July 24, 2023 Newsletter

Dear Friends,

Tangents: Happy Monday.

July 24, 1911: American explorer Hiram Bingham discovers Machu Picchu, the Lost City of the Incas.
Beginning of Mata Hari’s trial
Dutch-born dancer and courtesan Mata Hari, whose name became a synonym for the seductive female spy, went on trial this day in 1917, accused of spying for Germany, and was subsequently found guilty and shot by a firing squad. Go to article >>

Amelia Eargart, aviatrix, b. 1898.
Alexandre Dumas, writer, b. 1802.
Jennifer Lopez,b.1970.
‘Barbie’ breaks box-office records.  The movie raked in a stunning $155 million during its opening weekend, but not everyone is seeing it through rose-colored glasses. Read why some voices on the right are urging a boycott of the film.

A ‘gravity hole’ in the Indian Ocean has remained a mystery — until now.  Humans often think about Earth as a perfect sphere, but that’s far from the truth. Some spots on the planet — like this one — have a weaker gravitational pull, making Earth look more like a lumpy potato, according to scientists.

Jonas Vingegaard seals his second consecutive Tour de France victory.  With a wide smile, the Dane secured another victory on the Champs-Élysées in Paris.

Clearest-ever seafloor maps show deep-sea ‘Grand Canyon’ off US coast in stunning detail
A massive deep-sea ravine in the Pacific Ocean has been mapped out in greater detail than any other part of the world’s seafloor. Read More.

Scientists just made the largest quasicrystal ever – because one of them bet it couldn’t be done
The quasicrystal, a type of non-repeating crystal once deemed impossible, was made by jiggling thousands of metal balls in a tray for over a week. Read More.

Master copy of the Voyager Golden Record, designed as an audio postcard for intelligent aliens, is up for auction
Carl Sagan’s personal copy of the Voyager Golden Record contains 27 pieces of music and 22 minutes of sound meant to capture the beauty of life on Earth. Read More

PHOTOS OF THE DAY

Tynemouth, UK
The bad weather continues in some parts of the UK as waves crash over the pier at Tynemouth
Photograph: Owen Humphreys/PA

Mendoza, Argentina
A group of people, including relatives of passengers of a Uruguayan air force plane that crashed in the remote Andes mountains in the Argentine province of Mendoza, on the border with Chile, on 13 October 1972, with 45 people onboard including members of a rugby team, ride on horseback to the site of the accident
Photograph: Mariana Suárez/AFP/Getty Images

Rhodes, Greece
Smoke billows in the background of Kiotari village. Tens of thousands of people have fled blazes on the island of Rhodes, with many tourists scrambling to get home
Photograph: Spyros Bakalis/AFP/Getty Images
Market Closes for July 24^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1987, ZZZZ Best’s assets were sold at a bankruptcy auction for $62,000. Just months earlier, Barry Minkow’s carpet-cleaning company had a market value of roughly $300 million. But ZZZZ Best had virtually no customers, revenues or assets. Minkow, who had set up an elaborate system of phantom offices and phony account records, served five years in federal prison.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.2%, or 34.61 to 20,582.12 in Toronto. The index advanced to the highest closing level since May 9.
Canadian Natural Resources Ltd. contributed the most to the index gain, increasing 2.1%. Cenovus Energy Inc. had the largest increase, rising 2.7%.
Today, 111 of 228 shares rose, while 115 fell; 6 of 11 sectors were higher, led by energy stocks.
Insights
* This month, the index rose 2.1%
* The index advanced 8.4% in the past 52 weeks. The MSCI AC Americas Index gained 15% in the same period
* The S&P/TSX Composite is 1.3% below its 52-week high on Feb. 2, 2023 and 15.2% above its low on Oct. 13, 2022
* The S&P/TSX Composite is up 1.8% in the past 5 days and rose 6% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.5 on a trailing basis and 14.5 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.3% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.25t
* 30-day price volatility little changed to 10.05% compared with 10.04% in the previous session and the average of 10.86% over the past month
================================================================
|Index Points | | Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 29.0805| 0.8| 32/7
Financials | 6.8921| 0.1| 9/20
Information Technology | 2.9411| 0.2| 5/6
Real Estate | 2.5629| 0.5| 16/5
Materials | 0.3995| 0.0| 13/36
Health Care | 0.0835| 0.1| 2/2
Industrials | -0.0800| 0.0| 8/18
Utilities | -1.1968| -0.1| 7/9
Consumer Staples | -1.8604| -0.2| 7/4
Consumer Discretionary | -1.9001| -0.2| 9/6
Communication Services | -2.3263| -0.3| 3/2
================================================================
| | |Volume VS | | Index | | 20D AVG |YTD Change Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Canadian Natural Resources | 12.2000| 2.1| -15.7| 4.6
RBC | 10.0200| 0.8| -39.8| 3.7
Nutrien | 7.8780| 2.7| 42.8| -11.8
Couche-Tard | -2.5370| -0.7| -40.8| 12.9
Restaurant Brands | -3.2220| -1.4| -31.9| 15.6
TC Energy | -9.5870| -2.6| 45.1| -5.7

