May 17, 2024, Newsletter

Dear Friends,

Tangents: Happy Friday.

***May 17, 1792: The New York Stock Exchange was founded by brokers meeting under a tree on what is now Wall Street.  Go to article >> ***

May 17,1844: Rubber band patented.
May 17, 1954: School segregation banned.  Brown vs Board of Education.
May 17, 1990: The WHO deletes homosexuality from its list of mental diseases.

JWST spots 2 monster black holes merging at the dawn of time, challenging our understanding of the universe
New observations with the James Webb Space Telescope reveal the most distant pair of merging black holes ever spotted. The discovery further challenges leading theories of cosmology. Read More.

Long-lost branch of the Nile was ‘indispensable for building the pyramids,’ research shows
The Nile’s now-extinct branch likely helped the ancient Egyptians move materials to pyramid building sites. Read More.

Some of the oldest stars in the universe found hiding near the Milky Way’s edge — and they may not be alone
Astronomers reanalyzed the chemical composition of three stars in the Milky Way’s halo and found that they are between 12 and 13 billion years old. They may have also been stolen from other galaxies. Read More.

Deaf baby can hear after ‘mind-blowing’ gene therapy treatment
Seven months after her treatment, the baby girl can now respond to her parents’ voices without the aid of a cochlear implant. Read More.

The Mirage in Las Vegas is closing after 34 years
See which resort is taking its place on the iconic Las Vegas Strip.

Flowers, socks and sparkling wine: Queen Camilla reveals some of her favorite brands
Britain’s Queen Camilla has granted her first royal warrants to seven companies. These act as a stamp of approval to indicate the preferred goods and services used by the royal household.

Highlights from the PGA Championship
Xander Schauffele is playing some of the best golf of his career while world No. 1 Scottie Scheffler made a start that surpassed even his expectations.

Academy of Country Music Awards 2024: See the list of winners
Luke Combs took home the trophy for single of the year at the ACM Awards. See who else won big.

PHOTOS OF HE DAY

Geneva, Switzerland
Breathe, a pulsating dome of light created by the artist Dan Acher, in the Plainpalais neighbourhood
Photograph: Fabrice Coffrini/AFP/Getty Images

Elk gather around a calf at the Daqingshan National Nature Reserve in Hohhot, Mongolia, China
Photograph: Costfoto/NurPhoto/Rex/Shutterstock

