February 5, 2024, Newsletter

Dear Friends,

Tangents: Happy Monday.
Constitution Day, Mexico.

February 5^th, 1909: The world’s first synthetic plastic is announced.  Belgian chemist Leo Baekeland announced his invention of Bakelite at a meeting of the American Chemical Society on that day.
February 5, 1977 The album “Rumours” by Fleetwood Mac was released. Go to article >>

Key life skills you can learn from Martha Stewart
Grandparents, parents and children have all learned important life skills from Martha Stewart. Here are five you should add to your tool kit.

This is the world’s most terrifying ocean crossing
The Drake Passage is feared by travelers and sailors alike. Read stories from some brave people who have crossed the roughest conditions on the planet.

Venues and dates set for the 2026 World Cup
MetLife Stadium in New Jersey will host the 2026 World Cup final, the global soccer governing body announced.

The world’s rarest passport
There are only around 500 diplomatic passports issued by this sovereign nation with nearly 1,000 years of history.

Did art exist before modern humans? New discoveries raise big questions.
Scientists are finding ever-earlier examples of artistic expression in the archaeological record that reshape what we know about the cognitive abilities of our archaic human relatives, such as Neanderthals. Read More.

Our mixed-up human family: 8 human relatives that went extinct (and 1 that didn’t)
Modern humans are far from the only species in the Homo genus. Here are others that went extinct long ago.  Full Story: Live Science (2/5)

Major ‘magnetic anomaly’ discovered deep below New Zealand’s Lake Rotorua
Lake Rotorua, which sits at the heart of a dormant volcano and is the setting for one of New Zealand’s most famous Māori love stories, has been mapped in detail for the 1st time. Read More.

How do galaxies grow while ensnared in the universe’s cosmic web?
New simulations show how thousands of galaxies evolve by traveling through the strands of gas, dust and stars that make up the universe’s “cosmic web.” Read More.

April 8 solar eclipse: 4 telescopes and observatories where you can watch totality
The April 8 total solar eclipse will be visible from several astronomical observatories across North America. Here are four that have big events planned for the day the sun disappears. Read More.
PHOTOS OF THE DAY

Tokyo, Japan
A visitor walks through an exhibition by the Japanese collective teamLab at the recently opened 325-metre Azabudai Hills tower
Photograph: Richard A Brooks/AFP/Getty Images

Sylhet, Bangladesh
Migratory birds on a foggy morning in Dibir Haor
Photograph: Md Rafayat Haque Khan/Zuma/Rex

