January 16, 2025, Newsletter

Dear Friends,

Tangents: Happy Friday Eve.

January 16, 1919: Prohibition begins in the United States with the 18^th Amendment to the Constitution, banning the manufacture, sale, and transportation of intoxicating liquors.  It lasted for 13 years.
January 16, 2003: The space shuttle Columbia and its crew of seven blasted off from Cape Canaveral. (The shuttle broke up during its return descent on Feb. 1, killing everyone on board.)  Go to article.

January 16, 1883: Civil Service created.
1786: Religious Freedom Day.

Robert Service, poet, b.1874.

Speaking of outer space …
India today became the fourth country to successfully achieve an unmanned space docking. The feat is seen as pivotal for future missions as New Delhi cements its place as a global space power.

Extraordinary ocean stories
British marine biologist and photographer Richard Smith captured these photos of the ocean’s tiniest and weirdest creatures.

Italy will need proof your hotel was really that bad under proposed law
One cannoli imagine how hard it is for hotels to attract customers after a wave of bad reviews. Italy is considering a new law to help ensure that online travel review sites like Tripadvisor are more truthful.

Keep your red meat to these limits to protect your brain health
Eating too much red meat has been associated with poor health outcomes, but a new study shows it could also put your future cognitive health at risk.

Curse tablet found in Roman-era grave in France targets enemies by invoking Mars, the god of war
Excavation of a Roman-era cemetery in France yielded nearly two dozen lead tablets inscribed in Latin and Gaulish. Read More.

Scientists discover enormous reservoir hidden in Cascades — more than twice the amount of water in Lake Mead
An enormous water reservoir — likely the largest aquifer of its kind in on Earth — sits inside the volcanic rocks of the Oregon Cascades, scientists have revealed.  Read More.

Supermassive black hole spotted 12.9 billion light-years from Earth — and it’s shooting a beam of energy right at us
The newly discovered “blazar,” which has a mass equal to 700 million suns, is the oldest of its kind ever seen and changes what we know about the early universe. Read More.

World’s tiniest cat was a palm-sized tiddler that lived in China 300,000 years ago
Scientists identified the tiny species of cat from a fossilized jawbone, which could date back as far as 300,000 years ago. Read More.

Dust off your telescopes!  A planetary parade’s peak will soon align with clear skies in our region. Here’s when and how to look. And while we’re talking about space, video captures the sheer joy as Blue Origin’s massive rocket finally launched on its first test flight early today.

PHOTOS OF THE DAY

Cortina d’Ampezzo, Italy
A women’s downhill training session at the FIS Alpine Ski World Cup
Photograph: Leonhard Föger/Reuters

Cape Canaveral, Florida, USA
Blue Origin New Glenn rocket lifts off on its inaugural launch
Photograph: Steve Nesius/Reuters