​​​​​​​Edinburgh, Scotland
The Northern lights during a solar storm over the National Monument of Scotland. The aurora borealis lit up the night sky last weekend with rare sightings across the UK, Europe and the northern hemisphere.
Photograph: Jacob Anderson/AFP/Getty Images
Market Closes for May 17^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1961, the Dow Jones Industrial Average closed above 700 for the first time, a bit more than two years after passing 600.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the third day, climbing 0.7%, or 165.55 to 22,465.37 in Toronto.  
The move was the biggest since rising 1.4% on May 6.
Today, materials stocks led the market higher, as 8 of 11 sectors gained; 138 of 223 shares rose, while 82 fell.
Cameco Corp. contributed the most to the index gain, increasing 6.4%.
New Gold Inc. had the largest increase, rising 13.3%.
Insights
* So far this week, the index rose 0.7%
* The index advanced 11% in the past 52 weeks. The MSCI AC Americas Index gained 27% in the same period
* The S&P/TSX Composite is 0% below its 52-week high on May 10, 2024 and 20.2% above its low on Oct. 27, 2023
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.7 on a trailing basis and 15.5 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$3.54t
* 30-day price volatility rose to 9.27% compared with 9.01% in the previous session and the average of 8.84% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | 78.1689| 2.8| 46/4
Energy | 41.8693| 1.0| 30/9
Financials | 36.6580| 0.5| 21/6
Information Technology | 8.6416| 0.5| 5/5
Industrials | 5.1165| 0.2| 12/15
Utilities | 0.7509| 0.1| 6/9
Communication Services | 0.6953| 0.1| 2/3
Consumer Staples | 0.0305| 0.0| 5/6
Health Care | -1.8743| -2.9| 1/3
Consumer Discretionary | -2.2375| -0.3| 7/5
Real Estate | -2.2740| -0.5| 3/17
================================================================
| | |Volume VS | YTD
| Index | | 20D AVG | Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Cameco | 13.2700| 6.4| 65.9| 26.4
Canadian Natural Resources | 12.9100| 1.7| -43.5| 20.8
RBC | 10.0400| 0.7| -29.7| 8.5
TFI International | -2.1990| -2.1| 6.8| 0.7
Restaurant Brands | -2.2730| -1.1| -13.1| -6.8
Brookfield Corp | -2.5010| -0.4| -22.3| 13.9
US
By Rita Nazareth
(Bloomberg) — Stocks extended gains into a fourth consecutive week, with the Dow Jones Industrial Average closing above the 40,000 mark for the first time.
Following a set of inflation reports that reignited hopes on Federal Reserve rate cuts, the S&P 500 saw its longest weekly win since February.
Strong earnings have also fueled gains, with the focus now shifting to next Wednesday’s results from Nvidia Corp. — the poster child of the artificial-intelligence boom.
While the advance lost steam in the past two days, the market is still on pace for its best month in 2024.
“The pause that refreshes,” said Mark Newton at Fundstrat.
“Whether or not investors choose to hold out for a possible consolidation here is a tough choice, but I suspect that any weakness proves temporary.
It’s right to be bullish, and consolidation would make the S&P 500 more attractive for further gains up to 5,400.”
The S&P 500 hovered near 5,300.
Mega-caps were mixed, with Tesla Inc. up and Nvidia down.
GameStop Corp. sank on plans to sell up to 45 million shares.
Reddit Inc. jumped as it forged a partnership with OpenAI.
Applied Materials Inc.’s forecast failed to impress investors.
About $3 trillion of options were due to expire Friday, according to Rocky Fishman at Asym 500.
While trading in short-dated contracts has grown, the monthly event is still on Wall Street’s radar as it obliges investors to roll over existing positions or start new ones, potentially leading to sudden price swings.
Treasury 10-year yields rose four basis points to 4.42%.
Investor sentiment hit levels that signal market “euphoria,” driven by a spike in trading volumes amid rallies earlier this week in meme stocks like GameStop Corp. and AMC Entertainment Holdings Inc., according to Citigroup Inc.
Citi’s Levkovich Index, a contrarian indicator that measures trader attitudes toward stocks, re-entered euphoric territory, strategists led by Scott Chronert said.
Such levels imply a lower probability of positive forward returns over the subsequent year.
“Wild moves in retail favorite stocks have been headline-making over the past couple weeks, albeit in both directions,” Chronert wrote.
“This action, which is hard to explain using any traditional logic, provides perspective that the system is still awash with liquidity.”
After suffering the first 5% pullback of the year, the S&P 500 has rebounded to hit its 23rd record in 2024 earlier this week.
Following the end of the previous 28 declines of that same magnitude since stocks bottomed during the financial crisis in 2009, the median gain until the next correction has been 17.4% — with a minimum advance of 8.5%, according to Keith Lerner at Truist Advisory Services.
“This suggests upside potential remains, even while it won’t likely be a straight line higher,” he said.
“Until the weight of the evidence shifts, bull market rules apply. That is, investors should stick with the primary market uptrend and view pullbacks as opportunities.”
Deutsche Bank AG strategists led by Binky Chadha raised their year-end S&P 500 target to 5,500 from 5,100, pointing to a strong earnings cycle and expectations for market confidence to rise by year-end, which is set to bode well for US stocks.
“We see the earnings cycle having plenty of legs,” the strategists wrote. “While all the growth may not materialize this year, we see market confidence in a continued recovery rising by year end, supporting equity multiples.”
To Mark Haefele at UBS Global Wealth Management, the recent rally in stocks has been well-supported.
“If inflation pressures ease more quickly or profit growth is stronger, we think the S&P 500 could reach 5,500 by the end of the year,” he noted.
Analysts have ratcheted up earnings forecasts for the current quarter at the swiftest pace in two years, suggesting that the worst of the US profit slump may be firmly in the rear-view mirror, Bloomberg Intelligence data show.
Two groups with strong links to the economic cycle — energy and materials — have led the upward adjustments.
As the robust earnings season draws to a close, Florian Ielpo at Lombard Odier Asset Management says attention is shifting to the broader economic landscape.
“It appears that lower interest rates alone may no longer suffice to prop up the markets, raising the specter of potential pitfalls ahead,” he noted.
“In particular, investors are now faced with the conundrum of whether the softer growth context could have a detrimental impact on earnings or not.”
In fact, a series of weaker-than-estimated data points — from jobs to retail sales and manufacturing — has sent the US version of Citigroup’s Economic Surprise Index to the lowest since January 2023.
The gauge measures the difference between actual releases and analyst expectations.
As macroeconomic conditions soften, long-duration bonds are set for a comeback later in 2024, according to strategists at Bank of America Corp.
Positioning in markets, the next moves in monetary policy, and the risk to corporate profits from some weaker signals on the economy set the scene for a reversal of the “anything but bonds” trade in the second half, a team led by Michael Hartnett wrote in a note.
He pointed to investors being very long on cash, investment-grade bonds and stocks, “but no one” making bullish bets on the 30-year Treasury, which Hartnett sees as the best hedge for weaker nominal growth.
James Rossiter at TD Securities remarked that markets continue to see-saw around volatile data surprises, especially in the US.
“The dramatic moves in hard and soft data surprises have been extreme in recent months, but the bottom line is that inflation surprises, while moving in the right direction recently, are still persistently too high,” he noted.
Fed Governor Michelle Bowman repeated she anticipates inflation to remain elevated for “some time,” but continues to expect price pressures to ultimately subside with interest rates held at the current level.
Officials kept their benchmark rate steady earlier this month at a target range of 5.25% to 5.5% — the same level it’s been at since July.
Fed Chair Jerome Powell said Tuesday that officials will “need to be patient and let restrictive policy do its work.”
“The Fed can wait a little longer to cut rates given the domestic picture, but not a lot longer in our opinion,” said Don Rissmiller at Strategas.
“A few more months are likely enough to validate that the ‘last mile’ of this inflation fight is proceeding acceptably in the US given the reassuring data this week.”
Traders are keeping a close eye on flows into equities from the retail crowd as stocks hover near record highs and meme stocks popped and then fizzled this week.
“I am starting to have conversations regarding FOMU, fear of materially underperforming, this week heading into a positive trading window for the ‘US 60/40 portfolio,’”
Scott Rubner, global markets division managing director and tactical specialist at Goldman Sachs Inc., wrote in a note to clients Friday.
On Thursday, off-exchange volume, which shows the percentage of all US equities traded after the market close, reached 51.6%.
That surpassed the prior peak of 50% in January 2021.

–With assistance from Lu Wang, Jessica Menton, Alexandra Semenova, Farah Elbahrawy and Natalia Kniazhevich.

Have a wonderful weekend everyone.

Be magnificent!

As ever,

Carolann
The lack of money is the root of all evil. -Mark Twain, 1835-1910.

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