February 10, 2025 Newsletter

Dear Friends,

Tangents: Happy Monday!

February 10, 1964: Bob Dylan’s album “The Times They Are A-Changin”‘ was released. Go to article
February 10, 1996: IBM’s Deep Blue defeats world chess champion Garry Kasparov in a game, marking the first time a computer has beaten a reigning world champion under standard chess tournament time controls.

11,000-year-old settlement in Canada could rewrite history of Indigenous civilizations in North America
The discovery of an 11,000-year-old village in Saskatchewan could rewrite Indigenous history in central Canada. Read More.

Alaska’s ice is melting in front of our eyes, staggering satellite shots show
Unusual weather patterns and climate change have been driving stark changes in the northwestern state. Now, new satellite images show the extent of this transformation. Read More.

Stunning, rainbow-colored object spotted by James Webb telescope could be an alien solar system in the making
The James Webb Space Telescope has captured a belching protostar in its infancy. By studying the dust grains whirling around it, astronomers hope to better understand how solar systems like our own take shape. Read More.

Orcas off Antarctica filmed teaching calves to hunt in incredible new footage
PBS show “Nature: Expedition Killer Whale” reveals an hour-long lesson where adult orca teach calves how to hunt seals off Antarctica. Read More.

Coldest-ever qubits could lead to faster quantum computers
Scientists have cooled qubits to record low temperatures using a quantum refrigerator powered by “hot thermal baths.” Read More.

Would a fallout shelter really protect you in a nuclear blast?
Nuclear bunkers aren’t a foolproof way to stay safe during a nuclear attack. Here’s why. Read More.

Super Bowl LIX: A recap on the ads and Kendrick Lamar’s halftime show
CNN curated a list of Super Bowl commercials that stood out in a crowded field. Rapper Kendrick Lamar also headlined an energetic halftime show, completing a victory lap after a year-long feud with rapper Drake.

New marriages in China crash to record low
Around 6 million couples in China registered their marriages in 2024, a plunge of about 20% from the previous year. Read how the government is encouraging young people to tie the knot.

How to keep your private conversations private
These apps and online tools can help you maintain privacy in an increasingly connected world.

One of the last surviving Tuskegee Airmen dies at 100
Retired Lt. Col. Harry Stewart Jr., a decorated World War II pilot and one of the last surviving Tuskegee Airmen, has died. Watch this short video to learn about his life and legacy.

PHOTOS OF THE DAY

North Woodstock, US
People trek through the caverns and snow at Ice Castles in New Hampshire. Since 2011, Ice Castles has been dedicated to creating a world of ice caves, frozen waterfalls and glaciers formed into archways, caverns, slides and tunnels
Photograph: Joseph Prezioso/AFP/Getty Images

Carr Shield, UK
Snow blankets the Northumberland village
Photograph: Owen Humphreys/PA

