Dear Friends,

Tangents:

February 3, 1870: The Fifteenth Amendment is ratified, prohibiting the denial of voting rights in the US on the basis of race.

February 3, 1971: Apollo 14 astronauts Alan B. Shepard Jr. and Edgar D. Mitchell landed on the lunar surface during the third successful manned mission to the moon. Go to article.

Gertrude Stein, writer, b. 1874.

Kintsugi: The Japanese art of mending broken pottery with gold. It doesn’t hide the fracture, it highlights them, making them part of the object’s beauty.

China to ban hidden car door handles
China will ban hidden door handles on all cars sold in the country, targeting a feature popularized by Tesla.

Video: Cher causes confusion at the Grammy Awards
Cher stumbled for a moment onstage at the Grammys, but the crowd loved her all the same.

Bring in the robo-dogs
At the Oxford Robotics Institute, quadruped "robot dogs" are mapping forests with lasers, cameras and AI. Real dogs are confused.

A new study reveals a detailed look at what lies beneath the Hawaiian hotspot. Read More.

Millions of years ago, the Green River carved a path through the Uinta Mountains instead of flowing around the formation. Now, researchers have discovered how this could have happened. Read More.

A new social networking site exclusively for bots has sparked claims of AI inventing its own religion and plotting humanity’s downfall. But experts say its real dangers lie elsewhere. Read More.

PHOTOS OF THE DAY

Zigong, China

Tourists view lantern installations at the international dinosaur lantern festival in Sichuan province
Photograph: China News Service/Getty Images

New Jersey, US

The Great Falls in Paterson continues to freeze as prolonged bitter cold lingers across the region. Walkways, benches and railings surrounding the 77ft-tall waterfall were coated in ice after a week of below-freezing temperatures
Photograph: Anadolu/Getty Images

Cortina, Italy

Snow settles on the hat of an attender at the Olympic Village Cortina ahead of the Milano Cortina 2026 Olympic Games
Photograph: Al Bello/Getty Images
Market Closes for January 3rd , 2026

International Markets

Bonds

Commodities

Market Commentary:

On this day in 1913, US federal income tax was born with the 16th Amendment to the U.S. Constitution. It overturned Article I, Section 9 of the Constitution, which had expressly forbidden a general income tax.

