July 8, 2024, Newsletter

Dear Friends,

Tangents: Happy Monday.
Festa dos Tabuleiros, Portugal.

July 8, 1889: The Wall Street Journal was first published. Go to article >>

John D. Rockefeller, financier, b. 1839.
Elisabeth Kubler-Ross, writer, b. 1926.
Anjelica Huston, actress., b. 1951.
Anna Quindlen, writer, b. 1953.

Paris’ famous Moulin Rouge windmill gets its blades back
Paris’ iconic Moulin Rouge windmill has been fitted with new blades, nearly three months after they fell off the landmark back in April.

Archaeologists find marble god statue in ancient Roman sewer
Bulgarian archaeologists stumbled across this well-preserved marble statue depicting the Greek god Hermes

Tearful Lewis Hamilton wins British Grand Prix
The 39-year-old was emotional Sunday after securing another Grand Prix win. Read about his impressive victory on the rain-slicked track at Silverstone.

When your home becomes a tourist attraction
What happens when a private residence becomes an Instagram hot spot? Some residents told CNN what it’s like to own a home that is rich in history.

Cats love to meow at humans. Now we know why.
Meows are more than a cute sound — they’re also a window into the relationship between humans and their feline friends. Read More.

‘This is what drives the migraine headache’: Scientists uncover ‘missing link’ in why some migraines happen
A new mouse study uncovered a previously unknown route between the brain and peripheral nerves that could explain the link between aura symptoms and migraine headaches. Read More.

Forbidden black holes and ancient stars hide in these ‘tiny red dots’
The James Webb Space Telescope found “tiny red dots” in the early universe representing overgrown supermassive black holes and stars that are impossibly old for the infant cosmos. Read More.

PHOTOS OF THE DAY

Yamanote line trains passing each other at Takanawa Gateway station

Los Olivos, California, US
People play polo as the Lake Fire burns in Los Padres National Forest
Photograph: Mario Tama/Getty Images

