October 3,2022 Newsletter

Dear Friends,

Tangents: Happy Monday.

Just returned from an investment conference in NYC, first time in three years that it hasn’t been held virtually.  All eyes will be on third quarter earnings (quarter ending September 30^th) which will start to trickle in during the coming week and then flood the financial news next month.  War does change everything and the sabotaging of the Nord Stream pipeline last week will result in further disruption to energy supplies to Europe, hence until this war comes to an end or there is a regime change in Moscow, expect monetary policy by central bankers aimed at curbing the inflation that is the consequence of high energy prices as well as zero Covid policies in China, which are exacerbating supply chain shortages and further contributing to inflation.

On Oct. 3, 1990, West Germany and East Germany ended 45 years of postwar division, declaring the creation of a new unified country.  Go to article »
October 3, 1952: The United Kingdom successfully tests a nuclear weapon in the Montebello Islands, Western Australia, to become the world’s third nuclear power.

See what’s streaming in October:  There’s a plethora of fantastic shows and movies to stream this month on Netflix, Amazon, Disney+ and Hulu. Check out the list here (and yes, it includes some spooky offerings).

Tesla debuts a robot that can dance and water plants.  The robot, dubbed Optimus, walked on stage at Tesla’s AI Day, slowly waved at the crowd and gestured with its hands for about one minute. Watch the reveal here.

Nobel prize in medicine awarded to geneticist who sequenced Neanderthal genome.   The 2022 Nobel prize in physiology or medicine has been awarded to a Swedish geneticist who traced the evolution of modern day humans from the DNA of our close extinct relatives.  Svante Pääbo, a director at the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany and one of the founders of the field of paleogenomics, is set to receive the 10 million Swedish krona ($900,500) prize for his pioneering work on the evolution of hominins, relatives of humans more closely related to us than chimpanzees, the Royal Swedish Academy of Sciences in Stockholm announced Monday (Oct. 3).  Full Story: Live Science (10/3) 
PHOTOS OF THE DAY

The aurora borealis, more commonly known as the northern lights, illuminate the morning sky over Whitley Bay, North Tyneside
Photograph: Owen Humphreys/PA

Hikers ascend through clouds as they head to the summit in New Hampshire. A high-pressure system brought pleasant conditions to climbers on the first weekend of October
Photograph: Robert F Bukaty/AP

Bavarian mountain farmers bring their cattle down from summer pastures
Photograph: Matthias Schräder/AP
Market Closes for October 3, 2022