Canada

By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 0.6%, or 204.72 to 32,388.60 in Toronto.
Today, materials stocks led the market higher, as 8 of 11 sectors gained; 157 of 218 shares rose, while 60 fell.
Agnico Eagle Mines Ltd. contributed the most to the index gain, increasing 3.0%.
Energy Fuels Inc/Canada had the largest increase, rising 16.3%.
Insights
* The index advanced 28% in the past 52 weeks. The MSCI AC Americas Index gained 16% in the same period
* The S&P/TSX Composite is 3.1% below its 52-week high on Jan. 26, 2026 and 45.7% above its low on April 7, 2025
* The S&P/TSX Composite is down 2.1% in the past 5 days and rose 1.6% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 20.9 on a trailing basis and 19.9 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.2% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$5.1t
* 30-day price volatility fell to 13.44% compared with 13.63% in the previous session and the average of 9.74% over the past month
Index Points
Materials | 257.2383| 4.1| 55/1
Energy | 117.5639| 2.3| 34/3
Consumer Staples | 28.6005| 2.7| 9/1
Utilities | 14.1611| 1.3| 13/1
Communication Services| 2.7751| 0.4| 4/1
Industrials | 2.0574| 0.1| 20/9
Consumer Discretionary| 1.8301| 0.2| 6/3
Health Care | 0.3709| 0.4| 1/3
Real Estate | -7.2985| -1.5| 2/17
Financials | -27.0363| -0.3| 11/13
Information Technology| -185.5517| -7.3| 2/8
Agnico Eagle Mines | Ltd | 27.8500| 3.0| -13.1| 15.5
Cameco | 23.3300| 4.7| 8.5| 36.8
RBC | 21.9700| 1.0| -36.2| -0.5
Constellation | Software | -23.0100| -6.7| 97.8| -30.7
Brookfield Corp | -43.6100| -4.5| 44.2| -3.5
Shopify | -149.0000| -9.7| 69.9| -26.2
MT Newswires:
The Toronto Stock Exchange closed higher for a second-straight session Tuesday as bargain hunters move in after last Friday’s sell off, and also as investors hope energy-sector heavyweight Suncor Energy (SU.TO) will give the resources-heavy exchange, already buoyed by elevated commodity prices, a further lift with its fourth-quarter earnings update shortly.
The S&P/TSX Composite Index closed up 204.72 points, or 0.6%, at 32,388.60, with most sectors higher, led by Base Metals, up 6.6%, and Energy, up 1.9%.
Gains were capped on a decline in Information Technology, down 5%.
Today’s gains added to the near 260 points gained yesterday, and this follows the near 1,100 points, or 3.3% drop, on Friday.
Of commodities, gold is rebounding from two losing sessions late afternoon Tuesday, potentially retesting the US$5,000 mark as traders look to buy a dip in the price of the precious metal while the dollar weakens again.
Gold for March delivery was last seen up $312.40 to US$4,965.00 per ounce, recovering from two days of losses after closing at a record US$5,345.80 on Jan. 29.
Gold prices plunged Friday, dropping from its record as price support collapsed on a rising dollar, easing geopolitical tensions and lower worries over the independence of the Federal Reserve after U.S. President Trump nominated a former Fed official to replace Jerome Powell as governor when his term ends in May.
Also, West Texas Intermediate crude oil closed higher Tuesday, rebounding from a day-prior drop of near 5% that came on easing geopolitical tensions.
WTI crude oil for March delivery closed up $1.07 to settle at US$63.21 per barrel while April Brent crude was last seen up $0.99 to US$67.29.
The rise follows Monday’s drop that came as Iran agreed to talks with the United States over its nuclear program, easing concerns over a threatened U.S. strike on the OPEC+ member that controls the Strait of Hormuz, a choke point for the export of more than 20-million barrels per day of Persian Gulf imports.
In the Energy sector, Suncor, which closed up 1.2% today, is seen by RBC Capital Markets as "closing out another record year" when the oil producer and refiner reports after trade today.
RBC noted in a recent operational update Suncor, which remains its favorite integrated producer and is on the bank’s Global Energy Best Ideas List, delivered another record quarter and another record year on multiple fronts.
RBC also noted Suncor will host an Investor Day in Toronto on March 31, at which the bank anticipates Suncor will deliver a long-term supply plan among other corporate goals.
RBC in a note dated Feb. 2 forecast EPS of $0.90 versus a Street estimate of $0.98, based on a range of $0.75 to $1.23.
RBC’s Q4 outlook for Suncor includes pre-released production of 909,400 bbl/d after inter-asset transfers and internal consumption.
The consensus forecast at FactSet is for EPS of $1.04 versus $1.25 a year earlier.
US
By Rita Nazareth
(Bloomberg) — A tech selloff dragged down stocks from near-record levels amid a rotation into more economically sensitive industries.
A flare-up in geopolitical risks lifted oil while gold bounced after a historic rout.
Bitcoin hit the lowest since President Donald Trump’s election victory.
The plunge in software makers weighed on trading as Anthropic’s automation tool heightened concerns their core businesses are at risk.
The S&P 500 fell 0.8% and the Nasdaq 100 slid 1.6%.
In late hours, Advanced Micro Devices Inc. gave a disappointing forecast.
Energy firms joined crude higher as the US Navy shot down an Iranian drone headed toward an aircraft carrier in the Arabian Sea.
Despite losses in major benchmarks, most shares in the S&P 500 actually rose.
FedEx Corp. – an economic barometer – extended a record-breaking rally.
Walmart Inc. topped $1 trillion.
“Rotation is occurring,” said Steve Sosnick at Interactive Brokers.
“The tricky question is whether it is a benign reallocation of exposure or a sign of some underlying instability.”
Bets on AI companies have dominated the US equity market for three years, but a growing number of investors are now wagering that run, led by the “Magnificent Seven” mega caps, is giving way to broader market participation.
In fact, a violent rotation has taken place in 2026, with value shares far outpacing growth.
“Our sense is that markets are churning underneath the surface as worries over AI capital spending battle with ‘hopes and dreams’ of broadening out as a result of an accelerating US economy,” said Chris Senyek at Wolfe Research.
