November 1, 2023

Dear Friends,

Tangents: Happy November.  All Saints Day.
Scorpio: October 23-November 21.
Sagittarius: November 22-December 21.
November birthstone: Topaz
November flower: Chrysanthemum.

NOVEMBER:
“The last red berries shrivel.  Night comes early, dawn late.  The sun is weaker.  Ice is on the birdbath, frost on the car.  Perhaps it is already snowing.  Certainly, it’s damp and raw.  Rain is forecast.  Now is the time to act, to begin.  As Ishmael says in Moby Dick, ‘whenever it is a damp drizzly November in my soul…I account it high time to get to sea as soon as I can’.  He means it’s time for human deeds.  Without our contribution, nothing will happen, life will have no meaning.  Without our experience, the world cannot evolve, life on earth cannot become more abundant.  ‘We have it in our power to begin the world over again,’ said Tom Paine.  ‘Start by doing what’s necessary; then do what’s possible; and suddenly you are doing the impossible,” said St Francis of Assisi.  All it takes is patience, grace, intention, and the right moment.” -by Cosmo Doogood.

November 1, 1993: The Maastricht Treaty, which introduced the Euro as a common currency for European Union countries, comes into effect.
On Nov. 1, 1952, the United States exploded the first hydrogen bomb, in a test at Eniwetok in the Marshall Islands.  Go to article >>

The best celebrity Halloween costumes of 2023
With a team of professional makeup artists and hair stylists at their fingertips, these celebrities debuted the most elaborate costumes of the year.

Saudi Arabia set to host 2034 World Cup as Australia withdraws interest
Saudi Arabia is set to host the 2034 men’s FIFA World Cup after Australia withdrew its interest hours before the bidding deadline on Tuesday.

PHOTOS OF THE DAY

Artvin, Turkey
Autumn colours around Rutav Lake in the village of Yukarı Koyunlu.  Photograph: Ali Fatih Akcay/Anadolu Agency/Getty Images.

Tenterfield, Australia
Bushfires seen in the distance surrounding the northern New South Wales town of Tenterfield.  Photograph: Reuters.