​​​​​​​Doha, Qatar
Karina Magrupova of Kazakhstan competes in the preliminary round of the women’s solo free artistic swimming event during the World Aquatics Championships
Photograph: Manan Vatsyayana/AFP/Getty
Market Closes for February 5^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1637, “tulipmania” hit its peak in the Netherlands, with the price of the rare Witte Croonen tulip bulb reaching 1,345 guilders per half-pound, up 2,506% in 33 days. Over the next five years, these bulbs lose an annual average of 76% of their value, until they fetched only 37.5 guilders in 1641.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 1%, or 213.2 to 20,871.89 in Toronto.
The move was the biggest since falling 1.2% on Jan. 17.
Constellation Software Inc/Canada contributed the most to the index decline, decreasing 3.8%.
Lithium Americas Corp. had the largest drop, falling 8.0%.
Today, 197 of 225 shares fell, while 26 rose; all sectors were lower, led by financials stocks.
Insights
* The index advanced 0.5% in the past 52 weeks. The MSCI AC Americas Index gained 19% in the same period
* The S&P/TSX Composite is 1.8% below its 52-week high on Jan. 31, 2024 and 11.7% above its low on Oct. 27, 2023
* The S&P/TSX Composite is down 1.5% in the past 5 days and fell 0.3% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 16.4 on a trailing basis and 15.5 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.2% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.34t
* 30-day price volatility rose to 8.34% compared with 8.02% in the previous session and the average of 10.32% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -43.7976| -0.7| 6/21
Information Technology | -41.1500| -2.1| 2/8
Energy | -39.8234| -1.1| 3/37
Materials | -32.6309| -1.5| 5/46
Consumer Staples | -12.9760| -1.4| 1/10
Utilities | -12.4728| -1.5| 0/15
Communication Services | -9.1812| -1.2| 0/5
Real Estate | -7.8377| -1.6| 1/20
Consumer Discretionary | -7.3578| -0.9| 4/9
Industrials | -4.9850| -0.2| 4/22
Health Care | -0.9785| -1.6| 0/4
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
Constellation Software | -19.7100| -3.8| 63.7| 11.0
TD Bank | -12.5200| -1.2| -9.0| -6.4
Shopify | -11.9700| -1.3| 10.6| 6.8
Canadian Pacific Kansas | 1.5640| 0.2| -37.2| 7.1
Manulife Financial | 1.7740| 0.5| 83.4| 1.0
Canadian National | 2.2850| 0.3| -21.2| 2.7
US
By Rita Nazareth
(Bloomberg) — Wall Street traders sent bonds and stocks down, with strong economic data reinforcing the view that the Federal Reserve isn’t ready to call victory over inflation just yet.
Treasuries came under renewed pressure on speculation that optimism regarding disinflation may have gone too far.
In another sign that the world’s largest economy remains on solid footing, the Institute for Supply Management’s services gauge hit a four-month high while prices picked up.
The news jolted trading on a day when investors were already digesting cautious views from some Fed speakers including Jerome Powell.
The “one-two punch” prevented market players from achieving further upside, according to Jose Torres at Interactive Brokers.
JPMorgan Chase & Co. strategist Marko Kolanovic said that “absent a material shock, we think this year’s easing will prove more moderate than markets have priced.”
US 10-year yields climbed 14 basis points to 4.16% and those on two-year notes approached 4.5%.
Fed swaps almost wiped out the odds of a March rate move, and the chances of a May cut have also been reduced.
The dollar hit its strongest since November.
The S&P 500 fell from a record high — but came well off session lows as Nvidia Corp. led gains in chipmakers.
Traders also waded through remarks from Fed speakers, with Powell reiterating that policymakers will likely wait beyond March to cut rates in an interview conducted Thursday with CBS’s 60 Minutes that aired Sunday evening.
Fed Bank of Minneapolis President Neel Kashkari said officials have time to gauge incoming data before easing while his Chicago counterpart Austan Goolsbee reiterated he’d like to see more of the favorable inflation data.
To Thierry Wizman at Macquarie, the shift in the market’s assessment of when the Fed will begin to cut rates seems valid.
“We had always thought that June was the likelier month for a cut in view of the Fed’s prudence,” Wizman noted. “What does worry us, though, is whether the ongoing strength of the US job market in January means that the US consumer will stay strong, thereby undoing the disinflationary trend, and extending tight monetary policy more indefinitely.”
The ISM’s overall gauge of services increased to 53.4 last month.
The index has remained above the 50 level that indicates expansion for a year.
The latest reading exceeded all estimates in a Bloomberg survey of economists.
The group’s metric of prices paid for materials jumped — showing that costs are rising at a faster pace.
Jeffrey Roach at LPL Financial says the big uptick in prices paid mostly reflected the increase in shipping costs.
Investors should expect prices to revert if conditions in the Red Sea improve, he added.
The world’s major central banks mustn’t drop their guard in the fight against inflation as it’s too soon to say if sharp interest rate increases have contained underlying price pressures, the OECD said.
Meantime, the latest Bloomberg Markets Live Pulse survey showed American shoppers won’t be deterred by mounting credit-card bills or the recent ripple of layoffs.
More than half of 463 respondents said spending will stay strong or get even stronger in 2024.
“The ongoing strength of the US economy relative to most of its G-10 peers is one of the key reasons why we have held a counter consensus bullish view on the USD since September 2023,” said Dominic Bunning at HSBC. “The strength of activity data will, in our view, make it hard for the Fed to have confidence that inflation is fully tamed. As such, we see rate pricing in the US being more prone to upside than downside for now.”
Bill Gross said he’s betting that part of the interest-rate curve will return to a more normal pattern, eliminating the inversion that’s persisted even after the Fed stopped raising interest rates.
The one-time king of the bond world said on social media X that he’s buying September 2024 contracts tied to the Secured Overnight Financing Rate and selling the September 2025 one.
Meantime, the Fed said US banks reported stricter credit standards in the fourth quarter, although the proportion of those tightening standards shrank from the prior period, according to the Senior Loan Officer Opinion Survey on Bank Lending Practices — known as SLOOS.
The report suggests the severe credit crunch feared in the wake of the collapse of four regional lenders last year hasn’t materialized. While high borrowing costs have more broadly weighed on households as the Fed has lifted interest rates to a two-decade high, the economy has remained resilient.
“Overall the survey is not indicative of monetary conditions that would indicate a central bank that has kept rates too high for too long, even if it does show a cooling from the very loose conditions that prevailed a couple of years ago,” said Michael Shaoul at Marketfield Asset Management.
With the S&P 500 coming off its best stretch in nearly four decades, the road gets tougher for investors as the calendar flipped to February.
It’s the third-worst month for the gauge in the past 30 years, behind September and August, according to data compiled by Bloomberg.
After a torrid rally of almost 20% since October that took the S&P 500 to its first records in two years, there’s ample reason for concern: Artificial-intelligence hype came in for a reality check with the latest batch of big-tech earnings;
fevered speculation that the Fed would start easing next month has gone cold; and valuations remain elevated relative to history, evoking memories of the dot-com bubble for some strategists.
“It’s worth asking ourselves, have we priced in a little too much good news, at least in the near term?” said Mark Hackett at Nationwide. “Over the last two years, and especially during election years, this point on the calendar – February through March – tends to take a dip. Coupled with elevated sentiment and positioning, I expect to see a sideways to slightly negative move over the next 6-8 weeks as we get through seasonal choppiness.”
“After that, my longer-term outlook for the year remains positive,” he added.
Corporate Highlights:
* Boeing Co. found more mistakes with holes drilled in the fuselage of its 737 Max jet, a setback that could further slow deliveries on a critical program already restricted by regulators over quality lapses.
* Caterpillar Inc., one of the world’s largest manufacturers of heavy machinery, batted away concerns of a global economic slowdown after reporting higher fourth-quarter sales in its energy and transportation business, which helped it to post profit that topped analysts’ expectations.
* The US Attorney’s Office in Manhattan has launched an investigation into the accounting practices at Archer-Daniels-Midland Co., according to people with direct knowledge of the matter.
* McDonald’s Corp.’s sales missed investor expectations in the fourth quarter as growth decelerated, hurt in part by the conflict in the Middle East.
* Tyson Foods Inc. posted quarterly earnings that beat even the highest of analysts’ estimates.
* Snap Inc. is reducing its workforce by roughly 10% worldwide, joining the chorus of technology companies that have announced fresh rounds of cuts in 2024.
* Estée Lauder Cos. said it’s cutting as many as 3,000 positions as part of a restructuring plan to put one of the world’s largest beauty companies back on track.

