August 25th,2025, Newsletter

Dear Friends,

Tangents: Happy Monday.

August 25, 1939: The Wizard of Oz is released.
On Aug. 25, 1944, Paris was liberated by Allied forces after four years of Nazi occupation and marking a pivotal moment in World War II.  Go to article.
August 25, 1966:  The Beatles play afternoon and evening concerts in 1966 at Seattle Center Coliseum after landing at Sea-Tac Airport on a chartered jet. About 8,200 fans at the afternoon concert hear the English rock band play 10 songs, including “Day Tripper,” “Yesterday,” “Nowhere Man” and “Paperback Writer.” The lyrics are barely audible over the crowd’s screams and shouts. The second show is sold out, and 14,382 fans attend the half-hour, 10-song set. It is the last live performance by all four Beatles in Seattle; the group breaks up in 1970. (Compiled from HistoryLink.org).

Leonard Bernstein, composer, b.1918.
Sean Connery, actor, b. 1930.
Elvis Costello, musician, b.1954.
Claudia Schiffer, model, b. 1970

SpaceX scrubs Starship launch attempt
Since its debut in January, the mega rocket has twice exploded over populated islands east of Florida.

Kilauea puts on ‘extraordinary show’
It was the Hawaiian volcano’s 31st eruption since December, and the photos are striking. 

New dinosaur species discovered
According to paleontologists, the creature had a distinctive sail-like structure running down its back.

British music fest apologizes to Irish folk band
The Mary Wallopers claim they were muted during their set for waving a flag.

Kirsten Dunst: Everyone messes up my name
Nope, it’s not KER-sten.

Deep-sea creatures find livestream fame  
This viral scientific mission even included a plump starfish resembling a beloved cartoon character.

All humans around today are Homo sapiens — modern humans who emerged at least 300,000 years ago. However, many Homo species came before, shaping who we are today. But what species was the first? The answer, perhaps unsurprisingly, is complicated. Read more.

Rocket-like jellyfish, regal Komodo dragon and harrowing whale rescue — see the stunning Ocean Photographer of the Year 2025 finalists.
The finalists for the Ocean Photographer of the Year 2025 competition were announced this week, featuring synchronized swimming whales, schools of fish swirling around coral outcrops, jellyfish that look like UFOs, and a Komodo dragon that’s a little too close for comfort.   See more.

The first people to populate the Americas had DNA from Neanderthals and Denisovans, a new study has revealed. The genes likely came from Denisovans who mated with Neanderthals, who then passed them onto modern humans when they mated with them in turn.
This sliver of genetic material isn’t just an intriguing relic, it could have been key to humans’ expansion across the continent by offering them a mutational arsenal to fight off the new pathogens they encountered. Read more.

PHOTOS OF THE DAY

Colombo, Sri Lanka
People take part in the international kite festival
Photograph: Ishara S Kodikara/AFP/Getty Images

London, UK
People celebrate J’ouvert, meaning ‘daybreak’ or ‘opening of the day’ in French Creole, at the start of Notting Hill carnival
Photograph: Yui Mok/PA

Jakarta, Indonesia
Cyclists and environmental activists take part in an event calling for the protection of orangutans, during a car-free day in the city
Photograph: Yasuyoshi Chiba/AFP/Getty Images
Market Closes for Aug 25^th,2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
When a measure becomes a target, it ceases to be a good measure. -Charles Goodhart, b.1936.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.6% at 28,169.94 in Toronto.
The move was the biggest since falling 0.9% on Aug.
1 and follows the previous session’s increase of 1%.
Royal Bank of Canada contributed the most to the index decline, decreasing 0.9%.
Pason Systems Inc. had the largest drop, falling 2.9%.
Today, 153 of 211 shares fell, while 49 rose; 8 of 11 sectors were lower, led by financials stocks.

