June 12, 2024 Newsletter

Dear Friends,

Tangents: King Kamehameha Day, Hawaii.

June 11, 1817: the first predecessor of the bicycle (the Laufmaschine) is demonstrated.  German inventor Karl Drais completed a 14 km test run in less than an hour.

Richard Strauss, composer, b.1964.
Jacques Cousteau, undersea explorer, b. 1910.

Hundreds of centuries-old coins unearthed in Germany likely belonged to wealthy 17th-century mayor
Construction workers have unearthed a collection of 285 silver coins hidden in a trench. Read More.

Evidence of more than 200 survivors of Mount Vesuvius eruption discovered in ancient Roman records
After Mount Vesuvius erupted, survivors from the Roman cities of Pompeii and Herculaneum fled, starting new lives elsewhere. Read More.

Noise-canceling headphones can use AI to ‘lock on’ to somebody when they speak and drown out all other noises
Using only a small embeddable computer, microphone-equipped consumer headphones can block out all environmental sounds apart from a single target voice — even if it moves around. Read More.

‘Physics itself disappears’: How theoretical physicist Thomas Hertog helped Stephen Hawking produce his final, most radical theory of everything
Theoretical physicist Thomas Hertog tells us how he collaborated with Stephen Hawking on his final theorem — a Darwinian revolution in physics that explains the origin of time.  Full Story: Live Science (6/11)

7 potential ‘alien megastructures’ spotted in our galaxy are not what they seem
Scientists recently identified seven stars in the Milky Way that could potentially be gigantic alien structures called Dyson spheres. New research proposes an alternative explanation: Those are just cosmic “hot DOGs” in disguise.
Read More.

2024 James Beard Award winners announced
The Oscars of the food world — the James Beard Awards — were handed out Monday night. See the chefs and restaurants that received top honors.

What science says about blue-light blocking glasses and eye exercises.
There is a lack of evidence that eye exercises can improve vision, according to medical experts. Here’s what works

Vintage action figure fetches $525,000 at auction
An unreleased “Star Wars” action figure from 1979 has become the most valuable vintage toy ever sold at auction
Everything Apple announced at its big AI event
Apple introduced a suite of artificial intelligence tools for its various products, including iPhones, iPads, Macs and more. Here are the highlights.

PHOTOS OF THE DAY

Van, Turkey
Bathers visit an artificial waterfall at the end of the channel used for water discharge at Zernek Dam where the water level has reached 100% due to recent rains
Photograph: Anadolu/Getty Images

New York, US
Pedestrians cross a street at sunset in Manhattan
Photograph: Charly Triballeau/AFP/Getty Images

