February 8, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday Eve.  Nirvana Day, Buddhism.
February 8,1971:  NASDAQ, the world’s first electronic stock exchange, held its first trading day. Go to article >>

1910: Boy Scouts of America established.
John Ruskin, b. 1819.
Jules Verne, b. 1828.
James Dean, b.1931.

Iceland volcano erupts for 3rd time, triggering lava fountains over 200 feet tall
The underground volcano near Grindavík has begun its third major eruption in three months, opening up a 2-mile-long fissure that is pumping out large amounts of lava and ash. Read More.

‘It haunts all our imaginations’: Were Neanderthals really like us? In this adapted extract from The Naked Neanderthal: A New Understanding of the Human Creature, Ludovic Slimak examines how we should view our ancient relatives, the Neanderthals.  Full Story: Live Science (2/7)

Our universe is merging with ‘baby universes’, causing it to expand, new theoretical study suggests
The universe is expanding faster and faster, but not all scientists agree that dark energy is the cause. Perhaps, instead, our universe keeps colliding with and absorbing smaller “baby universes,” a new theoretical study suggests.
Read More.

Polar bear sleeping on tiny iceberg drifting in Arctic sea captured in heartbreaking photo
An image captured off the Norwegian archipelago of Svalbard shows a young polar bear drifting to sleep on a small iceberg after carving a bed in the ice. Read More.

325 million-year-old shark graveyard discovered deep within Mammoth Cave harbors new fossilized species
Two new ancient shark species have been uncovered in Mammoth Cave with teeth that “look like they just came out of the shark’s mouth yesterday.”
Full Story: Live Science (2/7)

This image won the top wildlife photography prize
See the “breathtaking” photo selected from over 50,000 other entries as the winner of the 2024 Wildlife Photographer of the Year People’s Choice Award.

This country is now the top exporter of goods into the US
Hint: It’s not China.

Researchers reveal first full passages decoded from ancient scroll
With the help of artificial intelligence, 15 passages have been deciphered from this 2,000-year-old unrolled Herculaneum scroll, providing a glimpse into the thoughts of an ancient philosopher. See what researchers learned.

Moths actually aren’t drawn to light as previously thought
A new study found that moths’ behavior around light isn’t about attraction.

PHOTOS OF THE DAY

Mexico City, Mexico
A visitor views an artwork at Zona Maco, the largest contemporary art fair in the country, at the Banamex Centre
Photograph: Rodrigo Oropeza/AFP/Getty Images

Riga, Latvia
A pedestrian braves the weather on Aleksandra Čaka Street during heavy snowfall
Photograph: Toms Kalniņš/EPA