Insights
* This month, the index rose 3.3%
* The index advanced 21% in the past 52 weeks. The MSCI AC Americas Index gained 15% in the same period
* The S&P/TSX Composite is 0.8% below its 52-week high on Aug. 22, 2025 and 26.7% above its low on April 7, 2025
* The S&P/TSX Composite is up 0.9% in the past 5 days and rose 2.5% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 20.2 on a trailing basis and 17.8 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.6% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$4.56t
* 30-day price volatility rose to 10.12% compared with 10.00% in the previous session and the average of 8.86% over the past month

Index Points
Financials | -82.4210| -0.9| 2/22
Industrials | -43.3786| -1.3| 1/28
Information Technology | -25.1404| -0.9| 1/9
Utilities | -4.9460| -0.5| 2/11
Consumer Discretionary | -3.3860| -0.4| 2/7
Real Estate | -2.5553| -0.5| 2/15
Communication Services | -2.0267| -0.3| 2/3
Health Care | -0.9948| -1.4| 0/3
Consumer Staples | 0.0721| 0.0| 4/6
Energy | 0.2773| 0.0| 13/24
Materials | 1.3138| 0.0| 20/25
RBC | -17.5200| -0.9| -47.0| 9.0
Shopify | -14.0700| -0.8| -41.0| 27.4
Brookfield Corp | -11.9500| -1.3| -24.2| 8.9
Cenovus | 4.1970| 2.1| 53.6| 6.2
Celestica | 4.7400| 2.2| -48.7| 101.5
Suncor | 5.8430| 1.2| 107.1| 9.1
(MT Newswires):
The Toronto Stock Exchange fell Monday, as investors took on some profits after Friday’s record close ahead of tomorrow’s start of the third-quarter earnings season for Canada’s big banks, which could offer clues on the health of the Canadian economy and consumers.
Despite steady to improved commodity prices, the S&P/TSX Composite Index closed down 163.19 points, or 0.6% from Friday’s record to 28,169.94 with most sectors lower, led by Health Care. down 1.5%, and Industrials, down 1.25%, while Battery Metals Index was up 3.5%.
Of commodities, gold was mostly steady late afternoon on Monday as the dollar and yields rose after a Friday drop as Federal Reserve Chair Jerome Powell signaled an interest-rate cut is coming.
Gold for December delivery was last seen down $7.50 to US$3,411.00 per ounce.
West Texas Intermediate crude oil rose, climbing for a fourth session as demand remains strong in the final week of the U.S. driving season and investors move to add risk after the chair of the Federal Reserve on Friday signaled an interest-rate cut is likely coming. WTI crude oil for October delivery closed up $1.14 to settle at US$64.80 per barrel, while October Brent oil was last seen up $1.22 to US$68.95.
The Canadian banks begin reporting their fiscal third-quarter results on Tuesday, starting with Bank of Montreal (BMO.TO, BMO) and Bank of Nova Scotia (BNS.TO. BNS).
As background to that, BMO Capital Markets Senior Economist Shelly Kaushik noted Canadian retail sales jumped 1.5% in June, marking a “decent turnaround” from May’s 1.2% decline. Kaushik noted the June pace matched the increase in volume terms, leaving the three-month gain near 3% annualized.
“Not bad for a quarter that likely captured the worst of the economic hit from trade uncertainty.” “To be sure,” Kaushik said, “decent consumer spending in both goods and services likely provided some offset for a deeply negative print in net exports.
Still, we don’t think it’ll be enough to avoid a real GDP contraction in Q2 when that report is released at the end of the week.”
“As mentioned, though,” Kaushik added, “this quarter will hopefully be the worst of it for the economy.
It’s still early, but we’re forecasting real GDP to be little changed in Q3, implying a recession will be narrowly avoided.
Indeed, the first look at July pointed to a 0.8% nominal decline in retail sales.”
On Tuesday’s earnings for BMO, National Bank in a preview note published earlier this month forecast cash earnings per share (EPS) of $2.96 compared to a consensus $2.95 and highlighted as key themes to look out for: a continuation of credit performance turnaround; U.S. loan growth “still stagnating”; and the bank’s potential to shed more assets.
FactSet is forecasting $2.97 versus $2.64 a year ago.
Then for Scotiabank, National Bank forecast cash EPS of $1.76 compared to $1.72 consensus estimate.
It will be looking for signs of: the corporate segment driving growth this year; the Canadian P&C performance “lagging” the group; and the “de-banking process still underway”.
FactSet is forecasting $1.73 versus $1.63.
On BMO’s credit performance turnaround should continue, National Bank noted that after negatively surprising on credit performance during fiscal 2024 (i.e., PCLs were about 60% above beginning of year consensus), BMO has delivered a turnaround in 2025. Impaired PCLs have declined each quarter from the Q4 2024 peak.
The bank signaled caution during Q2 2025, as reflected in a 17 bps performing PCL ratio.
Moreover, management suggested that tariff uncertainty could push the bank’s impaired PCL ratio into the low 50s, or above its high 40s guidance.
In National Bank’s view, a deviation from guidance is unlikely this quarter.
National noted that the bank’s U.S. regulatory filings indicated that BMO’s U.S. P&C credit performance (i.e., the primary source of 2024’s excess loan losses) had improved sequentially during calendar Q2 2025.
National Bank noted while BMO’s credit turnaround has been a positive development, stagnant commercial loan growth in the United States has not.
In National’s view, a revival of loan growth in this segment is an important catalyst for the stock, considering balances have been flat/declining since Q2 2023, when the Bank of the West (BotW) acquisition closed.
If anything, National said, this trend does little to indicate any progress on BotW revenue synergies.
