February 23, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday.  Full moon tonight.
“February’s full moon, known as the “snow” moon, will brighten skies starting Friday night before reaching maximum illumination early Saturday. The snow moon, the second full moon of the year, comes at a time when winter usually has a firm grip on the Northern Hemisphere.  This month’s full moon is also considered a “micro moon,” because it is passing Earth at its farthest distance in its orbit. It will appear slightly dimmer and less large than a typical full moon, but it will nonetheless appear big and bright in our night sky…” –Ian Livingston, Washington Post.

February 23, 1917: The February Revolution begins in Russia.  The demonstrations and armed clashes ultimately resulted in the demise of the Russian Empire.
February 23, 1945: Iwo Jima Day.
1954: The first mass inoculation of children against polio with the Salk vaccine began, in Pittsburgh. Go to article >>

Viking market may be buried on a Norwegian island, radar suggests
The Norwegian island of Klosterøy is famous for its medieval monastery, but new research suggests it was important long before that. Read More.

World’s oldest known decimal point discovered in merchant’s notes from 1440s Italy
Decimal points are at least 150 years older than historians thought, according to newly unearthed notes from Venetian merchant Giovanni Bianchini, who practiced astrology in the 1440s. Read More.

‘Mind-blowing’ deep sea expedition uncovers more than 100 new species and a gigantic underwater mountain
Researchers recently discovered an “incredible number” of potential new marine species, as well as a handful of hefty new seamounts while exploring the deep sea off the coast of Chile. Full Story: Live Science (2/23).

A small change by Microsoft was a big jolt for some users.  Read why the Microsoft default font change from Calibri to Aptos has upset some users.

Scientists uncover mystery behind whale song.  Eerie and fascinating, whale songs are one of the most mysterious sounds reverberating through the ocean. Now, researchers say they know how the sea creatures vocalize.

PHOTOS OF THE DAY

Nove Mesto, Czech Republic
Lucie Charvatova of the Czech Republic competes during the women’s 4x6km ski relay event of the Biathlon World Championships
Photograph: Michal Čížek/AFP/Getty Images

Inyo County, California
Tourists enjoy the rare opportunity to walk in water as they visit Badwater Basin, usually the driest place in the US, in Death Valley national park. The basin was flooded by Hurricane Hilary in August 2023 and by recent rains in California
Photograph: David Swanson/AFP/Getty Images