​​​​​​​Syria
A youth gathers reeds harvested from the marshlands in Raqqa province
Photograph: Delil Souleiman/AFP/Getty Images
Market Closes for July 8^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1889, the first issue of The Wall Street Journal was published by Charles Henry Dow, Edward Davis Jones and Charles M. Bergstresser.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose 0.3% at 22,126.13 in Toronto.
The move follows the previous session’s decrease of 0.8%.
Constellation Software Inc/Canada contributed the most to the index gain, increasing 1.7%.
Lundin Gold Inc. had the largest increase, rising 5.3%.
Today, 156 of 226 shares rose, while 68 fell; 8 of 11 sectors were higher, led by financials stocks.
Insights
* The index advanced 12% in the past 52 weeks. The MSCI AC Americas Index gained 26% in the same period
* The S&P/TSX Composite is 1.9% below its 52-week high on May 21, 2024 and 18.4% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 1.1% in the past 5 days and rose 0.5% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 17.8 on a trailing basis and 15 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.1% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.51t
* 30-day price volatility rose to 11.65% compared with 11.63% in the previous session and the average of 10.96% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 47.2928| 0.7| 23/4
Consumer Staples | 11.7522| 1.2| 7/4
Information Technology | 11.0359| 0.6| 8/2
Real Estate | 7.5613| 1.7| 19/1
Consumer Discretionary | 7.0878| 0.9| 11/2
Communication Services | 3.3060| 0.5| 3/2
Utilities | 1.1932| 0.1| 11/4
Health Care | 0.8452| 1.3| 4/0
Industrials | -0.1126| 0.0| 19/9
Energy | -10.2910| -0.3| 22/17
Materials | -12.5709| -0.5| 29/23
================================================================
| | |Volume VS | YTD
| Index | | 20D AVG | Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Constellation Software | 9.5600| 1.7| -44.2| 23.2
RBC | 8.7990| 0.6| 29.0| 11.3
TD Bank | 7.9260| 0.9| 7.6| -11.4
Cameco | -4.6770| -2.3| 88.5| 16.4
Canadian National | -6.0020| -0.9| -35.1| -4.4
Teck Resources | -7.0450| -3.2| -16.9| 18.8
US
By Rita Nazareth
(Bloomberg) — Stocks closed at all-time highs in a cautious session that saw traders gearing up for Jerome Powell’s testimony to US lawmakers and the start of the earnings season.
With a mere 0.1% advance, the S&P 500 notched its 35^th record this year.
Some of the largest American banks will unofficially kick off the second-quarter reporting season Friday — and growth expectations are quite lofty.
Analysts’ upgrades to profit estimates have outnumbered downgrades.
At the same time, forecasts for 12-month forward earnings stand at an all-time high.
John Stoltzfus at Oppenheimer Asset Management said a robust earnings outlook and a resilient economy could support higher valuations.
He raised his year-end S&P 500 target to 5,900.
At Goldman Sachs Group Inc., Scott Rubner says the bar for corporate results is high — with lofty expectations already baked in.
“As earnings season kicks off this week, investors should be prepared to see some ‘choppiness,’ but the market will likely climb back up again once companies resume buybacks,” said Mark Hackett at Nationwide.
The S&P 500 topped 5,570.
Nvidia Corp. climbed as UBS Group AG raised its target.
More than 2,600 Boeing Co. 737 jets registered in the US will need to have their oxygen generators inspected.
United Airlines Holdings Inc. said another of its Boeing aircraft lost a main landing gear wheel while taking off.
Broadcom Inc. is borrowing $5 billion in the investment-grade market.
Shorter-term Treasuries underperformed longer ones.
Bitcoin slid on concern about possible sales of the token by creditors of the failed Mt. Gox exchange.
The lack of a clear winner in the French elections spurred speculation there’s unlikely to be major policy changes amid political gridlock.
Meantime, US President Joe Biden pledged to fellow Democrats he’ll remain in the presidential race.
Traders should brace for a correction in the stock market as uncertainty swirls around corporate earnings, Fed policy and the US presidential campaign, according to Morgan Stanley’s Mike Wilson.
The third quarter is “going to be choppy,” Wilson told Bloomberg Television.
“This rally has continued despite growing concerns about the economy, political uncertainty, sticky inflation and lack of clarity about timing of first rate cut,” said Megan Horneman at Verdence Capital Advisors. “Therefore, we would not rule out at least a 10% correction in the S&P 500 in the second half of the year. Especially when we see future earnings expectations get more realistic.”
For the past two years, a small cohort of companies have contributed to the bulk of the gauge’s return: The S&P 500 has gained roughly 55% since the lows of October 2022 — but 58% of that advance has come from just the top 10 stocks in the benchmark, according to data compiled by Bloomberg.
“S&P 500 earnings growth will likely continue for the next year at a respectable pace,” said Nicholas Colas at DataTrek.
“Moreover, those improvements should be broad-based rather than in just a few tech-heavy sectors. All this adds up to continued strength in US large caps.”
The S&P 500 is in its 11th-longest stretch without a 2% down day since 1928, according to Ed Clissold at Ned Davis Research.
“The end of previous long streaks has been followed by mixed returns, but not the end of the bull market, on average,” he noted. “Never (OK, rarely) short a dull market.”
Clissold also noted that this is one of the “hardest bull markets” for stock pickers in the last 50 years.
“What makes the current cycle unique is that so few stocks are driving returns, providing fewer opportunities for stock pickers to outperform than during previous low vol streaks,” he concluded.
Aside from the corporate world, traders will continue focused on the Federal Reserve outlook.
Powell will face pressure this week from lawmakers growing impatient for the Fed to cut rates and others who are unhappy with its latest plan to boost capital requirements for Wall Street lenders.
The Fed chair heads to Capitol Hill on Tuesday and Wednesday for his semiannual testimony.
Also the June consumer price index data due Thursday will be a highlight.
The so-called core CPI, which is seen as a better measure of underlying inflation, is expected to show the smallest back-to-back gains since August, a pace more palatable for Fed officials.
“While the CPI release will be key, we will be looking for signs from Powell that the Fed is edging closer to a decision to cash in its chips and move in September provided ongoing inflation news broadly confirms that the run-rate has stepped back down,” said Krishna Guha at Evercore.
US consumers’ near-term inflation expectations fell for a second straight month, a Fed Bank of New York survey showed.
If US inflation moderates without collateral damage to the economy, the resulting Fed easing cycle could be a tailwind for risk assets, according to Jason Pride and Michael Reynolds at Glenmede.
“Synchronized global easing cycles have historically been a bullish signal for equities in the short-to-medium term,” they noted.
The S&P 500 has posted forward returns of 9.9% in the 12 months immediately following periods of 40–60% of global central banks easing policy, Glenmede said.
That number increases to 18.7% in the 80–100% tranche — suggesting that equities could benefit if more central banks hop on the easing bandwagon.
“The Fed is closing in on rate cuts, as the US economy moderates,” according to Principal Asset Management strategists.
“We expect cuts in September and December, but that will require additional evidence of a slowdown.”
Bond markets appear to be beginning the back half of 2024 with a long bias, as economic data weakens and we approach rate cuts in the fall, according to Thomas Tzitzouris at Strategas.
Despite the long positioning, there are preliminary signs of shorts coming back, he noted.
“When we break down the positioning data, we see a market that despite showing a long bias in anticipation of cuts, is not fully convinced this will occur with shorts slowly returning to the market,” Tzitzouris said.

