Fresh lows for TSX Real Estate, BCE's High Yield, Soaring Bankruptcies, FTC vs AMZN

More charts, less words, primarily Canadian focus.

Lets begin!

• TSX Real Estate sector breaking to fresh 10-Year relative lows
• BCE Dividend Yield north of 7%
• Bankruptcies on the rise
• FTC Sues Amazon Subscribe for free to receive new posts directly to your email

MARKET UPDATE

STOCKS: TSX -1.2% | S&P 500 -1.5% | NASDAQ -1.6% | Russell 2000 -1.3%

BONDS: US Agg -0.1% | Canada Agg 0.0% | US HY -0.3% | US 2Yr 5.1% 10Yr 4.5%

COMMODITIES: CRB IDX 0.3% | Oil (WTI) 1.8% | Gold -0.5%

CURRENCY: USDCAD $1.35 | EURUSD $1.05 | Dollar Index (DXY) 0.2%

CRYPTO: BITCOIN 2.4% to $26,775

VIX: -3.4% to 18.3

FUTURES: TSX60 -0.4% | S&P 500 -0.5% | NASDAQ -0.5%

Market futures pointing modestly higher.

The day started on a pessimistic note, with Jamie Diamond making a rather needless prediction that US interest rates could potentially reach as high as 7%. This was followed by a dip in consumer confidence and the Federal Trade Commission's decision to sue Amazon, which felt like the final blow to an already challenging day.

In both Canada and the United States, every one of the eleven GICS sectors experienced declines. The FANG stocks were among the biggest casualties and the highflying technology sector has now corrected by more than 10% from its peak in July.

When market price action deviates from expectations, it's often prudent to adopt a cautious approach and remain on the sidelines. This remains the situation for Utilities and REITs, which are typically considered defensive sectors but were among the leading decliners on this challenging day.

The VIX, while spiking to its highest level since last May, still remains below 20, which is the long-term average for the fear gauge.

TSX Sector:

• The energy sector emerged as the top performer, albeit with a return of -0.5%. MEG Energy (MEG) and Canadian Natural Resources (CNQ) stood out with gains of 4.1% and 2.4%, respectively.
• Conversely, the real estate sector continued to face challenges, with Colliers International (CIGI) experiencing a decline of -4.1%.

S&P500 Sector:

• Energy sector was once again the top performer, and Pioneer Natural Resources (PXD) led the way with a 1.0% gain.
• Utilities plunged 3.0% on the day, with every stock in the sector declining.

UTES & REITS

• On a day marked by widespread losses in the market, it remains remarkable to witness investors consistently offloading Utility and Real Estate stocks. These sectors have traditionally served as defensive havens during times of market volatility.
• My view is these these sectors are simply casualties of the high-interest-rate trade. As interest rates rise, the attractiveness of their high dividend yields diminishes, and their elevated debt levels leave them vulnerable to higher interest (i.e. high duration)

TSX Real Estate sector breaking to fresh 10-Year relative lows

S&P 500 Utilities Facing Similar Struggles

BCE Dividend Yield north of 7%

• After peaking in April 2022, BCE stock as declined over -22% and pushed the dividend yield to 7.4%
• When it comes to BCE, pursuing high yields may not be advisable, especially given the current chart trends.

Bankruptcies on the rise

• Bankruptcy filings have surged to levels reminiscent of the 2008 Great Recession and the 2020 COVID-19 pandemic.
• This trend is typically viewed as a worrisome economic indicator and has historically been associated with significant stock market downturns.

FTC Sues Amazon

• The long-awaited antitrust case has finally arrived, with the US Federal Trade Commission suing Amazon. The allegations suggest that the e-commerce giant has monopolized online marketplace services.
• AMZN stock took a significant hit, emerging as one of the poorest performers in the S&P 500, with a decline of over 4%.

AMZN pulling back within the context of an established trend

That's all for today...

Source for all charts (unless otherwise specified): Bloomberg, Mulvihill Capital Management Inc.

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