January 13, 2025, Newsletter

Dear Friends,

Tangents: Happy Monday.  Full moon tonight.

January 13, 1942: Henry Ford patents a method of constructing plastic auto bodies, revolutionising vehicle manufacturing with lighter and more affordable materials.
January 13, 2000: Microsoft chairman Bill Gates stepped aside as chief executive.  Go to article

Ice core may hold answers to mysteries of Earth’s past
A research team has collected what may be among the oldest ice samples on Earth — spanning at least 1.2 million years of the planet’s climate history.

Bob Dylan’s song drafts, artworks and photos to go on sale
A spectacular haul of Bob Dylan memorabilia, including early drafts of the singer and songwriter’s number 1 hit “Mr. Tambourine Man” and an original oil painting, will soon go under the hammer.

Takeaways from the wild-card round of the NFL playoffs
The Houston Texans, Baltimore Ravens and Buffalo Bills all advanced, as did the Philadelphia Eagles and the Washington Commanders.

‘I was shaking when I first unearthed it’: 11th-century silver coin hoard unearthed in England
Archaeologists have discovered 321 silver coins still wrapped in a cloth and lead pouch from a time in English history marked by upheaval due to the coronation of a new Anglo-Saxon king. Read More.

Passenger plane with entirely new ‘blended wing’ shape aims to hit the skies by 2030
A new type of passenger plane will adopt a design that blends wings into the aircraft’s body, which its creators say will cut fuel consumption by 50% and reduce noise. Read More.

PHOTOS OF THE DAY

Kent, UK
A red sky from the winter morning sunrise is pictured beyond the harbour wall at the port of Dover in south-east England
Photograph: Ben Stansall/AFP/Getty Images

​​​​​​​Jilin, China
A boat sailing on Songhua River as visitors gather to see the frost-covered trees on the riverbank in north-east China
Photograph: AFP/Getty Images