​​​​​​​Full steam ahead on the Snowdon Mountain Railway – in pictures
Photograph: Guardian photographer Christopher Thomond
Market Closes for June 11^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1930, New York Stock Exchange President Richard Whitney tried to instill confidence in the markets by buying 60,000 shares of U.S. Steel at $160 a share. It sunk to $21 a share within two years.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.8% at 21,887.34 in Toronto.
The index dropped to the lowest closing level since May 2 after the previous session’s increase of 0.3%.
Royal Bank of Canada contributed the most to the index decline, decreasing 0.9%.
Advantage Energy Ltd. had the largest drop, falling 6.1%.
Today, 181 of 222 shares fell, while 39 rose; 10 of 11 sectors were lower, led by financials stocks.
Insights
* This quarter, the index fell 1.3%
* The index advanced 10% in the past 52 weeks. The MSCI AC Americas Index gained 24% in the same period
* The S&P/TSX Composite is 3% below its 52-week high on May 21, 2024 and 17.1% above its low on Oct. 27, 2023
* The S&P/TSX Composite is down 0.4% in the past 5 days and fell 1.9% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 17.7 on a trailing basis and 14.9 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$3.5t
* 30-day price volatility fell to 10.72% compared with 11.22% in the previous session and the average of 9.84% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -73.1273| -1.1| 1/26
Materials | -40.4745| -1.5| 6/43
Energy | -28.6518| -0.7| 8/32
Industrials | -16.3051| -0.5| 5/22
Utilities | -8.5891| -1.0| 2/13
Consumer Staples | -5.6380| -0.6| 4/7
Real Estate | -4.3298| -1.0| 2/18
Consumer Discretionary | -4.0014| -0.5| 3/10
Information Technology | -1.5830| -0.1| 4/5
Health Care | -1.1201| -1.9| 0/4
Communication Services | 1.4055| 0.2| 4/1
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
RBC | -13.0100| -0.9| -52.5| 8.1
Cameco | -11.8600| -5.3| 33.8| 22.3
Nutrien | -9.2150| -3.5| 3.5| -2.0
BCE | 1.4700| 0.5| 33.4| -10.2
Canadian Natural Resources | 1.7290| 0.2| 242.4| 12.7
Shopify | 8.4620| 1.2| -6.9| -14.9
US
By Rita Nazareth
(Bloomberg) — Stocks and bonds lost steam on the eve of a key US jobs reading that will help shape the outlook for the Federal Reserve’s next steps.
Equities stalled near all-time highs as traders refrained from big bets ahead of the data.
A 22V Research survey shows there’s no consensus about the market reaction — with 36% of investors betting on a “risk-off” move, 33% saying “risk-on” and 31% “negligible/mixed.” Treasuries wavered.
The euro rose as the European Central Bank raised inflation forecasts after cutting rates.
US PREVIEW: Nonfarm Payrolls and Unemployment to Rise Together In the run-up to the payrolls reading, Wall Street waded through a slew of data.
Jobless claims topped estimates, labor costs increased by less than previously reported and the trade deficit widened.
Friday’s report is expected to show the US added 180,000 jobs in May while the unemployment rate held steady.
“A slowing in the job market, and even an increase in unemployment, should be welcome to the extent that it alleviates some upwards pressure on inflation,” said Chris Zaccarelli at Independent Advisor Alliance. “But we are aware that too much weakness in the labor market and in the economy could eventually prove to be an even greater threat to markets than inflation.”
The S&P 500 was little changed after notching its 25th record in 2024.
The US is opening antitrust investigations into Microsoft Corp. and Nvidia Corp. over their dominance of artificial intelligence, according to people familiar with the matter.
GameStop Corp. surged as Keith Gill, known as “Roaring Kitty,” scheduled a YouTube live stream for June 7 at 12 p.m. New York.
US 10-year yields fluctuated near 4.29%.
Swap markets continued to pencil in the start of the Fed rating cut in November, with a strong likelihood of another reduction in December.
“We look for payrolls to continue to lose momentum,” said Oscar Munoz and Gennadiy Goldberg at TD Securities. “Markets will likely react more to a weaker print than strong data, but data likely needs to be much weaker given that investor expectations have declined.”
A pre-payrolls survey conducted by BMO Capital Markets showed that 33% of respondents would “sell strength” and 54% indicated a willingness to “buy a dip.”
“The takeaway from this month’s pre-payrolls survey was that investors are comfortable playing the range, at least for the time being,” wrote strategists led by Ian Lyngen.
The tally also showed that 46% of respondents expect the next 15 basis-point move in 10-year yields to be higher — while 41% expect a fall.
Investors are balancing between growing evidence of an economic slowdown and the implications for rate cuts, according to Ed Clissold at Ned Davis Research.
“Moderating, but positive, growth would be the best-case scenario for stocks,” he added.
On the one hand, a cooling economy is signaling potential interest rate cuts, which can be bullish for stocks.  But the reason of rate cuts matters too.
“If it’s because of a slowdown in inflation, it can be bullish for stocks. But if the Federal Reserve cuts because of a slowdown in growth, it’s not good news for corporate earnings,” said Matt Maley, chief market strategist at Miller Tabak + Co.
As equities remain near record levels, stock fragility — or the magnitude of a company’s daily share-price move relative to realized volatility of the past 21 days — is approaching a 30- year extreme for the 50 largest stocks of the S&P 500 according to Bank of America Corp. strategists.
“So far, these fragility shocks have been idiosyncratic,” BofA analysts wrote. “However, there’s a risk of a correlated shock among these companies that control so much of the US as well as global equity indexes.”
The stock market will continue its uptrend in the second half of 2024, albeit at a slower pace following a double-digit run since January, according to Morgan Stanley’s Lisa Shalett.
“The path of least resistance between now and the end of the year is for the market to grind higher,” the chief investment officer of the bank’s wealth management unit told Bloomberg Television. That said, investors should have “measured expectations” around the magnitude of equity returns from now through December, with the S&P 500 already up 12% year-to-date, Shalett added.
The stock market’s strength in the first half of 2024 is on track to carry on into the remaining months of the year — and expand into quieter corners of the market, according to Citigroup Inc.’s wealth management business.
That’s why the group predicts the S&P 500 Equal Weight Index — which gives an even share to each constituent — may soon outperform the market-value weighted benchmark S&P 500.
While US technology behemoths have almost single-handedly powered the market of late, continued economic strength and profit growth in companies other than Big Tech are expected to broaden equity returns through the rest of this year.
Traders have escalated rate-cut bets in the past week, emboldened by a slew of softer-than-forecast US economic data, the Bank of Canada’s decision to ease monetary policy, and bets the ECB would be the next to cut — a move confirmed on Thursday.
“Bullish trading action in recent days has been motivated by the expectation that the Fed will follow suit as bond investors incrementally expand expectations for an accommodative central bank,” said Jose Torres at Interactive Brokers.
In a historic move that saw the ECB slashing borrowing costs ahead of the Fed, officials led by President Christine Lagarde said that while the inflation outlook has improved “markedly,” they’ll “keep policy rates sufficiently restrictive for as long as necessary.”
“The meeting signals the ECB is not going to cut in July, and September is not locked in advance,” said Krishna Guha at Evercore. “But we stand by our view this is a ‘cautious cut’ not a ‘hawkish cut’.”