​​​​​​​A honeybee flies to a spring crocus to collect nectar in mild weather, Brandenburg, Germany
Photograph: Frank Hammerschmidt/dpa
Market Closes for February 23^rd, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1965, Michael Dell was born. He later founded Dell Computer Corp. to assemble made-to-order computers.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.4%, or 95.07 to 21,413.15 in Toronto.
The index advanced to the highest closing level in at least a year.
Shopify Inc. contributed the most to the index gain, increasing 1.7%.
Altus Group Ltd/Canada had the largest increase, rising 8.1%.
Today, 131 of 225 shares rose, while 88 fell; 6 of 11 sectors were higher, led by financials stocks.
Insights
* This month, the index rose 1.9%
* So far this week, the index rose 0.7%
* The index advanced 6.1% in the past 52 weeks. The MSCI AC Americas Index gained 26% in the same period
* The S&P/TSX Composite is at its 52-week high and 14.6% above its low on Oct. 27, 2023
* S&P/TSX Composite is trading at a price-to-earnings ratio of 16.6 on a trailing basis and 17.2 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$3.38t
* 30-day price volatility rose to 12.35% compared with 12.33% in the previous session and the average of 10.11% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 42.0135| 0.6| 21/6
Materials | 28.1020| 1.3| 40/10
Information Technology | 25.4237| 1.4| 7/3
Industrials | 7.8656| 0.3| 13/12
Consumer Discretionary | 4.2913| 0.6| 9/3
Consumer Staples | 2.4317| 0.3| 5/6
Health Care | -0.3762| -0.6| 2/2
Communication Services | -0.5273| -0.1| 2/3
Real Estate | -0.9904| -0.2| 11/8
Utilities | -2.6569| -0.3| 7/8
Energy | -10.5052| -0.3| 14/27
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Shopify | 14.7500| 1.7| 3.2| -0.2
RBC | 9.0210| 0.7| -42.5| -0.6
TD Bank | 8.8170| 0.9| -24.1| -4.7
Cameco | -3.2760| -2.0| 8.5| -5.0
Nutrien | -3.8040| -1.5| 74.8| -3.7
Canadian Natural Resources | -8.9390| -1.3| 35.1| 1.6
US
By Rita Nazareth
(Bloomberg) — Stocks struggled to gain traction, with big tech losing steam after a powerful rally driven by the artificial-intelligence euphoria.
A feat of multiple records in the world’s biggest equity market drove the S&P 500 briefly above 5,100.
The “Magnificent Seven” group of mega-caps underperformed, though Nvidia Corp. saw a modest gain and its value hovered near $2 trillion.
“The speed of the tech rally has left investors wondering whether to take profits,” said Mark Haefele at UBS Global Wealth Management. “While we see merit in rebalancing portfolios, we believe that retaining strategic exposure to US large-cap technology is important.”
A rally in AI and optimism about economic growth at a time of easing monetary policy are the ingredients of a “magic sauce” to drive more gains in equities, according to Bank of America Corp.’s Michael Hartnett.
The strategist — who has taken a more neutral tone on stocks this year after remaining bearish through 2023 — said that a “baby bubble” in AI was “growing up.
The S&P 500 barely budged Friday, while posting a weekly win.
Treasury 10-year yields fell seven basis points to 4.25%.
Federal Reserve Bank of New York President John Williams said the economy is headed in the right direction, and it will likely be appropriate to cut rates later this year.
“We expect the momentum to continue and for markets to melt up in the short run, but the story of the stock market for this year will eventually be about the economy and the Federal Reserve,” said Chris Zaccarelli at Independent Advisor Alliance.  “As long as the economy keeps expanding, it’s really hard to interrupt a bull market.”
The “tug of war” between bulls and bears is currently being dominated by the bulls — as the technical tailwinds converge with positive fundamental developments, according to Mark Hackett at Nationwide.
“We have had a powerful rally and there is still a lot of momentum in the market,” said David Donabedian at CIBC Private Wealth US. “Anyone who goes against it – taking positions that the market will go in the other direction – will be sorry. You do not want to bet against this market in the short term.”
The surge in Nvidia’s shares in the session that followed its results left short sellers with about $3 billion in paper losses, according to an analysis by S3 Partners LLC — which called it an “AI generated nightmare” for bearish traders.
The mark-to-market losses are another blow for contrarians who argued that Nvidia’s sky-high valuations and speculative fever had all the makings of a market bubble about to pop.
The chipmaker is the third-largest US short with $18.3 billion of shares that have been borrowed and sold, according to S3.
While the rally in US tech behemoths has sparked some concern about a potential bubble, the price action is aligned with earnings fundamentals, according to Barclays Plc strategists.
As long as stocks move in tandem with profit outlook, the “fear of missing out” will continue to prevail for the tech/AI space and investors will give the benefit of the doubt to lofty valuations, the team led by Emmanuel Cau wrote.
“There will likely be pullbacks and volatility over the next few months and we are supportive of the buy-the-dip mentality when it comes to big tech,” said Greg Marcus at UBS Private Wealth Management.
As hard as the S&P 500 rallied in the session that followed Nvidia’s blowout results, the advance lacked an important component — strong participation of its constituents.
Only 73% of the S&P 500’s members advanced that day.
That was the lowest participation for an up day of this magnitude since the immediate aftermath of the 2020 election, when the index gained 2.2% while only 47% of its members went up.
“Even though market breadth is still narrow, it’s wider than it was last year, with more and more stocks this year outperforming the S&P 500,” Marcus added.
To Matt Maley at Miller Tabak + Co., while earnings out of Nvidia sparked another strong advance, it was disappointing to see a “very narrow” rally — which hasn’t hurt the market yet.
However, Maley points to a significant “valuation divergence” between Nvidia and the other AI-related stocks that has been developing for some time now.
“This should have important implications for how these stocks should be weighted in one’s portfolio — even when an inevitable correction takes place at some point in the future,” he noted.
Marcus at UBS says that if the Fed starts cutting interest rates, that will likely help spark wider breadth in the market.
Meantime, Goldman Sachs Group Inc. economists have pushed back their view on when the Fed will begin cutting rates to June after parsing recent comments from the central bank and minutes of its January meeting.
The US investment bank has dropped its forecast for a May cut and now expects four reductions this year, versus five previously, with moves in June, July, September and December.
It now sees four more cuts next year, versus a prior three, leaving the same terminal rate of 3.25%-3.5%, economists including Jan Hatzius wrote.
And rate strategists at JPMorgan Chase & Co. raised their year-end forecasts for Treasury yields “to reflect greater risk premium and a longer QT runway than previously expected,” a team led by Jay Barry said.
The 10-year yield forecast rose to 3.80% from 3.65%.
While “yields have room to decline from their current levels in the coming months” based on “markets pricing in a less dovish path than our forecast” for Fed policy — which is for 25bp rate cuts at every meeting this year beginning in June — uncertainty over the Fed’s path is likely to persist, they noted. “And Treasury yields will likely stay more elevated with a higher risk premium to reflect higher probability of fewer cuts over time.”

Corporate Highlights:
* Jeff Bezos, Nvidia Corp. and other big technology names are investing in a business that’s developing human-like robots, according to people with knowledge of the situation, part of a scramble to find new applications for artificial intelligence.
* Warner Bros. Discovery Inc. reported fourth quarter revenue and profits that fell short of Wall Street forecasts amid declining TV advertising sales and weakness at its studios business.
* Payments company Block Inc. reported results and first-quarter expectations that exceeded analysts’ estimates
* Booking Holdings Inc. gave a disappointing forecast for travel reservations and gross bookings, with the war in Israel and currency fluctuations weighing on results.
* Carvana Co. topped Wall Street’s profit expectations in the final months of 2023 and said it expects improved earnings this quarter as the used-car retailer defies the challenges of high interest rates and inflation.

Some of the main moves in markets:
Stocks
* The S&P 500 was little changed as of 4 p.m. New York time
* The Nasdaq 100 fell 0.4%
* The Dow Jones Industrial Average rose 0.2%
* The MSCI World index rose 0.1%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro was little changed at $1.0822
* The British pound was little changed at $1.2670
* The Japanese yen was little changed at 150.50 per dollar
Cryptocurrencies
* Bitcoin fell 1.1% to $51,088.63
* Ether fell 1.1% to $2,952.59
Bonds
* The yield on 10-year Treasuries declined seven basis points to 4.25%
* Germany’s 10-year yield declined eight basis points to 2.36%
* Britain’s 10-year yield declined seven basis points to 4.04%
Commodities
* West Texas Intermediate crude fell 2.6% to $76.60 a barrel
* Spot gold rose 0.6% to $2,036.47 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Elena Popina, Jessica Menton, Robert Brand and Subrat Patnaik.
Have a wonderful weekend everyone.

Be magnificent!
As ever,

Carolann
Say not you know another entirely, till you have divided an inheritance with him. –Johan Kasper Lavater, 1741-1801.

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