February 2025, Newsletter

Dear Friends,

Tangents:

February 25, 1836: Samuel Colt is granted a United States patent for his revolver firearm, revolutionizing personal weaponry and manufacturing.
February 25, 1901: United States Steel Corp. was incorporated by J.P. Morgan. Go to article.
February 25, 1932: Adolph Hitler gets German citizenship.
February 25, 1964: Cassius Clay (Muhammad Ali) becomes heavy weight champ.

Auguste Renoir, artist, b. 1841.
George Harrison, musician, b. 1943.

‘Nailed-head ritual’ in Iron Age Spain was more ‘complex than initially thought,’ severed skulls reveal
An analysis of the origins of seven severed skulls with nails through them shows that some people treated this way in Iron Age Spain were local while others came from afar. Read More.

Ancient DNA reveals mysterious origins of the Huns who sacked Rome
The origin of the Huns in fourth-century Europe has long been debated, but centuries-old DNA has revealed their diverse backgrounds. Read More.

‘That’s Zero Folks!’: Asteroid 2024 YR4 is no longer a hazard
The likelihood of asteroid 2024 YR4 hitting Earth in 2032 rose and fell last week. NASA’s impact odds are now so slim that the asteroid is no longer a hazard on the Torino asteroid scale. Read More.

Dogs may have domesticated themselves because they really liked snacks, model suggests
Competing theories explain how dogs came to be domesticated from wolves. Now, a new study adds further support to the idea that they domesticated themselves. Read More.

‘Math Olympics’ has a new contender — Google’s AI now ‘better than human gold medalists’ at solving geometry problems
Google’s second generation of its AI mathematics system combines a language model with a symbolic engine to solve complex geometry problems better than International Mathematical Olympiad (IMO) gold medalists.  Read More.

Lester Holt is stepping down as anchor of ‘NBC Nightly News’
Lester Holt, the trusted face of “NBC Nightly News” for the past decade, is stepping down from the newscast.

Sony World Photography Awards 2025: The year’s best images unveiled
Spanning categories including landscape, still life, and the environment, the annual competition’s professional awards will see one finalist named Photographer of the Year.

Hello, Claude
Artificial intelligence startup Anthropic said its new Claude 3.7 Sonnet model can display its step-by-step reasoning process, among other updates. Learn more about the tool’s “extended thinking mode.”
PHOTOS OF THE DAY

Norfolk, UK
‘This beautiful kingfisher was diving between rocks on the groyne to catch small prey. Quite an unusual site in the middle of the holiday season in Sheringham.’
Photograph: Jane Crossen

