July 19, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday.  Full moon this weekend!

July 19, 1870: The French emperor Napoleon III declares war on Prussia, beginning the Franco-German War.
July 19,1979: Nicaragua Liberation Day
July 19,1980: The Summer Olympics began in Moscow with dozens of nations boycotting because of Soviet military intervention in Afghanistan. Go to article >>

Charles Mayo, surgeon, b. 1865
Edgar Degas, artist, b. 1834

A dangerous hobby: Couple enjoys illegally scaling the world’s tallest buildings together
A Netflix documentary shows a pair of rooftoppers climbing impossible heights while navigating their own romantic ups and downs.

Even if your kids roll their eyes, keep making jokes
The kind of jokes parents make are sometimes stereotyped as corny, but they may be helpful in raising happy, connected children, according to a new study

Greece shuts Acropolis
The country temporarily shut down its biggest cultural attraction as tourists and residents in southern Europe struggle to stay cool in extreme heat.

‘ChatGPT moment for biology’: Ex-Meta scientists develop AI model that creates proteins ‘not found in nature’
The ESM3 model can ‘write’ new proteins from scratch, opening up new possibilities for synthetic biology.  Read More.

1,800-year-old ring depicting Roman goddess discovered by ancient quarry in Israel
A 13-year-old boy hiking in Haifa discovered a Roman-era ring with a depiction of Minerva, the goddess of war and wisdom. Read More.

Rock carvings of ancient Egyptian pharaohs found underwater near Aswan
Archaeologists discovered rock carvings featuring several pharaohs during an underwater expedition near Aswan, Egypt.  Full Story: Live Science (7/18)

PHOTOS OF THE DAY

Bees in their hive on the roof of a house in Havana, Cuba
Photograph: Alexandre Meneghini/Reuters

Norfolk, UK
‘I nearly didn’t get up for dawn (3am start) as the sunrise looked bland, but then soon after sunrise clouds appeared and provided a spectacular sunrise in Cromer. The pile of rocks are the new sea defences going in.’
Photograph: David Eberlin

​​​​​​​Maryland, US
‘It was sunset on Smith Island, in the Chesapeake Bay. I crouched down to capture the brown pelicans as they rested on a sandbar.’
Photograph: Lorraine Woellert
Market Closes for July 19^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1990, six IPOs were issued in a single day, setting a Wall Street record. The companies, including Command Security and In-Store Advertising, raised a total of $100 million.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the third day, dropping 0.2%, or 36.37 to 22,690.39 in Toronto.
Royal Bank of Canada contributed the most to the index decline, decreasing 0.7%. Ballard Power Systems Inc. had the largest drop, falling 4.0%.
Today, 134 of 226 shares fell, while 86 rose; 7 of 11 sectors were lower, led by financials stocks.
Insights
* So far this week, the index was little changed
* The index advanced 11% in the past 52 weeks. The MSCI AC Americas Index gained 19% in the same period
* The S&P/TSX Composite is 1.3% below its 52-week high on July 16, 2024 and 21.4% above its low on Oct. 27, 2023
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.3 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$3.61t
* 30-day price volatility fell to 10.75% compared with 11.23% in the previous session and the average of 11.08% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -28.3443| -0.4| 7/20
Materials | -10.2447| -0.4| 13/39
Energy | -4.1658| -0.1| 11/27
Communication Services | -2.8265| -0.4| 0/5
Industrials | -2.5586| -0.1| 10/16
Utilities | -2.0945| -0.2| 3/12
Consumer Discretionary | -1.8825| -0.2| 6/7
Health Care | 0.6505| 1.0| 3/1
Real Estate | 1.7485| 0.4| 15/4
Information Technology | 5.0409| 0.3| 9/1
Consumer Staples | 8.3043| 0.8| 9/2
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
RBC | -10.9700| -0.7| 141.6| 13.9
Canadian Natural Resources | -8.9900| -1.2| -59.5| 11.3
Bank of Nova Scotia| -6.5300| -1.2| -64.3| -0.5
Teck Resources | 3.7630| 1.9| -23.1| 14.7
Enbridge | 6.3880| 0.9| 45.8| 5.2
TC Energy | 8.1920| 2.0| -59.5| 9.0
US
By Rita Nazareth
(Bloomberg) — Stocks fell at the end of a wild week, with results from technology giants set to arrive at a critical moment on Wall Street.
Most groups in the S&P 500 dropped Friday, with the gauge having its worst week since April.
That’s after a “rotation” that saw investors trimming positions on this year’s winners in favor of laggards.
Underpinning that trade were bets the 2024 rally would broaden out of mega-caps as the Federal Reserve cuts rates.
The swift repositioning spurred calls for a pullback that engulfed various sectors alongside tech ahead of the industry’s earnings.
“Next week is important for the near-term trajectory of the stock earnings, with many mega-cap tech companies reporting,” said Glen Smith at GDS Wealth Management. “If we were to see the powerful combination of strong tech earnings and softening inflation, that could reverse the market’s recent weakness and spark a new leg higher.”
After the selloff, the “Magnificent Seven” cohort of mega-caps ended the week with a 5% slide.
Within the overall tech space, losses have been more pronounced in chipmakers.
A closely watched gauge of semiconductors like Nvidia Corp. and Intel Corp. sank almost 9%.
Even as investors cooled down on the rotation trade, small caps climbed over 1.5% in the span.
The S&P 500 dropped to around 5,500 Friday.
The Nasdaq 100 slid about 1%.
The Russell 2000 Index of smaller firms fell 0.6%.
Behind a massive IT failure that grounded flights, upended markets and disrupted corporations around the world was cybersecurity company CrowdStrike Holdings Inc.
Its stock tumbled as much as 15% before paring losses.
Aside from a slew of earnings next week, traders will be looking at key economic reports including the Fed’s preferred price gauge, which is expected to keep bets alive on a September rate cut.
Still, Treasury yields edged up across the curve Friday.
“Economic data has softened and this supports the case for easier monetary policy to come,” said Cayla Seder at State Street. “While lower rates are a good thing for small caps who are hurt more by higher rates, we aren’t convinced this signals a major turning point yet.”
George Cipolloni at Penn Mutual Asset Management says part of the recent rotation was due to money flowing from an overly concentrated market and into unloved, undervalued sectors.
“I do believe that overly concentrated markets can be a precursor for a more volatile market,” he said. “It only takes one big earnings miss or one negative headline from a highly \weighted company to take the major indexes down.”
Tesla Inc. and Alphabet Inc. will be the first of the “Magnificent Seven” to report earnings on Tuesday.
Analysts will likely press Elon Musk’s electric-vehicle giant on the progress of its plans for robo-taxis.
And investors will delve into the details of Google’s parent revenue boost from artificial intelligence.
After that, traders will have to wait until the following week — when Microsoft Corp., Meta Platforms Inc., Amazon.com Inc. and Apple Inc. report.
Earnings from Nvidia will only come out in late August.
“For the first time since 2022, S&P 500 earnings may not be laser-focused on just technology,” Bloomberg Intelligence strategists led by Gina Martin Adams wrote this month. “While forecasts for the Magnificent Seven remain robust, their earnings are expected to slow in the second quarter — just as the rest of the S&P 500 may finally post their first year-on-year growth in at least five quarters.”
There’s a risk of a setback for the equities this summer, according to Goldman Sachs Group Inc. strategists, who say the market is more likely to see a correction than a bear market in the second half.
That could result from “the combination of weaker growth data, already more dovish central bank expectations and rising policy uncertainty into the US elections,” strategists led by Christian Mueller-Glissmann wrote.
Investors have flocked to US equities as they grew more certain the Fed will cut rates by September and Donald Trump will win the US presidential election, according to Bank of America Corp. strategists.
US equity funds absorbed about $45 billion — the fourth-largest inflow on record — in the week through Wednesday, a team led by Michael Hartnett wrote in a note, citing EPFR Global data.
Small-cap funds had $9.9 billion of inflows, the second-largest ever, while large-cap funds received $27.4 billion.
Hartnett also said its likely stocks will slide after the Fed rate cut, calling it a “buy rumor, sell fact” opportunity.
His team is also bullish on bonds as he expects any new tariffs enacted by Trump over the next 12 months to be “deflationary than inflationary,” as opposed to market expectations.
After spending two months unloading the best-performing stocks in the market, hedge funds are now underweight technology, media and telecom by the most on record.
Their net leverage, which is often viewed as a barometer of risk appetite, fell to 54% in early July, the lowest level since January, according to Goldman Sachs Group Inc.’s prime brokerage desk.
This, however, is not a bearish trade.
Rather, the so-called smart money is gearing up for a wild presidential campaign, and the funds want cash ready to be deployed immediately as stock volatility rises and share prices start to swing.

