July 18, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday Eve.

July 18, 1969: A car driven by Sen. Ted Kennedy, D-Mass., plunged off a bridge on Chappaquiddick Island near Martha’s Vineyard. His passenger, 28-year-old Mary Jo Kopechne, died. Go to article >>
July 18, 1936: Spanish Civil War begins.

Nelson Mandela, S. African leader, b. 1918.
Hunter S. Thompson, writer, b. 1939

‘Rare daylight fireball’ meteor over NYC created loud boom near Statue of Liberty
Reports of a daylight fireball and loud booms across New York City and New Jersey suggest a meteor entered the atmosphere above the city and traveled west at 38,000 mph, NASA says. Read More.

Earth is wobbling and days are getting longer — and humans are to blame
New studies, which utilized AI to monitor the effects of climate change on Earth’s spin, have shown that our days are getting increasingly longer and that our planet will get more wobbly in the future. These changes could have major implications for humanity’s future. Read More.

Astronomers want to change how we define a planet — again
Astronomers are proposing a new, more quantitative definition of what makes a planet. The new definition looks more directly at the object’s mass — but it would still leave Pluto out of the running. Read More.

Magic mushrooms temporarily ‘dissolve’ brain network responsible for sense of self
Psilocybin, the active ingredient in magic mushrooms, reduces the synchronicity within a brain network responsible for reflection and the sense of self. Read More.

Mirage Hotel and Casino in Las Vegas closes after 34 years
The iconic resort on the Las Vegas Strip officially closed on Wednesday. It will reopen in 2027 as Hard Rock Las Vegas, with a soaring hotel tower shaped like a guitar.

Mirage Hotel and Casino in Las Vegas closes after 34 years
The iconic resort on the Las Vegas Strip officially closed on Wednesday. It will reopen in 2027 as Hard Rock Las Vegas, with a soaring hotel tower shaped like a guitar.

The world is drinking less wine
One of the world’s biggest booze makers is ditching most of its wine brands as consumption is falling globally.

RIP Bob Newhart.

PHOTOS OF THE DAY

London, England
A collection of paintings titled Tarot by the actor Johnny Depp are displayed at Castle Fine Art. The paintings reflect chapters in his personal journey
Photograph: Scott A Garfitt/Invision/AP

New York, US
Lightning strikes the water near One World Trade Center with midtown and lower Manhattan in the background, seen from Bayonne, New Jersey
Photograph: Craig T Fruchtman/Getty Images

