January 10, 2025 Newsletter

Dear Friends,

Tangents: Happy Friday.

January 10, 1863: The first line of the London Underground opens, transforming urban transport and infrastructure.
January 10, 2000: America Online agreed to buy Time-Warner for $162 billion. (Time-Warner decided to spin off AOL in 2009.)  Go to article

1920: League of Nations founded.

George Freeman, boxer, b. 1949.
Pat Benatar, singer, b. 1964.

College Football Playoff
Notre Dame defeated Penn State 27-24 on Thursday in a thrilling Orange Bowl College Football Playoff semifinal. The Cotton Bowl today is likely to serve up another tight game between Ohio State and Texas.

Dubai skyscrapers to be linked by daring rooftop pool
Developers in Dubai want to build a private swimming pool that will stretch across a pair of $1 billion residential towers. See the renderings.

Man with crocodile skull in luggage arrested at Delhi airport
A Canadian man was arrested by Indian authorities at the New Delhi airport after a large crocodile skull was found in his luggage.

‘Sea women’ and sacred waterfalls: Exploring one of Japan’s most stunning secrets
Surrounded by the vast Pacific Ocean, Japan’s Ise-Shima region is a place where ancient traditions, spirituality and the great outdoors collide.

There’s a speed limit to human thought — and it’s ridiculously low
Human brains take in sensory data at more than 1 billion bits per second, but only process that information at a measly 10 bits per second, new research has found.

Medieval crowns of Eastern European royalty hidden in cathedral wall since World War II finally recovered
A cache of precious metal regalia recently discovered in a Lithuanian cathedral sheds light on medieval royalty.

1,700-year-old Roman hoard includes gold coins depicting illegitimate emperor
“Secret” excavations in Luxembourg reveal 141 Roman gold coins from eight Roman emperors and one usurper.

Mars rock samples may contain evidence of alien life, but can NASA get them back to Earth?
NASA will explore two different strategies for fetching Mars rocks collected by the Perseverance rover, and there’s a chance these samples contain evidence of alien life.

See Mars at its best and closest this weekend — no telescope required
As Mars approaches opposition this month, it will become a dazzling spectacle in the night sky. See it at its best now, or wait until 2027.

PHOTOS OF THE DAY

London, England
A stag lies among frosty foliage at Richmond Park in London. The UK recorded its coldest night of this winter so far on Thursday, with more freezing temperatures expected in the coming days. Overnight temperatures fell as low as -14C in Altnaharra, northern Scotland, according to the Met Office
Photograph: Hollie Adams/Reuters

A brown-eared bulbul eats a pyracantha berry in the city of Gangneung on South Korea’s east coast
Photograph: YONHAP/EPA

