October 7,2022 Newsletter

Dear Friends,

Tangents: Happy Friday.  Don’t forget to look  for  the full moon on Sunday night.

On Oct. 7, 1985 Palestinian gunmen hijacked the Italian cruise ship Achille Lauro in the Mediterranean with more than 400 people aboard.  Go to article »

October 7, 1949: A constitution went into effect in the Soviet occupation zone of Germany that formed the country of /east Germany, which existed alongside West Germany until 1990, when the two Germanys reunited.

Pet sitter is no match for rambunctious puppies.  Watch this dog sitter faceplant while trying to wrangle some adorable puppies. Clearly, he was having a ruff day.

Yayoi Kusama’s yellow pumpkin sculpture is back on Naoshima Island.  Japan’s famous yellow pumpkin has been reinstalled after it was swept into the sea during a typhoon last summer. And the timing couldn’t be better.

Michelin gives — and takes — stars 

PHOTOS OF THE DAY

Waves break on a misty morning in Scarborough, UK
Photograph: Michael Spencer/Ocean Photographer of the Year 2022

A school of weedy seadragons – an extremely rare sight for these typically solitary animals, Australia
Photograph: Steve Walsh/Ocean Photographer of the Year 2022

Anemone fish in their colourful home
Photograph: Matty Smith/Ocean Photographer of the Year 2022
Market Closes for October 7, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1896, the Dow Jones Industrial Average began continuous daily publication. Its 12 members were the great industrial giants of the time: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, American Spirits Manufacturing, General Electric, Laclede Gas, National Lead, U.S. Cordage, Tennessee Coal & Iron, U.S. Leather, and U.S. Rubber.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the third day, dropping 2.1%, or 395.88 to 18,583.13 in Toronto.
The move was the biggest since falling 2.7% on Sept. 23.
Today, financials stocks led the market lower, as 10 of 11 sectors lost; 209 of 236 shares fell, while 25 rose.
Royal Bank of Canada contributed the most to the index decline, decreasing 2.9%.
Canopy Growth Corp. had the largest drop, falling 25.8%.
Insights
* In the past year, the index had a similar or greater loss eight times. The next day, it declined seven times for an average 0.7% and advanced 0.1% once * This year, the index fell 12%, heading for the worst year in at least 10 years
* So far this week, the index rose 0.8%
* The index declined 9% in the past 52 weeks. The MSCI AC Americas Index lost 19% in the same period
* The S&P/TSX Composite is 16.3% below its 52-week high on April 5, 2022 and 2.3% above its low on July 14, 2022
* S&P/TSX Composite is trading at a price-to-earnings ratio of 12.6 on a trailing basis and 11.5 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.4% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.02t
* 30-day price volatility rose to 21.66% compared with 21.24% in the previous session and the average of 16.68% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -137.7037| -2.4| 0/29
Materials | -87.6220| -3.8| 3/48
Industrials | -59.4156| -2.4| 1/26
Information Technology| -49.8923| -4.9| 0/14
Consumer Discretionary| -17.4565| -2.6| 0/14
Utilities | -13.3387| -1.5| 2/14
Real Estate | -11.0865| -2.4| 2/20
Health Care | -10.4344| -11.6| 0/7
Consumer Staples | -7.3111| -1.0| 3/8
Communication Services| -6.0356| -0.7| 1/6
Energy | 4.4162| 0.1| 13/23
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
RBC | -34.0900| -2.9| 51.7| -9.9
Shopify | -32.4400| -9.6| 6.1| -78.6
Brookfield Asset Management | -22.7200| -4.0| -13.7| -27.3
Tourmaline Oil | 1.1960| 0.7| -2.7| 105.9
TC Energy | 4.3900| 1.1| -48.0| -3.8
Canadian Natural Resources | 8.6660| 1.5| -27.2| 44.0
US
By Rita Nazareth
(Bloomberg) — Wall Street got a reality check, with data showing a hot labor market that will likely keep the Federal Reserve on its aggressive hiking trail.
Those bets sent stocks tumbling, driving benchmark Treasury yields to their longest weekly up streak since 1984.
To David Donabedian at CIBC Private Wealth US, the report puts an “an exclamation point” on the idea that the market-bottoming process is going to be “a long one”.
In this “bizarro world” of big hikes, traders may see the solid data as a reason to brace for turmoil, says Callie Cox of eToro.
The conclusion for Brown Brothers Harriman’s Win Thin is that a 75-basis-point Fed boost in November is a “done deal,” with another increase of that size in December becoming a “real possibility.”
Almost 95% of the companies in the S&P 500 fell.
The slide came just a few days after the gauge notched its biggest back-to-back rally since the onset of the pandemic amid a debate on whether the Fed would be closer to “peak hawkishness.”
Those gains gave the measure its best week in a month – despite Friday’s plunge.
The tech-heavy Nasdaq 100 sank nearly 4% Friday.
Ten-year yields approached 3.9% amid their 10th consecutive weekly rise.
The dollar advanced.
The swap contract for the November Fed meeting priced in nearly 75 basis points of tightening.
Market-implied expectations for where the rate will peak also increased, with the derivative contract for the March gathering trading around 4.66%.
The current range for the benchmark rate stands between 3% and 3.25%.
Fed Bank of New York President John Williams said rates need to rise to around 4.5% over time, but the pace and ultimate peak of the tightening campaign will hinge on how the economy performs.
Several officials, in separate remarks this week, delivered a resolutely hawkish message that price pressures remain elevated and they won’t be deterred from raising rates by volatility in financial markets.
All eyes will now be on next week’s US inflation data after a hotter-than-expected reading in August tempered hopes of a nascent slowdown.
Separately, minutes from the Fed’s September meeting will give clues into the central bank’s tolerance for economic pain.
Amid fears of a looming recession, investors poured the most money into cash since April 2020, but stocks could see further declines as they don’t fully reflect that risk, according to Bank of America Corp. strategists.
Their report cited EPFR Global data showing cash funds received nearly $89 billion in the week through Oct. 5 — while investors withdrew $3.3 billion from global stock funds.
Wall Street is “rebelling against” policy tightening, the strategists led by Michael Hartnett wrote before the labor-market report.
“The data being reported alongside our proprietary cycle work to date gives us confidence that we are on the right track in anticipating more of a ‘U’-shaped market bottom and recovery in the months ahead (into 2023),” he added. “We believe the floor will be established at some point in the weeks/months ahead — but for now, investors should continue to expect a very choppy glide path due to significant macro overhang.”