In another sign of rotation, an equal-weighted version of the S&P 500 — which gives Dollar Tree Inc. as much clout as Apple Inc. —edged only mildly lower.
The Russell 2000 of small firms added 0.3%.
At the same time, the group of software shares in the US equity benchmark tumbled almost 4%.
The dollar dropped after notching its biggest back-to-back advance since April.
Treasuries barely budged, with investors parsing the latest remarks from central bank speakers.
Federal Reserve Bank of Richmond President Tom Barkin said policy easing has bolstered the jobs market as officials now look to bring inflation back to the target.
Fed Governor Stephen Miran said the absence of strong price pressures means rates need to be lowered again this year.
While the trend in equities remains positive, it has become somewhat more guarded with the weakness in tech, according to Louis Navellier at Navellier & Associates.
The first wave of selling was in stocks associated with legal software and data services as shares of Experian Plc, London Stock Exchange Group Plc and Thomson Reuters Corp. tumbled.
Then it snowballed to include most of the software sector, pushing the iShares Expanded Tech-Software Sector ETF down about 4.5%.
Bloomberg LP, the parent of Bloomberg News, competes with LSEG and Thomson Reuters in providing financial data and news.
“Bifurcated action is characterizing today’s Wall Street trading, as tech surrenders the floor to cyclicals even as Palantir delivered a blockbuster beat-and-raise last night, which initially boosted optimism regarding AI prospects,” said Jose Torres at Interactive Brokers.
Small caps, meanwhile, are outperforming as they are relatively sensitive to economic health, he added.
“Despite elevated volatility across the macro landscape, the underlying structure of this market is clear: We are in a ‘rotational’ bull market,” said Craig Johnson at Piper Sandler.
“Capital is rotating into cyclicals and value stocks.”
Optimism that the American economy is set to take off has fueled the rotation, with companies whose fortunes are closely tied to the business cycle attracting investor cash.
At the same time, AI investing has become less monolithic in the tech sector, with investors starting to choose winners and losers.
“We are shifting our tactical allocation from neutral to favoring ‘value’ over ‘growth’,” said Ed Clissold and Thanh Nguyen at Ned Davis Research.
“Several of the factors we said we were watching when we moved to neutral have moved in value’s direction.”
The strategists noted that earnings growth from value stocks has exceeded expectations.
While results from tech mega caps were in line or better than expected market reaction to their spending plans varied wildly.
“We view the challenge for some ‘Magnificent Seven’ stocks as more of a valuation issue than an earnings growth issue,” they said.
“If economic growth moderates in the second half of 2026 as our macro team expects, investors may return to paying a premium for companies that can deliver earnings-per-share growth.”
Given the massive capex spend by hyperscalers, the premium may be less than in 2021-2025, but we do not rule out a return to the growth premium trade later this year, which would necessitate a rotation back into growth stocks, they concluded.
“We have seen a more nuanced view of AI recently, with skepticism and optimism more balanced,” said Mark Hackett at Nationwide.
“Skepticism is warranted given the enormous sums of money being spent with uncertain returns on investment, along with the greater use of debt.”
After Microsoft Corp.’s cloud revenue growth fell short of expectations, investors are now looking to Amazon.com Inc.’s and Alphabet Inc.’s results this week for insights into productivity gains, revenue generation, and margin growth, according to Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
“With continued demand, durable spending, and encouraging monetization trends, we believe AI will remain a key engine of overall equity performance,” she said.
“We also expect beneficiaries to continue to broaden to the application layer of the AI value chain as well as users of the technology in other sectors.”
Her firm expects the S&P 500 to move higher and maintains its December price target of 7,700.
The gauge closed at 6,917.81 Tuesday.
“We recommend investors position for a broadening rally, favoring financials, health care, utilities, and consumer, discretionary beyond the tech sector,” Hoffmann-Burchardi said.
Last week’s tech selloff saw lofty expectations for cloud revenues – now a proxy for how well AI is being monetized – disappointed, noted Lauren Goodwin at New York Life Investments.
“We are in the earliest days of AI, and monetization of these capabilities is a moving target,” she said.
“Instead of near-term AI revenues, we are looking for ongoing capex commitments from AI hyperscalers to assess the resilience of the AI boom, and we continue to see physical investment plans expand.”
Among the most-recent investments in the space, Elon Musk is combining SpaceX and xAI in a deal that values the enlarged entity at $1.25 trillion, as the world’s richest man looks to fuel his increasingly costly ambitions in AI and space exploration.
And this past Sunday, Oracle Corp. said it plans to raise $45 billion to $50 billion this year through a combination of debt and equity sales to build additional cloud infrastructure capacity, reflecting the scale of financing needed to feed AI’s growth.
The announcement — and a subsequent bond sale Monday — coincided with persistent fears about whether massive AI-linked investments by tech companies will pay off.
“The biggest concern about the AI revolution is that tech companies are spending hun-dreds of billions on AI infra- structure, without any guarantee that it will produce a positive ROI (Return on Investment),” said Tom Essaye at The Sevens Report.
“I’ve often compared the current AI revolution to the rollout of electricity in the country, where the industrialists of the 20th century funded the wiring of the country.
