September 16, 2024 Newsletter

Dear Friends,

Tangents: Happy Monday. Mayflower Day – Pilgrims deported from England.
September 16, 1963: Malaysia is created.  The Federation of Malaya united with Sabah, Sarawak, and Singapore to create Malaysia.  Singapore lift the arrangement two years later.
9/16/2008: The federal government announced an emergency $85 billion loan to rescue AIG, the world’s largest insurance company.  Go to article >>

September 16, 1924: Lauren Bacall is born in the Bronx.
B.B. King, b. 1925.

Mid-Autumn Festival: Mooncakes, lanterns and so much more
The Mid-Autumn Festival, or the Moon Festival, falls on September 17. Here are tips on how to join the massive full moon party.

Penguin wins New Zealand’s bird of the year
A shy penguin won New Zealand’s fiercely fought avian election today.

A’ja Wilson and rookie Caitlin Clark smash WNBA records
Las Vegas Aces star A’ja Wilson and Indiana Fever rookie Caitlin Clark both broke WNBA records Sunday, with Wilson becoming the first player to score 1,000 points in a single season and Clark breaking the rookie scoring record.

Making arts and crafts improves your mental health
Searching for a new hobby? Scientists say engaging in arts and crafts improves your mental health as much as having a job.

Scenic fall drives where you can get your foliage fix this year
From New England to the West, here are six scenic roadways where you can enjoy autumn leaves and more.
RIP
Tito Jackson.
PHOTOS OF THE DAY

Cullercoats Bay, UK
Swimmers take an early morning dip in the North Sea as the sun rises
Photograph: Owen Humphreys/PA

A Polar Romance by Florian Ledoux | Animals
As the sun set over the mountain slope, a male and female polar bear lay together, having just completed their courtship ritual. They soon fell asleep
Photograph: Florian Ledoux/Drone Photo Awards 2024

​​​​​​​Blue Adrenaline: the Surge of Pipeline by Matt Dusig | Sport
The raw energy and thrilling drama of a bustling surf day at Pipeline on the north shore of Oahu, Hawaii
Photograph: Matt Dusig/Drone Photo Awards 2024
Market Closes for September 16^th, 2024

