertising campaign to encourage Americans to buy equities. U.S. stocks lost 14.7% of their value that year and another 26.5% in 1974
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose 0.7% at 21,318.08 in Toronto.
The index advanced to the highest closing level in at least a year.
The move follows the previous session’s decrease of 0.2%.
Today, financials stocks led the market higher, as 9 of 11 sectors gained; 126 of 225 shares rose, while 99 fell.
Nutrien Ltd. contributed the most to the index gain, increasing 7.2%.
CCL Industries Inc. had the largest increase, rising 16.4%.
Insights
* This month, the index rose 1.4%
* So far this week, the index rose 0.3%
* The index advanced 5.6% in the past 52 weeks. The MSCI AC Americas Index gained 27% in the same period
* The S&P/TSX Composite is at its 52-week high and 14% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 2.1% in the past 5 days and rose 1.9% 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 39.5 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$3.36t
* 30-day price volatility rose to 12.33% compared with 12.23% in the previous session and the average of 10.06% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 61.6650| 0.9| 23/4
Industrials | 34.8061| 1.1| 17/9
Consumer Staples | 17.6954| 1.9| 10/1
Energy | 16.6002| 0.5| 26/15
Information Technology | 10.6964| 0.6| 6/4
Materials | 4.3306| 0.2| 12/40
Health Care | 1.8596| 2.9| 3/1
Real Estate | 1.2002| 0.2| 9/12
Consumer Discretionary | 0.8342| 0.1| 8/5
Communication Services | -1.2120| -0.2| 2/3
Utilities | -2.7616| -0.3| 10/5
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Nutrien | 16.9100| 7.2| 72.4| -2.2
Brookfield Corp | 14.7000| 2.7| -25.4| 4.3
Canadian National | 12.0400| 1.7| -9.7| 6.4
Wheaton Precious Metals | -5.0990| -2.9| 82.0| -18.3
Barrick Gold | -6.1370| -2.5| 30.5| -18.9
Shopify | -7.5830| -0.9| -32.1| -1.9
US
By Rita Nazareth
(Bloomberg) — The stock rally powered ahead as Nvidia Corp.’s bullish outlook rekindled the artificial-intelligence mania and data showed the world’s largest economy is still going strong.
From the US to Europe and Japan, equities hit all-time highs, with the most-valuable chipmaker up 16% Thursday and adding $277 billion to its market capitalization.
That’s the biggest single-session increase in value ever — eclipsing a $197 billion gain made by Meta Platforms Inc.
With the numbers now in, bulls are calculating Nvidia’s new price-to-earnings ratio, or how much investors are paying for future growth.
Put another way, the company’s profits have been growing faster than its shares.
“Nvidia got to where it is because of extremely strong earnings and revenue,” said James Demmert, chief investment officer at Main Street Research. “When a company posts 265% year-over-year revenue growth — like Nvidia did — it deserves a premium valuation.”
The MSCI ACWI Index of both developed and emerging-market shares rose to its highest level ever.
The Nasdaq 100 added 3%, while the S&P 500 saw its biggest gain since January 2023.
The $16 billion VanEck Semiconductor ETF (SMH) jumped 6.8%.
Advanced Micro Devices Inc. and Broadcom Inc. — two other chipmakers expected to benefit from AI growth — rallied to records.
Super Micro Computer Inc., which has become a darling for investors wanting exposure to the revolutionary technology, soared 33%.
Equities were also buoyed by solid manufacturing, housing and labor-market data, with traders taking more hawkish Fedspeak in stride.
Treasury 10-year yields were little changed at 4.32%.
“Few things are more certain than death, taxes, and Nvidia beats on earnings,” said Ryan Detrick at Carson Group.  “The bar was set quite high, and incredibly they’ve once again stepped up and hit a home run.”
Nvidia’s market capitalization has now increased by more than $700 billion this year — with its valuation now topping $1.9 trillion — as investors bet that the company will remain the prime beneficiary of an AI computing boom.
Companies such as Amazon.com Inc., Meta Platforms, Microsoft Corp. and Alphabet Inc.’s Google are Nvidia’s largest customers — accounting for nearly 40% of its revenue, — as they rush to invest in hardware for AI computing.
“Demand for AI is surging worldwide across companies, industries and nations,” said Tom Hulick at Strategy Asset Managers. “We own NVDA and continue to hold the company. This is an exciting momentum play that we have been promoting and participating with for a few years now.”
Demmert at Main Street Research says that for investors who already own Nvidia, the recommendation would be to hold the stock and avoid selling in order to capture future expected growth “as we are still early in this transformative AI technology.”
“For investors who don’t own the stock, we would be buying on any weakness,” he noted. “With Nvidia’s stock, there will be corrections and bumps along the way, but the stock will continue to climb the wall of worry.”
Nvidia’s results come as a relief for AI bulls, as expectations have improved significantly, according to Solita Marcelli at UBS Global Wealth Management.
Despite the industry surge, she sees potential for further gains in technology shares — especially those that would benefit from the AI revolution.
“We think the near-term momentum in AI-related stocks is likely to continue,” Marcelli noted. “To position, we maintain our preference for semiconductors and software, and see opportunities in beneficiaries of AI edge computing, big tech, and their partners.”
Nvidia’s blockbuster results also underscored the tech dominance over the rest of the stock market, with the “Magnificent Seven” group of mega-caps leading gains.
To Chris Senyek at Wolfe Research, US equities are poised to power ahead over the next two to three weeks — with the AI-leveraged names, most of the “Mag 7,” and momentum themes driving the gains.
Other stock-market industries are not rallying as strongly  as the tech sector.
“We still believe it is going to be important for the stock market to broaden out a lot more than it has this year if it’s going move a lot more than it already has so far this year,” said Matt Maley at Miller Tabak + Co. “What we’re trying to say is that although the tech sector is the most important one for the stock market right now, there are still plenty of opportunities in other sectors in the marketplace.”
The tech rally has propelled the valuation of the Nasdaq 100 to an elevated level versus history, with a similar picture for the S&P 500.
Lofty valuations could ultimately curb more gains as investors weigh how much they’re willing to pay for stocks valued on future growth.
Still, Citigroup Inc. strategist Scott Chronert said recently that index price-to-earnings readings could be misleading because 40% of the S&P 500 trades off other metrics.
He predicted that more stocks could re-rate even with the US benchmark trading at 20 times forward earnings — which is exactly what followed.
Meantime, demand for options protecting against a short-term pullback in the Nasdaq 100 is easing after nearing the highest level in months before Nvidia’s earnings report.
The implied volatility premium for one-month puts over calls — known as the skew — on the Invesco QQQ Trust Series 1 ETF had increased to about 3.5 points this week, a level last seen for any length of time back in November. The concerns were focused in the market for short-term options, with the difference between one-month and three-month skews reaching the narrowest level since April 2022 before widening back out.