​​​​​​​Ağrı, Turkey
People cross a bridge over a frozen lake
Photograph: Abdullah Söylemez/Anadolu/Getty Images
Market Closes for February 10, 2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1997, Prudential Insurance emerged as the investor backing a pioneering financial instrument: debt backed by music royalties. David Bowie became the first musician to securitize his back catalog with Prudential snapping up all $55 million of the “Bowie bonds,” which paid 7.9% interest.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose 0.8% at 25,658.86 in Toronto.
The index advanced to the highest closing level since Jan. 30 after the previous session’s decrease of 0.4%.
Toronto-Dominion Bank contributed the most to the index gain, increasing 3.9%.
MDA Space Ltd. had the largest increase, rising 13.0%.
Today, 153 of 221 shares rose, while 67 fell; 8 of 11 sectors were higher, led by materials stocks.
Insights
* The index advanced 22% in the past 52 weeks. The MSCI AC Americas Index gained 20% in the same period
* The S&P/TSX Composite is 0.8% below its 52-week high on Jan. 30, 2025 and 25.4% above its low on Feb. 13, 2024
* The S&P/TSX Composite is up 1.7% in the past 5 days and rose 3.6% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 21.2 on a trailing basis and 17.8 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.7% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$4.11t
* 30-day price volatility fell to 10.86% compared with 10.93% in the previous session and the average of 11.23% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Materials | 64.2511| 2.0| 40/10
Energy | 59.9851| 1.4| 38/4
Information Technology | 49.7259| 1.8| 10/0
Industrials | 30.8797| 1.0| 20/8
Consumer Discretionary | 11.3075| 1.4| 8/3
Communication Services | 5.2189| 0.9| 4/1
Real Estate | 3.5532| 0.7| 13/7
Utilities | 1.4685| 0.2| 8/7
Health Care | -0.9476| -1.4| 0/4
Financials | -2.0544| 0.0| 7/18
Consumer Staples | -7.4435| -0.8| 5/5
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
TD Bank | 39.0600| 3.9| 101.9| 12.4
Shopify | 32.9600| 2.3| 29.6| 12.1
Agnico Eagle Mines Ltd | 11.7000| 2.4| 27.1| 27.9
CIBC | -7.6090| -1.3| -36.2| -3.4
Couche-Tard | -8.4400| -2.1| 95.1| -8.5
RBC | -15.4600| -0.9| -17.8| -2.6
US
By Rita Nazareth
(Bloomberg) — Stocks kicked off the week with gains, rebounding after a slide driven by concerns over inflation and US tariff threats.
The dollar strengthened and gold hit a record high.
The advance in equities was led by the market’s most-influential group – technology – with the Nasdaq 100 up over 1% Monday.
Nvidia Corp. extended a five-day surge to about 15% while Meta Platforms Inc. rose for a 16th consecutive session.
Materials producers were also on the spotlight amid President Donald Trump’s plans to impose 25% tariffs on all US imports of steel and aluminum.
United States Steel Corp. and Alcoa Corp. climbed at least 2.2%.
Trump said Sunday the steel and aluminum tariffs would apply to shipments from all countries, including major suppliers Mexico and Canada.
He didn’t specify when the duties would take effect.
The president also said he would announce reciprocal tariffs this week on countries that tax US imports.
Aside from the global trade picture, investors will also be focused on this week’s key inflation data and Federal Reserve Chair Jerome Powell’s testimony before Congress.
Expected inflation rates over the next year and three years ahead were both unchanged in January at 3%, according to results of the New York Fed’s Survey of Consumer Expectations published Monday.
“Inflation data, Powell’s congressional testimony, and tariffs are poised to drive the market story,” said Chris Larkin at E*TRADE from Morgan Stanley.
“If the S&P 500 is going to break out of its two-month consolidation, it may need a respite from the types of negative surprises — like DeepSeek, tariffs, and consumer sentiment — that have tripped it up over the past few weeks.”
Hedge funds emerged as big buyers of US stocks last week, shifting away from a previously bearish stance in the wake of stronger-than-expected earnings reports.
They snapped up US equities at the fastest pace since November, resulting in the heaviest net buying of single stocks in more than three years, according to Goldman Sachs Group Inc.’s prime brokerage report for the week ended on Feb. 7.
The activity was heaviest in the information technology sector.
The S&P 500 rose 0.7%.
The Nasdaq 100 climbed 1.2%.
The Dow Jones Industrial Average added 0.4%.
The Bloomberg Magnificent Seven Total Return Index advanced 0.4%.
The Russell 2000 Index gained 0.4%.
The yield on 10-year Treasuries was little changed at 4.5%.
The Bloomberg Dollar Spot Index rose 0.2%. Gold topped $2,900 an ounce.
To Jose Torres at Interactive Brokers, many investors are starting to realize that much of the tariff talk is hardly going to come to fruition, with the rhetoric increasingly appearing to be a negotiation tactic.
“The posturing is intended to benefit domestic economic conditions rather than disrupt global commerce momentum, and the outcomes are likely to be much better than feared,” he said.
“For this reason, traders are stepping up to the plate today and scooping up stocks.”
“In the Old Testament, even God rested on the seventh day!” said Bespoke Investment Group strategists.
“Since the Inauguration, though, whether you love or hate him, we can all agree that President Trump’s second term has started with a nonstop fire hose of news and headlines.”
Despite the jitters around the news flow, one metric shows the market has actually been surprisingly calm.
Over the last 100 trading days, the roughly $630 billion exchange-traded fund tracking the S&P 500 (SPY) has traded in a relatively narrow range of less than 10%, according to Bespoke.
While that may sound like a wide range, it ranks in just the 13th percentile of all comparable periods dating back to SPY’s inception in 1993.
Back in Covid, this reading spiked above 50% and during the Financial Crisis, it widened even more, peaking above 75%.
“Investors may be better served by not reacting to the news cycle,” said Anthony Saglimbene at Ameriprise.
“Stand still and let tariff, Big Tech, and interest-rate developments play out over the near term. Making investment decisions on still unknown outcomes increases the risk of being wrong or offside if developments shift in the opposite direction.”
“Despite day-to-day confusion, tariff uncertainty, the geopolitical environment, and elevated valuations in the tech space remain the biggest unknowns for investors,” said Mark Hackett at Nationwide.
“Together, these factors point to measured gains this year rather than blockbuster returns of recent years.”
By one barometer, investors’ expectations for the stock market have never been this high at the start of a presidential term.
The cyclically-adjusted price-to-earnings ratio, more commonly known as the CAPE ratio, stood at nearly 38 in late January, an “extremely high” level, according to Charlie Bilello at Creative Planning.
Positioning tells a similar story.
The US equity risk premium (ERP) — a measure of the differential between the expected returns of stocks and bonds — is deep into negative territory, something that hasn’t happened since the early 2000s.
Whether that’s a negative indicator for share prices depends on the economic cycle.
A lower number can be seen as indicating that corporate profits are going to rise.
Or it could mean that stocks are climbing too rapidly and are far above their actual value.
“Although multiples are elevated, we remain fully invested due to the potential for continued economic growth, moderating inflation and an accommodative Fed,” said Richard Saperstein at Treasury Partners.
“Our characterization for stocks this year is a choppy market that trends higher over the year.”
Callie Cox at Ritholtz Wealth Management says high expectations, elevated rates and policy uncertainty “don’t mix well together.”
“We’re learning that in real time,” Cox said. “Strive for portfolio balance, and remember that there’s a world outside of AI.”
The resilience of stocks in the face of tariffs may invite further trade escalations, making equity pullbacks likely, according to Deutsche Bank AG strategists including Binky Chadha.
They noted these pullbacks require same playbook as for geopolitical shocks, which have historically seen sharp but short-lived selloffs, with equities typically bottoming even as the event continues and recouping losses before any de-escalation.
In such scenarios, equities would typically weaken 6%-8%, moving lower for three weeks before gaining strength for three weeks.
“For investors, the greatest market risk likely lies in policy unpredictability,” according to Christian Floro at Principal Asset Management.
“Given this environment, diversification is essential to manage portfolio risk and capture opportunities as companies, countries and markets adjust.”
While headlines continue to be dominated by concerns over tariffs and mega cap tech spending, the market narrative shift around broadening and leadership is being confirmed by fundamentals and market dynamics, according to Lisa Shalett at Morgan Stanley Wealth Management.
“Watch for rotation of stock index leadership from the Magnificent Seven toward value, cyclicals and non-GenAI infrastructure secular growth,” she said.
“Consider adding cyclicals like financials, energy, domestic manufacturers and consumer services to US stock positions.”
“We stay overweight US equities on a solid macro outlook and the AI mega force – a big, structural shift,” said BlackRock Investment Institute strategists including Jean Boivin and Wei Li.
“We go overweight government bonds in the euro area, where the potential growth hit from tariffs should reinforce rate cuts.”
As US stocks confront mounting risks, such as questions around the economy and gains concentrated in just a few companies, it’s a good time to shift into other equity markets, says Alexander Altmann at Barclays Plc.
The firm’s global head of equities tactical strategies, who joined the bank last year after running a portfolio at Millennium Capital Management, recommends “shorting US exceptionalism” — at least temporarily —  with American stocks at historically high valuations.

