May 11, 2022 Newsletter

Dear Friends,

Tangents:
1998: India set off three underground atomic blasts, its first nuclear tests in 24 years.  Go to article »

1997: IBM’s chess-playing computer Deep Blue defeats Garry Kasparov in the last game of a six-game match to claim a 3.5-2.5 victory (it won two games and had three draws) and it marks the first time a current world champion had lost a match to a computer under tournament conditions.

Salvador Dali, artist, b. 1904.
Martha Graham, dancer, b. 1894.
Irving Berlin, lyricist, b. 1888.
1862: Merrimac destroyed.

Passenger with no flying experience safely lands a plane after its pilot became incapacitated.  Impressive is an understatement. Check out this video and audio from the heart-racing ordeal. 

Balenciaga is selling destroyed sneakers for $1,850.  When you think of a luxury fashion house, these dirty and destroyed sneakers probably don’t come to mind. Has the trend gone too far?

A team of Chinese scientists has discovered a giant new sinkhole with a forest at its bottom.  The sinkhole is 630 feet (192 meters) deep, according to the Xinhua news agency, deep enough to just swallow St. Louis’ Gateway Arch. A team of speleologists and spelunkers rappelled into the sinkhole on Friday (May 6), discovering that there are three cave entrances in the chasm, as well as ancient trees 131 feet (40 m) tall, stretching their branches toward the sunlight that filters through the sinkhole entrance.  Full Story: Live Science (5/11) 

Russian soldiers have reportedly stolen gold Scythian artifacts dating back about 2,300 years from the Melitopol Museum of Local History in Ukraine. Additionally, there are reports that a museum staff member is currently being held by the Russian military.  The Scythians, culturally related groups of nomadic pastoralists and formidable warriors, thrived across Eurasia between roughly 800 B.C. and A.D. 300 and crafted many beautiful artifacts out of gold.
Full Story: Live Science (5/11) 

PHOTOS OF THE DAY

Laura Sharpe examines Florence Nightingale’s original lamp at the Florence Nightingale Museum, which re-opens to the public on Thursday on International Nurses’ Day and Florence’s 202nd birthday
CREDIT: Rex/Shutterstock

A group of women sing and dance to celebrate the birth of a child
CREDIT: Alexis Huguet/AFP/Getty Images

Performers dance near the Blue House compound, a day after it was opened to the public following a campaign promise by President Yoon Suk-yeol
CREDIT: Anthony Wallace/AFP/Getty Images

Market Closes for May 11^th, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1861, as a sign of patriotic fellowship, the New York Stock Exchange banned all trading in Confederate stocks and bonds. However, members were still free to short-sell any Union securities they choose.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the fifth day, dropping 0.3%, or 52.81 to 19,837.25 in Toronto.
The index dropped to the lowest closing level since July 19.
Shopify Inc. contributed the most to the index decline, decreasing 5.2%.
Aurora Cannabis Inc. had the largest drop, falling 13.0%.
Today, 156 of 239 shares fell, while 79 rose; 9 of 11 sectors were lower, led by information technology stocks.
Insights
* The index advanced 2.9% in the past 52 weeks. The MSCI AC Americas Index lost 7% in the same period
* The S&P/TSX Composite is 10.7% below its 52-week high on April 5, 2022 and 4.1% above its low on May 13, 2021
* The S&P/TSX Composite is down 6.4% in the past 5 days and fell 9% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 15.6 on a trailing basis and 12.3 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.9% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.18t
* 30-day price volatility fell to 17.86% compared with 17.88% in the previous session and the average of 13.16% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
* Information Technology | -22.3412| -2.2| 1/15
* Consumer Discretionary | -15.9725| -2.5| 1/13
* Communication Services | -13.4995| -1.3| 0/7
* Consumer Staples | -12.0757| -1.5| 1/9
* Financials | -11.5611| -0.2| 9/19
* Industrials | -5.6653| -0.2| 8/22
* Utilities | -2.8904| -0.3| 9/7
* Real Estate | -1.7291| -0.3| 9/13
* Health Care | -1.0500| -1.1| 2/6
* Materials | 8.1679| 0.3| 17/33
* Energy | 25.8023| 0.7| 22/12
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
* Shopify | -17.6200| -5.2| 70.9| -76.2
* Brookfield Asset Management | -5.2190| -0.9| 30.2| -20.3
* BCE | -4.7490| -1.1| -37.2| 3.6
* TD Bank | 8.9060| 0.8| -45.1| -4.4
* Nutrien | 12.7300| 2.7| 11.0| 32.7
* Suncor Energy | 15.2700| 3.4| 14.3| 46.1

