May 8, 2024, Newsletter

Dear Friends,

Tangents: VE Day; Victory in Europe Day.
Carolann is away from the office for a conference, I will be writing the newsletter on her behalf.

Victory in Europe Day is the day celebrating the formal acceptance by the Allies of World War II of Germany’s unconditional surrender of its armed forces on Tuesday, 8 May 1945; it marked the official end of World War II in Europe in the Eastern Front, Read More.
May 8, 1846: First major battle of the Mexican–American War fought at Palo Alto, Texas
May 8, 1886 Jacob’s Pharmacy in Atlanta sells the first Coca-Cola (contained cocaine)
May 8, 1899 Ernest Rutherford publishes his discovery of two different kinds of radiation (Alpha and Beta Particles)

Epic NASA video takes you to the heart of a black hole — and destroys you in seconds
What would it be like to fall past the event horizon of a black hole? A new NASA simulation provides a peek into the bizarre physics of spaghettification.

Japan captures 1st image of space debris from orbit, and it’s spookily stunning
A new Japanese mission to photograph space junk from orbit marks a milestone in orbital debris cleanup efforts.

2,500-year-old Illyrian helmet found in burial mound likely caused ‘awe in the enemy’
Archaeologists excavating a burial mound in Croatia have discovered a 2,500-year-old Illyrian helmet that may have been a votive offering. Read More.

Hoard of 17th-century coins hidden during English Civil War unearthed during kitchen renovation
During a kitchen renovation, a family in England unexpectedly discovered a hoard of coins that was likely buried for safekeeping during the first English Civil War. Read More.

‘A dream come true’: Nuclear clock breakthrough could revolutionize study of the universe’s fundamental forces
By nudging a thorium-229 nucleus into a higher energy state, physicists have made it possible to develop a nuclear clock that could probe the most fundamental forces in physics. However, there is still a long way to go. Read More.

PHOTOS OF THE DAY

Marseille, France
People on boats accompany the Belem, a three-masted sailing ship, as it arrives into the Old Port carrying the Olympic flame, for the Paris Olympics 2024
Photograph: Benoît Tessier/Reuters

Qiqihar, China
A red-crowned crane guards its chick and egg at Zhalong national nature reserve. The reserve is the world’s largest habitat and reproduction base for the birds with more than 380 bred in captivity being released into the wild
Photograph: Xinhua/Rex/Shutterstock

