February 5, 2025, Newsletter

Dear Friends,

Tangents:
February 5, 1675: The Royal Greenwich Observatory begins official operations, playing a critical role in astronomy and timekeeping, including defining the Prime Meridian.
February 5, 1937: President Roosevelt proposed increasing the number of Supreme Court justices; critics charged Roosevelt was attempting to “pack” the court. Go to article

Hank Aaron, baseball player, b.1934.

Ocean plate from time of Pangaea is now being torn apart under Iraq and Iran
What was once the floor of an ancient ocean is still shaping the landscape between Arabia and Eurasia. Read More.

Jupiter’s ‘tormented moon’ Io just unleashed the most powerful volcanic event ever seen
NASA’s Juno spacecraft has discovered a giant volcanic hot spot on the surface of Jupiter’s hellish moon Io. The eruptions in this area are chucking out six times the energy being produced by all Earth’s power stations, researchers say.  Read More.

How much did SpaceX’s Starship Flight 7 explosion pollute the atmosphere?
Scientists are not sure how much metallic dust remained in the atmosphere after the most recent SpaceX rocket ‘disassembly.’ Read More.

New laser-based artificial neuron processes enormous data sets at high speed
A new artificial neuron that spikes like human brain cells could be used to process data at ultrafast speeds.  Read More.

What’s happening in Santorini?
Over 6,000 residents have recently left the Greek island of Santorini after hundreds of earthquakes. Local officials say the intense seismic activity may continue for many more days, if not weeks.

Google updates its AI ethics policy
Google has erased its promise not to use artificial intelligence technology for weapons or surveillance. Here’s what we know.

Just deal with it in the morning
A new study shows why tackling a problem in the morning may be beneficial.

Light pollution is getting worse
Light pollution negatively impacts wildlife and humans, but the solutions are surprisingly simple. Read about the movement to preserve natural darkness.

The Super Bowl is often a snapshot in time and the NFL is in a unique position to capture and lift the imagination of the country. — An NFL spokesperson, confirming that the phrase “Choose Love” will be stenciled in the back of one end zone at Sunday’s Super Bowl. The other end zone will have the message “It Takes All of Us.” According to The Athletic, this will be the first time that the words “End Racism” are not used in the big game since 2021.

PHOTOS OF THE DAY

Ashford, England
Mist covers Hoad’s Wood as the sun rises over Kent
Photograph: Gareth Fuller/PA

Toronto, Canada
A flock of Canadian geese at Rouge Beach in Rouge national urban park, Ontario
Photograph: Mert Alper Dervis/Anadolu/Getty Images

​​​​​​​Heron Island, Australia
A green sea turtle hatchling attempts to find its way to the ocean. The hatchlings often face predators such as seagulls and reef sharks, resulting in an estimated survival rate of one in 1,000
Photograph: James Gourley/Getty Images
Market Closes for February 5, 2025