US
By Rita Nazareth
(Bloomberg) — Stocks slid after data showed that US inflation will remain high for quite some time, adding to concern the Federal Reserve may be forced to unleash further tightening measures that could tip the economy into a recession.
Remarks from Fed Bank of Atlanta President Raphael Bostic didn’t help sentiment either as the official said he’s open to “moving more” on rates if inflation persists at elevated levels.
The S&P 500 erased gains and dropped to its lowest since March 2021, while the tech-heavy Nasdaq 100 tumbled about 3% amid a rout in giants like Tesla Inc. and Apple Inc.
Small caps sank after a rally that approached 2% earlier in the day.
The Treasury curve flattened, with the gap between two- and 10-year yields narrowing nine basis points.
Investors seem to agree that a 75 basis-point hike isn’t likely, according to pricing in federal-fund futures markets.
But they did increase bets that the Fed will roll out another half-point hike in September — following increases of that size in June and July.
The US central bank hiked interest rates by a half-point last week and Fed Chair Jerome Powell signaled that similar rate increases are on the table for the next two meetings, while pushing back against making a larger move.
While annual measures of consumer prices cooled slightly from March — signaling a peak that economists expected – the details of a report Wednesday painted a more troubling picture as monthly figures advanced more than forecast.
Services costs accelerated while inflation for most goods remained stubbornly high, underscoring the persistence and breadth of price pressures.

Reaction to CPI:
* “Inflation appears to be entrenched within many areas of the economy and regardless if we have witnessed inflation peak, a persistently slow grind lower will be more problematic for the Fed to simultaneously cool inflation without tipping the economy into recession,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.
* “Although the possibility of peak CPI being behind us remains on the table, the way back to acceptable levels still looks to be some distance away, both in terms of time and potential monetary tightening,” said Michael Shaoul, chief executive officer at Marketfield Asset Management.
* “This reading does not change the Fed’s path on policy, but extends the window for more market volatility ahead as clarity on inflation remains elusive,” said Cliff Hodge, chief investment officer at Cornerstone Wealth.
* “A moderating inflationary environment in the second half of the year means there will be less pressure on the Fed to combat inflationary pressures with aggressive monetary policies, which leaves open the possibility of a soft landing of the economy as opposed to the crash and burn that markets have been pricing in as of late,” said Peter Essele, head of portfolio management at Commonwealth Financial Network.
The rout in stocks isn’t over just yet, according to Morgan Stanley strategists, who see scope for equities to correct further amid mounting concerns of slowing growth.
Strategist Michael Wilson, who has long been a skeptic of the decade long  bull run in US stocks, said in a note that even after five weeks of declines, the S&P 500 is still mispriced for the current environment of the Fed tightening policy into slowing growth.
“We continue to believe that the US equity market is not priced for this slowdown in growth from current levels,” Wilson said in a note. “We expect equity volatility to remain elevated over the next 12 months.”
He recommends defensive positioning with an overweight in health-care, utilities and real-estate shares.
The S&P 500 may be at risk of further downside toward 3,600 points — down 10% from the Tuesday close — before reaching a historically important technical support level.
The 200-week moving average since 1986 has seen the US benchmark bounce back during all major bear markets, except for the tech bubble and the global financial crisis.
Here are key events to watch this week:
* San Francisco Fed President Mary Daly speaks, Thursday
* US PPI, initial jobless claims, Thursday
* University of Michigan consumer sentiment, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 1.6% as of 4 p.m. New York time
* The Nasdaq 100 fell 3.1%
* The Dow Jones Industrial Average fell 1%
* The MSCI World index fell 0.9%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro fell 0.1% to $1.0516
* The British pound fell 0.6% to $1.2243
* The Japanese yen rose 0.4% to 129.95 per dollar
Bonds
* The yield on 10-year Treasuries declined eight basis points to 2.91%
* Germany’s 10-year yield declined one basis point to 0.99%
* Britain’s 10-year yield declined two basis points to 1.83%
Commodities
* West Texas Intermediate crude rose 5.4% to $105.13 a barrel
* Gold futures rose 0.6% to $1,852.50 an ounce
–With assistance from Sunil Jagtiani, Andreea Papuc, John Viljoen, Srinivasan Sivabalan, Peyton Forte, Michael Msika and Cecile Gutscher.
Have a lovely evening everyone.

Be magnificent!
As ever,

Carolann

Measure wealth not by the things you have, but by the thins you have for which you would not take money. -Dave Ramsey, b.1960.

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