October 25, Newsletter

Dear Friends,

Tangents: Happy Friday!
Carolann is away from the office for a conference, I will be writing the newsletter on her behalf.

October 25, 1861: Toronto Stock Exchange created.
October 25, 2001: Microsoft releases Windows XP for retail sale
October 25, 2021 NASA scientists announce they may have detected the first planet outside our galaxy, in Whirlpool Galaxy (M51), 28 million light-years away

Scientists launch amazing ‘atlas’ of embryos, showing how cells move and develop through time
“Zebrahub” is an atlas of cells in developing zebrafish embryos, and scientists say it will help us learn about our own biology, too. Read more.

Parents who have this gene may be more likely to have a girl
A large new analysis suggests that some people carry genetic variants that make them more likely to have female than male offspring. Read more.

New device ‘zaps’ bacteria on the skin, potentially preventing infections
Early experiments suggest a patch that delivers harmless electric currents into the skin can thwart certain bacterial infections. However, it has not yet been tested in humans. Read more.

Perseverance rover watches a solar eclipse on Mars
NASA’s Perseverance rover turned its eyes toward the sky and photographed a solar eclipse from Mars, capturing the tiny moon Phobos crossing the sun’s face.

PICTURES OF THE DAY

Makow Podhalanski, Poland
An aerial view of trees under a morning fog and lit by the sunrise of a golden autumn morning
Photograph: Omar Marques/Anadolu/Getty Images

Nanjing City, China
Tourists enjoy the blooming of pink muhly grass in the eastern province of Jiangsu
Photograph: Rex/Shutterstock