Related News headlines:
* Stocks Kick Off Busy Earnings Week With Mild Gains: Markets Wrap
* Canadian Stocks Gain, Led by Information Technology
* Alberta Oil Output Recover in June Post Maintenance, Fires: AER
* Nutrien Shares Rise As Wells Fargo Sees Growth Opportunity (1)
* Bayer FY Adjusted Ebitda Forecast Misses Estimates
US
By Rita Nazareth
(Bloomberg) — A pivotal week for markets started with small gains in stocks as traders braced for rate decisions from major central banks and a deluge of corporate earnings.
In the run-up to the Federal Reserve and European Central Bank’s gatherings, investors got a reminder about the side- effects of aggressive policy tightening. Disappointing data from both the US andeuro-area added to bets officials are close to ending their hiking cycles to prevent a recession. Aside from the economic picture, global companies with a combined $27 trillion in value were set to report results, including giants Microsoft Corp., LVMH and Samsung Electronics Co.
“This week will offer plenty of opportunity to test the stock-market rally that began on Oct. 12,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management.
“Traders will be seeking to gain further insight into the direction the markets are likely to take from here.”
The Dow Jones Industrial Average rose for an 11th straight day — its longest winning run since 2017. The S&P 500 traded near 4,550, while the Nasdaq 100 underperformed after a “special rebalance” that took effect Monday. Two-year US bond rates climbed as an auction drew the highest yield since 2007. The dollar was little changed. Bitcoin briefly fell below $29,000.
West Texas Intermediate crude topped $78 a barrel. Wheat and corn gained as Russia attacked one of Ukraine’s biggest Danube river ports.
Among the corporate highlights, Tesla Inc. advanced after disclosing strong sales outside the US and China. Apple Inc. gained as Bloomberg News reported the company is keeping its iPhone shipments steady despite the 2023 turmoil. AMC Entertainment Holdings Inc. climbed as a surprise court ruling Friday scuttled a stock conversion plan the cinema chain has now revised. Chevron Corp. rose on solid earnings.
The delayed impact of aggressive interest-rate hikes by global central banks, dwindling consumer savings and a “deeply troubling” geopolitical backdrop are poised to spur fresh market declines and renewed volatility, according to JPMorgan Chase & Co. strategist Marko Kolanovic. Kolanovic also noted that the stock-price reaction to earnings reports is expected to be muted as the market was strong coming into the second-quarter reporting season.
Investors have mostly shrugged off positive earnings surprises from companies that reported results so far, according to strategists at Bank of America Corp. Moves were on average 1.3 percentage points larger than implied by the options market, but the direction was skewed to the downside.
“This suggests increased positioning risk and good news having been priced in,” BofA strategists led by Savita Subramanian added.
To Chris Larkin at E*Trade from Morgan Stanley, tech may “hold the key” to the continuation of the near-term bullish enthusiasm of stock traders as big names get ready to report their quarterly numbers.
Indeed, the stakes are high for heavyweight technology firms, which have fueled an advance of over 40% for the Nasdaq 100 this year. The “big seven” — Apple Inc., Amazon.com Inc., Nvidia Corp., Meta Platforms Inc., Alphabet Inc., Tesla and Microsoft — now trade at a record premium to the bottom 493 stocks in the S&P 500, according to BofA’s Subramanian.
“We expect big tech earnings to be mixed and the real test will be for companies that have significant exposure to artificial intelligence as investors are eager to see if these companies can report strong enough results to support their significantly elevated share prices in recent months,” said James Demmert, chief investment officer at Main Street Research.
The S&P 500’s high valuation is reasonable and could rise further this year as laggards of the index join the surge in winners from artificial intelligence, according to Goldman Sachs Group Inc. strategists.
While the base-case scenario is for the S&P 500’s price-to- earnings ratio to shrink slightly to 19 times from the current level of about 20 by the end of 2023, the risks to valuations are now skewed to the upside, strategists led by David J Kostin said.
Meantime, Glenmede’s Global Expected Returns Model shows valuations on US large-cap equities currently sit at the 77^th percentile — which implies 22% downside if valuations were to revert to fair value.
“Recession beginning later this year or early next remains the base case, a likelihood which is not reflected in equity valuations,” said Jason Pride, chief of investment strategy and research at Glenmede.
The outlook for the world’s largest economy will likely hinge on the Fed’s willingness to tolerate inflation markedly higher than it would prefer. After taking a break from tightening last month, Chair Jerome Powell and his colleagues look locked in to raising interest rates by a quarter percentage point on Wednesday.
The big question facing policymakers and financial markets at this stage is what comes next.
“The market is pretty well signaling another 25-basis point rate hike is in the cards,” said George Mateyo, chief investment officer at Key Private Bank. “People are probably looking past the announcement itself and then trying to glean some read in terms of what happens later this year.”
Whether the Fed gives investors a reason to sell or there’s a big earnings disappointment this week, the market is ripe for a decline into the fall, according to Paul Nolte at Murphy & Sylvest Wealth Management.
“For now, that decline is not something to upset the longer-term trajectory of the market,” he noted.