Corporate Highlights:
* Boeing Co. is discussing a potential path forward with the US Defense Department to preserve its government contract business after the company agreed to plead guilty to a criminal charge tied to two fatal crashes of its 737 Max jet, according to a person familiar with the discussions.
* Microsoft Corp. told employees in China that starting in September they’ll only be able to use iPhones for work.
* Exxon Mobil Corp. expects refining profits to drop due to lower margins across the industry, reducing earnings estimates for the second quarter.
* Southwest Airlines Co., which is facing demands for sweeping leadership and business changes from activist Elliott Investment Management, has named aviation industry veteran Rakesh Gangwal to its board.
* Airbus SE logged its best monthly deliveries so far this year as the plane maker works to resolve its supply-chain woes and pares back its order backlog.
* Eli Lilly & Co. agreed to buy U.S. gut-drug maker Morphic Holding Inc. for about $3.2 billion.
* Devon Energy Corp. agreed to acquire the Williston Basin business of EnCap Investments LP’s Grayson Mill Energy for $5 billion.
* Paramount Global agreed to merge with Skydance Media in a deal that hands control of the storied Hollywood studio to producer David Ellison.
* Lucid Group Inc. beat expectations for quarterly production and deliveries, shaking off concerns about a slowdown in the electric-vehicle market.

Key events this week:
* China aggregate financing, money supply, new yuan loans, Tuesday
* Jerome Powell delivers semi-annual testimony to the Senate Banking Committee, Tuesday
* US Treasury Secretary Janet Yellen testifies to the House Financial Services Committee, Tuesday
* Fed’s Michael Barr and Michelle Bowman speak, Tuesday
* China PPI, CPI, Wednesday
* Jerome Powell testifies to the House Financial Services Committee, Wednesday
* Fed’s Austan Goolsbee, Michelle Bowman and Lisa Cook speak, Wednesday
* US CPI, initial jobless claims, Thursday
* Fed’s Raphael Bostic and Alberto Musalem speak, Thursday
* China trade, Friday
* University of Michigan consumer sentiment, US PPI, Friday
* Citigroup, JPMorgan and Wells Fargo’s earnings, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.1% as of 4 p.m. New York time
* The Nasdaq 100 rose 0.2%
* The Dow Jones Industrial Average was little changed
* The MSCI World Index was little changed
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro fell 0.1% to $1.0824
* The British pound was little changed at $1.2809
* The Japanese yen was little changed at 160.79 per dollar
Cryptocurrencies
* Bitcoin fell 1.4% to $56,460.6
* Ether rose 0.2% to $3,004.78
Bonds
* The yield on 10-year Treasuries was little changed at 4.27%
* Germany’s 10-year yield declined two basis points to 2.54%
* Britain’s 10-year yield declined one basis point to 4.11%
Commodities
* West Texas Intermediate crude fell 1.1% to $82.25 a barrel
* Spot gold fell 1.4% to $2,359.27 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Cecile Gutscher, Juliette Laffont, Catherine Bosley, Matthew Burgess, Vildana Hajric, Sagarika Jaisinghani, Alexandra Semenova and Natalia Kniazhevich.

Have a lovely evening everyone.

Be magnificent!
As ever,

Carolann
Never confuse a single failure with a  final defeat. –F. Scott Fitzgerald, 1896-1940.

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