Somerset, UK
‘A moment of calm at Clevedon pier.’
Photograph: Sofoulis Iacovou

Seagulls pose for the camera at the Baltic Sea in Scharbeutz, northern Germany
Photograph: Michael Probst/AP
Market Closes for February 25, 2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Money is made by sitting, not trading. –Jesse Livermore, 1877-1940.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.2%, or 52.72 to 25,203.98 in Toronto.
Bank of Montreal contributed the most to the index gain, increasing 4.7%.
Innergex Renewable Energy Inc. had the largest increase, rising 54.8%.
Today, 104 of 220 shares rose, while 111 fell; 8 of 11 sectors were higher, led by financials stocks.
Insights
* This month, the index fell 1.3%
* The index advanced 18% in the past 52 weeks. The MSCI AC Americas Index gained 17% in the same period
* The S&P/TSX Composite is 2.6% below its 52-week high on Jan. 30, 2025 and 18.7% above its low on Feb. 28, 2024
* The S&P/TSX Composite is down 1.7% in the past 5 days and fell 1% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 20.7 on a trailing basis and 18.6 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$4.06t
* 30-day price volatility little changed to 10.95% compared with 10.95% in the previous session and the average of 11.01% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 66.0834| 0.8| 13/12
Industrials | 29.0544| 0.9| 16/10
Consumer Staples | 14.1330| 1.5| 8/2
Utilities | 9.8557| 1.0| 9/6
Real Estate | 7.2521| 1.5| 17/2
Consumer Discretionary | 3.8089| 0.5| 7/4
Communication Services | 2.7051| 0.4| 3/2
Health Care | 1.1714| 1.7| 3/1
Materials | -5.3647| -0.2| 16/31
Energy | -25.1090| -0.6| 8/35
Information Technology | -50.8548| -1.9| 4/6
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Bank of Montreal | 34.4800| 4.7| 62.5| 6.8
RBC | 15.3800| 0.9| 15.9| -1.5
Canadian Pacific Kansas | 13.2800| 1.9| -8.4| 6.5
Bank of Nova Scotia| -7.2420| -1.2| 51.5| -7.5
Canadian Natural Resources | -9.3220| -1.5| 144.9| -7.0
Shopify | -49.7400| -3.6| 0.5| 3.8
US
By Rita Nazareth
(Bloomberg) — Stocks closed at a five-week low and bonds surged as another disappointing reading on the US consumer fueled concern about the health of the world’s largest economy.
Another slide in the Nasdaq 100 pushed its four-day loss to around 5%, the most since early September.
A gauge of mega caps extended a plunge from its peak to more than 10% – passing the threshold that meets the definition of a correction.
Selling was heaviest in speculative corners of the market, with a 6% slide in Bitcoin spurring a plunge in exchange-traded funds specializing in crypto.
A rally in Treasuries drove 10-year yields to their lowest levels in 2025.
US consumer confidence fell the most since August 2021 on concerns about the outlook for the broader economy.
The data followed recent disappointments on the retail, services and housing fronts.
That’s prompted traders to boost their bets on Federal Reserve rate cuts this year even as inflation pressures seem to be intensifying.
“The market seems more worried about growth than inflation,” said Chris Verrone at Strategas.
At Brown Brothers Harriman, Elias Haddad says “red flags are emerging,” and another month or two of weak US data would deliver “a blow to the US exceptionalism narrative.
” To Keith Lerner at Truist Advisory Services, while the primary stock-market uptrend remains intact and recession risks remain relatively low, the near-term risk/reward appears more mixed.
The S&P 500 fell 0.5%.
The Nasdaq 100 slid 1.2%.
The Dow Jones Industrial Average rose 0.4%.
A gauge of the “Magnificent Seven” mega caps sank 2.2%.
On the eve of Nvidia Corp.’s results, the shares lost 2.8%.
The yield on 10-year Treasuries sank 11 basis points to 4.29%.
Money markets are now pricing in more than two quarter-point reductions by the Fed in 2025.
A dollar gauge slid 0.2%.
Wall Street Gamblers Get Crushed as Leveraged ETF Losses Hit 40%
“Markets have suddenly begun declining on fears over a slowdown in growth. Wasn’t everyone just worried about too-strong growth and higher inflation a couple of weeks ago?” said Bespoke Investment Group strategists.
“We would also note that three of the five Fed manufacturing reports released in February were all in growth territory. So not all the news is bad. The economic outlook is uncertain, but isn’t it always?”
To Jeff Roach at LPL Financial, consumers are increasingly nervous about the unknown impacts from potential tariffs and could pull forward consumer demand as they anticipate higher prices for imports in the near future.
One note of caution from Roach: Consumer surveys are much more volatile than the hard data of retail sales.
That means the Fed will not likely change their stance on monetary policy at the next couple meetings, according to the economist.
Inflation expectations over the coming year increased to the highest since May 2023.
Fed officials including Chair Jerome Powell have signaled they’re keeping interest rates steady until progress on inflation resumes.
“Consumer confidence continues to come off its election-fueled sugar high from November,” said Bret Kenwell at eToro.
“Economic uncertainty remains elevated, whether that’s around tariffs or more US-centric data like inflation or retail sales.”
That’s why this week’s reading on prices will be key.
The Fed’s preferred inflation metric is expected to cool to the slowest pace since June.
The core personal consumption expenditures price index — which excludes often-volatile food and energy costs — probably rose 2.6% in the year through January in Commerce Department data due on Friday.
Overall PCE inflation likely eased on an annual basis as well.
“Investors should keep an eye on this week’s PCE report,” said Kenwell.
“It will give another clue as to how consumers are feeling about their purchasing power. An in-line or lower reading may act as a relief catalyst for consumers and investors alike.”
Before that, traders will be wading through Nvidia’s earnings.
They will arrive at a critical juncture, with US stocks vulnerable from a technical and systematic standpoint.
Not only have equities rejected a move beyond their all- time highs, the market is also in a state of vulnerability from three of its biggest drivers.
Retail flows are fading, trend followers are estimated to be sellers in every scenario and option flows are unfavorable.
Nvidia Results to Show the Status of AI Build-Out: Preview “There are fewer volatility buffers in place to stabilize the market” and a weak print from Nvidia could just be the catalyst “we need to send volatility significantly higher,”  the option strategists at Tier 1 Alpha said.
Nvidia’s numbers are the most closely watched barometer of the AI boom.
Investors also will be looking for signs that the company is transitioning smoothly to its new Blackwell design from the older Hopper lineup.
The shift may cause customers to slow purchases until there’s better availability of the new products, according to some analysts.
In Wednesday’s Nvidia earnings report, investors will examine not only whether the chipmaker beats projections for earnings, revenues, and units sold, but will also listen closely to what chief Jensen Huang says about the company’s prospects going forward, according to Mary Ann Bartels at Sanctuary Wealth.
There’s growing “suspicion” among investors about the scope for more S&P 500 gains at a time when European and Chinese stocks are outperforming, according to Bank of America Corp. strategist Michael Hartnett.
“The longer it takes and the harder it is for the S&P to get to new highs, the doubts grow,” Hartnett said in an interview on Bloomberg Television.
He has recommended international equities over US peers this year as he expects the Magnificent Seven mega caps to wobble.
While he said investors are far from pessimistic about big tech, these stocks are vulnerable to declines if the trade “doesn’t keep working.”