​​​​​​​Derbyshire, UK
An ice climber ascends Kinder Downfall, a frozen waterfall in the Peak District National Park
Photograph: Oli Scarff/AFP/Getty Images
Market Closes for January 10, 2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1870, John D. Rockefeller founded Standard Oil Co. (Ohio). The company, he said, “will someday refine all the oil and make all the barrels.”
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 1.2% at 24,767.73 in Toronto.
The move was the biggest since falling 2.2% on Dec. 18 and follows the previous session’s increase of 0.1%.
Today, financials stocks led the market lower, as all sectors lost; 168 of 223 shares fell, while 54 rose.
Brookfield Corp. contributed the most to the index decline, decreasing 5.9%. Tilray Brands Inc. had the largest drop, falling 12.1%.
Insights
* In the past year, the index had a similar or greater loss eight times. The next day, it declined four times for an average 1% and advanced four times for an average 0.7%
* So far this week, the index fell 1.2%
* The index advanced 18% in the past 52 weeks. The MSCI AC Americas Index gained 21% in the same period
* The S&P/TSX Composite is 4.2% below its 52-week high on Dec. 9, 2024 and 21% above its low on Feb. 13, 2024
* S&P/TSX Composite is trading at a price-to-earnings ratio of 20.4 on a trailing basis and 17 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.8% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.95t
* 30-day price volatility rose to 10.72% compared with 10.19% in the previous session and the average of 9.65% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -148.7353| -1.8| 3/23
Information Technology| -57.3140| -2.3| 2/8
Materials | -31.3996| -1.0| 10/40
Industrials | -19.4063| -0.6| 10/18
Consumer Staples | -11.5786| -1.2| 1/9
Communication Services| -10.6915| -1.8| 1/4
Utilities | -10.0755| -1.1| 5/10
Real Estate | -8.6072| -1.8| 0/20
Energy | -4.2404| -0.1| 19/24
Health Care | -2.2971| -3.1| 0/4
Consumer Discretionary| -1.2861| -0.2| 3/8
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Brookfield Corp | -49.5100| -5.9| 66.4| -4.1
Shopify | -48.6600| -3.7| 27.8| -2.1
RBC | -35.1800| -2.0| 19.3| -1.4
Canadian Natural Resources | 5.3200| 0.8| -14.0| 6.5
Aritzia | 6.3250| 19.1| 349.3| 27.0
Suncor | 14.2600| 2.9| 44.8| 10.7
US
By Rita Nazareth
(Bloomberg) — Stocks got hammered and bond yields climbed alongside the dollar, with traders slashing their bets for Federal Reserve rate cuts this year after a blowout jobs report.
Equities erased their 2025 gains, with the S&P 500 seeing its worst rout since Dec. 18 — when the Fed roiled markets by signaling caution over how quickly it can continue reducing rates.
Riskier corners of Wall Street sold off, with small caps down about 10% from previous highs.
A slide in Treasuries briefly drove 30-year yields above 5%.
Swaps are now pricing in less than 30 basis points of Fed cuts this year.
The US economy in December added the most jobs since March and the unemployment rate unexpectedly fell, capping a surprisingly strong year.
Separate data fueled concerns about stubborn price pressures, with consumers’ longer-term inflation expectations rising to the highest level since 2008.
And a surge in oil only added to anxiety on that front.
Neil Birrell at Premier Miton Investors says that any hope of a quiet start to the year has well and truly disappeared now.
“Good news for the strength of the economy and bad news for those hoping for interest-rate cuts, as inflation will stay bang at the top of the Fed’s agenda now,” he noted.
“The jump in bond yields looks set to continue, which is bad news for equities. Could a 5% yield on the 10-year Treasury really be hit?”
At Interactive Brokers, Steve Sosnick says equity traders once again revealed their “liquidity addiction.”
“Stock traders are once again more concerned about the potential for monetary accommodation rather than the type of robust economy that can improve corporate fundamentals.”
The S&P 500 fell 1.5%, hovering near its 100-day moving average.
The Nasdaq 100 sank 1.6%.
The Dow Jones Industrial Average dropped 1.6%.
A gauge of the “Magnificent Seven” mega caps fell 1.2%.
The Russell 2000 index of small firms lost 2.2%.
Wall Street’s favorite volatility gauge — the VIX — surged to around 20.
The yield on 10-year Treasuries advanced seven basis points to 4.76%.
The Bloomberg Dollar Spot Index rose 0.5%.
Following Friday’s solid jobs data, economists at some big banks revised their forecasts for additional Fed rate cuts.
Bank of America Corp., which previously expected two quarter-point reductions this year, no longer expects any, and said there’s a risk the next move is a hike.
Citigroup Inc. — whose rate-cut outlook is among Wall Street’s most hopeful — still looks for five quarter-point cuts, but says they’ll start in May.
Goldman Sachs Group Inc. sees two cuts this year versus three.
“The Fed can be very comfortable staying put in January and will need some meaningful downside inflation surprises or reversals in upcoming jobs reports to wake them from rate slumber in March,” said Seema Shah at Principal Asset Management.
“For global bonds, the strength of the US jobs report just adds to their challenges. The peak for yields has not yet been reached.”
Treasury yields have been climbing since the Fed in September kicked off its rate cutting cycle.
A resilient US economy has fueled the moves further, leaving the 10-year yield more than 100 basis points higher than it was before the debut rate reduction.
All that has forced bond investors to contend with the possibility that the benchmark yield could soon return to 5% — a level that has been breached only a handful of times over the past decade.
The move higher in Treasury yields over the past month has largely been driven by real rates — suggesting that higher growth expectations have been the dominant driver behind the selloff, according to Gennadiy Goldberg at TD Securities.
“Investors may want to brace themselves for more volatility as the market recalibrates expectations for fewer cuts,” said Gina Bolvin at Bolvin Wealth Management Group.
Although the stock market doesn’t need lower rates in order to go higher, a Fed that is easing policy is always a better environment for equity investors than one where they are tightening policy — or leaving policy unchanged), said Chris Zaccarelli at Northlight Asset Management.
“At this point in the cycle, earnings will need to improve– and not just within the large tech companies – in order to have markets ‘grow into’ their already high valuations, so we would be cautious in the short term,” he noted.
For investors hoping equity markets would broaden from the mega cap tech names, the latest data didn’t do them any favors, according to Lara Castleton at Janus Henderson Investors.
“People are now going to get concerned that the Fed will not be able to cut at all, pressure is building on the Fed,” said Guy Stear at the Amundi Investment Institute.
“Yields will continue to rise towards 5% in the next couple of months, putting pressure on equity markets unless you get a very strong first-quarter earnings season.”
To Bret Kenwell at eToro, while the market may not love the latest jobs data, there are a lot of worse things than a strong labor market.
“Without a strong foundation in the labor market, the whole thing falls apart. Investors need to keep that in mind — even if that means rate-cut expectations take a step back,” Kenwell said.
Indeed, it looks like we are back in a world where good news is bad news, said Scott Helfstein at Global X. But that seems shortsighted, he noted.
“We believe that companies can deliver on lofty earnings expectations this year powered by automation technologies like AI and deregulation, and that will drive equities rather than the Fed,” he said.
Earnings season kicks into full gear next week with reports from the financial sector.
Banks including JPMorgan Chase & Co. and Wells Fargo & Co. are expected to show continued gains from trading and investment banking, which helped offset net interest income declines caused by higher deposits and sluggish loan demand.
The latest data raises the stakes for inflation gauges to be released next week. December consumer price index data to be released Jan. 15 are forecast to show a third straight month of acceleration, to a rate of 2.9%.
“The surprisingly strong jobs report certainly isn’t going to make the Fed less hawkish,” said Ellen Zentner at Morgan Stanley Wealth Management.
“All eyes will now turn to next week’s inflation data, but even a downside surprise in those numbers probably won’t be enough to get the Fed to cut rates any time soon.”