Corporate Highlights:
* American Express Co. said it’s planning to increase spending on marketing even as billings growth on the company’s credit cards slowed in the second quarter.
* Nippon Steel Corp. has hired former US Secretary of State Mike Pompeo to help complete a proposed purchase of United States Steel Corp., a deal facing bipartisan opposition from Donald Trump and President Joe Biden.
* SLB and Halliburton Co. said they see strong international demand for crude drilling after posting earnings that met or beat forecasts, supporting their shift into overseas markets.
* SunPower Corp. plunged as Guggenheim Securities cut the solar equipment firm’s price target to zero and said the stock may soon be delisted.
* Eli Lilly & Co.’s Mounjaro gained Chinese regulatory approval for weight less than a month after a similar therapy from Novo Nordisk A/S, fueling competition in a nation that’s among the world’s most severely hit by obesity.

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.7% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.9%
* The Dow Jones Industrial Average fell 0.9%
* The MSCI World Index fell 0.8%
Currencies
* The Bloomberg Dollar Spot Index rose 0.2%
* The euro fell 0.2% to $1.0880
* The British pound fell 0.3% to $1.2911
* The Japanese yen was little changed at 157.50 per dollar
Cryptocurrencies
* Bitcoin rose 5.1% to $67,073.76
* Ether rose 2.8% to $3,511.22
Bonds
* The yield on 10-year Treasuries advanced three basis points to 4.24%
* Germany’s 10-year yield advanced four basis points to 2.47%
* Britain’s 10-year yield advanced six basis points to 4.12%
Commodities
* West Texas Intermediate crude fell 3.1% to $80.28 a barrel
* Spot gold fell 1.9% to $2,398.73 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao, Isabelle Lee, Farah Elbahrawy, Henry Ren, Natalia Kniazhevich, Divya Patil and Richard Henderson.
Have a wonderful weekend everyone.

Be magnificent!

As ever,

Carolann
We are face to face with our destiny and we must meet it with a high and resolute courage. For us is the life of action, of strenuous performance of duty; let us live in the harness, striving mightily; let us rather run the risk of wearing out than rusting out. – Theodore Roosevelt, 1858-1919.

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