Foz do Iguaçu, Brazil
Tourists view Iguazú Falls, which are currently at full water capacity due to rainfall
Photograph: Kiko Sierich/Reuters
Market Closes for May 8^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1929, John Clifton Bogle, future founder of the Vanguard Group of Investment Cos., is born in Montclair, N.J., to homemaker Josephine Hipkins Bogle and William Yates Bogle, Jr., a manufacturing executive and former aviator.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.1% at 22,259.16 in Toronto.
The move was the biggest since falling 1.3% on April 30 and follows the previous session’s increase of 0.1%.
Today, information technology stocks led the market lower, as 2 of 11 sectors lost; 74 of 223 shares fell, while 146 rose.
Shopify Inc. contributed the most to the index decline and had the largest move, decreasing 18.5%.
Insights
* The index advanced 8.1% in the past 52 weeks. The MSCI AC Americas Index gained 25% in the same period
* The S&P/TSX Composite is 0.5% below its 52-week high on April 9, 2024 and 19.1% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 2.4% in the past 5 days and was unchanged in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.5 on a trailing basis and 15 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 fell to 9.45% compared with 9.78% in the previous session and the average of 8.35% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Information Technology| -153.3138| -8.1| 6/4
Health Care | -1.0531| -1.6| 2/2
Consumer Discretionary| 1.0677| 0.1| 6/7
Communication Services| 3.1220| 0.4| 2/3
Real Estate | 3.2514| 0.7| 16/4
Materials | 7.3492| 0.3| 25/22
Consumer Staples | 7.5846| 0.8| 11/0
Utilities | 8.9801| 1.1| 14/1
Industrials | 13.9957| 0.5| 19/8
Energy | 19.5799| 0.5| 25/16
Financials | 57.9582| 0.9| 20/7
================================================================
| | |Volume VS| YTD
| Index Points | | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
Shopify | -165.5000| -18.5| 132.7| -16.5
Cameco | -4.5860| -2.1| -4.0| 21.6
NexGen Energy | -4.5680| -12.3| 246.6| 13.5
Constellation Software | 8.9770| 1.7| 18.9| 16.3
TD Bank | 11.5500| 1.2| -22.4| -10.2
RBC | 12.2000| 0.9| -42.7| 4.4
US
By Rita Nazareth
(Bloomberg) — Wall Street’s enthusiasm for stocks faded as many traders were reluctant to keep piling in after a solid rally in early May.
The S&P 500 closed little changed, remaining below the 5,200 mark that it briefly touched this week.
Tesla Inc. and Google’s parent Alphabet Inc. led losses in megacaps.
Intel Corp. sank as it expects revenue to fall “below the midpoint” of previously issued projections after a US ban on chip exports to Huawei Technologies Co.
Treasuries remained lower after a $42 billion sale of 10-year bonds saw tepid demand.
“All of these ingredients create a perfect recipe for an excuse for investors to take a step back after the recent bounce and reassess things,” said strategists at Bespoke Investment Group.
Lack of conviction among investors to buy into the recent bounce in US stocks shows the market is far from turning fully bullish, said Citigroup Inc. strategists.
The recent unwind of short positions has left the S&P 500 close to one-sided net long, but investors appear hesitant to add to the existing bullish positions, a team led by Chris Montagu noted.
“Flows tell a story of limited enthusiasm with a trickle of new long positions and only marginal increase in risk appetite,” Montagu said.
The S&P 500 hovered near 5,190, following its biggest four- day advance since November. Treasury 10-year yields rose three basis points to 4.49%.
Following a pullback last month, equities resumed their advance in early May as solid corporate earnings bolstered sentiment and speculation grew that the Federal Reserve will be able to cut rates this year.
The recent rally brought the S&P 500 about 1% away from its all-time high.
Yet the bounce off April’s lows was a narrow one, noted Matt Maley at Miller Tabak + Co.
“That’s not the end of the world,” he said. “But it would be a lot more positive if this rally can broaden out over the coming days and weeks — given that the market is a lot more expensive than it was at this time last year.”
A surge in the S&P 500 since the end of October through April had pushed the equity gauge to trade at 20 times projected profits, some 11% above its 10-year average.
Traders are now looking for reasons to justify the high valuations and want to see bigger growth ahead.
The recent stock rally signaled that traders are more driven by “fear of missing out” than confidence about fundamentals as there is still uncertainty as to where earnings go from here and few market catalysts on the horizon, according to David Bahnsen, chief investment officer at The Bahnsen Group.
“With no rate cuts possible until July and not likely until September, and the next earnings season two months from starting, there are no apparent catalysts to change the near future direction of stocks other than speculation around what various data points,” he noted.
Inflation figures due next week will offer fresh insights about the US economy after employment data out Friday showed the labor market is cooling.
Fed Bank of Boston President Susan Collins signaled Wednesday that interest rates will likely need to be held at a two-decade high for longer than previously thought to damp demand and reduce price pressures.
“Despite the lack of good news on inflation, there is a silver lining for patient investors,” said Mark Hackett at Nationwide. “As the Federal Reserve extends the timeline for interest rate cuts, historical data shows that longer Fed pauses often correlate with better equity returns. This should give investors reasons to be optimistic.”
Indeed, longer pauses have been constructive for equities, according to a study conducted by Ryan Grabinski at Strategas.
“The longest pause from June 2006 to September 2007 was associated with the best equity market return,” he noted. “We are reaching the point where a Fed cut is probably more likely to mean issues are perking up.”
Robust corporate earnings will continue to lift the S&P 500 to 5,500 by the end of this year as profit margins improve, according to Societe Generale SA.
“Profits are the glue in this cycle,” the firm’s head of US equity strategy Manish Kabra wrote, adding that 2024 should be considered “an inflationary year, rather than stagflationary” as earnings-per-share growth is poised to accelerate further.
S&P 500 companies crushed earnings-growth expectations again in the first quarter, driving upward momentum in consensus for top and bottom lines, but guidance suggests a heavy dependence on margin to meet future expectations, according to
Gina Martin Adams at Bloomberg Intelligence.
“Earnings are well on the recovery path now that the 2022-2023 earnings recession is past, and they should return to double-digit growth with widespread participation later this year,” she noted. “However, sales growth is expected to hover in the low-to mid-single digit range through 2026, suggesting the earnings recovery is so far mostly about margin expansion amid cost-cutting and easing inflation pressures.”
There’s been a resurgence of earnings per share as several industries emerge from “EPS rolling recessions,” according to Erin Browne and Emmanuel Sharef at Pacific Investment Management Co.
That means different equity sectors experience earnings downturns at different times and then recover, one after the other, over a span of several quarters.
The growth sector of the S&P 500 — dominated by technology— went through an EPS recession in 2022 and then recovered in 2023 — while most other sectors’ EPS were contracting, they added.
“As we progress through 2024, we expect defensive and cyclical stocks will emerge from their earnings contractions, potentially leading to significant price appreciation,” they noted. “Macro trends and supportive bottom-up signals have us modestly overweight equities in multi-asset portfolios.”
Against a backdrop of slowing job growth and slumping consumer confidence, investors will now turn their focus to the earnings of retailing giants like Walmart Inc. and Target Corp. to gauge shoppers’ spending habits.
Both firms are due to report over the next couple weeks, with the potential to sway expectations for economic growth and retail shares, which are trailing the broader market in 2024.
Meantime, utility companies are beating the S&P 500 at a blistering pace since the equity benchmark bottomed last month, a defensive shift that poses a roadblock for the bulls in the short-run if traders are using bond-proxy sectors as leadership stocks.
The utilities sector, which includes companies providing electricity, water and gas that are known for their consistent dividend payments, has climbed by 11% in 15 sessions through Tuesday — a sizzling rate that was last exceeded in the depths of the pandemic in 2020, according to data compiled by Bloomberg.