Corporate Highlights:
* Lyft Inc. is expecting gross bookings to grow about 15% at a compound annual rate over the next three years.
* Hertz Global Holdings Inc., seeking to bolster its balance sheet after an electric-vehicles blunder, is considering the sale of at least $700 million in secured debt as well as a convertible note offering, according to people with knowledge of the matter.
* Instacart announced a new $500 million share repurchase program, the third round of buybacks the grocery delivery company has authorized since September as it seeks to boost confidence in its growth potential.
* Nio Inc. reported a bigger-than-expected loss in the first quarter as increased competition dealt the electric-vehicle maker another setback in its push for profitability.
* SpaceX’s Starship rocket blasted off to space and plunged through Earth’s atmosphere for an ocean landing, notching a key objective on its fourth major test flight.
* Boeing Co.’s space taxi docked with the International Space Station, bringing the spacecraft’s first two passengers to the orbiting laboratory as part of a critical flight test for NASA.

Key events this week:
* China trade, forex reserves, Friday
* Eurozone GDP, Friday
* US unemployment rate, nonfarm payrolls, Friday

Some of the main moves in markets:
Stocks
The S&P 500 Index was little changed at 4 p.m. New York time.
The Dow Jones Industrial Average increased 0.2%.
The Nasdaq Composite Index fell 0.1%.
The Stoxx Europe 600 Index jumped 0.7%.
The MSCI All-Country World Index gained 0.3%.
Currencies
The Bloomberg Dollar Spot Index was little changed at 1,252.46.
The euro increased 0.2% to $1.0889.
The British pound was little changed at $1.279.
The Japanese yen strengthened 0.3% to 155.61 per dollar.
Bitcoin sank 1.1% to $70,427.
Bonds
The yield on 10-year Treasuries rose one basis point to 4.29%.
Germany’s 10-year yield gained four basis points to 2.55%.
Britain’s 10-year yield decreased one basis point to 4.174%.
Commodities
The Bloomberg Commodity Index jumped 1.6% to 103.46.
West Texas Intermediate crude jumped 2% to $75.58 a barrel.
Gold strengthened 0.7% to $2,372.52 an ounce.

–With assistance from Winnie Hsu, John Viljoen, Sujata Rao, Ruth Carson, Masaki Kondo, Natalia Kniazhevich and Alexandra Semenova.

Have a lovely evening.

Be magnificent!
As ever,

Carolann
It is our responsibilities, not ourselves, that we should take seriously. -Peter Ustinov, 1921-2004.

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