“Unfortunately,” National added, it does not appear as though BMO will turn around volume growth in the U.S. P&C segment this quarter”.
It noted BMO’s calendar Q2 2025 Call Report showed that end of period commercial loans were down 2% Q/Q.
On BMO potentially looking to shed more assets. National Bank noted media reports suggest that BMO could be selling its Transportation Finance business, originally acquired as GE Transportation Finance in 2015.
The business has US$11 billion of assets and press reports indicate a potential sale price of approximately US$1 billion.
That figure would be lower than what BMO paid to acquire the business in 2015, which National estimates as a combination of capital required to back RWAs (near US$800 million) and goodwill & intangibles (near US$350 mln).
However, National said, since BMO converted the portfolio to AIRB models that reduced its capital intensity, the comparison isn’t apples to apples.
“We do not know how much profit the business generates, though it does create PCL volatility from time to time,” National added, noting there was a six-quarter stretch between Q4 2016 and Q1 2018 that transportation loans generated a cumulative $160 million of provisions. More recently, National noted, BMO has reported nearly $350 million of cumulative transportation sector losses since Q1 2024, a period of challenging credit performance in this category that has affected many banks.
“Overall,” National said, “if a sale is announced it would most likely be part of BMO’s balance sheet optimization strategy, which aims to exit sub-scale and/or below target ROE businesses.”
Other examples it cited include the exit of the Canadian and U.S. consumer auto finance business, which was announced in September 2023 and the sale of the RV Finance loan portfolio in December 2023.
Meanwhile, on Scotiabank and its corporate segment driving growth this year.
National Bank noted lower rates have been a tailwind for BNS’ Corporate segment.
Lower funding costs have resulted in segment NII [net interest income] improving nearly 75% during the first half of 2025, culminating in a segment loss of $80 million during Q2, compared to a peak quarterly loss of $283 million during Q4 2023.
National Bank said this improvement, which also includes the impact of BNS’ 15% share of KEY earnings, should explain virtually all of BNS’s 2025 earnings growth.
Based on the assumption of the segment achieving break-even status by Q4 2025, National estimates that Corporate should contribute 30% of consensus 2026 estimated EPS growth.
The remaining 70% (or 8% stand-alone EPS growth Y/Y) will rely on improved performance in BNS’ other segments, National added.
National Bank noted BNS’ Canadian P&C segment delivered 2% PTPP [Pre-Tax Pre-Provision] earnings growth during first half 2025 (vs. 8% peer average), including negative 1% during Q2 25 (vs. 6% peer average).
It said performance has been weighed down by several factors.
For one, commercial loan growth has been negligible (just 1% Y/Y in Q2 and down 2% YTD), well below peers at 9% Y/Y growth (and +5% YTD), which reflects BMO’s de-banking strategy.
It added card loans tell a similar story, with BNS’ balances down 3% YTD vs. peers flat.
Secondly, National said, the segment has seen 5 bps of NIM compression YTD, in contrast to peers at +6 bps on average.
The NIM compression is primarily due to deposit margins, along with slower growth in higher yielding loan categories, National added.
National noted that since its 2023 Investor Day, BNS has been engaging in the process of “de-banking”, which entails running-off certain lending relationships.
It said one motivation was to mitigate the impact of the Basel III output floor, which has faded as a concern given that OSFI postponed further increases to this regulatory capital headwind on February 12, 2025.
Separately, it added, BNS is also re-evaluating its banking relationships and trimming those that do not meet ROE targets.
National said we’ve seen the impact mainly on Corporate loans in the capital markets segment, where balances are down 27% from Q2 2023 peak levels.
It added we’ve also seen the impact in the International Banking segment, with commercial balances down 13% from Q2 2023 peak levels.
The bank has stated that it expects to resume balance sheet growth during fiscal 2026, National noted.
US
By Rita Nazareth
(Bloomberg) — A rally that put stocks on the brink of all- time highs sputtered and bond yields rose as euphoria around Federal Reserve rate cuts eased ahead of a key inflation reading.
While Jerome Powell on Friday signaled a September rate cut is likely on the way amid downside risks to jobs, doubts over the pace of those reductions lingered on Wall Street.
In addition to officials remaining divided, traders are bracing for a not-so-friendly price reading later this week.
Policymakers are grappling with inflation that’s still above their 2% goal — and rising — and a labor market that’s showing signs of weakness.
That unnerving reality, which pulls policy in opposite directions, is made worse by a high degree of uncertainty about how each of those factors will evolve over the coming months.
The Fed’s preferred measure of underlying inflation probably ticked higher last month, with the personal consumption expenditures price index excluding food and energy rising 2.9% from a year ago.
That would be fastest annual pace in five months.
“Now the discussion will likely turn to how aggressive the Fed may be,” said Chris Larkin at E*TRADE from Morgan Stanley.
“Signs of a slowing labor market currently appear to be outweighing inflation concerns, but the Fed hasn’t abandoned its 2% target.”
