September 12, 2023, Newsletter

Dear Friends,

Tangents:
September 12^th, 1940: Four teenagers, following their dog down a hole near Lascaux, France, discover 17,000 year old drawings now known as the Lascaux Cave Paintings.
2008: A commuter train engineer ran a red light while text messaging on his cell phone and struck a freight train head-on in Los Angeles,
killing himself and 24 other people.  Go to article >>

‘The Simpsons’ celebrates historic 35th season.  The animated series is the longest-running primetime scripted show in television history. Here’s what we know about the new season.

BMW will invest $750 million to keep making the Mini in Oxford.  BMW announced Monday that it would invest $750 million in building two new electric versions of the Mini in the United Kingdom.
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Japan is weighing building a train that would run halfway up Mt. Fuji.

James Webb telescope could detect life on Earth from across the galaxy, new study suggests
Researchers have shown that if the James Webb Space Telescope was pointed at Earth from a distant star, it could detect the signatures of intelligent life in our planet’s atmosphere.  Read More.

In a 1st, scientists grow human kidneys inside developing pig embryos
Scientists grew early-stage human kidneys inside pig embryos and found the kidneys were “structurally normal” and made up of around 60% human cells.  Read More.

Here’s why Morocco’s quake was so deadly and what we can do for the next one
More than 2,500 people died when a powerful magnitude 6.8 earthquake struck Morocco on Sept. 8.  Read More.

Divers recover US airman’s remains from WWII bomber wreck near Malta
The remains have been identified as those of a gunner killed when the badly damaged aircraft crashed into the sea in 1943.  Read More.
PHOTOS OF THE DAY

Glasgow, Scotland
Ballet dancers Claire Souet and Ishan Mahabir-Stokes pose in Kelvingrove art gallery before the UK premiere of Schachmatt (Checkmate) by Cayetano Soto. Performed on a giant chessboard, the work is part of Scottish Ballet’s contemporary double bill Twice-Born, which embarks on a Scotland-wide tour.  Photograph: Jeff J Mitchell/Getty Images.

Paris, France
Rowers scull along the Seine towards the Île de la Cité as they participate in the annual La Traversee de Paris en Aviron rowing event, which brings together more than 1,000 rowers and 230 boats in the capital.  Photograph: Miguel Medina/AFP/Getty Images

Tokyo, Japan
People navigate along a street in the Minami-Senju area of Arakawa Ward.  Photograph: Richard A Brooks/AFP/Getty Images.
Market Closes for September 12^th, 2023

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1968, H. Ross Perot took his Electronic Data Systems public for $16.50 a share, or 118 times earnings, as tech stocks boomed. Perot had refused 17 offers to do an IPO, until investment banker Ken Langone vowed to sell EDS at more than 100 times earnings. By early 1970, the stock was at $160.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.2%, or 40.32 to 20,223.08 in Toronto.
Canadian Natural Resources Ltd. contributed the most to the index gain, increasing 2.0%.
Vermilion Energy Inc. had the largest increase, rising 4.6%.
Today, 120 of 226 shares rose, while 104 fell; 4 of 11 sectors were higher, led by energy stocks.
Insights
* This year, the index rose 4.3%, heading for the best year since 2021
* This quarter, the index rose 0.3%
* The index advanced 1.2% in the past 52 weeks. The MSCI AC Americas Index gained 7.8% in the same period
* The S&P/TSX Composite is 3% below its 52-week high on Feb. 2, 2023 and 13.1% above its low on Oct. 13, 2022
* The S&P/TSX Composite is down 0.9% in the past 5 days and fell 0.9% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 15.3 on a trailing basis and 14.5 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$3.2t
* 30-day price volatility fell to 11.93% compared with 12.04% in the previous session and the average of 11.35% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | 60.7720| 1.7| 39/1
Financials | 11.0771| 0.2| 15/13
Communication Services | 4.0471| 0.5| 3/2
Consumer Discretionary | 2.6331| 0.4| 7/7
Utilities | -0.2174| 0.0| 9/7
Industrials | -1.7251| -0.1| 13/13
Consumer Staples | -1.7797| -0.2| 4/7
Health Care | -2.7900| -4.2| 1/3
Real Estate | -3.3235| -0.7| 3/17
Materials | -5.3489| -0.2| 23/26
Information Technology | -23.0300| -1.4| 3/8
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Canadian Natural Resources | 13.1300| 2.0| 84.7| 16.7
Suncor Energy | 10.6400| 2.5| 17.4| 9.4
RBC | 7.9860| 0.7| -52.8| -4.8
First Quantum Minerals | -3.5360| -2.6| 39.3| 21.2
Brookfield Corp | -4.5910| -1.0| -22.7| 10.1
Shopify | -19.0700| -2.6| -22.8| 81.7
US
By Rita Nazareth
(Bloomberg) — A rout in technology companies dragged down the stock market, with traders gearing up for a key inflation report that’s expected to bring more insights on the outlook for  the Federal Reserve’s next steps.
The Nasdaq 100 underperformed, falling 1.1%.
Apple Inc., which unveiled the iPhone 15 and other products, dropped almost 2%.
Its launches are famous “sell-the-news” events.
Oracle Corp. sank the most since 2002 after a slowdown in cloud sales.
US-traded BP Plc shares slid as its chief resigned at a time when the company is trying to persuade investors to stick with it through a costly transition to low-carbon energy.
A rally in crude sent energy shares higher and added to concern about inflationary pressures.
Banks also gained amid a presentation at the Barclays Global Financial Services Conference.
Treasury two-year yields, which are more sensitive to imminent Fed moves, topped 5%.
The auction of 10-year US Treasury notes on Tuesday drew the highest yield since 2007 — a day after a sale of three-year notes did the same — as investors demand increased compensation for elevated inflation and growth in the supply of US government debt.
The dollar edged higher.
With the economy defying pessimism and energy prices rising, Wednesday’s consumer-price index is expected to show a pick-up in inflation pressures.
Swap traders are currently betting the Fed will stay on hold at a policy meeting next week, and see roughly a 50% chance that it delivers a hike in November.
“In our view, it may be a good moment for investors to consider allocation moves that prepare for a re-firming of inflation this fall,” said Lauren Goodwin, economist and
portfolio strategist at New York Life Investments. “For example, cyclical growth equity sectors soared on hopes of a divine disinflation and near-term Fed cuts. Yet, if inflation re-emerges, these sectors might give up some of their year-to-date gains.”
The Cleveland Fed’s Nowcast model suggests upside risks for CPI, with persistently high inflation seen in September as well, according to Win Thin, global head of currency strategy at Brown Brothers Harriman.
“With inflation data expected to show ongoing stickiness, we think it’s risky to go into tomorrow’s CPI report short dollars,” Thin noted.
CPI is really key because if it halts its downward trend, markets will have to price in a more hawkish Fed — and that would be a headwind on stocks, said Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter.
“Put in a more familiar way, CPI impacts two of the three pillars of the rally: disinflation and expectation the Fed is done with rate hikes,” Essaye noted. “If CPI is too hot, both will be damaged.”
Traders continued watching closely the negotiations between the United Auto Workers and automakers to prevent a strike.
General Motors Co., Ford Motor Co. and Stellantis NV are under pressure to meet the demands of the UAW, which is seeking a new contract that replaces one expiring in just two days.
A strike, even a short one, would ripple across the US economy.
That includes possibly pushing Michigan into a brief recession.
Meantime, there’s been a “dramatic shift” in investors’ equity allocation — a rush toward the US and an exodus from emerging markets, Bank of America Corp.’s latest global fund manager survey showed.
That’s had an impact on emerging markets equity allocation, which fell to a net 9% overweight in September from 34%, the lowest reading since November 2022.
In contrast, allocation to US equities rose 29 percentage points to a net 7% overweight — the first overweight reading since August last year, according to the survey.
To Dan Wantrobski at Janney Montgomery Scott, the market continues to carve out a “rangebound glide path” near term, and this should possibly continue being the case as we move through September and into the final quarter of 2023.
“Overall, we believe elevated volatility will surface again, but stocks may still see more rally efforts over the short-run – making for a very choppy trading range.”