​​​​​​​Toowoon Bay, Australia
‘This family of tawny frogmouths lives in the trees next door to our house. During the day they roost in a different branch of a different tree, and they disappear off at night to hunt. Last year the parents raised three offspring, this year it is only two. We enjoy looking out for them and seeing where they choose to sleep each day.’
Photograph: Jo Hayes
Market Closes for January 16, 2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
📈 On this day in 1991, the Persian Gulf war began, when the U.S. launched its aerial bombardment of Baghdad and Kuwait, known as Operation Desert Storm.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the third day, climbing 0.2%, or 56.9 to 24,846.20 in Toronto.
Today, financials stocks led the market higher, as 9 of 11 sectors gained; 106 of 222 shares rose, while 113 fell.
Brookfield Corp. contributed the most to the index gain, increasing 1.7%.
Richelieu Hardware Ltd. had the largest increase, rising 5.1%.
Insights
* So far this week, the index rose 0.3%
* The index advanced 19% in the past 52 weeks. The MSCI AC Americas Index gained 24% in the same period
* The S&P/TSX Composite is 3.9% below its 52-week high on Dec. 9, 2024 and 21.4% above its low on Feb. 13, 2024
* The S&P/TSX Composite is down 0.9% in the past 5 days and fell 1.2% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 20.5 on a trailing basis and 17.2 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$3.89t
* 30-day price volatility rose to 11.26% compared with 11.25% in the previous session and the average of 10.28% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | 55.8235| 0.7| 19/7
Industrials | 19.0436| 0.6| 14/14
Utilities | 18.5468| 2.0| 14/1
Information Technology | 12.9314| 0.5| 9/1
Consumer Staples | 9.4533| 1.0| 7/3
Communication Services | 6.1921| 1.1| 3/2
Health Care | 0.5462| 0.8| 3/0
Real Estate | 0.0836| 0.0| 6/13
Consumer Discretionary | 0.0001| 0.0| 7/4
Materials | -18.3598| -0.6| 15/35
Energy | -47.3726| -1.1| 9/33
================================================================
| | |Volume VS| YTD
|Index Points | | 20D AVG | Change
Top Contributors | Move | % Change | (%) | (%)
================================================================
Brookfield Corp | 13.6600| 1.7| -44.1| 0.3
RBC | 12.7900| 0.8| 62.7| -0.3
Canadian National | 9.6120| 1.7| -15.6| 0.6
TC Energy | -5.2340| -1.1| -3.4| -0.8
Suncor | -11.0900| -2.2| -14.7| 9.6
Canadian Natural Resources | -11.9700| -1.8| -26.3| -0.1
US
By Rita Nazareth
(Bloomberg) — Stocks struggled to make headway after a solid rally, while bond yields dropped on dovish remarks from Federal Reserve Governor Christopher Waller.
Wall Street also kept a close eye on comments from Treasury secretary nominee Scott Bessent, who said the US faces an economic crisis if the 2017 Republican tax cuts aren’t extended.
Equities edged lower, following an almost 2% jump in the S&P 500.
While most companies rose, a slide in tech mega caps dragged down the market.
Not even solid earnings from Morgan Stanley and Bank of America Corp. buoyed benchmarks.
“Investors are hitting the pause button following yesterday’s momentous rally,” said Jose Torres at Interactive Brokers.
Treasuries rose as Waller told CNBC that officials could lower rates again in the first half of 2025 if inflation data continue to be favorable.
He also wouldn’t entirely rule out a cut in March.
Swap trading implied a little bit more easing this year.
The dollar hovered near two-year highs. Bessent stressed that maintaining the greenback as the world’s reserve currency is critical.
When asked about any inflationary impact of President-elect Donald Trump’s economic plans, Bessent said he believed the policies will bring inflation closer to the Fed’s target.
The S&P 500 fell 0.2%.
The Nasdaq 100 lost 0.7%.
The Dow Jones Industrial Average slid 0.2%.
A gauge of the “Magnificent Seven” mega caps slipped 1.9%.
The Russell 2000 added 0.2%.
The KBW Bank Index declined 0.2%.
The yield on 10-year Treasuries declined four basis points to 4.61%.
The Bloomberg Dollar Spot Index rose 0.1%.
The American Association of Individual Investors (AAII) Weekly Sentiment Survey just flashed a contrarian buy signal, according to Larry Tentarelli at the Blue Chip Daily Trend Report.
The tally shows “bullish sentiment” at the lowest level since the November 2023 major S&P 500 lows, he noted.
“Investors tend to be most bullish at market highs and most bearish near market lows,” Tentarelli said.
“We consider sentiment indicators at the extremes as fairly reliable contrarian indicators.”
A third straight year of outsize gains in US stocks — a display of strength last seen in the 1990s — leads Bank of America Corp.’s list of potential market surprises for 2025.
It’s a tall order but not unimaginable, according to the firm, which floats the idea in the latest rendition of its list honoring late Wall Street strategist Byron Wien.
After the S&P 500 Index soared 24% in 2023 and 23% in 2024, lofty valuations will make it tough to achieve such a performance again this year, as will risks including extreme concentration and uncertainty around fiscal and monetary policy, BofA strategists led by Jared Woodard wrote in a report this week.
As traders waded through corporate earnings, Thursday’s economic data was mixed.
US homebuilders grew less upbeat about sales prospects, while retail sales figures pointed to a consumer that held up well in the holiday season.
“In the coming weeks, the fourth-quarter earnings season will provide investors with an opportunity to shift some attention from macro to micro data,” said David Lefkowitz at UBS Global Wealth Management.
“We continue to have an attractive view on US equities.”
Even a solid corporate earnings season is unlikely to fuel a sustained rally in equity markets.
That’s the view of Helen Jewell at BlackRock Inc., who warned the outlook for stocks remained fragile over the coming weeks amid concerns around economic growth and inflation.
“It’s going to be a rocky reporting season, although not necessarily as much on the earnings number itself,” Jewell said in an interview.
“My nervousness is more on how much beats get rewarded versus how much misses get hit, particularly in the US where the valuation multiple is very high.”
Meantime, investors have increased their exposure to the biggest technology stocks, and they appear to have little appetite for hedging less than two weeks before earnings season begins for the group.
Discretionary investors have boosted their presence across mega cap, growth and technology stocks to the highest level since July, according to data compiled by Deutsche Bank AG. And hedge funds are returning to the group after months of consistent selling in 2024.

