June 17th, 2024, Newsletter

Dear Friends,

Tangents: Happy Monday.

June 17, 1885 The Statue of Liberty arrived in New York City aboard the French ship Isere. Go to article >>
June 17, 1944: Iceland becomes a republic.  The Nordic island country had previously been included in the Norwegian and Danish monarchies.
June 17, 1972: Watergate arrests.

John Wesley, founder of Methodism, b. 1703.
Igor Stravinsky, composer, b. 1882H
M.C. Escher, artist, b.1898.
Venus Williams, tennis player, b. 1980.

A jolt for the summer box office
Movie theaters may be facing a bleak future, but an animated film could give the industry a much-needed boost. This movie just notched the most lucrative box office opening since “Barbie,” which grossed $162 million.

Tony Awards 2024: See the full list of winners
The Tony Awards, which honor the best of Broadway, were presented on Sunday in New York City. See the full list of winners.

Highlights from the US Open
Bryson DeChambeau won his second US Open title on Sunday, edging Rory McIlroy in a nerve-shredding finale at Pinehurst No. 2 in North Carolina.

‘House of the Dragon’ Season 2 premiere recap
At last, the wait is over. The second season of “House of the Dragon” returned Sunday to HBO (which is owned by CNN’s parent company, Warner Bros. Discovery). Let’s talk about it.

Planet Nine: Is the search for this elusive world nearly over?
Deep in the outer reaches of the solar system — so far away from the known planets that the sun would barely be distinguishable from a nearby star — a massive, icy world may be lurking in the shadows, waiting to be discovered by humanity.
And the day that we finally find this elusive planet may be coming soon, thanks to a state-of-the-art telescope that will begin scanning the sky next year. With the opening of the groundbreaking Vera C. Rubin Observatory in 2025, we may either finally find Planet Nine within the next few years — or rule out the idea for good. Read More.

Gilgamesh flood tablet: A 2,600-year-old text that’s eerily similar to the story of Noah’s Ark
The baked clay tablet tells the tale of an epic flood. Read More.

Scientists inserted a window in a man’s skull to read his brain with ultrasound
New research shows it’s possible to use ultrasound waves to monitor activity in the human brain. Read More.

PHOTOS OF THE DAY

Devon, UK
A steam train passes above Broadsands beach in Paignton, in south-west England, a longstanding base of the Liberal Democrats. Support for Ed Davey’s party has edged up and a recent poll showed it may snatch Yeovil in Somerset from the Tories
Photograph: Finnbarr Webster/Getty Images

İzmir, Turkey
Aerial view of Ilıca beach in the resort of Çeşme, in western Anatolia, where Turkish and foreign visitors took advantage of the Eid al-Adha holiday
Photograph: Berkan Cetin/Anadolu/Getty Images