Corporate Highlights:
* Uber Technologies Inc. reported gross bookings in the first quarter that missed analysts’ estimates with softer-than- expected demand in Latin America and earlier holidays weighing on orders.
* Lyft Inc. reported first-quarter results and financial guidance that beat investors’ expectations, a sign of the company’s ability to retain and attract new riders in the US and Canada.
* Rivian Automotive Inc. fell short of Wall Street’s earnings expectations to start the year as the automaker pursues a costly effort to revamp its manufacturing operations and boost output of electric vehicles.
* Shopify Inc. shares tumbled after the Canadian e-commerce company pledged to continue investing in marketing even though doing so will pinch profits.
* Chinese iPhone shipments jumped about 12% in March after Apple Inc. and its retailers slashed prices, official data showed, suggesting efforts to arrest an accelerating decline in sales are yielding early results.
* Pfizer Inc. has agreed to settle more than 10,000 cases accusing it of hiding the cancer risks of its Zantac heartburn drug, according to people familiar with the deal, the biggest of the litigation.
* Reddit Inc. jumped as improvements to the social-media platform’s advertising system helped push quarterly sales higher than expected in its first results as a public company.
* Brookfield Asset Management reported its first quarterly decline in profit since it spun out of its parent company amid a drop in fees from some permanent capital vehicles.

Key events this week:
* Bank of Japan issues summary of opinions from April policy meeting, Thursday
* China trade, Thursday
* UK BOE rate decision, Thursday
* US initial jobless claims, Thursday
* UK industrial production, GDP, Friday
* ECB publishes account of April policy meeting, Friday
* BOE Chief Economist Huw Pill speaks, Friday
* US University of Michigan consumer sentiment, Friday
* Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 was little changed as of 4 p.m. New York time
* The Nasdaq 100 was little changed
* The Dow Jones Industrial Average rose 0.4%
* The MSCI World index fell 0.2%
Currencies
* The Bloomberg Dollar Spot Index rose 0.2%
* The euro was little changed at $1.0745
* The British pound was little changed at $1.2497
* The Japanese yen fell 0.6% to 155.62 per dollar
Cryptocurrencies
* Bitcoin fell 1.3% to $62,180.27
* Ether fell 1.6% to $3,000.6
Bonds
* The yield on 10-year Treasuries advanced three basis points to 4.49%
* Germany’s 10-year yield advanced four basis points to 2.46%
* Britain’s 10-year yield advanced one basis point to 4.14%
Commodities
* West Texas Intermediate crude rose 1.1% to $79.21 a barrel
* Spot gold fell 0.2% to $2,309.04 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Farah Elbahrawy and Jessica Menton.

Have a wonderful day everyone!

Be magnificent!
As ever,

Shabnam
“All great art contains at its center contemplation, a dynamic contemplation.”– Susan Sontag

Shabnam Mohammadpourmarzbali
Assistant to Carolann Steinhoff
Queensbury Securities Inc.

340A – 730 View Street
Victoria BC  V8W 3Y7
Tel: 778-430-5851
Fax: 778-430-5828