Corporate Highlights:
* UnitedHealth Group Inc. shares fell after a report that Republican Senator Charles Grassley is launching an inquiry into the insurer’s Medicare billing practices.
* Home Depot Inc. expects a key sales metric to return to growth this year, though the retailer cautioned that housing demand won’t change significantly in the near term.
* Nvidia Corp., the top provider of chips used in new artificial intelligence computers, is extending a partnership with networking-gear maker Cisco Systems Inc. in a push aimed at making it easier for corporations to deploy AI systems.
* ASM International NV’s first-quarter revenue forecast beat estimates as an artificial intelligence boom drives demand for the Dutch semiconductor-equipment maker’s products.
* PayPal Holdings Inc. predicted growth in earnings and transaction margins in coming years, as its new leadership continues to streamline the sprawling business.
* Eli Lilly & Co. is ramping up the fight against cheaper, copycat versions of Zepbound by lowering prices for a version of its blockbuster obesity drug.
* Krispy Kreme Inc.’s net revenue forecast disappointed. The company is weighing refranchising some of its businesses in international markets even as it expands its distribution network in the US, Chief Executive Officer Josh Charlesworth said.
* Warner Bros. Discovery Inc. is closing three video-game studios and halting work on a highly anticipated Wonder Woman title in a bid to boost the profitability of its interactive entertainment business.
* Bank of Montreal and Bank of Nova Scotia kicked off Canadian bank earnings season with strong results from their capital- markets divisions amid an increase in trading activity.

Key events this week:
* US new home sales, Wednesday
* Nvidia earnings, Wednesday
* Fed’s Raphael Bostic speaks, Wednesday
* Eurozone consumer confidence, Thursday
* US GDP, durable goods, initial jobless claims, Thursday
* Fed’s Jeff Schmid, Beth Hammack, Patrick Harker, Michael Barr, Michelle Bowman speak, Thursday
* Japan Tokyo CPI, industrial production, retail sales, Friday
* US PCE inflation, income and spending, Friday
* Fed’s Austan Goolsbee speaks, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.5% as of 4 p.m. New York time
* The Nasdaq 100 fell 1.2%
* The Dow Jones Industrial Average rose 0.4%
* The MSCI World Index fell 0.3%
* Bloomberg Magnificent 7 Total Return Index fell 2.2%
* The Russell 2000 Index fell 0.4%
Currencies
* The Bloomberg Dollar Spot Index fell 0.2%
* The euro rose 0.5% to $1.0517
* The British pound rose 0.4% to $1.2672
* The Japanese yen rose 0.5% to 148.94 per dollar

* Bitcoin fell 6% to $88,329.46
* Ether fell 5.5% to $2,491.99
Bonds
* The yield on 10-year Treasuries declined 11 basis points to 4.29%
* Germany’s 10-year yield declined two basis points to 2.46%
* Britain’s 10-year yield declined six basis points to 4.51%
Commodities
* West Texas Intermediate crude fell 2.3% to $69.10 a barrel
* Spot gold fell 1.3% to $2,913.65 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Denitsa Tsekova, Cecile Gutscher, Sujata Rao, Robert Brand and Aya Wagatsuma.
Have a lovely evening everyone.

Be magnificent!
As ever,

Carolann
I do not know anyone who has got to the top without hard work.  That is the recipe.  It will not always get you to the top, but should get you pretty near. -Margaret Thatcher, 1925-2013.

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)
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www.carolannsteinhoff.com