March 27, 2023 Newsletter

Dear Friends,

Tangents: Happy Monday.
March 27, 1513: Spanish explorer Juan Ponce de Leon sighted Florida. Go to article >  

Men’s NCAA tournament Final Four is set.  You probably weren’t expecting the brackets to look like this! Here are the teams headed to the Final Four following victories by San Diego and Miami.

‘Succession’ Season 4 opener sets the stage for battles to come.  The two-time Emmy-winning HBO show kicked off its final flight of episodes, offering a glimpse into the intense drama ahead. (HBO, like CNN, is a unit of Warner Bros. Discovery.)

Most powerful solar storm in 6 years caused auroras all over the US. And nobody saw it coming.
The strongest solar storm to hit Earth for six years sparked stunning auroras across the U.S., with intense light displays appearing as far south as Alabama and Northern California. Yet no one saw it coming.
The March 24 solar storm was the result of a “stealth” coronal mass ejection. Full Story: Live Science (3/24)

Your native language may shape the wiring of your brain
A person’s native language may shape how their brain builds connections between different hubs of information processing, a new brain scan study reveals.
The observed differences in these language network structures were related to linguistic characteristics in the native languages of the study participants. Full Story: Live Science (3/24)

Heat waves are hitting the deep ocean floor, with potentially catastrophic results
Heat waves are happening at the bottom of the ocean, a new study finds.  And these so-called “bottom marine heat waves” can be devastating because they last longer than surface heat waves and affect many key species, such as lobster and cod. Full Story: Live Science (3/24)

Black holes may be swallowing invisible matter that slows the movement of stars
For the first time, scientists may have discovered indirect evidence that large amounts of invisible dark matter surround black holes.  The discovery, if confirmed, could represent a major breakthrough in dark matter research.
Full Story: Live Science (3/24)

2 megamouth sharks caught on video for the 1st time ever
Stunning new footage shows a pair of extremely elusive megamouth sharks (Megachasma pelagios) swimming together off the coast of San Diego.  The video, captured by fishers in early September 2022, may show the deep-dwelling beasts in a courtship ritual. Full Story: Live Science (3/24)

RIP, penmanship.

A company makes clothes to hide from AI.

PHOTOS OF THE DAY

Northumberland, England
Daffodils around the base of Warkworth Castle
Photograph: Owen Humphreys/PA

Edinburgh, Scotland
Sunrise over the Queensferry crossing, Forth Road Bridge and Forth Bridge on the Firth of Forth
Photograph: Jane Barlow/PA