​​​​​​​California, US
Californians are welcome to try one of the world’s largest corn mazes, which is open in Dixon until 31 October
Photograph: Fred Greaves/Reuters
Market Closes for October 25^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1907: As the year’s financial panic continued, J.P. Morgan raised still more cash to prop up struggling brokerage firms, this time flushing up $10 million to lend at the New York Stock Exchange. Brokers shouted with joy on seeing the cigar-chomping Morgan barging back to his office to announce that he had raised the money.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the fifth day, dropping 0.4%, or 87.88 to 24,463.67 in Toronto.
The index dropped to the lowest closing level since Oct. 15.
Barrick Gold Corp. contributed the most to the index decline, decreasing 3.2%.
Storage Vault Canada Inc. had the largest drop, falling 6.9%.
Today, 136 of 223 shares fell, while 84 rose; 9 of 11 sectors were lower, led by financials stocks.
Insights
* This year, the index rose 17%, heading for the best year since 2021
* This month, the index rose 1.9%
* So far this week, the index fell 1.4%, heading for the biggest decline since the week ended Sept. 6
* The index advanced 29% in the past 52 weeks. The MSCI AC Americas Index gained 38% in the same period
* The S&P/TSX Composite is 1.8% below its 52-week high on Oct. 21, 2024 and 30.9% above its low on Oct. 27, 2023
* S&P/TSX Composite is trading at a price-to-earnings ratio of 19.5 on a trailing basis and 17 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.8% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.89t
* 30-day price volatility rose to 6.86% compared with 6.73% in the previous session and the average of 8.71% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -39.1817| -0.5| 6/21
Materials | -23.0742| -0.7| 18/34
Industrials | -18.6556| -0.6| 9/18
Information Technology | -14.8415| -0.7| 2/8
Consumer Discretionary | -8.0061| -1.0| 2/8
Consumer Staples | -6.0264| -0.6| 4/7
Communication Services | -5.7261| -0.8| 1/4
Real Estate | -4.8502| -0.9| 3/16
Utilities | -1.0964| -0.1| 6/9
Health Care | 0.2990| 0.4| 2/2
Energy | 33.2928| 0.8| 31/9
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Barrick Gold | -10.9000| -3.2| 27.8| 13.9
Canadian Pacific Kansas | -10.3000| -1.5| -34.4| 2.2
RBC | -9.6890| -0.6| 36.1| 27.0
TC Energy | 4.3490| 0.9| -70.9| 39.3
Suncor | 7.0120| 1.5| -57.4| 27.6
Canadian Natural Resources | 11.6000| 1.6| -71.2| 13.8
US
By Rita Nazareth
(Bloomberg) — A rally in stocks faded as banks dragged down the broader market despite gains in tech shares.
Bitcoin slumped after a news report that federal investigators are probing cryptocurrency firm Tether.
The S&P 500 was little changed after climbing almost 1%.
Banks got hit as New York Community Bancorp tumbled 8.3% on a weaker outlook.
Goldman Sachs Group Inc. dropped 2.3% and JPMorgan Chase & Co. lost 1.2%. Crypto shares sank as the Wall Street Journal said the US is investigating Tether for possible violations of sanctions and anti-money-laundering rules.
A gauge of the “Magnificent Seven” megacaps notched its best back-to-back jump since February.
Treasuries wrapped up a tumultuous week with saw small moves as caution prevailed ahead of key events.
As the earnings season rolled in, traders also braced for the US presidential election and key economic data — including next week’s jobs report — for clues on the scope for Federal Reserve rate cuts.
“Investors are still very cautious as we approach a pivotal couple of weeks,” said Henry Allen at Deutsche Bank. “So there’s been a reluctance to push the rally much further before we get some clarity on those, all of which will play a crucial role in shaping the outlook as we move into next year.”
The S&P 500 saw its first down week since early September.
The Nasdaq 100 added 0.6% Friday.
The Dow Jones Industrial Average fell 0.6%.
The KBW Bank Index dropped 1.4%.
A gauge of the “Magnificent Seven” rose 1.3%.
Bitcoin fell 2%.
Treasury 10-year yields rose three basis points to 4.24%.
Oil climbed as traders kept an eye on the risk of escalation in the Middle East conflict and a deluge of other potentially pivotal market drivers.
Five of the “Mag Seven” report earnings next week, with Alphabet Inc., Meta Platforms Inc. and Amazon.com Inc. poised for double-digit earnings growth fueled by ad spending.
Apple Inc. could get a fillip from Chinese sales of its latest iPhones, while Microsoft Corp. may use its earnings call to address concerns that it’s lagging rivals in artificial intelligence.
“These reports will likely be critical in shaping how investors view the overall third quarter earnings season,” said Anthony Saglimbene at Ameriprise. “As long as fundamental conditions remain firm, the bull market should continue to ride the near-term ups and downs in sentiment.”
Tech behemoths have driven the bulk of the equity-market advance this year, but they trailed last quarter as the Fed cut interest rates for the first time since 2020, supporting sectors like financials and utilities.
The latest Bloomberg Markets Live Pulse survey published earlier this week showed takers anticipate the tech giants will take the lead again.
A combined 75% expect the “Magnificent Seven” to either beat or perform in line with the rest of the market this quarter.
One reason investors remain bullish is that the bulk of the S&P 500’s earnings growth still comes from big tech.
“Expectations for the next few quarters still favor technology driving the earnings growth bus, and the ‘Mag Seven’ is obviously driving technology earnings,” said Nancy Tengler at Laffer Tengler Investments.
“Overall, we expect big tech earnings next week will display a mix of steady operational performance, AI-led revenue acceleration, and resilient advertising that signals ongoing health and innovation,” said Ido Caspi at Global X.
“More so, we expect to see further evidence of generative AI moving along its growth curve and continued shift from experimentation to widespread monetization.”
One event that tech-stock watchers will be focusing on is Nvidia Corp.’s earnings, to be released in November.
The company’s last report drove the chipmaker’s shares down in the following days.
This time around, the biggest group of Markets Live Pulse survey respondents, 45%, see the results pushing the stock up.
Nvidia has been the poster child for the boom in AI technology, with its stock almost tripling this year.
“Earnings season is heating up and we will soon hear from big tech companies and the latest on their artificial intelligence spend,” said David Laut at Abound Financial.
“For big tech, this is the show me the money quarter, as investors are becoming impatient with AI spend that may or may not yield extra profits.
Tech valuations are priced for perfection and any disappointment could spark a pullback.”
From a fundamental standpoint, sales growth for the “Big Three” — Nvidia, Microsoft and Apple — is expected to lag the rest of the tech sector — but seen accelerating though the end of 2025, with the rest of the industry expected to decelerate, according to Ryan Grabinski at Strategas Securities.
“However, the acceleration the ‘Big Three’ group is expected to see in net income is likely to keep a bid toward the names compared to the rest of the index,” he noted.
Grabinski also said that perhaps most interesting is that the margin expansion expected to occur for the tech sector is not heavily concentrated in the “Big Three”.
In fact, the contribution for them is expected to remain static at about 45% through the end of 2025, he noted.
While most of this year’s S&P 500 record highs occurred during low VIX Index readings, all-time highs set in recent weeks have accompanied wider price swings.
This isn’t necessarily something to worry about.
“Periods of rising volatility within bull markets are not necessarily cause for concern but rather an indication of a maturing rally,” note strategists at Tier 1 Alpha.
Risk assets remain in the throes of a powerful year-end rally consistent with our 6,200 S&P 500 target, according to Rich Ross at Evercore.
The gauge closed around 5,808 on Friday.
He noted that advance would be driven by a bullish expansion of breadth across “Big Tech, Banks, Bullion and Bitcoin” and set against a Goldilocks macro backdrop.
On the economic front, data Friday showed sentiment among US consumers increased in October to a six-month high as households grew more upbeat about buying conditions.
They expect prices will climb at an annual rate of 2.7% over the next year, unchanged from the prior month.
And see costs rising 3% on average over the next five to 10 years, down from 3.1% in the prior month.
“Certainly better news for Jerome Powell and Company,” said Jeff Roach at LPL Financial. “Consumers feel confident that inflation is easing.
Investors are anticipating next Friday’s employment release as the Fed attempts to stick the soft landing.”
Treasury traders are wrapping up a wild week in which a gauge of bond-market volatility soared to a new high for the year, suggesting more upheaval to come.
The severity of this week’s back and forth suggests even greater volatility in coming days, when the US bond market must weather a myriad of events — from key jobs data, to the US election, to a meeting by the Fed.
The ICE BofA Move Index, which tracks expected swings in Treasuries in the coming month, climbed to the highest level this year on Tuesday.
October’s jobs report will likely register the first negative payroll print in about four years, according to Anna Wong at Bloomberg Economics.
While analysts may discount the weakness due to transitory weather effects, she says cyclical factors will also play a substantial role.
“We look for a downshift in payroll growth to 120,000 in October and a steady unemployment rate,” said BNP Paribas economists.
“We expect Fed officials to look through the weak number given negative storm and strike effects.”
“If the report proves surprisingly strong on all key dimensions though, we expect it would add to murmurs of a Fed pause as early as December. Even so, a near-term pivot could prove difficult given inflation progress and the consensus Fed view that policy rates are still restrictive,” they said.