International Markets

Bonds

Currencies

Commodities

MARKET COMMENTARY:
🌷 On this day in 1637, “Tulip mania” hit its peak in the Netherlands, with the price of the rare Witte Croonen tulip bulb up 2,506% in 33 days. Over the next five years, the bulbs lost an annual average of 76% of their value.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the second day, climbing 1.1%, or 290.49 to 25,569.84 in Toronto.
Shopify Inc. contributed the most to the index gain, increasing 2.1%.
Finning International Inc. had the largest increase, rising 12.6%.
Today, 154 of 221 shares rose, while 62 fell; 10 of 11 sectors were higher, led by information technology stocks.
Insights
* In the past year, the index had a similar or greater gain 12 times. The next day, it advanced nine times for an average 0.4% and declined three times for an average 1%
* The index advanced 23% in the past 52 weeks. The MSCI AC Americas Index gained 22% in the same period
* The S&P/TSX Composite is 1.2% below its 52-week high on Jan. 30, 2025 and 24.9% above its low on Feb. 13, 2024
* The S&P/TSX Composite is up 0.4% in the past 5 days and rose 2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 21 on a trailing basis and 17.5 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$3.97t
* 30-day price volatility rose to 10.89% compared with 10.53% in the previous session and the average of 11.08% over the past month
================================================================
|Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Information Technology | 70.2713| 2.5| 10/0
Financials | 61.8555| 0.8| 20/5
Materials | 61.0854| 1.9| 37/13
Industrials | 40.4620| 1.3| 19/8
Energy | 18.4272| 0.4| 18/22
Consumer Discretionary | 11.0248| 1.4| 9/2
Utilities | 10.4153| 1.1| 12/3
Real Estate | 8.0042| 1.7| 18/2
Communication Services | 7.9119| 1.3| 3/2
Health Care | 1.1771| 1.7| 4/0
Consumer Staples | -0.1279| 0.0| 4/5
================================================================
| | |Volume VS |
| Index | | 20D AVG |YTD Change
Top Contributors |Points Move| % Change | (%) | (%)
================================================================
Shopify | 31.0100| 2.1| 14.7| 14.0
Brookfield Corp | 15.6700| 1.9| -7.5| 3.3
Agnico Eagle Mines Ltd | 15.1700| 3.2| 66.3| 25.5
Thomson Reuters | -2.8170| -1.2| 207.5| 2.9
FirstService | -3.2430| -4.3| 261.9| -4.2
Nutrien | -5.4260| -2.1| -18.7| 15.2
US
By Rita Nazareth
(Bloomberg) — Stocks bounced back as gains in most major industries overshadowed underwhelming earnings from some tech heavyweights.
Bonds climbed after a weak reading on US services.
Some 350 companies in the S&P 500 rose, with the benchmark erasing earlier losses.
Nvidia Corp. led gains in chipmakers.
But a gauge of the “Magnificent Seven” mega caps sank 1.5% as Alphabet Inc.’s results drove Google’s parent to its worst plunge in over a year.
Advanced Micro Devices Inc. tumbled 6.3% on a disappointing outlook.
Treasury yields reached 2025 lows.
The dollar fell.
QUALCOMM SEES 2Q REV. $10.3B TO $11.2B, EST. $10.35B Wall Street has been whipsawed by uneven economic data, trade tensions and questions on whether the billions of dollars spent on artificial intelligence will start to pay off.
To Mark Hackett at Nationwide, the flurry of market-moving headlines in the first few weeks of 2025 serves as a stark reminder to investors that volatility can emerge unexpectedly.
“The ultimate performance of equity markets by year’s end is far less significant than how investors navigate the volatility encountered throughout the year,” he said.
Last week, DeepSeek’s emergence as an AI threat wiped half a trillion dollars of value off Nvidia.
Last night, Alphabet’s results sparked questions about its capital expenditures from the cohort of big techs that has powered the bull market.
While the “Magnificent Seven” have made up more than half of the S&P 500’s gains over the past two years, their profit growth is decelerating.
“Within the US stock market, we like large caps — particularly S&P 493 companies — which should expand profit margins as they adopt productivity-boosting technologies,” said Ed Yardeni, founder of his namesake research firm.
“We do not believe the Mag Seven are grossly overvalued. However, we see room for the S&P 493 to outperform.”
The S&P 500 rose 0.4%.
The Nasdaq 100 added 0.4%.
The Dow Jones Industrial Average gained 0.7%.
UnitedHealth Group Inc. pared losses to 1% after saying it contacted the US Securities and Exchange Commission with concerns about investor Bill
Ackman’s since-deleted X post suggesting the company overstated profits.
Uber Technologies Inc. slid 7.6% on a weak gross bookings guidance.
The yield on 10-year Treasuries declined nine basis points to 4.42%.
The Bloomberg Dollar Spot Index fell 0.2%.
“Volatility has been the story this week, with the stock market trying to find its footing as it navigates a shifting tariff landscape and mixed earnings,” said Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.
“The S&P 500 hit new record highs less than two weeks ago, but taking a step back, it’s really been in a ‘choppy consolidation’ since early December.”
Given ongoing tariff uncertainty, Skelly says “international” sectors like IT hardware and equipment, autos, and parts of the consumer goods space may be more vulnerable.
Meantime, domestically-oriented areas of the market, such as financials, may attract investor interest.
Legendary short seller Jim Chanos says no one can see the biggest risks facing US markets over the next six to 12 months — because the challenges are going to be unpredictable events, like the recent DeepSeek concern that wiped out roughly $1 trillion in market value from US stocks.
“The real risks will be something like DeepSeek that comes out of left field that changes people’s thinking,” Chanos said in an interview with Bloomberg TV Wednesday.
“By definition, we do not know what that is.”
As the earnings season rolls in, one thing Bespoke Investment Group strategists are keeping a close eye on is the percentage of stocks reporting “triple plays.”
That’s when a company exceeds analyst estimates on the top and bottom lines while boosting forward guidance.
So far this year, 75% of stocks have beaten consensus earnings-per-share estimates, while 66% have exceeded revenue estimates, they said.
While those rates are strong relative to history, we’ve also seen 8% of companies lower guidance — compared to just 5% that have raised guidance.
“When triple plays were super common in 2021, share prices were reacting much less positively to them,” Bespoke strategists said.
“Now that triple plays have become less common again, the stocks that are reporting triple plays are reacting more positively.”
Over the last three months through Tuesday, there have been exactly 100 stocks that have reported triple plays, Bespoke noted.
And these stocks have averaged a one-day share price gain of more than 10% in response.
As traders gear up for Friday’s jobs report, data showed employment at US companies picked up in January by more than forecast, highlighting resilient labor growth despite mounting uncertainty.
Federal Reserve officials are closely tracking developments in the jobs market as they assess how much to lower interest rates this year.
A rapid pickup in the unemployment rate last summer was a key driver behind policymakers’ decision to lower rates by a full percentage point in 2024.
That said, the job market has showed renewed strength since then, with Fed Chair Jerome Powell describing it last week as “pretty stable.”
A survey conducted by 22V Research shows only 24% of respondents think Friday’s data will be “risk-on.”
Thirty percent said “risk-off” while 46% “mixed/negligible.”
“Investors have turned their focus to average hourly earnings this month after being far more focused on payrolls and the u-rate last month,” said Dennis DeBusschere at 22V.