Well, what if people preferred candles and didn’t buy electricity? They would have lost the equivalent of billions,” he said.
Meantime, retail traders’ appetite for US equities faces a tough test as the record buying wave that powered last month’s rally shows signs of fatigue.
January net inflows ran more than 50% above the same period last year, according to Citadel Securities data.
That pace of buying from the retail crowd is difficult to maintain — particularly in February, a seasonally slower month for equities — according to Scott Rubner, head of equity and equity derivatives strategy at the firm.
“We expect global equities to rise around 10% by the end of this year, and investors who have concentrated positions in the US should benefit from diversifying into other markets,” said Mark Haefele at UBS Global Wealth Management.
“Ultimately, we believe one of the most effective ways to manage macroeconomic uncertainty and market volatility is to ensure portfolio diversification.”
Corporate Highlights:
* Palantir Technologies Inc.’s revenue forecast for fiscal 2026 that significantly exceeded Wall Street expectations, a boost for the data analytics company after its shares have gotten off to a lackluster start so far this year.
* Nvidia Corp. Chief Executive Officer Jensen Huang said that the massive build-out of artificial intelligence capacity, which is currently straining the power grid in many locations, will eventually lead to cheaper energy costs.
* Netflix Inc. and Warner Bros. Discovery Inc. faced a skeptical Senate panel Tuesday as their executives defended their $82.7 billion media merger against lawmakers’ concerns about the proposed tie-up and its impact on streaming consumers and Hollywood workers.
* Walt Disney Co. said Josh D’Amaro will succeed Bob Iger as chief executive officer of the entertainment giant, passing the reins at a key moment in the company’s history and after struggles to find a new leader in the past.
* Paramount Skydance Corp. Chief Executive Officer David Ellison turned down an invitation to testify before the Senate at an antitrust hearing about the proposed tie-up between Netflix Inc. and Warner Bros. Discovery Inc.
* Bank of America Corp. priced $7 billion sale of investment- grade bonds, adding to a flurry of offerings by major Wall Street banks.
* Banco Santander SA agreed to acquire Webster Financial Corp. for $12 billion as Spain’s largest bank bets big on the US.
* PayPal Holdings Inc. said HP Inc. Chief Executive Officer Enrique Lores will take the top job from Alex Chriss, whose turnaround plan failed to meet targets and streamline the sprawling payments business.
* Chipotle Mexican Grill Inc.’s doldrums are set to extend into 2026, with the burrito chain offering a full year-sales target that fell short of Wall Street’s expectations.
* PepsiCo Inc. is cutting prices by as much as 15% for key brands, including Lay’s and Doritos, in a bid to lift sales by offering more affordable products.
* Archer-Daniels-Midland Co. sees emerging US biofuels policy as the key to its outlook for 2026, as weak crush margins continue to weigh on the company’s results.
* Amgen Inc. exceeded fourth-quarter expectations on strong sales of its biggest medicines and forecast 2026 performance that aligns with what Wall Street is anticipating, positive results for the company as it faces rising challenges from rivals.
* Pfizer Inc. revealed data from one of its new obesity treatments early Tuesday with little detail, leaving investors wondering if the up to $10 billion it spent purchasing the company that created the medicine will pay off.
* Merck & Co. forecast 2026 sales and profit that missed Wall Street’s expectations and said its HPV vaccine Gardasil may remain off the market in China this year as it continues to face challenges in the once-hot market for its shot.
* Novo Nordisk A/S said its sales will drop this year as its blockbusters Ozempic and Wegovy face ever-tougher competition and the company gets hit by the US government’s push to cut drug prices.
* The US Food and Drug Administration turned down a self- administered version of AstraZeneca Plc’s lupus medicine, but the UK drugmaker said it’s still working with regulators to advance the request.
* Uber Technologies Inc. is rolling out its ride hailing service in the Chinese gambling hub of Macau, expanding into a new Asian market for the first time in years.
* Billionaire Michael Novogratz said he remains optimistic even after Galaxy Digital Inc. posted a wider-than-expected loss of almost $500 million during the crypto market’s fourth-quarter crash.
* The crypto exchange Kraken, which is planning to go public, saw revenue and earnings fall sequentially in the fourth quarter while digital asset prices tumbled and investor demand plummeted.
* Ivanhoe Mines Ltd. is looking to supply the US with minerals mined in the Democratic Republic of Congo as the Trump administration moves to build strategic stockpiles and loosen China’s grip on global supply chains.
* Mercuria Energy Trading SA has signed a 20-year agreement to buy liquefied natural gas from the US through Commonwealth LNG’s planned facility in Louisiana, as the trading house looks to bolster its gas positions globally.
* Siemens Energy AG will invest $1 billion (€847 million) in manufacturing capacity in the US over the next two years as power demand surges.
* Nintendo Co.’s profit rose a smaller-than-expected 23% after the US levied tariffs on the Switch 2 console, revealing a big hit to margins while concerns grow about the impact of soaring memory chip prices in 2026.
What Bloomberg Strategists say…
“Tuesday’s equity price action indicates market participants still believe in the reacceleration story despite increased geopolitical headwinds and AI disruptions.
Major equity indexes have sped up their move lower on an already weak day after tensions between the US and Iran came back into focus.
But under the surface, value is outperforming growth, while equal weight is holding up better than the cap-weighted SPX. Small caps are again outperforming mega-cap tech.”
—Michael Ball, Macro Strategist, Markets Live.