London, UK
A giant inflatable octopus on the bank of the River Thames next to the Houses of Parliament, during action by Greenpeace highlighting the need to protect oceans.
Photograph: Henry Nicholls/AFP/Getty Images
Market Closes for November 1^st, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1978: Total daily trading volume on the New York Stock Exchange exceeded 50 million for the first time, with 50.45 million shares changing hands.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the third day, climbing 1.1%, or 205.53 to 19,079.00 in Toronto.
The move was the biggest since rising 1.3% on Oct. 10.
Today, financials stocks led the market higher, as 10 of 11 sectors gained; 177 of 227 shares rose, while 46 fell.
Brookfield Corp. contributed the most to the index gain, increasing 4.8%.
Brookfield Infrastructure Partners LP had the largest increase, rising 10.8%.
Insights
* In the past year, the index had a similar or greater gain 12 times. The next day, it advanced eight times for an average 0.4% and declined four times for an average 0.6%
* This year, the index fell 1.6%, heading for the worst year since 2022
* The index declined 2.2% in the past 52 weeks. The MSCI AC Americas Index gained 9% in the same period
* The S&P/TSX Composite is 8.5% below its 52-week high on Feb. 2, 2023 and 2.1% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 0.7% in the past 5 days and fell 2.4% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 14.3 on a trailing basis and 13.4 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.5% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$2.99t
* 30-day price volatility rose to 13.81% compared with 13.24% in the previous session and the average of 14.14% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 54.0023| 1.0| 25/3
Energy | 37.2276| 1.0| 32/6
Utilities | 27.5954| 3.7| 15/0
Information Technology | 26.8785| 2.0| 7/4
Industrials | 22.3679| 0.9| 22/4
Communication Services | 13.8526| 1.9| 5/0
Consumer Staples | 11.5810| 1.4| 10/1
Real Estate | 10.3164| 2.4| 21/0
Consumer Discretionary | 1.7215| 0.2| 8/6
Health Care | 0.8272| 1.5| 3/1
Materials | -0.8262| 0.0| 29/21
================================================================
| | |Volume VS | YTD
| Index | | 20D AVG | Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Brookfield Corp | 19.6300| 4.8|n/a | -0.6
Shopify | 18.1300| 3.3|n/a | 43.9
Canadian Natural Resources | 12.6000| 1.9|n/a | 19.3
Franco-Nevada | -3.8780| -1.7|n/a | -10.2
SSR Mining | -4.1310| -15.1|n/a | -23.1
First Quantum Minerals | -5.0610| -8.0|n/a | -47.8
US
By Rita Nazareth
(Bloomberg) — Investors who were braced for a “hawkish hold” from Jerome Powell Wednesday got something altogether different from the Federal Reserve chairman — hope that that the rate-hike cycle is over.
The result was sizable rallies in both stocks and bonds.
Traders got a dose of encouragement after Powell signaled the current tightening cycle has come far and noted the Fed is “proceeding carefully.”
The S&P 500 climbed over 1%.
Ten-year US rates dropped 17 basis points to 4.76%, with the move initially triggered by the Treasury’s plans to slow the pace of increase in its long-term debt sales.
Swaps for January show a peak rate of 5.41% — equating to only eight basis points of additional hikes.
“The Fed tried to deliver a hawkish hold, but Wall Street is not believing additional tightening will happen this cycle,” said Edward Moya, senior market analyst for the Americas at Oanda. “Fed Chair Powell tried to talk a hawkish game, but he wasn’t convincing enough.”
Another relevant aspect was that the Fed signaled that a run-up in long-term Treasury yields reduces the impetus to raise interest rates again.
The perception is —  the massive increase in longer-term rates has effectively done some of the work the Fed has been trying to accomplish in its quest to tighten conditions and bring inflation back to the 2% target.
“The Fed didn’t hike today, mainly because the bond market hiked for them,” Callie Cox at eToro. “This should be a relief for investors. The Fed is paying attention to the big picture, and they know that blindly hiking on top of substantially tight conditions could tip the economy over the edge.”
The US central bank’s policy-setting Federal Open Market Committee held interest rates at a 22-year high for a second straight meeting on Wednesday.
It said in a post-meeting statement that “tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation,” adding the word “financial” to
language that previously referred only to credit conditions.
To Tiffany Wilding, economist at Pacific Investment Management Co., the central bank is balancing the resilient economic data in recent months against tighter financial conditions.
“Based on the November FOMC meeting, tighter financial conditions seem to be winning out for Fed officials for now,” she noted.

More Comments:

* Greg McBride, chief financial analyst at Bankrate:
“The Federal Reserve held off on another interest rate hike, but is keeping their options open to raise rates at an upcoming meeting should conditions warrant. The rise in long-term interest rates in recent months has had the same desired effect of monetary tightening, effectively doing some of the Fed’s dirty work for them.”

* Peter Boockvar, author of the Boock Report:
“The FOMC statement added one tweak to the statement with everything else pretty much identical to the September one but the messaging was that the rise in long-end rates is another form of monetary tightening as it should be treated as such.  What else would you call a 100 bps rise in the average 30-year mortgage rate since their last rate hike in July coincident with the jump in long rates?”