Corporate Highlights:
* MicroStrategy Inc., the software maker that has been tapping capital markets to fund purchases of Bitcoin, announced on Wednesday that the company would now be doing business under the name Strategy.
* Chipotle Mexican Grill Inc.’s sales rose less than expected, highlighting the high bar the company set by defying an industrywide traffic slowdown in recent years.
* Walt Disney Co. reported fiscal first-quarter results that topped analysts’ estimates, fueled by the blockbuster film Moana 2 and higher income from its streaming services.
* Johnson Controls International Plc jumped following a boost in its profit forecast and the hiring of a new chief executive officer.
* Match Group Inc. named Zillow Group Inc. co-founder Spencer Rascoff as its new chief executive officer, replacing Bernard Kim who has struggled to end a persistent decline in subscribers to the company’s flagship dating app Tinder.
* Snap Inc. issued a disappointing earnings outlook, taking away from stronger-than-expected revenue gains in the last quarter.

Key events this week:
* Eurozone retail sales, Thursday
* UK rate decision, Thursday
* US initial jobless claims, Thursday
* Fed’s Christopher Waller, Lorie Logan speak, Thursday
* Amazon earnings, Thursday
* US nonfarm payrolls, unemployment, University of Michigan consumer sentiment, Friday
* Fed’s Michelle Bowman, Adriana Kugler speak, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.4% as of 4 p.m. New York time
* The Nasdaq 100 rose 0.4%
* The Dow Jones Industrial Average rose 0.7%
* The MSCI World Index rose 0.5%
* Bloomberg Magnificent 7 Total Return Index fell 1.5%
* The Russell 2000 Index rose 1.1%
Currencies
* The Bloomberg Dollar Spot Index fell 0.2%
* The euro rose 0.3% to $1.0405
* The British pound rose 0.2% to $1.2502
* The Japanese yen rose 1.1% to 152.70 per dollar
Cryptocurrencies
* Bitcoin rose 0.8% to $97,327.01
* Ether rose 4.7% to $2,764.03
Bonds
* The yield on 10-year Treasuries declined nine basis points to 4.42%
* Germany’s 10-year yield declined three basis points to 2.37%
* Britain’s 10-year yield declined eight basis points to 4.44%
Commodities
* West Texas Intermediate crude fell 2% to $71.22 a barrel
* Spot gold rose 0.7% to $2,862.27 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Robert Brand, Margaryta Kirakosian and Winnie Hsu.

Have a lovely evening everyone.

Be magnificent!
As ever,

Carolann
The aim of argument, or of discussion, should not be victory, but progress. –Joseph Joubert, 1724-1824.

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