​​​​​​​London, UK
An aerial view of the Palace of Westminster and a placid River Thames as the nation prepares to elect a new parliament
Photograph: Yann Tessier/Reuters
Market Closes for June 17^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1930, the U.S. imposed the Smoot-Hawley Tariff Act, raising average tariffs on foreign goods by about 20%. The U.S.’s trade partners retaliated with tariffs of their own, dealing a sharp blow to trade and worsening the Great Depression.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the third day, dropping 0.2%, or 51.22 to 21,587.88 in Toronto.
The index dropped to the lowest closing level since March 5.
Shopify Inc. contributed the most to the index decline, decreasing 1.7%.
Novagold Resources Inc. had the largest drop, falling 7.7%.
Today, 127 of 222 shares fell, while 94 rose; 7 of 11 sectors were lower, led by energy stocks.
Insights
* This quarter, the index fell 2.6%
* The index advanced 8.1% in the past 52 weeks. The MSCI AC Americas Index gained 23% in the same period
* The S&P/TSX Composite is 4.3% below its 52-week high on May 21, 2024 and 15.5% above its low on Oct. 27, 2023
* The S&P/TSX Composite is down 2.2% in the past 5 days and fell 3.9% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 17.3 on a trailing basis and 14.7 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$3.43t
* 30-day price volatility fell to 10.23% compared with 11.18% in the previous session and the average of 10.13% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -25.2424| -0.7| 23/16
Information Technology | -13.7423| -0.8| 5/5
Materials | -13.2769| -0.5| 11/39
Financials | -10.3393| -0.2| 11/16
Utilities | -7.2580| -0.9| 2/13
Communication Services | -5.6462| -0.8| 0/5
Real Estate | -1.8457| -0.4| 4/16
Health Care | 0.1743| 0.3| 2/2
Consumer Discretionary | 3.1588| 0.4| 11/2
Consumer Staples | 5.4309| 0.6| 7/4
Industrials | 17.3835| 0.6| 18/9
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Shopify | -13.6200| -1.7| -19.9| -11.5
TD Bank | -8.0810| -0.9| 74.1| -13.7
Canadian National | -6.3950| -0.9| 56.2| -0.5
Manulife Financial | 6.0730| 1.4| -29.0| 19.5
Waste Connections | 10.0400| 2.4| 45.8| 19.8
Canadian Pacific Kansas | 10.6400| 1.5| 46.4| 2.3
US
By Rita Nazareth
(Bloomberg) — A rally in the world’s largest technology companies drove stocks to all-time highs, with some prominent Wall Street strategists rushing to boost their targets even as many hedge funds grow increasingly cautious.
The S&P 500 hit its 30th record this year, defying concerns about narrow breadth that could make the market more vulnerable to surprises.
As traders geared up for retail-sales data and a slew of Federal Reserve speakers, Treasuries fell amid a flurry of high-grade corporate bond sales that exceeded $21 billion, led by Home Depot Inc.
That’s ahead of Wednesday’s Juneteenth holiday.
Optimism over a resilient economy, improving corporate earnings and the potential start of rate cuts have pushed equities up about 15% this year, with ebbing inflation and the artificial-intelligence fervor also propelling equities higher.
“We believe the S&P 500 can reach 6,000 by year-end as the combination of better earnings and one or two rate cuts is like a turbo booster for stock prices,” said James Demmert at Main Street Research.
The S&P 500 topped 5,470, with Tesla Inc. and Apple Inc. leading gains in mega-caps.
The Nasdaq 100 rose 1.2% and approached the 20,000 mark.
Micron Technology Inc. climbed to a record as some firms raised their targets for the chipmaker.
Broadcom Inc. jumped over 5%. Activist investor Starboard Value said it’s built a stake in Autodesk Inc. valued at more than $500 million.
French stocks rebounded after last week’s tumble.
Yet the Stoxx Europe 600 Index was little changed as Citigroup Inc. downgraded the region’s equities, citing “heightened political risks” among other reasons.
Citigroup strategists raised their 2024 forecast for the S&P 500 to 5,600, becoming the third Wall Street firm since Friday to upgrade its outlook.
Ongoing positive earnings revisions and broadening of profit growth to non-tech companies prompted the target upgrade, Citi strategists led by Scott Chronert wrote.
In recent days, Goldman Sachs Group Inc. strategists led by David Kostin also boosted their target to 5,600, reflecting Wall Street’s optimistic outlook for earnings growth and the US economy.
Julian Emanuel at Evercore raised his year-end forecast on the S&P 500 to 6,000, the highest among major equity strategists tracked by Bloomberg.
Meantime, hedge funds decreased their long-short gross leverage, which measures their overall exposure to the market, by the most since March 2022, according to a note from Goldman Sachs’s prime brokerage desk.
The move points to a more cautious stance from the so-called smart money, the team wrote.
While there’s been no shortage of headlines about the latest record highs on the S&P 500, the highs have been less significant as a sign of market strength than as an influence on investor sentiment, according to Tim Hayes at Ned Davis Research.
“As record highs were reached by major benchmarks, breadth has weakened,” he said. “Benchmark records are not confirmed by most markets, sectors and stocks.”
In the run-up to the latest reading on retail sales, traders also kept an eye on Fed-speak.
Fed Bank of Philadelphia President Patrick Harker said he sees one rate cut as appropriate for this year based on his current forecast, underscoring the message that high rates are likely to persist.
Investors are being warned that rates will stay higher for longer than they’d expected, with the median projection from Fed officials calling for one interest rate cut this year.
And yet cash is pouring into stocks that benefit from lower borrowing costs.
The question now for investors is what will the market do when the Fed eventually does decide to cut?
Historically, rate cuts have marked a key inflection point that has ushered in strong equity returns — but only for cycles that aren’t triggered by a recession, like this one.
“Improving inflation trends would lead to a more constructive policy outlook, which should be a tailwind for equities and fixed income,” said Jason Pride and Michael Reynolds at Glenmede. “Assuming all continues to go well with
inflation along a moderating path through the summer, a September rate cut is likely on the table.”
Some stock-market optimists have speculated that a swath of  the roughly $6 trillion sitting in money-market cash is poised to be reallocated into equities and will give the rally another boost.
But a growing number of soothsayers at firms ranging from Morgan Stanley to Deutsche Bank AG are poking holes in that theory.
With generous yields on cash amid elevated interest rates, it’s no surprise that inflows to money market funds just hit another all-time high.
Yet, there’s little evidence to suggest that cash is going to move into riskier assets anytime soon.
“Choppiness and a flight to quality are likely to dominate the markets until the Fed clarifies the scope and timing of rate cuts,” said Robert Teeter at Silvercrest Asset Management. “This guidance may come as early as the Jackson Hole event in August.”
Many stocks are now becoming more sensitive to softer growth conditions, according to Morgan Stanley strategists led by Michael Wilson.
They say some value/cyclical stocks have started to focus more on earnings expectations and less on the impact of interest rates
“This development is in line with our consistent view that higher rates are a clear headwind to small caps, but lower rates don’t offer a comparable benefit,” they wrote.
The correlation between stock prices and bond yields continues to invert and is the most negative since 1997, suggesting a major shift in the inflation regime is likely underway and that stock prices and bond yields may together
remain subject to extreme sensitivity to inflation trends, according to according to Bloomberg Intelligence strategists led by Gina Martin Adams.
“The correlation between the two asset classes was positive for the better part of 20 years, suggesting disinflation was the dominant regime,” they said. “The positive correlation historically implied that equities trended in the direction of yields as inflation mostly coincided with growth.”
The shift in the correlation to negative might be signaling a significant longer-term change in inflation conditions has begun, the BI strategists noted.
Stocks held a negative correlation to yields throughout most of the 1980s and 1990s, when inflation hurt equities.