Corporate Highlights:
* Tesla Inc. refreshed its best-selling Model Y, applying a design element of the polarizing Cybertruck to its high-volume sport utility vehicle.
* Hewlett Packard Enterprise Co. won a deal worth more than $1 billion to provide Elon Musk’s X social network with servers optimized for artificial intelligence work.
* Nvidia Corp. criticized new chip export restrictions that are expected to be announced soon, saying the White House was trying to undercut the incoming Trump administration by imposing last- minute rules.
* Delta Air Lines Inc.’s profit beat Wall Street’s estimates for the final months of 2024, buoyed by gains in both the US market and overseas. The company doesn’t expect the momentum to slow in the new year.
* Walgreens Boots Alliance Inc. reported quarterly sales that surpassed Wall Street’s expectations, spurring the shares and easing pressure on the drugstore chain as it mulls strategic options including a sale.
* Constellation Energy Corp. agreed to acquire closely held Calpine Corp. for $16.4 billion in a deal that will create the largest fleet of US power stations.
* Walt Disney Co., Fox Corp. and Warner Bros. Discovery Inc. scrapped plans to create a joint sports streaming service, saying they want to focus on their existing online offerings instead.
* Chip-design company Synopsys Inc. won conditional approval from the European Union’s merger watchdog for its planned $34 billion buyout of software developer Ansys Inc, after addressing the regulator’s fears over the deal.

Some of the main moves in markets:
Stocks
* The S&P 500 fell 1.5% as of 4 p.m. New York time
* The Nasdaq 100 fell 1.6%
* The Dow Jones Industrial Average fell 1.6%
* The MSCI World Index fell 1.5%
* Bloomberg Magnificent 7 Total Return Index fell 1.2%
* The Russell 2000 Index fell 2.2%
Currencies
* The Bloomberg Dollar Spot Index rose 0.5%
* The euro fell 0.5% to $1.0245
* The British pound fell 0.8% to $1.2210
* The Japanese yen rose 0.3% to 157.72 per dollar
Cryptocurrencies
* Bitcoin rose 2.8% to $94,655.51
* Ether rose 1.7% to $3,261.71
Bonds
* The yield on 10-year Treasuries advanced seven basis points to 4.76%
* Germany’s 10-year yield advanced three basis points to 2.59%
* Britain’s 10-year yield advanced three basis points to 4.84%
Commodities
* West Texas Intermediate crude rose 3.7% to $76.64 a barrel
* Spot gold rose 0.9% to $2,691.16 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Natalia Kniazhevich and Julien Ponthus.

Have a wonderful weekend everyone.

Be magnificent!
As ever,

Carolann
Man has always sacrificed truth to his vanity, comfort and advantage.  He lives not by truth but by make-believe. –W. Somerset Maugham, 1874-1965.

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
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www.carolannsteinhoff.com