International Markets

Bonds

Currencies

Commodities

 Market Commentary:
On this day in 1913, less than 20 years after federal income tax was declared unconstitutional by the U.S. Supreme Court, it came back from the dead as the Underwood-Simons bill (later known as the Income Tax Act of 1913) was enshrined into law by President Woodrow Wilson.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 2.4%, or 436.97 to 18,881.19 in Toronto.
The move was the biggest since rising 2.9% on April 29, 2020.
Today, energy stocks led the market higher, as all sectors gained; 226 of 236 shares rose, while 9 fell.
Canadian Natural Resources Ltd. contributed the most to the index gain, increasing 6.3%.
Endeavour Silver Corp. had the
largest increase, rising 12.7%.
Insights
* This year, the index fell 11%, heading for the worst year since 2018
* The index declined 6.3% in the past 52 weeks. The MSCI AC Americas Index lost 17% in the same period
* The S&P/TSX Composite is 15% below its 52-week high on April 5, 2022 and 3.9% above its low on July 14, 2022
* The S&P/TSX Composite is up 3% in the past 5 days and fell 2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 12.8 on a trailing basis and 11.7 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.3% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$2.94t
* 30-day price volatility rose to 19.40% compared with 17.77% in the previous session and the average of 15.62% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 149.3533| 4.6| 38/0
Financials | 83.7392| 1.4| 28/1
Industrials | 66.1268| 2.7| 25/2
Materials | 46.6920| 2.1| 50/0
Communication Services | 25.3281| 2.8| 7/0
Information Technology | 19.0104| 2.0| 13/1
Utilities | 14.2988| 1.5| 16/0
Consumer Staples | 12.2649| 1.6| 10/1
Consumer Discretionary | 11.7081| 1.8| 12/2
Real Estate | 7.0887| 1.5| 21/1
Health Care | 1.3607| 1.7| 6/1
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Canadian Natural Resources | 31.2600| 6.3| -64.2| 30.6
Suncor Energy | 27.1800| 7.4| -30.5| 31.9
Canadian Pacific | 22.0300| 3.7| -0.7| 5.1
FirstService | -0.3130| -0.7| 1.9| -34.3
Boyd Group Services| -0.5860| -2.3| 77.9| -14.8
Saputo | -1.7020| -3.1| 92.4| 12.0
US
By Rita Nazareth
(Bloomberg) — Stocks kicked off the week with big gains after suffering their worst September in two decades as Treasury yields halted a seemingly endless surge, with weak US manufacturing data soothing concern the Federal Reserve will overtighten monetary policy.
As a sign of exhaustion of the recent selling, about 95% of the S&P 500’s shares flashed green, with the gauge having its best day since July.
Aside from being oversold from a technical perspective, extreme pessimism and low fund positioning also fueled a rebound that followed its third-worst performance during the first nine months of a year since 1931.
In a bad-news-is-good-news world as far as Fed policy goes, a drop in the Institute for Supply Management’s gauge of factory activity suggested the economy may be faltering, reducing the urgency for more aggressive rate hikes. Fed Bank of New York President John Williams said the central bank still has more work to do to curb inflation, warning the process will take time.
Equities also managed to gain even in the face of Credit Suisse Group AG’s market turmoil and disappointing deliveries from electric-vehicle giant Tesla Inc.
“The market is oversold, and sentiment is extremely negative, so a bounce…even a sharp one…could happen at any time,” wrote Matt Maley, chief market strategist at Miller Tabak + Co. “However, we see lower-lows before the ultimate bottom is reached for this bear market…as the stock market has not fully priced-in a recession.”
As equities snapped back, the Cboe Volatility Index dropped to around 30.
The VIX closed above that threshold every day last week. Nicholas Colas at DataTrek Research said Friday he’d like to see the gauge closing over that mark for several more days before believing on a “tradeable low.”
Key technicals will likely need to capitulate before the S&P 500 can truly bottom, according to Bank of America Corp.’s Stephen Suttmeier.
Although the US equity market typically turns bullish in the fourth quarter of midterm election years, capitulation remains elusive in equity put-call ratios and S&P 500 selling volume.
Treasuries surged across the curve, with the five-year yield at one point plummeting over 30 basis points.
The 10-year rate sank to 3.65% after recently topping 4% and climbing for nine straight weeks. Swaps tied to Fed policy meeting dates fell sharply for early 2023.
The March meeting contract’s rate currently suggests a peak policy rate of 4.46% next year, down from recent highs above 4.60%.
The dollar slipped, yet the latest MLIV Pulse survey showed the greenback is expected to hit new highs over the next month.
Gold surged.
US coal prices surged past $200 for the first time as a global energy crunch drives up demand for the dirtiest fossil fuel.
Oil saw its biggest rally since July as potential OPEC+ output cuts heighten fears of supply tightness on the horizon.
Despite the rebound in risk assets, markets are bracing for more turbulence later this week as a crucial reading on the still-tight US labor market is set to give traders a chance to reassess the Fed’s commitment to its aggressive path of rate hikes.
Friday’s release of September job figures looms as a test of the central bank’s plan to rein in inflation by tightening policy further and unwinding its mammoth balance sheet.
The Fed should consider stopping its tightening campaign  after one more rate hike in November, according to Ed Yardeni, who coined terms like “Fed Model” and “bond vigilantes.”
The stress in financial markets from big rate increases, a surging dollar and quantitative tightening has reached the point that officials should make financial stability the top priority, he added.
“Investors are starting to doubt central banks globally will remain aggressive with fighting inflation as financial stability risks are growing,” said Ed Moya, senior market analyst at Oanda. “It is too early to call for a Fed pivot, but it seems the action in Treasury markets suggests traders are growing confident that the global growth slowdown is starting to drag down pricing pressures.”
Brazilian assets soared after President Jair Bolsonaro secured his way to a runoff election against Luiz Inacio Lula da Silva as investors cheered on the incumbent’s better-than-expected showing and bet his leftist challenger will be forced to moderate his stances in the second stretch of the race.
The real was the best-performing among the world’s major currencies Monday.
After two consecutive months of declines, Bitcoin advocates are hoping that the largest cryptocurrency reverts to form in October, which has typically been one of its best months for gains.
The virtual currency tends to rise roughly 25% in October and has, since 2015, advanced more than 85% of the time during it, according to Bespoke Investment Group.
Traders are betting it will take a bigger UK government policy U-turn to restore credibility with markets.
Wagers against the pound over the next year have climbed to a record high in the options market, even after Chancellor Kwasi Kwarteng said he will scrap a proposed tax cut for the country’s highest earners.
Key events this week:
* Eurozone PPI, Tuesday
* US factory orders, durable goods, Tuesday
* Fed’s John Williams, Lorie Logan, Loretta Mester, Mary Daly speak at events, Tuesday
* Eurozone services PMIs, Wednesday
* OPEC+ meeting begins, Wednesday
* Fed’s Raphael Bostic speaks, Wednesday
* Eurozone retail sales, Thursday
* US initial jobless claims, Thursday
* Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
* US unemployment, wholesale inventories, nonfarm payrolls, Friday
* BOE Deputy Governor Dave Ramsden speaks at event, Friday
* Fed’s John Williams speaks at event, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 2.6% as of 4 p.m. New York time
* The Nasdaq 100 rose 2.4%
* The Dow Jones Industrial Average rose 2.7%
* The MSCI World index rose 2%
Currencies
* The Bloomberg Dollar Spot Index fell 0.5%
* The euro rose 0.3% to $0.9828
* The British pound rose 1.4% to $1.1325
* The Japanese yen was little changed at 144.67 per dollar
Cryptocurrencies
* Bitcoin rose 1.7% to $19,556.6
* Ether rose 1.2% to $1,319.21
Bonds
* The yield on 10-year Treasuries declined 17 basis points to 3.65%
* Germany’s 10-year yield declined 19 basis points to 1.92%
* Britain’s 10-year yield declined 13 basis points to 3.96%
Commodities
* West Texas Intermediate crude rose 4.7% to $83.26 a barrel
* Gold futures rose 2.2% to $1,709.20 an ounce
–With assistance from Sujata Rao, Srinivasan Sivabalan, Vildana Hajric, Isabelle Lee and Peyton Forte.

Have a wonderful evening everyone.

Be magnificent!
As ever,

Carolann

We have taken a different course in our society.  We decided that we can separate private and public morality,
and thus we have, again rejected the lessons of history and of the past.  We have also, as a society, decided
that truth is not an absolute value.  Again, for the Greeks, truth and liberty were one and the same, and that there
were enduring truths like justice and honor ordained by the gods, and whatever the laws or the attitudes of the majority
might be, as Antigone tells us, “These laws of truth endure forever.” -Dr. Rufus J. Fears, 1945-2012.

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