Corporate Highlights:
* Donald Trump’s social media venture has more than tripled in the five weeks since they bottomed out after the expiration of a lockup period that prevented insiders from selling the stock.
* Capri Holdings Ltd. plunged after a federal judge blocked the company’s planned $8.5 billion acquisition by Tapestry Inc., which rallied.
* Boeing Co. is exploring a sale of its space division as the troubled planemaker’s new leader looks to streamline and focus the company on its core operations, according to the Wall Street Journal.
* Apple Inc. was downgraded to underweight at KeyBanc Capital Markets, which questioned the company’s lofty growth expectations.
* Capital One Financial Corp. posted a profit that beat Wall Street estimates on strength in its credit-card and auto-lending businesses.
* Centene Corp. jumped after the health insurer’s third-quarter profits exceeded Wall Street’s expectations, a relief for investors braced for a tough quarter.
* Deckers Outdoor Corp. rallied after the maker of Hoka running shoes and UGG boots posted sales that beat the average analyst estimate and boosted its sales forecast for the year.
* Western Digital Corp. reported adjusted first-quarter earnings that beat expectations. Analysts note that the company’s NAND flash memory segment is holding up better than expected.

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 rose 0.6%
* The Dow Jones Industrial Average fell 0.6%
* The MSCI World Index fell 0.1%
* KBW Bank Index fell 1.4%
* Bloomberg Magnificent 7 Total Return Index rose 1.3%
Currencies
* The Bloomberg Dollar Spot Index rose 0.3%
* The euro fell 0.3% to $1.0796
* The British pound fell 0.1% to $1.2960
* The Japanese yen fell 0.3% to 152.24 per dollar
Cryptocurrencies
* Bitcoin fell 2% to $66,773.01
* Ether fell 2.5% to $2,473.72
Bonds
* The yield on 10-year Treasuries advanced three basis points to 4.24%
* Germany’s 10-year yield advanced three basis points to 2.29%
* Britain’s 10-year yield was little changed at 4.23%
Commodities
* West Texas Intermediate crude rose 2.1% to $71.67 a barrel
* Spot gold rose 0.2% to $2,742.86 an ounce

This story was produced with the assistance of Bloomberg Automation.

Have a lovely weekend.

Be magnificent!
As ever,

Shab
” Let me tell you the secret that has led me to my goal. My strength lies solely in my tenacity.” — Louis Pasteur
 

Shab Mohammadpour
Assistant to Carolann Steinhoff
Queensbury Securities Inc.

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