Antalya, Turkey
‘A boat carrying tourists leaves the Roman harbour against a backdrop of the Western Taurus Mountains.’
Photograph: Harvey Wasserman
Market Closes for July 18^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1968, Robert Noyce and Gordon Moore established N.M. Electronics to miniaturize electronic circuitry onto silicon chips. The Mountain View, Calif.-based firm generated $2,672 in revenue in its first year. It would soon change its name to Intel.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 0.5%, or 124.41 to 22,726.76 in Toronto.
Shopify Inc. contributed the most to the index decline, decreasing 2.4%.
Hudbay Minerals Inc. had the largest drop, falling 7.5%.
Today, 151 of 226 shares fell, while 71 rose; 8 of 11 sectors were lower, led by materials stocks.
Insights
* So far this week, the index was little changed
* The index advanced 12% in the past 52 weeks. The MSCI AC Americas Index gained 21% in the same period
* The S&P/TSX Composite is 1.2% below its 52-week high on July 16, 2024 and 21.6% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 0.8% in the past 5 days and rose 5.2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.4 on a trailing basis and 15.6 times estimated earnings of
its members for the coming year
* The index’s dividend yield is 3% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.63t
* 30-day price volatility rose to 11.23% compared with 11.10% in the previous session and the average of 11.06% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | -57.9855| -2.0| 8/44
Industrials | -21.8835| -0.7| 7/21
Information Technology | -21.6823| -1.2| 1/9
Financials | -13.5705| -0.2| 8/18
Consumer Discretionary | -12.6677| -1.5| 2/11
Utilities | -3.2151| -0.4| 6/9
Real Estate | -1.6902| -0.3| 7/13
Health Care | -1.0824| -1.6| 1/2
Communication Services | 1.5624| 0.2| 3/1
Energy | 2.6216| 0.1| 23/18
Consumer Staples | 5.1838| 0.5| 5/5
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Shopify | -18.1700| -2.4| 39.9| -16.1
Teck Resources | -10.3600| -4.9| 34.9| 12.6
Canadian National | -9.1630| -1.4| -15.6| -0.3
Fairfax Financial | 3.2930| 1.4| -38.5| 31.4
RBC | 4.2510| 0.3| 111.2| 14.7
Couche-Tard | 4.7760| 1.2| -50.6| 5.4
US
By Rita Nazareth
(Bloomberg) — A weeklong decline in mega-cap technology stocks broadened Thursday to encompass small caps and financial shares as signs of economic weakness overwhelmed optimism over rate cuts.
Almost every major group in the S&P 500 fell.
A rally that drove the gauge to almost 40 record highs this year spurred expectations of a pullback or at least consolidation.
And those calls have grown after a wide array of companies soared in just a few days, outperforming the leaders of the bull market — big tech.
Conviction the central bank is poised to ease back on its battle to subdue inflation has prompted a retreat from mega-cap stocks, which emerged during the Federal Reserve’s tightening cycle as a de-facto safety trade due to their steady profits and pristine balance sheets.
In turn, money had been flowing to a broader swath of industrial and staples firms for whom high financing costs posed a bigger impediment.
While every data point that signals the Fed is close to cutting rates would bolster that trade, it wasn’t so much the case on Thursday after a surge in jobless claims showed the US labor market continued to cool.
“Investors have quickly moved from ‘over-crowded’ mega-cap leaders and put money to work in “down-cap” opportunities,” said Craig Johnson at Piper Sandler. “While this makes the case for a broadening bull market, prudence favors pullbacks at confirmed support levels amid improved breadth signals.”
The S&P 500 fell to around 5,545.
Mega-caps were mixed, with Nvidia Corp. up and Apple Inc. down.
The Russell 2000 of smaller firms dropped about 2% after recently hitting its most-overbought level since 2017.
The Dow Jones Industrial Average halted a six-day winning streak.
In late hours, Netflix Inc. extended its lead over the streaming competition, adding 8.05 million customers in the second quarter, crushing its own forecasts and those of Wall Street.
In regular trading, Taiwan Semiconductor Manufacturing Co. closed with a small gain despite a bullish outlook.
Domino’s Pizza Inc. fell the most since 2008 after it unexpectedly suspended its store growth target.
D.R. Horton Inc. hit a record high on solid results.
Treasury 10-year yields rose four basis points to 4.20%.
The euro dropped on bets the European Central Bank will cut rates in September.
In just a few days, the Russell 2000 rose more than 10%, with most of the rally coming after Thursday’s cooler inflation data bolstered bets on rate cuts.
Small caps notched their best performance over their larger peers in a five-day period ever, Jim Bianco, founder of his namesake research firm, said in a recent X post.
He tracked the difference between the Russell 2000 and Russell 1000 since 1978.
To Dan Wantrobski at Janney Montgomery Scott, the recent “rotation” pushed the broader markets into some moderately overbought territory on a short-term basis.
This alongside ongoing extended conditions in leadership areas renders them vulnerable to potential consolidation over the short run, he noted.
“As pundits start to jump on the ‘rotation is real’ bandwagon, we are cognizant of the threat of potential bull traps ahead,” Wantrobski said. “As we noted last week when the change in trend first began, this rotation is in its very early
stages, and cannot yet be confirmed as a longer-term investment
theme in our opinion. So while we are encouraged by the broadening out of US equity markets most recently, we want to be mindful of any false signals.”
“Certainly, some digestion of the rotation is required after the massive moves of the past trading week,” said Tom Essaye at the Sevens Report. “But whether the rotation can continue will be determined by economic data and earnings.”
While the rotation could continue for weeks as economic data remains mostly “Goldilocks” and tech is still “over owned,” Essaye is not in favor of aggressive allocations to cyclicals for anything other than tactical capital.
“I do remain concerned about economic growth,” he said.  “While the market is convinced lower rates will prevent a slowdown, corporate earnings and Fed commentary continue to imply investors are too complacent when it comes to slowdown risks,” Essaye said.
“As the Fed embarks on a rate cutting cycle, markets tend to cheer it initially and even for a short period after the cuts begin,” said Liz Young Thomas at SoFi. “But if that cutting cycle occurs in concert with slowing economic data,
disappointing earnings, or a quick compression in multiples, small-caps would likely lose steam quickly.”
That’s not to mention, the Fed typically cuts rates late in the economic cycle, not early in the cycle when small-caps tend to have their moment in the spotlight, she noted.
“In the near-term, this rotation into smalls can continue.  Markets are looking forward to easier monetary conditions, and they’re likely to get them this fall. The question is whether that will be followed by a slow and steady cooling in inflation and jobs, or a quick and painful one,” she concluded.

Corporate Highlights:
* SunPower Corp. plunged after the solar company told dealers it would no longer support new installations and was halting shipments.
* PNC Financial Services Group Inc., U.S. Bancorp and Citizens Financial Group Inc. are selling bonds on Thursday, joining the biggest Wall Street banks in tapping the investment-grade debt market after reporting quarterly earnings.
* Apple Inc. is having discussions about licensing more films from major Hollywood studios as it looks to bolster its Apple TV+ streaming service, people familiar with the matter said.
* US shoppers spent $14.2 billion online during Amazon.com Inc.’s 48-hour Prime Day sale, up 11% from a year ago and in line with estimates, according to Adobe Inc.
* Warner Bros. Discovery Inc. is considering separating its streaming and studio businesses from legacy TV, one of several options intended to boost its share price, the Financial Times reported.
* Infosys Ltd. raised its sales forecast for the year in a sign that clients are gradually beginning to boost technology spending, encouraged by a resilient global economy.
* Ford Motor Co. will invest $3 billion to build its highly profitable Super Duty F-Series pickup truck at a plant in Ontario, Canada, shifting focus at the site after previously delaying plans for electric sport utility vehicle.

Key events this week:
* Japan CPI
* Fed’s John Williams, Raphael Bostic speak, Friday
* Canada retail sales

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.8% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.5%
* The Dow Jones Industrial Average fell 1.3%
* The MSCI World Index fell 0.8%
Currencies
* The Bloomberg Dollar Spot Index rose 0.5%
* The euro fell 0.4% to $1.0898
* The British pound fell 0.5% to $1.2946
* The Japanese yen fell 0.7% to 157.37 per dollar
Cryptocurrencies
* Bitcoin fell 1.6% to $63,515.8
* Ether fell 0.4% to $3,401.64
Bonds
* The yield on 10-year Treasuries advanced four basis points to 4.20%
* Germany’s 10-year yield advanced one basis point to 2.43%
* Britain’s 10-year yield declined one basis point to 4.06%
Commodities
* West Texas Intermediate crude fell 0.8% to $82.21 a barrel
* Spot gold fell 0.7% to $2,442.61 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao and John Viljoen.
Have a lovely evening.

Be magnificent!

As ever,

Carolann
Life isn’t about finding yourself.  Life is about creating yourself. –George Bernard Shaw, 1856-1950.

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