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1920, just before noon, a massive charge of dynamite went off in a horse-drawn wagon parked before J.P. Morgan’s Wall Street headquarters. Thirty people were killed immediately, another 10 were mortally wounded and hundreds were injured. “RED PLOT SEEN IN BLAST,” declared The New York Times, but no “Bolshevik” involvement was ever proven and the crime hasn’t been solved. Several buildings on Wall Street are still scarred from the blast.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the fourth day, climbing 0.6%, or 133.42 to 23,702.07 in Toronto.
Brookfield Corp. contributed the most to the index gain, increasing 2.2%.
Bausch Health Cos. had the largest increase, rising 10.6%.
Today, 142 of 226 shares rose, while 81 fell; 8 of 11 sectors were higher, led by financials stocks.
Insights
* This year, the index rose 13%, heading for the best year since 2021
* This quarter, the index rose 8.3%, heading for the biggest advance since the second quarter of 2020
* The index advanced 15% in the past 52 weeks. The MSCI AC Americas Index gained 26% in the same period
* The S&P/TSX Composite is at its 52-week high and 26.8% above its low on Oct. 27, 2023
* The S&P/TSX Composite is up 2.9% in the past 5 days and rose 2.8% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.9 on a trailing basis and 16.4 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.9% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.74t
* 30-day price volatility fell to 11.59% compared with 13.62% in the previous session and the average of 14.13% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 52.6336| 0.7| 19/8
Energy | 28.6813| 0.7| 29/11
Industrials | 24.5578| 0.8| 20/8
Information Technology | 24.4279| 1.3| 7/3
Consumer Discretionary | 7.6781| 1.0| 6/7
Consumer Staples | 5.0879| 0.5| 8/3
Utilities | 4.4378| 0.5| 14/1
Health Care | 1.6936| 2.4| 2/2
Real Estate | -2.1740| -0.4| 4/16
Materials | -6.1691| -0.2| 29/21
Communication Services | -7.4473| -1.0| 4/1
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Brookfield Corp | 14.3800| 2.2| 8.5| 28.9
Shopify | 13.0100| 1.6| 9.0| -3.1
TD Bank | 11.7600| 1.1| 116.9| -0.2
Kinross Gold | -4.2900| -3.7| 58.8| 60.3
RBC | -4.3490| -0.3| -11.8| 25.1
Barrick Gold | -5.2750| -1.5| 20.1| 16.5
US
By Rita Nazareth
(Bloomberg) — Wall Street traders gearing up for this week’s Federal Reserve decision kept driving a rotation out of the tech mega caps that have powered the bull market in stocks.
As bets on a half-point Fed cut on Wednesday kept growing, money continued to flow into economically sensitive corners of the market.
While the S&P 500 edged only mildly higher — most of its shares were up.
The gauge’s equal-weighted version — one that gives Target Corp. as much clout as Microsoft Corp. — hit a record high on hopes the rally will broaden out.
“We remain positive on equities,” said John Stoltzfus at Oppenheimer Asset Management. “The broad rotation which began in the rally from last year’s S&P 500 low has deflected volatility repeatedly. Pullbacks experienced thus far this year have mostly looked like ‘trims’ and ‘haircuts’ for the S&P 500.”
In the run-up to the Fed decision, strategists from Morgan Stanley to Goldman Sachs Group Inc. and JPMorgan Chase & Co. are saying that the size of the reduction is less relevant for stocks than the health of the US economy.
“We’re getting a rate cut of some sort this week absent an act of God,” said Callie Cox at Ritholtz Wealth Management.
“The economic impact of one rate cut – regardless of whether it’s 25 or 50 basis points – will likely be insignificant. The path and degree of cuts over the next year or so matters the most.”
The S&P 500 rose 0.1%.
Its equal-weighted version added 0.7%.
The Nasdaq 100 slid 0.5%.
The Dow Jones Industrial Average gained 0.6%.
The Bloomberg “Magnificent Seven” gauge of mega caps slipped 0.7%.
The Russell 2000 of small firms added 0.3%.
Banks outperformed the broader market on bets a soft economic landing would trump margin pressures.
Apple Inc. led losses in big tech as a closely followed analyst warned demand for the iPhone 16 Pro has been lower than expected.
Treasury 10-year yields declined three basis points to 3.62%.
The dollar fell to the lowest since January. Gold hit an all-time high.
Technology giants like Nvidia Corp. and Microsoft Corp. have led gains in equities for much of the last two years, with investors attracted to their booming profits and exposure to artificial intelligence.
However, since the S&P 500 peaked on July 16, the so-called Magnificent Seven have mostly slumped, with the cohort of tech mega caps falling over 6%.
Meantime, other industries have gained traction.
“Since technology stocks (temporarily?) peaked in July, the winners have been the remaining ‘493 stocks’ in the S&P 500,” said Paul Nolte at Murphy & Sylvest Wealth Management.
“There have been plenty of ‘false starts’ when technology stocks seem to be done, only to see them regain a market-leadership position.”
Nolte says that over the past three to six months, the spread between the high flying technology sector and the average stock was large as early 2000.
“While history may not repeat itself, it would at least argue to reduce exposure to the tech sector for a while,” he concluded.
Meantime, hedge funds are back to buying big technology stocks, according to a recent Morgan Stanley’s prime brokerage report.
Conversely, defensive sectors have been net sold as the funds trimmed their exposure across real estate, health care and utilities.
As investors prepare for the start of the Fed rate-cutting cycle, stocks and bonds both appear to be priced aggressively, yet to embrace different views of the forward path, according to Lisa Shalett at Morgan Stanley Wealth Management.
“Equities are pricing an ‘immaculate soft landing,’ driven by double-digit profit growth without major disruption to the labor market and consumption,” she noted. “Bonds, for their part, have rallied aggressively, suggesting recession and intimating that the Fed is ‘behind the curve’.”
If bonds are “right,” stocks face downside from falling earnings, Shalett said.
If they are “wrong,” rates will back up, creating headwinds for valuations.
“Consider owning the equal-weighted S&P 500 Index as better risk-adjusted exposure than the market-cap-weighted version,” she said.  “Financials, industrials, energy, health care, infrastructure-linked stocks and materials continue to offer compelling ideas, as do parts of the tech sector, such as software. Look for defensive ideas among residential REITs and utilities.”
The upside for stock valuations is likely limited from current levels, as the outlook for economic growth is a more important driver than the speed of rate cuts alone, according to Goldman Sachs Group Inc. strategists led by David Kostin.
“While some investors believe the speed of Fed cuts will be the key determinant of equity returns in coming months, the trajectory of growth is ultimately the most important driver for stocks,” they wrote.
Liquidity and the state of the economy will define the equity market reaction to rate cuts, according to JPMorgan Chase & Co. strategists led by Mislav Matejka.
They recommend staying overweight defensives and expect small caps to benefit from continued decrease in bond yields.
“If the labor data weaken from here, markets can trade with a risk-off tone regardless of whether the Fed’s first move is 25 or 50 basis points,” Morgan Stanley’s Mike Wilson noted.
On the other hand, if jobs were to strengthen, a series of 25 basis-point reductions into mid-2025 could prop up equity valuations further, he said.
The election, the economy, just how big this week’s US interest rate cut will be — it has all left the market on edge.
Savita Subramanian, an equity and quant strategist at Bank of America Corp., wants investors to avoid risks.
“You want to be in safe dividends — and I know this is the most boring call of all time, but sometimes boring is good,” Subramanian said in an interview with Bloomberg Television on Monday.

