June 13, 2022 Newsletter

Dear Friends,

Tangents:
On this day in 1381, Wat Tyler led the first English popular rebellion, which became known as “The Peasants’ Revolt”.
1983: The U.S. space probe Pioneer 10 became the first spacecraft to leave the solar system as it crossed the orbit of Neptune.   Go to article »
1966: “Miranda” rights established.
2000: South Korean President Kim Dae-Jung meets North Korean leader Kim Jong II in a summit that marks the first meeting between heads of the two countries, helping earn Kim Dae-Jung the Nobel Peace Prize.

William Butler Yeats, poet, b.1865.

Photos of chickens, taken by chickens.

Galapagos tortoise species turns out to not be extinct. (h/t Ellen Kominers)

Face of wealthy Bronze-Age Bohemian woman revealed in stunning reconstruction: Researchers have reconstructed the face of a petite, dark-haired woman who was among the richest residents of Bronze-Age Bohemia.  The woman was buried with five bronze bracelets, two gold earrings and a three-strand necklace of more than 400 amber beads. Also entombed with her were three bronze sewing needles. She was part of the Únětice culture, a group of peoples from early Bronze Age Central Europe known for their metal artifacts, including ax-heads, daggers, bracelets and twisted-metal necklaces called torcs.  Full Story: Live Science (6/13) 

Discovery of ‘hidden world’ under Antarctic ice has scientists ‘jumping for joy’:  A never-before-seen ecosystem lurks in an underground river deep below the icy surface in Antarctica. Researchers recently brought this “hidden world” into the light, revealing a dark and jagged cavern filled with swarms of tiny, shrimplike creatures.   The scientists found the secret subterranean habitat tucked away beneath the Larsen Ice Shelf — a massive, floating sheet of ice attached to the eastern coast of the Antarctic peninsula that famously birthed the world’s largest iceberg in 2021. Satellite photos showed an unusual groove in the ice shelf close to where it met with the land, and researchers identified the peculiar feature as a subsurface river, which they described in a statement. The team drilled down around 1,640 feet (500 meters) below the ice’s surface using a powerful hot-water hose to reach the underground chamber.  Full Story: Live Science (6/10) 

PHOTOS OF THE DAY

Giant pandas are seen at Chengdu Research Base of Giant Panda Breeding.
CREDIT: VCG/Getty Images

People watch the large swells at Bronte Beach in the city’s eastern suburbs
CREDIT: Bianca de Marchi/EPA

Cynthia Erivo attends the 75th annual Tony awards at Radio City Music Hall
CREDIT: Bryan Bedder/Getty Images for Tony Awards Productions