Key events this week:
* Reserve Bank of Australia’s rate decision, Tuesday
* Eurozone retail sales, Tuesday
* Germany factory orders, Tuesday
* UBS earnings, Tuesday
* Bank of Canada Governor Tiff Macklem speaks, Tuesday
* Fed’s Loretta Mester and Patrick Harker speak, Tuesday
* Germany industrial production, Wednesday
* Walt Disney earnings, Wednesday
* Fed’s Adriana Kugler and Tom Barkin speak, Wednesday
* China PPI, CPI, Thursday
* US wholesale inventories, initial jobless claims, Thursday
* Treasury Secretary Janet Yellen speaks at a Senate banking committee hearing on the Financial Stability Oversight Council annual report, Thursday
* Pharma CEOs speak at a Senate panel on prescription drug prices, Thursday
* ECB Chief Economist Philip Lane speaks, Thursday
* ECB publishes economic bulletin, Thursday
* US CPI revisions, Friday
* Germany CPI, Friday
* President Joe Biden hosts German Chancellor Olaf Scholz at the White House, Friday
Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.3% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.2%
* The Dow Jones Industrial Average fell 0.7%
* The MSCI World index fell 0.4%
Currencies
* The Bloomberg Dollar Spot Index rose 0.4%
* The euro fell 0.4% to $1.0742
* The British pound fell 0.8% to $1.2536
* The Japanese yen fell 0.2% to 148.66 per dollar
Cryptocurrencies
* Bitcoin fell 0.9% to $42,361.51
* Ether fell 0.4% to $2,289.39
Bonds
* The yield on 10-year Treasuries advanced 14 basis points to 4.16%
* Germany’s 10-year yield advanced seven basis points to 2.32%
* Britain’s 10-year yield advanced nine basis points to 4.01%
Commodities
* West Texas Intermediate crude rose 0.7% to $72.82 a barrel
* Spot gold fell 0.7% to $2,024.86 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jessica Menton, Elena Popina, Kasia Klimasinska, Reade Pickert and Alexandra Semenova.
Have a lovely evening.

Be magnificent!

As ever,

Carolann
Something will turn up. -Benjamin Disraeli, 1804-1881.

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