Saitama, Japan
Canada’s Keegan Messing backflips over Maxime Deschamps during the world figure skating championships
Photograph: Issei Kato/Reuters
Market Closes for March 27^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1980, Texas oil barons Nelson Bunker Hunt and W. Herbert Hunt failed spectacularly to corner the market in silver after the metal plunged from $21.62 to $10.80 an ounce in a single day.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.6%, or 123.26 to 19,624.74 in Toronto.
The move was the biggest since rising 2% on Jan. 6.
Toronto-Dominion Bank contributed the most to the index gain, increasing 2.0%.
Athabasca Oil Corp. had the largest increase, rising 7.2%.
Today, 164 of 235 shares rose, while 69 fell; 8 of 11 sectors were higher, led by energy stocks.
Insights
* This quarter, the index rose 1.2%
* This month, the index fell 2.9%
* The index declined 11% in the past 52 weeks. The MSCI AC Americas Index lost 13% in the same period
* The S&P/TSX Composite is 11.7% below its 52-week high on April 5, 2022 and 9.8% above its low on Oct. 13, 2022
* The S&P/TSX Composite is up 0.5% in the past 5 days and fell 3.1% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 12.6 on a trailing basis and 12.8 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.3% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.13t
* 30-day price volatility rose to 12.06% compared with 11.95% in the previous session and the average of 9.94% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 44.8970| 1.4| 36/4
Financials | 41.2854| 0.7| 20/9
Consumer Staples | 12.2737| 1.5| 11/0
Utilities | 9.2427| 1.1| 14/2
Information Technology | 7.0483| 0.5| 9/4
Industrials | 6.1291| 0.2| 20/7
Real Estate | 4.7771| 1.0| 19/1
Consumer Discretionary | 1.8014| 0.3| 5/10
Health Care | -0.0754| -0.1| 2/4
Communication Services | -1.9656| -0.2| 1/5
Materials | -2.1527| -0.1| 27/23
================================================================
| | |Volume VS | YTD
| Index | | 20D AVG | Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
TD Bank | 19.1100| 2.0| 15.3| -9.7
Canadian Natural Resources | 10.2400| 1.9| -21.9| -4.3
RBC | 9.1820| 0.8| -37.0| 0.4
Barrick Gold | -2.1890| -0.7| -24.6| 8.8
Franco-Nevada | -2.4210| -0.9| -29.8| 6.5
Brookfield Corp | -2.4650| -0.6| -6.5| -4.0
US
By Peyton Forte and Emily Graffeo
(Bloomberg) — Gains in financial shares lifted US stocks, while Treasuries retreated as fears of broader contagion from the banking turmoil eased.
Tech shares slumped after last week’s rally.
The S&P 500 rose on Monday, with financial firms in the index up more than 1%. Energy producers also advanced.
The tech-heavy Nasdaq 100 ended the session 0.7% lower capping a two-week advance.
The two-year Treasury yield topped 4%.
A gauge of regional lenders climbed roughly 2.5% as First Citizens BancShares Inc. rallied more than 50% after agreeing to buy SVB Financial Group’s Silicon Valley Bank.
First Republic Bank jumped on a Bloomberg report that US authorities are considering expanding an emergency lending facility that would give the lender more time to bolster its balance sheet.
“The market is being pushed and pulled between banks and tech stocks. As the banks have rebounded a lot of money has come out of tech stocks which have held up the market the past two weeks,” said Joe Gilbert, portfolio manager at Integrity Asset Management. “There is a lot of churning going on under the surface right now. Plus the back up in interest rates puts cold water on the tech trade.”
The weekend may have brought some relief to the banking sector, but it will continue to be closely watched.
A gauge of regional US banks has lost roughly 30% since early February.
“You have a massive tug of war between the fact that people know the fundamental outlook is poor, but a lot of people were already either short or long cash, or just generally positioned away from US equity markets, so you could argue positioning is ripe for a squeeze,” said Huw Roberts, head of analytics at Quant Insight. “The most obvious catalyst to my mind that resolves the tug of war would be a new development in terms of the credit crunch.”
Market jitters were still on display on Monday as banking stocks pulled back from an early rally and the S&P 500 retreated from a key technical level.
“There’s no doubt that the response so far has prevented the situation from becoming much worse and confidence will gradually improve as long as no other banks fall into difficulties,” Craig Erlam, a senior market strategist at Oanda
wrote. “That’s obviously a big if at this point.”
The yield on the 10-year Treasury rose to around 3.54% while the interest rate-sensitive two-year jumped to 4.02%.
Such an inverted yield curve — where the short-term rate is higher than the long-term — continues to signal a downturn ahead.
Fed Minneapolis President Neel Kashkari warned over the weekend that the strain on the financial sector had the US on the brink of a recession.
The usually hawkish Kashkari avoided making a prediction about the central bank’s May meeting.
“Recent bank turmoil gives us increased conviction that a deeper-than-expected recession is going to hit this year,” Chris Senyek of Wolfe Research said. He also sees “blow up” risks rising. “We’re already seeing early signs of deterioration in CRE and Autos, and we believe that widening spreads signal more trouble ahead.”
US stocks have largely been shrugging off recession fears with the S&P 500 and Nasdaq both advancing over the past two weeks.
JPmorgan’s chief strategist Marko Kolanovic said the first quarter “will likely mark the high point for equities this year,” recommending investors stay defensive in a research note.
“We view the most vulnerable areas as unprofitable companies that depend on steady flow of equity capital to fund operations and tight carry trades implemented over the last 10 to 20 years,” Kolanovic wrote.
One of Wall Street’s most prominent bears, Morgan Stanley strategist Michael Wilson was also cautious on stocks, saying earnings estimates and valuations need to come down.
“Given the events of the past few weeks, we think guidance is looking more and more unrealistic, and equity markets are at greater risk of pricing in much lower estimates ahead of any hard data changes,” Wilson wrote in a note on Monday.
Seema Shah, chief global strategist at Principal Asset Management, told Bloomberg TV that many US stocks were expensive and unappealing ahead of a looming economic slump.
“If you’re looking outside of the US, valuations are still pretty cheap,” she said. “There’s very little to be attractive about this US market at this stage.”
Investors will be closely watching data on the personal consumption expenditures price index, which is the Fed’s preferred measure of underlying price pressure, that will come out later this week for direction on the US central bank’s rate path.
On Monday, traders were once again leaning toward a quarter-point rate hike at the Fed’s next meeting.
“If they do raise rates again – especially if they say or imply that May isn’t the last one – then we could get a risk off rally again, with defensives outperforming cyclicals,” said Chris Zaccarelli, chief investment officer at Independent
Advisor Alliance.
Elsewhere, European Central Bank Executive Board member Isabel Schnabel pushed for this month’s decision statement to signal possible interest-rate increases in future, according to people with knowledge of the matter.
In a further indication of risk-on sentiment, oil rose and gold slipped. 
Key events this week:
* US wholesale inventories, US Conf. Board consumer confidence, Tuesday
* EIA Crude Oil Inventory Report, Wednesday
* Eurozone economic confidence, consumer confidence, Thursday
* US GDP, initial jobless claims, Thursday
* Boston Fed President Susan Collins and Richmond Fed President Thomas Barkin speaks at event. Treasury Secretary Janet Yellen also speaks, Thursday
* China PMI, Friday
* Eurozone CPI, unemployment, Friday
* US consumer income, PCE deflator, University of Michigan consumer sentiment, Friday
* ECB President Christine Lagarde speaks, Friday
* New York Fed President John Williams speaks, Friday
Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.2% as of 4:00 p.m. New York time
* The Nasdaq 100 fell 0.7%
* The Dow Jones Industrial Average rose 0.6%
* The MSCI World index rose 0.3%
Currencies
* The Bloomberg Dollar Spot Index fell 0.2%
* The euro rose 0.3% to $1.0797
* The British pound rose 0.4% to $1.2287
* The Japanese yen fell 0.7% to 131.59 per dollar
Cryptocurrencies
* Bitcoin fell 2.9% to $27,006.81
* Ether fell 3.3% to $1,704.21
Bonds
* The yield on 10-year Treasuries advanced 16 basis points to 3.54%
* Germany’s 10-year yield advanced 10 basis points to 2.23%
* Britain’s 10-year yield advanced eight basis points to 3.37%
Commodities
* West Texas Intermediate crude rose 5.4% to $73 a barrel
* Gold futures fell 1.3% to $1,975.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee, Vildana Hajric and Carly Wanna.
Have a lovely evening.

Be magnificent!
As ever,

Carolann

Every action of our lives touches on some chord that will vibrate in eternity. –Sean O’Casey, 1880-1964.
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
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www.carolannsteinhoff.com