Corporate Highlights:
* AT&T Inc. said its mobile network has been restored after a widespread, hours-long outage Thursday as the FBI and U.S. Department of Homeland Security began investigating why hundreds of thousands of wireless subscribers lost service.
* Reddit Inc. filed for an initial public offering, confirming its revenue growth and helping to propel a still tenuous
resurgence in US listings.
* AbbVie Inc. is selling around $15 billion of bonds in the US investment-grade market on Thursday to help fund its acquisitions of ImmunoGen Inc. and Cerevel Therapeutics Holdings Inc., adding to a recent rush of buyout  financings.
* Space exploration startup Intuitive Machines Inc. will attempt on Thursday to put the first intact, US-made lander on the moon in more than 50 years.
* Rivian Automotive Inc., an electric-vehicle maker, issued a disappointing production forecast and announced another round of job cuts.
* Moderna Inc. reported fourth-quarter revenue that beat analysts’ expectations by gaining Covid vaccine market share on its rival, Pfizer Inc.
* Newmont Corp., the world’s top gold producer, will sell six mines and two projects in a set of divestitures aimed at generating $2 billion in cash.
* Grab Holdings Ltd., a ride-hailing company, forecast 2024 revenue below analysts’ estimates, suggesting a deeper-than-anticipated slowdown in its core online business.

Key Events This Week:
* 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 rose 2.1% as of 4 p.m. New York time
* The Nasdaq 100 rose 3%
* The Dow Jones Industrial Average rose 1.2%
* The MSCI World index rose 1.7%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro was little changed at $1.0821
* The British pound rose 0.2% to $1.2661
* The Japanese yen fell 0.1% to 150.51 per dollar
Cryptocurrencies
* Bitcoin rose 1.1% to $51,928.73
* Ether rose 2.8% to $3,009.41
Bonds
* The yield on 10-year Treasuries was little changed at 4.32%
* Germany’s 10-year yield declined one basis point to 2.44%
* Britain’s 10-year yield was little changed at 4.11%
Commodities
* West Texas Intermediate crude rose 0.7% to $78.44 a barrel
* Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Subrat Patnaik, Carmen Reinicke, Ryan Vlastelica, Carly Wanna, Farah Elbahrawy and Thyagaraju Adinarayan.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
How far that little candle throws its beams!  So shines a good deed in a naughty world. -William Shakespeare, 1564-1616.

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