Kuala Lumpur, Malaysia
People prepare to take part in a lunar new year parade in the city’s Chinatown
Photograph: Annice Lyn/Getty Images
Market Closes for January 13, 2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1937, the first shipment of gold was received at the Fort Knox Bullion Depository, the nation’s official gold vault.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 0.9%, or 231.41 to 24,536.32 in Toronto.
The index dropped to the lowest closing level since Dec. 19. Shopify Inc. contributed the most to the index decline, decreasing 2.2%.
Orla Mining Ltd. had the largest drop, falling 7.1%.
Today, 176 of 223 shares fell, while 45 rose; 10 of 11 sectors were lower, led by energy stocks.
Insights
* In the past year, the index had a similar or greater loss 17 times. The next day, it declined nine times for an average 0.8% and advanced eight times for an average 0.5%
* The index advanced 17% in the past 52 weeks. The MSCI AC Americas Index gained 21% in the same period
* The S&P/TSX Composite is 5.1% below its 52-week high on Dec. 9, 2024 and 19.9% above its low on Feb. 13, 2024
* The S&P/TSX Composite is down 1.9% in the past 5 days and fell 2.9% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 20.3 on a trailing basis and 16.9 times estimated earnings of its members for the coming year
* The index’s dividend yield is 2.9% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.9t
* 30-day price volatility rose to 10.95% compared with 10.72% in the previous session and the average of 10.02% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Energy | -62.5615| -1.4| 4/39
Materials | -48.6121| -1.6| 8/43
Financials | -47.8892| -0.6| 4/22
Information Technology | -31.9396| -1.3| 1/9
Industrials | -17.2981| -0.6| 9/19
Utilities | -11.3244| -1.2| 3/12
Consumer Staples | -10.0535| -1.1| 1/8
Real Estate | -2.9472| -0.6| 5/14
Health Care | -1.9921| -2.8| 1/3
Consumer Discretionary | -1.6542| -0.2| 5/6
Communication Services | 4.8662| 0.8| 4/1
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
Shopify | -27.6000| -2.2| 13.3| -4.3
Canadian Natural Resources | -26.9000| -3.9| -11.3| 2.4
Bank of Nova Scotia | -11.3300| -1.8| -23.9| -5.7
Constellation Software | 3.1600| 0.5| 3.7| -3.3
Waste Connections | 3.5780| 0.8| -27.5| 3.1
Nutrien | 13.1600| 5.5| 37.8| 14.6
US
By Rita Nazareth
(Bloomberg) — A renewed wave of dip buying fueled a rebound in stocks, following a selloff triggered by a recalibration of Federal Reserve wagers.
Almost 380 companies in the S&P 500 rose, with the gauge wiping out a decline that approached 1% earlier Monday.
Energy producers joined a rally in oil while banks climbed ahead of the start of the earnings season.
That’s despite a slide that engulfed tech powerhouses like Nvidia Corp. and Apple Inc.
The bond market saw small moves after a rout driven by speculation of fewer Fed cuts this year amid stubborn price pressures.
“While even cooler-than-expected inflation data this week won’t nudge the Fed into another rate cut this month, it may help ease some of the bearish momentum — as could a solid start to earnings season,” according to Chris Larkin at E*TRADE from Morgan Stanley.
To Callie Cox at Ritholtz Wealth Management, while analysts have been slashing earnings expectations “like mad,” the degree of cuts has been unusual, and the reports over the next few weeks could help stabilize the market.
“If anything, earnings are a reminder of how we got here,” she said. “It’s so important to remember how encouraging the story is for the economy right now.
High expectations have caused us to stumble, but this dip could entice a lot of buyers simply because the foundation is strong.”
The S&P 500 rose 0.2%.
The Nasdaq 100 fell 0.3%.
The Dow Jones Industrial Average climbed 0.9%.
A Bloomberg gauge of the “Magnificent Seven” mega caps slid 0.4%.
The Russell 2000 index of smaller firms added 0.2%.
The yield on 10-year Treasuries advanced three basis points to 4.79%.
The Bloomberg Dollar Spot Index was little changed.
Oil rallied to the highest level in five months.
“Analysts may have gone too far in their rapid markdowns for earnings, with fourth-quarter estimates now at levels that our guidance model suggests can be easily beaten — though it may not matter to stocks if 2025 estimates keep dropping,” said Gina
Martin Adams and Wendy Soong at Bloomberg Intelligence.
The Magnificent Seven may be “the spoiler again” even as their growth eases, yet the key to 2025 will be the degree to which the other S&P 493 can generate some fundamental momentum, they noted.
Earnings season kicks into full gear this week with reports from the financial sector. Banks including JPMorgan Chase & Co. and Wells Fargo & Co. are expected to show continued gains from trading and investment banking, which helped offset net interest income declines caused by higher deposits and sluggish loan demand.
Lenders will also be quizzed about the 2025 outlook — as the Fed has signaled fewer rate cuts this year, which could stunt future profit growth.
“The big banks often give us a good insight into what we can expect to see from the more consumer-oriented companies, which report earnings later on in earnings season,” said Michael Landsberg at Landsberg Bennett Private Wealth Management.
“If credit card usage is up, that typically bodes well for companies that sell directly to consumers.”
“While economic growth has remained resilient in the face of ongoing inflation pressures, we expect growth to slow in 2025,” said Megan Horneman at Verdence Capital Advisors.
“As a result, the current earnings estimate for 2025 may be too optimistic.”
Horneman says she will monitor closely the comments from company leaders regarding inflation, their view on the labor market, what they are seeing regarding consumer spending and what a new administration may mean for their bottom line.
Options traders are bracing for one of the most-volatile earnings periods in history.
They expect individual stocks in the S&P 500 to move 4.7% on average in either direction after reporting their results, the largest earnings-day moves on record, according to strategists at Bank of America Corp.
“We believe this earnings season will once again be stock pickers’ paradise,” Savita Subramanian, head of US equity and quantitative strategy, wrote Monday.
Meantime, HSBC strategists led by Max Kettner say their sentiment and positioning indicators are already flashing a mild buy signal.
They noted that a hawkish surprise from US data this week including on inflation and retail sales could present a buying opportunity for risk assets.
“Some bad news would be good news right now,” the strategists wrote.
Underlying US inflation probably cooled only a touch at the close of 2024 against a backdrop of a resilient job market and steadfast economy, supporting the Fed’s go-slow approach to further rate cuts.
The consumer price index excluding food and energy is seen rising 0.2% in December after four straight months of 0.3% increases, according to the median projection in a Bloomberg survey of economists.
The core CPI, a better snapshot of underlying inflation, is forecast to have risen 3.3% from a year earlier — matching readings from the prior three months.
“The post-data reaction has left Treasuries oversold,” said Will Compernolle at FHN Financial. “Bond market pricing reflects too much investor confidence in labor market strength and an overly pessimistic inflation outlook.
There may be nothing today or tomorrow on the calendar that will snap bond yields out of their upward drift, but a 0.2% increase in the core CPI on Wednesday, as the consensus expects, would give a bond-bullish jolt to the prevailing market sentiment.”
The equity market has seen more pronounced reactions to macroeconomic news since late 2024, with the S&P 500 swinging at least 1% in either direction in 8 of the last 15 trading sessions since the Fed’s latest rate decision Dec. 18.
Sentiment around equities is being explained by bond yields more than any point in the past 30 years, according to Michael Kantrowitz, chief investment strategist at Piper Sandler & Co. Market weakness will more likely come from higher rates rather than softer growth, he says, a dynamic that begin in 2022 during the biggest paradigm shift for stocks since the 2007 peak in value over growth.
This year’s sharp decline in funding spread suggests that institutional investors’ positioning in equities is shifting as markets rethink the Fed’s interest-rate path, according to strategists at Goldman Sachs Group Inc.
The funding spread — a measure of demand for long exposure through equity derivatives such as swaps, options and futures —has tumbled to around 70 basis points from about 130 basis points in late December, they said.
“In our experience, large short-term moves in funding almost always mean that there has been a change in demand trends from professional investors,” the team led by John Marshall wrote in a note to clients.
“We believe that pension funds, asset managers, hedge funds and CTAs have all been net sellers over the past few weeks.”