More comments on jobs:

Jeffrey Roach, chief economist at LPL Financial: “In a word: ‘frustrating.’ As long as job gains are strong, the markets should expect aggressive rate hikes by the Federal Reserve.”
Michael Shaoul, chief executive officer at Marketfield Asset Management: “This report should keep expectations of any ‘dovish pivot’ at bay, and underlines our concerns that any shift in policy is much more likely to be provoked by much worse financial market conditions than a soft landing in the underlying US economy.”
Shawn Cruz, head trading strategist at TD Ameritrade:  “The market has been in a ‘bad-news-is-good-news’ mentality and there’s really no bad news in this report. It’s a solid jobs report, but it’s not what the market wants to see because it doesn’t give the Fed a reason to pause or shift away from its hawkish intentions.”
Ronald Temple, managing director at Lazard Asset Management:  “While job growth is slowing, the US economy remains far too hot for the Fed to achieve its inflation target. The path to a soft landing keeps getting more challenging. If there are any doves left on the FOMC, today’s report might have further thinned their ranks.”
Seema Shah, strategist at Principal Global Investors:  “Today’s job number is a hawkish reading. With the Fed’s dot plot pointing to policy rates closer to 5% than 4% next year, we have a market that is wishing for the economy to slow quickly. That’s when you know there is only one path ahead: risk assets have further to fall.”
Ian Lyngen, head of US rate strategy at BMO Capital Markets:  “On net, it was a strong enough read to keep a 75 bp Nov hike as the path of least resistance, but the deceleration in wage growth YoY adds to the case for a slowed hiking pace to 50 bp in December, and we still expect the final 25 bp hike in February to reach terminal.”

Some of the main moves in markets:
Stocks
* The S&P 500 fell 2.8% as of 4 p.m. New York time
* The Nasdaq 100 fell 3.9%
* The Dow Jones Industrial Average fell 2.1%
* The MSCI World index fell 2.4%
Currencies
* The Bloomberg Dollar Spot Index rose 0.4%
* The euro fell 0.5% to $0.9739
* The British pound fell 0.7% to $1.1080
* The Japanese yen fell 0.2% to 145.36 per dollar
Cryptocurrencies
* Bitcoin fell 2.9% to $19,461.43
* Ether fell 2.7% to $1,327.55
Bonds
* The yield on 10-year Treasuries advanced six basis points to 3.89%
* Germany’s 10-year yield advanced 11 basis points to 2.19%
* Britain’s 10-year yield advanced seven basis points to 4.24%
Commodities
* West Texas Intermediate crude rose 4.6% to $92.48 a barrel
* Gold futures fell 1% to $1,703 an ounce
–With assistance from Emily Graffeo, Cecile Gutscher and Vildana Hajric.
Have a wonderful weekend everyone.

Be magnificent.
As ever,

Carolann

Ill habits gather by unseen degrees – as brooks make rivers, rivers run to seas. –John Dryden, 1631-1700.

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