​​​​​​​Yogyakarta, Indonesia
Lava flows from Mount Merapi during foggy weather
Photograph: Anadolu/Getty Images
Market Closes for February 8^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1971, after nearly a decade of preparation, the Nasdaq market opened for trading. The Nasdaq Composite Index was set at an initial value of 100. It closed Wednesday at 15756.64.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.2% at 20,919.64 in Toronto.
The move follows the previous session’s increase of 0.1%.
Today, financials stocks led the market lower, as 6 of 11 sectors lost; 127 of 225 shares fell, while 95 rose.
Fairfax Financial Holdings Ltd. contributed the most to the index decline, decreasing 11.9%.
Lightspeed Commerce Inc. had the largest drop, falling 24.4%.
Insights
* So far this week, the index fell 0.8%, heading for the biggest decline since the week ended Nov. 10
* The index advanced 1.2% in the past 52 weeks. The MSCI AC Americas Index gained 21% in the same period
* The S&P/TSX Composite is 1.6% below its 52-week high on Jan. 31, 2024 and 11.9% above its low on Oct. 27, 2023
* The S&P/TSX Composite is down 0.9% in the past 5 days and fell 0.7% 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 15.6 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$3.32t
* 30-day price volatility fell to 7.97% compared with 8.04% in the previous session and the average of 10.03% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -38.2603| -0.6| 6/20
Communication Services | -20.7539| -2.6| 0/5
Materials | -18.4686| -0.9| 13/39
Utilities | -10.8628| -1.3| 2/13
Industrials | -7.4477| -0.2| 10/16
Health Care | -0.4643| -0.7| 0/4
Consumer Staples | 1.0008| 0.1| 2/9
Energy | 1.6551| 0.0| 33/8
Real Estate | 4.9592| 1.0| 10/9
Consumer Discretionary | 5.9774| 0.8| 11/2
Information Technology | 33.1223| 1.7| 8/2
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Fairfax Financial | -26.1000| -11.9| 157.5| 1.2
Cameco | -13.4700| -6.9| 67.9| 5.4
BCE | -12.7000| -3.8| 232.2| -2.1
Thomson Reuters | 9.0710| 4.3| 99.8| 8.2
Brookfield Corp | 10.5000| 2.0| -3.1| 2.6
Shopify | 29.8300| 3.1| 8.7| 14.6
US
By Rita Nazareth
(Bloomberg) — Wall Street struggled to gain traction on Thursday, with the bond market digesting another big sale of Treasuries and stocks hovering near records.
Bonds fell despite a strong $25 billion auction that reduced jitters about an oversupply.
Equities closed little changed after the S&P 500 briefly hit 5,000 for the first time.
A sense of caution prevailed as investors positioned for Friday’s consumer-price index revisions thinking about what happened a year ago: The update was significant enough to cast doubt on overall inflation progress.
“There is some talk that tomorrow’s CPI revisions could throw cold water on the recent good inflation numbers — but this is a wonky number,” said Andrew Brenner at NatAlliance Securities. “We think the next move comes off the CPI number next Tuesday.”
Ahead of those figures, investors got a jobless claims reading that added to evidence of a still strong labor market and gave credence to the recent cautious rhetoric from central bank speakers.
Federal Reserve Bank of Richmond President Thomas Barkin was the latest to reiterate policymakers have time to be patient about the timing of rate cuts.
The S&P 500 closed at 4,997.97. As the earnings season rolled in, Walt Disney Co. and Arm Holdings Plc jumped on upbeat outlooks, while PayPal Holdings Inc. sank on an underwhelming forecast.
Treasury 10-year yields rose three basis points to 4.15%.
Bitcoin topped $45,000.
Oil rallied amid doubts over a potential cease-fire in the Israel-Hamas war.
To Larry Tentarelli at Blue Chip Daily Trend Report, a solid jobs market and a resilient consumer continue to bode well for the economy and should push back on immediate recession concerns.
Chris Larkin at E*TRADE from Morgan Stanley says the next few inflation reports may determine whether stocks will be able to keep setting new records in the near term.
“We remain cautious,” said Dan Wantrobski at Janney Montgomery Scott. “On this front, we note narrowing of breadth, ongoing divergences in momentum, overbought conditions in leadership areas, and sentiment that can approach extremes relatively quickly.”
From its March 2020 pandemic-low, the S&P 500 has more than doubled, with gains in the past year fueled by bets on a soft economic landing and optimism about the impact of artificial intelligence over corporate earnings.
While US stocks are now pricing in plenty of good news, UBS’s Chief Investment Office sees the potential for further gains in the event of a “Goldilocks” economic outcome.
“Our base case remains for a soft landing for the US economy, with the S&P 500 ending the year around current levels,” said Solita Marcelli at UBS Global Wealth Management.
“However, recent economic data have highlighted the potential for a period of continued stronger growth, tame inflation, and swifter monetary easing. In this event, we believe the S&P 500 has the potential to rise to around 5,300 this year.”
Stronger-than-expected earnings are leading companies to announce share buybacks at a blistering pace as 2024 gets going — a potentially crucial pillar of support for stocks already trading at all-time highs.
US companies have announced $105 billion in planned share repurchases in the first seven days of February, surpassing the full-month tally in January.
It’s the strongest start to a February ever for announced buybacks and the second-best start to a year after 2023, according to data compiled by Birinyi Associates Inc.
Meantime, a survey conducted by 22V Research shows that 56% of the investors polled think economic growth will be stronger than consensus estimates in 2024.
That’s up from 35% two weeks ago.
Recession odds are down to 7%.
The tally also showed that tech is the “most-popular long” for the rest of 2024.
An index of sentiment among chief executive officers of US companies has turned positive for the first time in two years, according to the Conference Board.
Stocks have tended to rally after the first Fed rate cut, but the phase of the economic cycle matters, according to Ed Clissold at Ned Davis Research.
The strongest performance has come during soft landings, while the weakest has come when the economy entered recession less than a year after the first cut.
“Growth has outperformed value after first cuts — especially during slow cycles,” Clissold wrote in a note entitled: “Dear Jay: move slowly. Sincerely, the bulls.”
Big tech — the group that’s powered the equity resurgence — is bringing in more cash than ever before, priming the group to return money to shareholders and potentially adding fuel to a rally that’s already sent most of the group into record territory.
The five biggest technology companies that have reported earnings so far — Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc. and Meta Platforms Inc. — generated a record $139.5 billion of combined cash from operations in the quarter that ended on Dec. 31, according to data compiled by Bloomberg.
At these levels, the equity market appears overbought — but the fact is that many traders don’t want to miss out on continued gains.
That has prompted outsized interest in options contracts that provide upside exposure for minimal premium.
The premium in implied volatility of 3-month 10-delta calls to 40-delta calls hovers around its highest in a decade, as pointed out by Susquehanna International Group.
That relationship signals added demand for call options implying higher gains relative to those seeking more modest advances.
Increasingly, traders are turning to the cheap contracts to position for broad market advances without having to purchase pricey benchmarks.