Key events this week:
* US Conf. Board consumer confidence, Tuesday
* US new home sales, Wednesday
* FOMC rate decision, Fed Chair Powell news conference, Wednesday
* China industrial profits, Thursday
* ECB rate decision, Thursday
* US GDP, durable goods orders, initial jobless claims, wholesale inventories, Thursday
* Japan Tokyo CPI, Friday
* BOJ rate decision, Friday
* Eurozone economic confidence, consumer confidence, Friday
* US consumer income, employment cost index, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks
* The S&P 500 rose 0.4% as of 4 p.m. New York time
* The Nasdaq 100 rose 0.1%
* The Dow Jones Industrial Average rose 0.5%
* The MSCI World index rose 0.2%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro fell 0.6% to $1.1062
* The British pound fell 0.3% to $1.2817
* The Japanese yen rose 0.1% to 141.52 per dollar
Cryptocurrencies
* Bitcoin fell 3.4% to $29,121.49
* Ether fell 2.3% to $1,849.92
Bonds
* The yield on 10-year Treasuries advanced three basis points to 3.87%
* Germany’s 10-year yield declined four basis points to 2.43%
* Britain’s 10-year yield declined two basis points to 4.26%
Commodities
* West Texas Intermediate crude rose 2.4% to $78.92 a barrel
* Gold futures fell 0.5% to $1,994.80 an ounce
This story was produced with the assistance of Bloomberg Automation.

–With assistance from Brett Miller, Tassia Sipahutar, Sujata Rao and Isabelle Lee.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
A loving person lives in a loving world.  A hostile person lives in a hostile world:
everyone you meet is your mirror. -Ken Keyes, 1921-1995.

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