Market Closes for June 13^th, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1991, the New York Stock Exchange began after-hours trading for the first time, as two “crossing sessions” of trades among institutional investors extended the trading day to 5:15 p.m. ET.
Canada
By Stefanie Marotta
(Bloomberg) — Canadian equities slumped to a one-month low, with the benchmark index falling into a correction, as investors fled risk assets amid concerns over rising inflation.
The S&P/TSX Composite fell for the fourth day, dropping 2.6%, or 532.26 to 19,742.56 in Toronto.
The move was the biggest since falling 3.1% on May 9.
Today, energy stocks led the market lower, as all sectors lost; 225 of 239 shares fell, while 11 rose.
Shopify Inc. contributed the most to the index decline, decreasing 9.4%.
Lightspeed Commerce Inc. had the largest drop, falling 14.4%..
Insights
* In the past year, the index had a similar or greater loss once
* This quarter, the index fell 9.8%, heading for the biggest decline since the first quarter of 2020
* The index declined 2% in the past 52 weeks. The MSCI AC Americas Index lost 13% in the same period
* The S&P/TSX Composite is 11.1% below its 52-week high on April 5, 2022 and 1.3% above its low on May 12, 2022
* The S&P/TSX Composite is down 5.2% in the past 5 days and fell 1.8% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 15.3 on a trailing basis and 12.2 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$3.24t
* 30-day price volatility rose to 20.79% compared with 19.31% in the previous session and the average of 20.33% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
* Energy | -123.4715| -3.1| 1/33
* Financials | -123.0637| -2.0| 0/28
* Materials | -117.8748| -4.5| 1/50
* Information Technology| -46.9934| -4.5| 1/15
* Industrials | -35.7626| -1.6| 4/26
* Real Estate | -17.9214| -3.4| 0/23
* Communication Services| -15.9842| -1.6| 0/6
* Consumer Discretionary| -15.5556| -2.4| 2/12
* Utilities | -14.7767| -1.5| 1/15
* Consumer Staples | -11.6346| -1.5| 1/9
* Health Care | -3.9606| -5.1| 0/8
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
* Shopify | -32.6700| -9.4| -13.4| -76.9
* Canadian Natural Resources | -27.5300| -4.1| 89.6| 48.6
* Enbridge | -20.0600| -2.5| 34.0| 14.8
* Ritchie Bros | 0.8670| 1.5| -5.7| 0.1
* Imperial Oil | 1.2080| 1.2| 92.7| 53.4
* Constellation Software | 2.1190| 0.8| 88.0| -19.
US
By Rita Nazareth
(Bloomberg) — US stocks hurtled toward a bear market, Treasury yields spiked to levels not seen in a decade and the dollar rallied as the fallout from a hot inflation reading continued to rattle global trading already shaken by worries the Federal Reserve will plunge the economy into a recession.
Another brutal bout of selling sent the S&P 500 to a 15-month low and down more than 20% from its January peak.
Highly valued tech shares bore the brunt of the rout, with the Nasdaq 100 slumping about 3.5%.
The Cboe Volatility Index jumped above 30 and the futures curve inverted in a rare instance of traders pricing in more uncertainty in the here-and-now than in three months.
Speculative areas of the market inflated by years of Fed and government largesse buckled.
Profitless software firms, newly public companies and blank-check entities sold off.
Bitcoin plummeted below $24,000 after a lending platform ceased operations.
Credit markets continued their historic repricing of rate trajectories.
Treasury 10-year yields climbed 20 basis points to the highest since 2011 while two-year rates jumped to levels last seen before the 2008 crisis.
The cost to protect investment-grade debt from default surged to a two-year high as a closely watched segment of the US curve inverted amid recession fears.
Only the dollar provided a respite from the selloff, having its biggest four-day rally since the onset of the pandemic.
“It’s going to get a little uglier,” said Victoria Greene, chief investment officer at G Squared Private Wealth. “It’s going to be very hard for stocks to rally when the Fed continues to put hawkish pressure. There’s no way they can slam on the brakes with inflation without slamming on the brakes economically speaking. It’s funny we still have recession deniers.”
Financial markets are bracing for the Fed to turn very hawkish after its meeting Wednesday.
Traders are now pricing in 175 basis points of tightening by September — implying two half-point and one 75-basis-point hike.
If that comes to pass, it would be the first time since 1994 the Fed resorted to such an aggressive pace.
Officials are muzzled before the decision in two days and Chair Jerome Powell’s conference, where the characterization of inflation and long-term forecasts for the fed funds target — the so-called dot plot — will be critical.