* Diane C Swonk, chief economist at KPMG, on Bloomberg TV:
“The strength of the economy justifies higher rates, and it also brings into question, how much restriction we have. And if financial conditions were to unwind, and the rout in the bond market were to unwind, that takes away the restriction that’s out there, and all of the sudden, the Fed has to get back in the game. So that optionality of every meeting being live?  Critical.”
Meantime, the Treasury said it will sell $112 billion of longer-term securities at its quarterly refunding auctions next week, which span 3-, 10- and 30-year notes.
Many major dealers had predicted $114 billion.
Secretary Janet Yellen has rejected the idea that increased government borrowing caused the recent surge in bond yields, but several market participants have cited fiscal concerns.
“Our takeaway from the new information was that the reintroduction of term premium into the long-end of the curve was enough to give Yellen pause in being too aggressive with long-end issuance increases,” said Ben Jeffery, US rates strategist at BMO Capital Markets. “While the Treasury said it anticipates one more quarter of larger auctions, we suspect the risk is tilted toward a more measured approach going forward.”
Oversold technicals are making stocks prone to relief rallies, but the direction of travel is likely to be tied to the Fed’s policy — especially after very strong tightening in financial conditions in the past six weeks — which took the Goldman Sachs US Financial Conditions Index to its highest in a year.
“We estimate that the recent tightening has roughly the same impact on the economy as four 25 bp hikes,” say Goldman Sachs economists led by Jan Hatzius. “The rise in interest rates has been driven by a reassessment of the neutral rate and an increase in the term premium, and for that reason looks unlikely to reverse anytime soon.”
While October is typically the market’s most volatile month and known for crashes in 1929, 1987 and 2008, November has traditionally been the second-strongest month for stocks behind April.
November traditionally kicks off the “best six months” of the year for the S&P 500, typically because stock buying by companies and pension plans tend to pick up starting on Nov. 1, per the Stock Trader’s Almanac.
The tax-loss harvesting deadline for mutual funds is usually Oct. 31, compared with the end of the year for individual taxpayers.
A contrarian indicator from Bank of America Corp. that compiles Wall Street strategists’ recommended allocation to stocks is getting closer to flashing “buy.”
The gauge’s current level implies a 16% price return for the S&P 500 over the next 12 months, strategists led by Savita Subramanian said Wednesday in a note to clients.
“Sentiment and positioning are at extremes, while financial conditions are at the tightest level in a year,” said Mark Hackett, chief of investment research at Nationwide. “There are similarities to the extreme pessimism from a year ago that led to a 20% rally in equities, though the fundamental backdrop will need to remain healthy to support such a move.”

Corporate Highlights:
* Advanced Micro Devices Inc. climbed after saying a new AI chip will generate $2 billion in sales next year, fueling optimism that demand for the component will offset a slump in orders for video-game equipment.
* Apollo Global Management Inc. jumped as investors looked past a private equity deal slowdown and cheered momentum in the firm’s massive credit business.
* Estée Lauder Cos.’ already-battered shares plummeted still more after the beauty giant slashed its full-year outlook on troubles in China and the Middle East.
* JPMorgan Chase & Co. is searching for a potential partner to grow its private credit business and accelerate its push into one of the hottest areas in leveraged finance, according to people with knowledge of the matter.
* WeWork Inc. is preparing to file for bankruptcy as soon as next week, according to people with knowledge of the matter.
* Netflix Inc.’s advertising-supported plan has reached 15 million global customers one year after its launch, the company said in a blog post Wednesday.
* CVS Health Corp. fell as its management told investors to expect adjusted 2024 profit toward the low end of the company’s forecast.
* Humana Inc. sank after executives said the initial outlook for 2024 profit growth would be at the low end of its forecast.
Key events this week:
* Eurozone S&P Global Eurozone Manufacturing PMI, Thursday
* Bank of England interest rate decision. Governor Andrew Bailey holds news conference, Thursday
* US factory orders, initial jobless claims, productivity, Thursday
* Apple earnings, Thursday
* China Caixin services PMI, Friday
* Eurozone unemployment, Friday
* US unemployment, nonfarm payrolls, Friday
* Canada employment report, Friday
–With assistance from Emily Graffeo and Michael Mackenzie.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
When we are born we cry that we are come to this great stage of fools. –William Shakespeare, 1564-1616, King Lear.

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