March 14, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday Eve.

March 14, 1794: Eli Whitney patents the cotton gin machine revolutionizing the cotton industry in the southern US states.
March 14, 1900: Congress ratified the Gold Standard Act. Go to article >>

George Frederick Handel, b. 1681
Albert Einstein, b.1879
Diane Arbus, b. 1923

How technology can help feed the planet
Dubai is already home to the world’s largest vertical farm. Now, a bigger facility is underway in the city. See how the new “Giga Farm” could transform waste into compost, animal feed, clean water and energy.

Paul Alexander, polio survivor who lived in iron lung for 70 years, dies age 78
Paul Alexander was one of the last people to use an iron lung, having been left unable to breathe on his own after catching polio in the 1950s. Read More.

NASA unveils cryptic message from Earth to be sent to Jupiter’s icy ocean moon Europa
From a poem written by a U.S. Poet Laureate to millions of stenciled names, NASA’s Clipper spacecraft’s trip to Europa will be marked with a human touch. Read More.

Opposites attract? Not in new experiment that finds loophole in fundamental rule of physics
Like-charged objects were found to clump together while opposites repelled because of the newly discovered “electro solvation force.” Read More.

The 2024 Sony World Photography Awards Open Competition.
Le Monde’s selection of France’s 15 best croissants

PHOTOS OF THE DAY

Patan, Nepal
A worker paints the eye of Lord Buddha before the procession of the Samyak Mahadan festival, an alms-giving festival offering worship at the painted idol of Lord Buddha, brought from various temples, for world peace and human welfare
Photograph: Narendra Shrestha/EPA

Cambridge, UK
Gallery technicians install Zipporah by Barbara Walker at the Fitzwilliam Museum, which is reopening its five main painting galleries to the public after a major refurbishment and redisplay project
Photograph: Joe Giddens/PA

​​​​​​​Buckinghamshire, UK
‘A fly on a snowdrop in a church graveyard in Shalstone.’
Photograph: Chris Allen
Market Closes for March 14^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1821, the market opened, but not a single share changed hands, on one of the quietest days in Wall Street history
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.6% at 21,829.85 in Toronto.
The move was the biggest since falling 2.3% on Feb. 13 and follows the previous session’s increase of 0.6%.
Today, financials stocks led the market lower, as 10 of 11 sectors lost; 144 of 225 shares fell, while 77 rose.
Royal Bank of Canada contributed the most to the index decline, decreasing 0.9%. Jamieson Wellness Inc. had the largest drop, falling 11.7%.
Insights
* This quarter, the index rose 4.2%
* So far this week, the index rose 0.4%
* The index advanced 11% in the past 52 weeks. The MSCI AC Americas Index gained 31% in the same period
* The S&P/TSX Composite is 0.8% below its 52-week high on March 13, 2024 and 16.8% above its low on Oct. 27, 2023
* The S&P/TSX Composite is little changed in the past 5 days and rose 4.5% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.4 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$3.48t
* 30-day price volatility rose to 11.92% compared with 11.73% in the previous session and the average of 12.04% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -54.9375| -0.8| 6/21
Materials | -22.3305| -0.9| 15/36
Communication Services | -19.8405| -2.7| 1/4
Industrials | -18.1222| -0.6| 10/16
Consumer Staples | -9.4667| -1.0| 0/11
Consumer Discretionary | -8.7848| -1.1| 3/10
Utilities | -7.1773| -0.9| 4/10
Information Technology | -5.0886| -0.3| 3/7
Health Care | -0.8764| -1.4| 0/4
Real Estate | -0.3359| -0.1| 5/14
Energy | 6.7091| 0.2| 30/11
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
RBC | -11.5600| -0.9| -26.0| 0.7
Canadian Pacific Kansas | -11.1300| -1.4| 12.7| 15.8
Brookfield Corp | -10.0900| -1.8| -0.3| 4.6
Cameco | 2.2730| 1.4| 1.5| -5.4
Fairfax Financial | 3.0170| 1.3| -16.2| 23.7
Suncor Energy | 8.1410| 1.9| 14.8| 15.0
US
By Rita Nazareth
(Bloomberg) — The world’s biggest bond market sold off after another hot inflation report reinforced bets the Federal Reserve will be in no rush to cut rates even as some areas of the economy show signs of sluggishness.
Treasury yields rose and stocks fell as the data underscored the Fed’s challenges in achieving its 2% inflation goal.
Following the steps of the consumer-price data, the producer price index also signaled a pickup in cost pressures.
In contrast, retail sales missed estimates.
While it’s probably early to draw any conclusions, the set of figures raised some eyebrows about the specter of stagflation.
“Well, this is a pickle,” said Chris Low at FHN Financial.  “On the heels of a second steamy CPI, and just a week before the Fed meeting, the February PPI rises at twice the expected pace.  Retail sales were ‘meh’ at best, if not downright weak.”
US 10-year yields climbed 10 basis points to 4.29%.
Traders pared bets on Fed cuts in 2024, with swaps fully pricing in a first move in July.
The S&P 500 fell to around 5,150 ahead of Friday’s options expiration — which has the potential to amplify volatility.
Nvidia Corp. and Tesla Inc. slid.
Homebuilders sank after Lennar Corp.’s weak forecast.
The dollar rose.
Oil topped $81.
“In a way, today was the past month in microcosm — sticky inflation combined with signs of softness elsewhere in the economy,” said Chris Larkin at E*TRADE from Morgan Stanley. “The questions now are: Will traders rethink how soon the Fed will cuts rates? And will that slow down the stock-market rally in any meaningful way?”
The inflation numbers are just not giving policymakers any incentive to ease, said Andrew Brenner at NatAlliance Securities.
The Fed is expected to keep rates unchanged at the March 19-20 meeting for the fifth straight gathering.
Coming on the heels of reports warning of persistently high inflation, the focus will be on the Fed’s new “dot plot.”
The median forecast of policymakers in December showed three quarter-point rate reductions for 2024.
Over two days on Capitol Hill earlier this month, Fed Chair Jerome Powell gave no evidence he was bothered by surging asset prices — which arguably work against his goal of keeping financial conditions tight enough to wring excesses out of the economy.
“Equity and bond bulls are staring at their calendars and drawing a ‘big red circle’ around the 20th of this month,” said Jose Torres at Interactive Brokers. “Folks are concerned Powell may have to pull a dangerous U-turn during his ride on the monetary-policy highway. His dovish messaging since December has driven an intense loosening in financial conditions.”
To Ian Lyngen at BMO Capital Markets, there was nothing within Thursday’s set of economic updates that will offer anything new for next week’s Fed meeting.
It’s only a couple of prints and “insufficient” to draw any broad-based conclusion, he noted.
Ellen Zentner at Morgan Stanley says she expects little change to the Fed statement and the projections — with the median dot remaining at three cuts.
“Key risk: it would take just two participants to change from three cuts to two for the median dot to move to a total of two cuts in 2024 — underscoring that the risk tilts toward fewer rather than greater,” she noted. “Chair Powell is unlikely in the ‘two camp,’ and we think will push to keep the median at three.”
With February’s CPI and PPI data in hand, Bloomberg Economics estimates that the core PCE deflator — the Fed’s preferred inflation indicator — and core services excluding housing, known as “super core,” will both moderate.
While the February PPI was stronger than expected, the details that affect PCE inflation were on the “softer side,” according to Bank of America Corp. economists including Michael Gapen.
“We continue to expect the Fed will start its cutting cycle in June,” they said. “However, it will need to see more improvement in the upcoming inflation data to have enough confidence to begin to ease.”
Amid all the economic and policy uncertainties, equities also struggled on Thursday.
That happened at a time when high valuations of a few mega-caps have pushed some market observers to worry about a bubble.
Markets are showing characteristics of a bubble in the record-setting surge by tech’s so-called Magnificent Seven stocks and the all-time highs in cryptocurrencies, according to Bank of America Corp.’s Michael Hartnett.
With inflation re-accelerating, growth a little soft and risk assets unscathed, “that is very symptomatic of a bubble mentality,” Hartnett told Bloomberg Television.
While the top 10 stocks in the benchmark index are indeed historically expensive relative to the rest of the market — the other 490 are also trading at multiples significantly above their long-term averages, according to Ned Davis Research’s Ed Clissold.
If a bubble is forming in US stocks, it has plenty of room to expand before it bursts, according to strategists at Société Générale SA.
A team at the bank led by Manish Kabra said the S&P 500 can climb to 6,250 — over 20% from its current level — before reaching the multiples seen at the peak of the dot-com boom in 2000.
That suggests the stock market can continue its sharp advance despite brewing worries that it has run up too far.