Corporate Highlights:
* Walt Disney Co. reported better-than-expected earnings for its fiscal first quarter and issued an upbeat profit outlook for the year, giving Chief Executive Officer Bob Iger ammunition to deflect proxy challenges at its shareholder meeting this spring.
* Chip designer Arm Holdings Plc issued a surprisingly bullish earnings forecast, showing its push beyond smartphones is helping fuel growth.
* PayPal Holdings Inc. said it expects earnings to be flat this year as it continues to cut costs and streamline its operations.
* Harley-Davidson Inc. eked out a fourth-quarter profit that beat estimates as sales fell as the rugged American brand boost incentives to offset high-borrowing costs on slow-selling motorcycles.
* Under Armour Inc. raised its outlook for full-year earnings, with cost cuts in its turnaround effort making up for a continued decline in revenue.
* Philip Morris International Inc. forecast high single digit profit growth in 2024 as shipments of its Zyn nicotine pouches surge in the US, offsetting lower cigarette sales.
* Spirit Airlines Inc., fighting to preserve its acquisition by JetBlue Airways Corp., said revenue will increase this quarter more than analysts were expecting and that it has the liquidity needed to stand on its own even as concerns mount about its financial future.

Key events this week:
* 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 was little changed as of 4 p.m. New York time
* The Nasdaq 100 rose 0.2%
* The Dow Jones Industrial Average rose 0.1%
* The MSCI World index was little changed
Currencies
* The Bloomberg Dollar Spot Index rose 0.2%
* The euro was little changed at $1.0777
* The British pound was little changed at $1.2619
* The Japanese yen fell 0.7% to 149.27 per dollar
Cryptocurrencies
* Bitcoin rose 2.8% to $45,435.07
* Ether fell 0.3% to $2,423.82
Bonds
* The yield on 10-year Treasuries advanced three basis points to 4.15%
* Germany’s 10-year yield advanced four basis points to 2.35%
* Britain’s 10-year yield advanced six basis points to 4.05%
Commodities
* West Texas Intermediate crude rose 3.5% to $76.45 a barrel
* Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Carly Wanna, Alexandra Semenova, Allegra Catelli, Jessica Menton, Elena Popina, Michael Msika and Subrat Patnaik.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
The main thing is to keep the main thing the main thing. – Stephen Covey, 1932-2012.

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