September 8, 2022 Newsletter

Dear Friends,

Tangents: Happy Friday Eve.

Queen Elizabeth II may have been given a crown, but her global admiration was earned. — Therese Raphael.

Head here to read more following the death of Britain’s longest-reigning monarch.

PHOTO OF THE DAY

The Union flag is lowered on Windsor Castle on September 08, 2022 in Windsor, England.
Photographer: Chris Jackson

Market Closes for September 8, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1916: The U.S. Congress enacted that year’s Revenue Act, creating the federal estate tax
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.9%, or 171.56 to 19,413.00 in Toronto.
The move was the biggest gain since Aug. 12.
Royal Bank of Canada contributed the most to the index gain, increasing 1.4%.
NexGen Energy Ltd. had the largest increase, rising 10.0%.
Today, 164 of 237 shares rose, while 67 fell; 8 of 11 sectors were higher, led by financials stocks.
Insights
* This year, the index fell 8.5%, heading for the worst year since 2018
* This quarter, the index rose 2.9%
* So far this week, the index rose 0.7%
* The index declined 6.4% in the past 52 weeks. The MSCI AC Americas Index lost 13% in the same period
* The S&P/TSX Composite is 12.6% below its 52-week high on April 5, 2022 and 6.8% above its low on July 14, 2022
* The S&P/TSX Composite is up 0.4% in the past 5 days and fell 1.3% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13.1 on a trailing basis and 11.9 times estimated earnings of its members for the coming year
* The index’s dividend yield is 3.2% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.07t
* 30-day price volatility fell to 13.35% compared with 13.81% in the previous session and the average of 13.70% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 96.4824| 1.6| 26/3
Materials | 32.1170| 1.5| 41/8
Industrials | 19.7796| 0.8| 25/3
Energy | 16.9846| 0.5| 25/12
Information Technology | 12.8905| 1.3| 10/4
Consumer Discretionary | 3.2169| 0.5| 10/3
Utilities | 1.6994| 0.2| 11/4
Real Estate | 0.0500| 0.0| 6/16
Health Care | -0.0567| -0.1| 5/1
Consumer Staples | -5.3610| -0.6| 4/7
Communication Services | -6.2469| -0.6| 1/6
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
RBC | 16.8000| 1.4| -39.6| -6.4
Brookfield Asset Management | 14.9100| 2.3| 9.3| -15.3
Bank of Nova Scotia| 14.1200| 2.4| 45.9| -18.9
Couche-Tard | -2.1920| -0.7| 14.0| 10.4
Enbridge | -2.2350| -0.3| -71.6| 8.9
TC Energy | -3.3500| -0.8| -7.4| 6.1
US
By Rita Nazareth
(Bloomberg) — Volatility gripped the stock market as unsurprising remarks from Jerome Powell and his colleagues did little to alter bets on another super-sized rate hike during the Federal Reserve’s September gathering.
In the final 15 minutes of trading, the S&P 500 extended its advance to close above 4,000 for the first time since late August — pushing further away from a level seen by chartists as critical for short-term direction.
The benchmark swung between gains and losses all day as the Fed’s boss reprised his hawkish views from the Jackson Hole confab, saying officials are strongly committed to their fight against inflation.
A selloff in Treasuries sent the yield on the policy-sensitive two-year note up eight basis points to 3.51%.
Swap traders priced a roughly four-in-five chance that Fed officials will implement a 75-basis-point hike this month.
Powell said the central bank won’t flinch in its efforts to curb inflation “until the job is done.” “We need to act now, forthrightly, strongly as we have been doing,” he noted at a Cato Institute’s conference. “It is very important that
inflation expectations remain anchored,” Powell said, adding that “what we hope to achieve is a period of growth below trend, which will cause the labor market to get back into better balance.”
Separately, Fed Bank of Chicago President Charles Evans said “we could very well do 75 in September,” while adding that he’s “open minded.”
His St. Louis counterpart James Bullard noted that bringing inflation back down to the 2% target is the “top priority.”
“Fedspeak has once again injected volatility (after all, it is September) into the rangebound environment,” wrote Julian Emanuel, chief equity and quantitative strategist at Evercore, highlighting “Powell’s view that the ‘clock is ticking’ on intolerably high inflation expectations becoming part of the American consumer’s behavioral norm.”
To Michael Gapen at Bank of America Corp., the September Fed meeting may still be a “game-time decision.”
Should next week’s consumer inflation data surprise to the downside, that could open the door to a smaller rate increase.
Still, the economist says it’s more likely than not that the Fed will deliver a 75-basis-point hike.
Seasoned investors, staring at a world clouded by war, inflation and economic uncertainty, are buying catastrophe insurance at a record clip.
Institutional traders paid a total of $8.1 billion to initiate purchases of equity puts last week, the highest premium in at least 22 years, Options Clearing Corp. data compiled by Sundial Capital Research show.
Adjusted for market capitalization, demand for hedges matches levels from the 2008 financial crisis.
US stocks could slide a further 25% if the economy tips into recession, with risks to a sustained equity rally mounting, according to Deutsche Bank AG strategists.
With company profits set to drop, valuations still high and economic risks looming, the fundamental picture is challenging, strategists led by Binky Chadha wrote in a note dated Sept. 7.
Their base-case scenario still sees shares rising by year-end.
The recent equity selloff has left beaten-down small caps at the cheapest levels compared to their larger counterparts in nearly two decades, according to Bank of America.
The group’s valuations could offer evidence of a stock bottom since historically, broader markets don’t bounce higher until small caps bottom.
“Very elevated valuation dispersion within the Russell 2000 overall — which can suggest more opportunity for stock selection  — is also supportive for value near-term,”  wrote Jill Carey Hall, equity and quantitative strategist at the firm.
Meantime, European bonds slid after the region’s central bank said it would temporarily remove a 0% cap for remunerating government deposits.
That reduces the incentive to shift billions of euros of public money from cash into short-term debt.
Officials are prepared to deliver another jumbo rate increase at their October meeting if the inflation outlook warrants an additional big step, according to people familiar with the debate.
Elsewhere, oil rebounded from an eight-month low as the market shrugged off a US report showing swelling crude stockpiles and slumping demand.
Traders characterized the move as a technical correction following crude’s descent into oversold territory.
Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.7% as of 4 p.m. New York time
* The Nasdaq 100 rose 0.5%
* The Dow Jones Industrial Average rose 0.6%
* The MSCI World index rose 0.8%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro was little changed at $0.9999
* The British pound fell 0.3% to $1.1503
* The Japanese yen fell 0.2% to 144.02 per dollar
Bonds
* The yield on 10-year Treasuries advanced five basis points to 3.31%
* Germany’s 10-year yield advanced 14 basis points to 1.72%
* Britain’s 10-year yield advanced 11 basis points to 3.15%
Commodities
* West Texas Intermediate crude rose 0.9% to $82.71 a barrel
* Gold futures fell 0.6% to $1,718 an ounce
–With assistance from Andreea Papuc, John Viljoen, Michael MacKenzie, Isabelle Lee and Emily Graffeo.
Have a lovely evening.

Be magnificent!
As ever,

Carolann

I have in sincerity pledged myself to your service, as so many of you are pledged to mine. Throughout all my life and with all my heart
I shall strive to be worthy of your trust. –Queen Elizabeth on her Coronation Day, 1953.
Grief is the price we pay for love. –Queen Elizabeth, on the September 11^th attacks, September 11, 2001.

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