Almost 400 shares in the S&P 500 fell, with the gauge dropping 0.4%.
Nvidia Corp. paced gains in mega caps ahead of its results.
The yield on 10-year Treasuries rose three basis points to 4.28%.
The dollar climbed.
“Today’s trading lacks catalysts, which explains much of the muted sentiment throughout the indices, although rate- sensitive, cyclically oriented areas are underperforming,” said Jose Torres at Interactive Brokers.
“Part of that sluggishness results from traders reevaluating Chair Powell’s dovishness.”
Money markets are pricing in roughly 80% odds of a Fed rate cut in September, and a total of two reductions by the end of the year.
“While folks are generally in consensus about a September cut, October and December are still live, data-dependent meetings,” Torres noted.
To Krishna Guha at Evercore, the repricing of a September rate cut after Powell’s Jackson Hole speech Friday was “not excessive.”
“If we are right, the focus shifts to what happens after September,” Guha said.
“If the next set of labor data is not too bad, we think the Fed will begin to frame out the cautious recalibration cut, while seeking to contain expectations of ‘too much too soon’.”
Dovish or Hawkish Cut?
“While we still see the Fed cutting in September, we now have to figure out whether it will be a ‘dovish cut’ or a ‘hawkish cut’,” said Andrew Brenner at NatAlliance Securities.
“We don’t want one to think that inflation is not that important, but the real unknown risk to the economy is the employment situation.”
The exact path forward, particularly the pace of rate cuts, is still up for debate as Fed officials hold diverging views on the potential impact of tariffs and the overall state of the economy, according to Jason Pride and Michael Reynolds at Glenmede.
“Upcoming leadership changes at the Fed may mark a dovish shift over the long-term, with most candidates under consideration for chair broadly viewed as more accommodative than Powell,” they said.
National Economic Council Director Kevin Hassett indicated President Donald Trump’s decision on who should succeed Powell is months away.
His term as Fed chair is set to expire in May.
“We expect Powell to advocate for easing at the September meeting unless incoming data, such as a strong August labor report or higher-than-expected inflation, provide reason to stay on hold,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
“Against this backdrop, we anticipate four quarter- point rate cuts through January 2026, starting in September.”
Investors will also monitor comments from US policymakers at public events this week to gauge their appetite for a September rate cut, with Fed Governor Christopher Waller scheduled to speak on Thursday.
Fed Bank of Dallas President Lorie Logan said money markets could face temporary pressures around quarter-end next month, though the US central bank still has room to continue reducing its balance sheet.
“We also look for Fedspeak this week to generally echo Powell’s view that the Fed can ease in September on shifting concerns towards the labor market,” said Oscar Munoz and Eli Nir at TD Securities.
At Glenmede, the strategists noted that resuming the rate cut cycle will likely be a tailwind for bonds.
Fixed income may offer upside potential for investors as yields across major fixed income categories remain near fair value.
“Small caps may stand to benefit most from easing, with more than half of their debt charging floating rate interest,” they said.
“Lower interest expenses could notably lift earnings, potentially setting the stage for a small cap comeback into year-end.”
Aside from the macro picture, the next big test for the stock market will be a read on what’s been driving gains for the past few years: artificial-intelligence euphoria.
Nvidia Corp. – the last of the “Magnificent Seven” to report earnings – is due to unveil its results Wednesday after the close.
Traders are hoping it can soothe fears about AI spending and effectively confirm that the stock market’s latest rally isn’t just a technology bubble.
“Unless we get some sort of major UFO (Unforeseen Occurrence), the most important development of this week will be the earnings report and guidance out of Nvidia,” said Matt Maley at Miller Tabak.
“Those earnings will be good. The only question will be whether they’re good enough to push the stock higher after almost doubling over the past 4-5 months,” he added.
Nvidia’s size, it’s the biggest weight in the S&P 500 at almost 8%, and its position at the center of AI development have made it a bellwether of the broader market.
The tech giant’s chips are everywhere, 40% of its revenue comes from Meta Platforms Inc., Microsoft Corp., Alphabet Inc. and Amazon.com Inc. — all are among the Top 10 weightings in the S&P 500.
Through several measures, big tech has become very influential, and that level of concentration suggests these stocks don’t just influence the market, but they increasingly drive the overall direction of travel, noted Anthony Saglimbene at Ameriprise.
“In isolation, that could be a caution flag,” he said. “We believe big tech’s market cap heft and elevated valuations today are supported by unusually strong profitability and cash flow generation relative to almost every other corner of the market.”
Even so, elevated expectations raise the bar. “And the margin for error is shrinking,” he said.
“These dynamics could create near-term air pockets from time to time. However, the same forces that pushed these mega-cap tech companies to the top of the S&P 500 (e.g., superior growth, superior margins, and superior cash flow generation) continue.
The onus now is on execution.”