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.8% as of 4 p.m. New York time
* The Nasdaq 100 fell 1.6%
* The Dow Jones Industrial Average fell 0.3%
* The MSCI World Index fell 0.3%
* Bloomberg Magnificent 7 Total Return Index fell 1.5%
* The Russell 2000 Index rose 0.3%
* S&P 500 Equal Weighted Index fell 0.2%
Currencies
* The Bloomberg Dollar Spot Index fell 0.3%
* The euro rose 0.3% to $1.1824
* The British pound rose 0.2% to $1.3699
* The Japanese yen was little changed at 155.73 per dollar
Cryptocurrencies
* Bitcoin fell 2.7% to $76,344.45
Bonds
* The yield on 10-year Treasuries declined one basis point to 4.27%
* Germany’s 10-year yield advanced two basis points to 2.89%
* Britain’s 10-year yield advanced one basis point to 4.52%
* The yield on 2-year Treasuries was little changed at 3.57%
* The yield on 30-year Treasuries declined two basis points to 4.90%
Commodities
* West Texas Intermediate crude rose 3% to $64.03 a barrel
* Spot gold rose 6.2% to $4,951.15 an ounce

Have a lovely evening.

Be magnificent!

As ever,

Carolann

It’s hard to beat a person who never gives up.-Babe Ruth, 1895-1948.

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