Corporate Highlights:
* Tesla Inc. has been granted approval to test its advanced driver-assistance system on some Shanghai streets, according to a person familiar with the matter — the next step in rolling out the feature to Chinese drivers.
* The US Federal Trade Commission sued Adobe Inc., alleging the software company violated consumer protection laws by making it too difficult for consumers to cancel their subscriptions.
* As crisis engulfs Boeing Co. following the near-catastrophic accident on an airborne 737 Max 9 aircraft, Chief Executive Officer Dave Calhoun has kept a low profile in recent months. A Senate hearing on Tuesday will put him on the spot to defend his record and salvage his legacy as he prepares to step down later this year.
* Walt Disney Co.’s Deadpool & Wolverine will hit Chinese theaters next month, a win for the studio after Beijing barred previous blockbuster releases at a time of frosty relations with the US.
* Cybercriminals are demanding payments of between $300,000 and $5 million apiece from as many as 10 companies breached in a campaign that targeted Snowflake Inc. customers, according to a security firm helping with the investigation.
* GameStop Corp. Chief Executive Officer Ryan Cohen told investors he’s focused on achieving profitability at the ailing video game retailer and plans to avoid the “hype” that has buffeted the shares to extremes as part of the meme-stock frenzy.

Key events this week:
* Australia rate decision, Tuesday
* Eurozone CPI, Tuesday
* US retail sales, business inventories, industrial production, Tuesday
* Fed’s Thomas Barkin, Lorie Logan, Adriana Kugler, Alberto Musalem, Austan Goolsbee speak, Tuesday
* UK CPI, Wednesday
* US Juneteenth holiday, Wednesday
* China loan prime rates, Thursday
* Eurozone consumer confidence, Thursday
* UK BOE rate decision, Thursday
* US housing starts, initial jobless claims, Thursday
* Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday
* US existing home sales, Conf. Board leading index, Friday
* Fed’s Thomas Barkin speaks, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.8% as of 4 p.m. New York time
* The Nasdaq 100 rose 1.2%
* The Dow Jones Industrial Average rose 0.5%
* The MSCI World Index rose 0.5%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro rose 0.3% to $1.0733
* The British pound rose 0.1% to $1.2704
* The Japanese yen fell 0.2% to 157.73 per dollar
Cryptocurrencies
* Bitcoin rose 0.3% to $66,647.91
* Ether fell 1.3% to $3,551.29
Bonds
* The yield on 10-year Treasuries advanced five basis points to 4.27%
* Germany’s 10-year yield advanced five basis points to 2.41%
* Britain’s 10-year yield advanced six basis points to 4.11%
Commodities
* West Texas Intermediate crude rose 2.6% to $80.47 a barrel
* Spot gold fell 0.5% to $2,320.67 an ounce
This story was produced with the assistance of Bloomberg Automation.–With assistance from Christopher DeReza, Michael Gambale,
Jessica Menton, Alexandra Semenova, Natalia Kniazhevich, Matthew Burgess, Winnie Hsu, Sujata Rao and Julien Ponthus.
Have a lovely evening.

Be magnificent!

As ever,

Carolann
There’s another kind of river, one that runs through every one of us, no matter where we come from, all over the world.
It’s the river of the heart, and the heart’s desire.  It’s the pure, essential truth of what each one of us is, and can achieve. –Gregory David Roberts, Shantaram.

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