Corporate Highlights:
* Elon Musk accused Apple Inc. and OpenAI in a lawsuit of unfairly favoring the artificial intelligence app across iPhones and thwarting competition for other chatbot makers.
* Warren Buffett’s Berkshire Hathaway Inc. isn’t in the market for a deal to buy a competing railroad.
** Buffett told CNBC on Monday that he met with the CSX Corp. chief executive officer earlier this month to discuss cooperation, while indicating he wouldn’t make a bid for CSX. A Berkshire spokesperson confirmed the comments.
* KPop Demon Hunters, an animated musical released by Netflix Inc., topped the US and Canadian box office during its two-day theatrical debut, a rare win at theaters for the streaming giant, which usually avoids chasing box office revenue for its original movies.
* Wayfair Inc. and RH tumbled on Monday as President Donald Trump said late Friday the US is conducting a “major Tariff Investigation on Furniture coming into the United States,” setting the stage for industry-specific levies.
* Keurig Dr Pepper Inc. agreed to buy JDE Peet’s NV for €15.7 billion ($18.4 billion) to bolster its struggling coffee business before kicking off a split of its operations.
* Thoma Bravo has agreed to buy Verint Systems Inc. for $1.23 billion in cash, just days after announcing a $12.3 billion takeover of Dayforce Inc.
* Galaxy Digital, Multicoin Capital and Jump Crypto are in talks with potential backers about raising roughly $1 billion to accumulate Solana, in what would be the largest treasury dedicated to the digital token.
* Webull Corp. will let US customers buy and sell cryptocurrencies on its trading platform again after dropping the service in 2023 when it was trying to go public.
* AbbVie Inc. agreed to buy an experimental depression treatment from Gilgamesh Pharmaceuticals Inc. for up to $1.2 billion in a deal that highlights the drug industry’s growing interest in next-generation psychedelic compounds.
* Orsted A/S sank after the Trump administration blocked construction of an almost-finished offshore wind farm, throwing a wrench into a planned 60 billion kroner ($9.4 billion) share sale backed by the government.
* The Pinault family has reached out to potential buyers of Puma SE after the German sports brand lost about half of its market value in the past year, according to people familiar with the matter.
* US auto safety regulators are investigating the risk of potential engine failures in about 1.4 million vehicles made by Honda Motor Co.
* PDD Holdings Inc. posted better-than-expected results after China’s government ramped up stimulus to galvanize consumers and offset the economic fallout from US tariffs.
What Bloomberg strategists say…
“The mix of underperformers in Monday’s session is geared toward consumer sectors that are highly sensitive to inflation, which could stand in the way of cuts even after Powell tilted the emphasis onto a weakening labor market.”
— Kristine Aquino, Managing Editor, Markets Live.