Corporate Highlights:
* Toronto-Dominion Bank expects to raise about $14 billion through the sale of its entire stake in Charles Schwab Corp. as part of a corporate overhaul in the wake of its historic US money-laundering settlement.
* Microsoft Corp. is under investigation from the French antitrust authority amid concerns the US tech giant is degrading the quality of results when smaller rivals pay to use Bing technology in their own search-engine products.
* McDonald’s Corp. sales rose in the fourth quarter after growth in the chain’s international business made up for a decline in the US.
* Lyft Inc. will launch driverless rides with technology vendor and Intel Corp. spinoff Mobileye Global Inc. in Dallas as soon as 2026, building on a partnership that was first announced last November.
* Hyatt Hotels Corp. struck a deal to purchase Playa Hotels & Resorts NV for about $2.6 billion, expanding its reach into the all-inclusive resort market in countries including the Dominican Republic and Jamaica.
* Hertz Corp. has kicked off negotiations to settle litigation surrounding a make-whole payout of over $270 million that has been demanded by some bondholders, the company said on Monday.
* BP Plc surged after Elliott Investment Management built a stake in the company, seeking to end years of under-performance by pushing for significant change.
* The notion that China’s DeepSeek spent under $6 million to develop its artificial intelligence system is “exaggerated and a little bit misleading,” according Google DeepMind boss Demis Hassabis.

Key events this week:
* Fed Chair Jerome Powell gives semiannual testimony to Senate Banking Committee, Tuesday
* Fed’s Beth Hammack, John Williams, Michelle Bowman speak, Tuesday
* US CPI, Wednesday
* Fed Chair Jerome Powell testifies to House Financial Services panel, Wednesday
* Fed’s Raphael Bostic and Christopher Waller speak, Wednesday
* Eurozone industrial production, Thursday
* US initial jobless claims, PPI, Thursday
* Eurozone GDP, Friday
* US retail sales, industrial production, business inventories, Friday
* Fed’s Lorie Logan speaks, Friday

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 1.2%
* The Dow Jones Industrial Average rose 0.4%
* The MSCI World Index rose 0.5%
* Bloomberg Magnificent 7 Total Return Index rose 0.4%
* The Russell 2000 Index rose 0.4%
Currencies
* The Bloomberg Dollar Spot Index rose 0.2%
* The euro fell 0.2% to $1.0306
* The British pound fell 0.3% to $1.2365
* The Japanese yen fell 0.4% to 151.96 per dollar
Cryptocurrencies
* Bitcoin rose 2.3% to $97,382.75
* Ether rose 5.1% to $2,684.87
Bonds
* The yield on 10-year Treasuries was little changed at 4.50%
* Germany’s 10-year yield declined one basis point to 2.36%
* Britain’s 10-year yield declined two basis points to 4.46%
Commodities
* West Texas Intermediate crude rose 2% to $72.45 a barrel
* Spot gold rose 1.6% to $2,907.21 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from John Viljoen, Catherine Bosley and Matthew Burgess.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
You were born to win, but to be a winner, you must plan to win, prepare to win, and expect to win. –Zig Ziglar, 1926-2012.

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