As the Fed attempts to boost its credibility on inflation, it could reach for a more drastic increase if it’s compelled to demonstrate a “Volcker moment,” said Steven Englander, global head of Group-of-10 currency research at Standard Chartered Bank.
He was referring to Fed Chair Paul Volcker, who crushed inflation with a series of historic rate increases, starting in 1979.
With that possibility, Englander predicts there’s a 10% chance of a 100-basis-point increase Wednesday — with his baseline still a half-percentage point increase.
The dramatic moves in the world’s biggest bond market spell further trouble for battered US equities.
Recent history shows that stocks tend to swoon when the 10-year Treasury yield hits 3%, as seen in early May and in late 2018, according to DataTrek Research’s Nicholas Colas.
It topped 3.3% Monday.
Equities still aren’t fully reflecting the risks facing corporate earnings, according to strategists at Morgan Stanley, Goldman Sachs Group Inc. and BlackRock Investment Institute.
Weaker consumer demand and aggressive tightening by the Fed in an attempt to fight the hottest US inflation in four decades can do further damage to bottom lines and, in turn, share prices.
For Evercore strategist Julian Emanuel, “what’s been missing the last several months is sort of what I would call a ‘cathartic flush out,’ where you get the VIX above 40, which is one of the things you need for at least a trading bottom.”
The last bulwark in stocks is in danger of shattering, if the mood of chief executive officers is any indication.
A survey of sentiment among corporate stewards by the Conference Board  showed that CEO confidence declined sharply in the second quarter of the year for the fourth straight time.
Similar skepticism in the past has always coincided with a recession in profits, wrote Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.

More comments:
* “The idea that there is some Goldilocks outcome in the cards or soft landing is a mockery,” wrote Danielle DiMartino Booth, chief strategist of Quill Intelligence. “While tightening into a recession is no easy task, the Federal Reserve must indicate a willingness to raise interest rates by more than a half-percentage point at upcoming meetings if inflation continues to surprise to the upside.”
* “Chairman Jerome Powell and his colleagues are walking a monetary policy tightrope hoping to avoid a recession while dampening demand,” wrote Mark Hamrick, senior economic analyst at Bankrate.com. “This year’s decline in stock prices and rise in bond yields are among the more obvious consequences of the Fed’s actions.”
* “There has been no follow-through by the bulls,” wrote JC O’Hara, chief market technician at MKM Partners. “Until they have a data point to celebrate, investors will continue to shed risk assets. The largest risk now is that interest-rate expectations are still too low and earnings expectations are still too high.”
The damage in the highly speculative crypto market took on staggering contours as the value of all assets sank below $1 trillion, down by two-thirds from the heady levels reached in November.
Bitcoin and its cousins have largely tracked risk assets, but the latest leg down — as much as 17% for the world’s largest digital token — came with concern that the freezing of withdrawals at the Celsius lending platform might indicate systemic risk in the crypto world that could accelerate the meltdown.
“You can’t have these massive drawdowns without some real damage being done and real money being lost,” said Art Hogan, chief market strategist at National Securities. “The volatility is inherent in both directions.”
What to watch this week:
* US PPI, Tuesday.
* China key economic activity data, liquidity operations, medium-term lending facility, Wednesday.
* FOMC rate decision, Chair Jerome Powell briefing, US business inventories, empire manufacturing, retail sales, Wednesday.
* ECB President Christine Lagarde due to speak, Wednesday.
* Bank of England rate decision, Thursday.
* US housing starts, initial jobless claims, Thursday.
* Bank of Japan policy decision, Friday.
* Eurozone CPI, Friday.
* US Conference Board leading index, industrial production, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 3.4% as of 3 p.m. New York time
* The Nasdaq 100 fell 4%
* The Dow Jones Industrial Average fell 2.5%
* The MSCI World index fell 3.3%
Currencies
* The Bloomberg Dollar Spot Index rose 1%
* The euro fell 0.9% to $1.0424
* The British pound fell 1.4% to $1.2140
* The Japanese yen rose 0.1% to 134.23 per dollar
Bonds
* The yield on 10-year Treasuries advanced 20 basis points to 3.36%
* Germany’s 10-year yield advanced 12 basis points to 1.63%
* Britain’s 10-year yield advanced eight basis points to 2.53%
Commodities
* West Texas Intermediate crude was little changed
* Gold futures fell 2.6% to $1,826.90 an ounce
–With assistance from Sunil Jagtiani, Denitsa Tsekova, Robert rand, Vildana Hajric, Peyton Forte, Lu Wang, Isabelle Lee and James Crombie.
Have  a lovely evening.

Be magnificent!
As ever,
And say my glory was I had such friends. –William Butler Yeats, 1865-1939.

Carolann

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