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.4% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.3%
* The Dow Jones Industrial Average fell 0.8%
* The MSCI World Index fell 0.6%
* Bloomberg Magnificent 7 Total Return Index rose 0.4%
* The Russell 2000 Index fell 1%
Currencies
* The Bloomberg Dollar Spot Index rose 0.5%
* The euro fell 0.9% to $1.1610
* The British pound fell 0.5% to $1.3454
* The Japanese yen fell 0.6% to 147.82 per dollar
Cryptocurrencies
* Bitcoin fell 2% to $110,537.51
* Ether fell 7.6% to $4,421.36
Bonds
* The yield on 10-year Treasuries advanced three basis points to 4.28%
* Germany’s 10-year yield advanced four basis points to 2.76%
* Britain’s 10-year yield was little changed at 4.69%
* The yield on 2-year Treasuries advanced three basis points to 3.73%
* The yield on 30-year Treasuries advanced two basis points to 4.89%
Commodities
* West Texas Intermediate crude rose 1.8% to $64.78 a barrel
* Spot gold fell 0.2% to $3,365.38 an ounce

Have a lovely evening.

Be magnificent!
As ever,

Carolann
Life is a long lesson in humility. –James M. Barrie, 1860-1937.

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
Fax: 778.430.5828
www.carolannsteinhoff.com