Corporate News
* T-Mobile US Inc. said it would buy airwaves from Comcast Corp. for between $1.2 billion and $3.3 billion and close the purchase by 2028, pending approval from the US Federal Communications Commission.
* Birkenstock has filed for an initial public offering, in another sign of the allure US equity markets hold for European firms seeking a valuation uplift.
* Top US wireless carriers announced free iPhone promotions following Apple’s introduction of its newest models Tuesday.
* Walmart Inc.’s top executive predicted a “pretty good” holiday shopping season as US consumers hold up better than the nation’s largest retailer anticipated at the beginning of the year.
* Alphabet Inc.’s Google pays more than $10 billion a year to maintain its position as the default search engine on web  browsers and mobile devices, stifling competition, the US Justice Department said.
* United Parcel Service Inc. will pay out the biggest portion of its new, five-year labor pact over the next 12 months while trying to win back customers it lost during the contentious contract talks, making for a challenging upcoming year, its chief executive said.
* Chevron Corp. will become majority owner of what’s expected to be the world’s largest hydrogen production and storage facility as the oil giant invests in tech aimed at addressing the intermittency that plagues wind and solar power.
Key events this week:
* Japan PPI, Wednesday
* Eurozone industrial production, Wednesday
* UK industrial production, Wednesday
* US CPI, Wednesday
* Tech leaders including Tesla’s Elon Musk and Meta Platforms’ Mark Zuckerberg are set to attend a forum on the future of AI convened by Senator Chuck Schumer, Wednesday
* Japan industrial production, Thursday
* European Central Bank policy meeting and news conference by President Christine Lagarde, Thursday
* US retail sales, PPI, business inventories, initial jobless claims, Thursday
* China property prices, retail sales, industrial production, Friday
* US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.6% as of 4 p.m. New York time
* The Nasdaq 100 fell 1.1%
* The Dow Jones Industrial Average was little changed
* The MSCI World index fell 0.4%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro fell 0.2% to $1.0728
* The British pound fell 0.1% to $1.2492
* The Japanese yen fell 0.4% to 147.13 per dollar
Cryptocurrencies
* Bitcoin rose 3.9% to $26,071.13
* Ether rose 3.7% to $1,598.38
Bonds
* The yield on 10-year Treasuries declined three basis points to 4.26%
* Germany’s 10-year yield was little changed at 2.64%
* Britain’s 10-year yield declined six basis points to 4.42%
Commodities
* West Texas Intermediate crude rose 1.9% to $88.94 a barrel
* Gold futures fell 0.6% to $1,935.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee and Felice Maranz.
Have  a lovely evening.

Be magnificent!
As ever,

Carolann
There is no dignity quite so impressive, and no one independence, quite so important, as living within your means. -Calvin Coolidge, 1872-1933.

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