Corporate Highlights:
* Apple Inc.’s iPhone sales declined about 5% globally in the final quarter of last year, hurt by underwhelming upgrades and competitors making inroads in China.
* The White House unveiled sweeping new limits on the sale of advanced AI chips by Nvidia Corp. and its peers, leaving the Trump administration to decide how and whether to implement curbs that have encountered fierce industry opposition.
* Macy’s Inc. issued a downbeat outlook for sales in the current quarter, a sign that executives might have been too optimistic about their expectations for a solid holiday shopping season.
* Honeywell International Inc. is poised to proceed with a breakup following pressure from activist Elliott Investment Management to split, people familiar with the matter said.
* Cleveland-Cliffs Inc. is partnering with Nucor Corp. to weigh a potential joint bid for United States Steel Corp., according to a person familiar with the matter. Cliffs’ top boss later confirmed his interest in the American steelmaker at a press event.
* Lululemon Athletica Inc. expects fourth-quarter sales to surpass the market’s expectations, showing the upscale activewear brand is fending off upstart competitors and slower growth in consumer spending.
* Abercrombie & Fitch Co. raised its fourth-quarter sales outlook on better-than-expected holiday sales, but the increase wasn’t enough to reassure investors the retailer could keep up the fast pace of growth.
* Shake Shack Inc. reported fourth-quarter sales that surpassed expectations, signaling that efforts to raise its profile and serve customers faster are paying off.
* Health insurance companies selling private Medicare Advantage plans in the US would see a greater increase in payments in 2026 than in the current year if a proposal released Friday is adopted by the incoming Trump administration.
* Moderna Inc. slashed its sales forecast for this year as it struggles with slow demand for its Covid and RSV vaccines.
* Johnson & Johnson agreed to acquire Intra-Cellular Therapies Inc., a company focused on treatments for central nervous system disorders, for about $14.6 billion.

Key events this week:
* US PPI, Tuesday
* Fed’s John Williams and Jeffrey Schmid speak, Tuesday
* Eurozone industrial production, Wednesday
* Citigroup, JPMorgan, Goldman Sachs, Bank of New York Mellon, Wells Fargo and BlackRock earnings, Wednesday
* US CPI, Empire manufacturing, Wednesday
* Fed’s John Williams, Tom Barkin, Austan Goolsbee and Neel Kashkari speak, Wednesday
* TSMC earnings, Thursday
* ECB releases account of December policy meeting, Thursday
* Bank of America, Morgan Stanley earnings, Thursday
* US initial jobless claims, retail sales, import prices, Thursday
* China GDP, property prices, retail sales, industrial production, Friday
* Eurozone CPI, Friday
* US housing starts, industrial production, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 rose 0.2% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.3%
* The Dow Jones Industrial Average rose 0.9%
* The MSCI World Index was little changed
* Bloomberg Magnificent 7 Total Return Index fell 0.4%
* The Russell 2000 Index rose 0.2%
Currencies
* The Bloomberg Dollar Spot Index was little changed
* The euro fell 0.3% to $1.0216
* The British pound fell 0.2% to $1.2177
* The Japanese yen was little changed at 157.67 per dollar
Cryptocurrencies
* Bitcoin fell 0.6% to $93,753.82
* Ether fell 5.2% to $3,094.34
Bonds
* The yield on 10-year Treasuries advanced three basis points to 4.79%
* Germany’s 10-year yield advanced two basis points to 2.61%
* Britain’s 10-year yield advanced five basis points to 4.88%
Commodities
* West Texas Intermediate crude rose 2.8% to $78.68 a barrel
* Spot gold fell 1% to $2,662.09 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao, Margaryta Kirakosian, Catherine Bosley and Isabelle Lee.
Have a lovely evening.

Be magnificent!
As ever,

Carolann
The best things in life are free.  The second best things in life are very, very expensive. –Coco Chanel, 1883-1971.

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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