Corporate Highlights:
* US Federal Trade Commission Chair Lina Khan said in a speech that Boeing Co. became “too big to fail” after it bought up domestic competitors and became the country’s largest commercial aerospace maker.
* United States Steel Corp. plunged for a second day after President Joe Biden said the company should retain American ownership, coming out against a takeover by Japan’s Nippon Steel Corp. despite the risk of upsetting a key ally.
* Cleveland-Cliffs Inc. Chief Executive Officer Lourenco Goncalves said he’d consider another bid — with union support — for US Steel, albeit at a significantly lower price than the existing offer from Nippon Steel.
* Lennar Corp., one of the biggest US homebuilders, says it is considering a $4 billion spinoff of land it holds.
* Dollar General Inc.’s latest earnings signaled improvements in operations, but the discount retailer cautioned that turnaround efforts will take time.
* Dick’s Sporting Goods Inc. reported sales that surpassed analysts’ expectations, spurred by strong demand for sports gear.
* Reddit Inc. is telling potential investors in its initial public offering that it expects revenue in 2024 to grow by more than 20% versus the previous year, according to a person familiar with the situation.
* New York Community Bancorp, the troubled commercial real estate lender that just got a capital infusion from a group led by Steven Mnuchin, said it will book a gain after selling a portfolio of consumer loans with a net book value of $899 million as well as a co-op loan.

Key events this week:
* China property prices, Friday
* Japan’s largest union federation announces results of annual wage negotiations, just ahead of Bank of Japan policy meeting, Friday
* Bank of England issues inflation survey, Friday
* US industrial production, University of Michigan consumer sentiment, Empire Manufacturing, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.3% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.3%
* The Dow Jones Industrial Average fell 0.3%
* The MSCI World index fell 0.4%
Currencies
* The Bloomberg Dollar Spot Index rose 0.3%
* The euro fell 0.5% to $1.0891
* The British pound fell 0.3% to $1.2755
* The Japanese yen fell 0.3% to 148.24 per dollar
Cryptocurrencies
* Bitcoin fell 5.3% to $69,284.01
* Ether fell 5.3% to $3,780.22
Bonds
* The yield on 10-year Treasuries advanced 10 basis points to 4.29%
* Germany’s 10-year yield advanced six basis points to 2.43%
* Britain’s 10-year yield advanced seven basis points to 4.09%
Commodities
* West Texas Intermediate crude rose 1.7% to $81.11 a barrel
* Spot gold fell 0.5% to $2,163.19 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Esha Dey, Alexandra Semenova and Liz Capo McCormick.

Have a lovely evening.

Be magnificent!
As ever,

Carolann
In every man’s heart there is a secret nerve that answers to the vibrations of beauty. –Christopher Darlington Morley, 1890-1957.

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