Corporate Highlights:
* Oracle Corp. was upgraded to buy from hold at Melius Research, which increased its projections for the software company on higher backlog, its prospects for continued artificial- intelligence success, and cloud revenue acceleration.
* Intel Corp. has officially qualified for as much as $3.5 billion in federal grants to make semiconductors for the Pentagon, according to people familiar with the matter, after the chipmaker reached a binding agreement with US officials.
* Alcoa Corp. will receive $1.1 billion in cash and stock in Saudi Arabian Mining Co. as part of a deal that will involve the Pittsburgh-based firm selling its stake in two metals plants in northern Saudi Arabia.
* Charles Schwab Corp. said revenue is rebounding after slipping earlier this year as fewer customers shift money in search of higher yields.

Key events this week:
* Germany ZEW, Tuesday
* US business inventories, industrial production, retail sales, Tuesday
* Eurozone CPI, Wednesday
* Fed rate decision, Wednesday
* UK rate decision, Thursday
* US Conf. Board leading index, initial jobless claims, US existing home sales, Thursday
* FedEx earnings, Thursday
* Japan rate decision, Friday
* Eurozone consumer confidence, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.1% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.5%
* The Dow Jones Industrial Average rose 0.6%
* The MSCI World Index rose 0.2%
* S&P 500 Equal Weighted Index rose 0.7%
* Bloomberg Magnificent 7 Total Return Index fell 0.7%
* The Russell 2000 Index rose 0.3%
Currencies
* The Bloomberg Dollar Spot Index fell 0.3%
* The euro rose 0.5% to $1.1129
* The British pound rose 0.7% to $1.3213
* The Japanese yen rose 0.1% to 140.68 per dollar
Cryptocurrencies
* Bitcoin fell 3.2% to $57,871.71
* Ether fell 3.8% to $2,274.89
Bonds
* The yield on 10-year Treasuries declined three basis points to 3.62%
* Germany’s 10-year yield declined three basis points to 2.12%
* Britain’s 10-year yield declined one basis point to 3.76%
Commodities
* West Texas Intermediate crude rose 2.6% to $70.45 a barrel
* Spot gold rose 0.2% to $2,582.23 an ounce

This story was produced with the assistance of Bloomberg Automation.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
It is the willingness to accept responsibility, I think, that is the measure of a man. –Louis L’Amour, 1908-1988.

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 (Text Only)
Toll Free: 1.877.430.5895
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www.carolannsteinhoff.com