Corporate Highlights:
* Morgan Stanley’s fourth-quarter profit more than doubled, boosted by trading revenue that came in well ahead of estimates on volatility tied to the US elections.
* Bank of America Corp. posted fourth-quarter profit that topped analysts’ estimates as investment-banking fees hit the highest in three years and net interest income outperformed forecasts.
* PNC Financial Services Group Inc. and U.S. Bancorp gave muted predictions for net interest income in the first quarter, amid uncertainty over how lower interest rates will revive lending demand.
* Microsoft Corp. is raising the price of its package of Office apps for consumers, a bet that subscribers will be willing to cough up more for access to new artificial intelligence tools.
* UnitedHealth Group Inc.’s elevated medical costs persisted in the fourth quarter and revenue missed estimates.
* Target Corp. raised its sales guidance following a better-than-expected holiday season, but the boost wasn’t big enough to ease investors’ concerns about profitability.
* American Express Co. will pay about $230 million to resolve a long-running investigation into some of the firm’s prior sales practices which regulators said misled small-business owners.
* Rio Tinto Group and Glencore Plc have been discussing combining their businesses, according to people familiar with the matter, in what could result in the mining industry’s largest-ever deal.
* Reliance Industries Ltd., controlled by billionaire Mukesh Ambani, posted a slightly better-than-expected quarterly profit, as gains from its telecom and retail units offset the volatility in its petrochemical business.
* Taiwan Semiconductor Manufacturing Co. projected quarterly sales and capital expenditure ahead of analysts’ estimates, fueling hopes that spending on AI hardware should remain resilient in 2025.

Key events this week:
* 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 fell 0.2% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.7%
* The Dow Jones Industrial Average fell 0.2%
* The MSCI World Index was little changed
* Bloomberg Magnificent 7 Total Return Index fell 1.9%
* The Russell 2000 Index rose 0.2%
* KBW Bank Index fell 0.2%
Currencies
* The Bloomberg Dollar Spot Index rose 0.1%
* The euro was little changed at $1.0298
* The British pound fell 0.1% to $1.2229
* The Japanese yen rose 0.8% to 155.22 per dollar
Cryptocurrencies
* Bitcoin rose 0.6% to $100,262.36
* Ether fell 3% to $3,329.5
Bonds
* The yield on 10-year Treasuries declined four basis points to 4.61%
* Germany’s 10-year yield declined one basis point to 2.55%
* Britain’s 10-year yield declined five basis points to 4.68%
Commodities
* West Texas Intermediate crude fell 1.7% to $78.66 a barrel
* Spot gold rose 0.7% to $2,714.48 an ounce

This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao, Margaryta Kirakosian, John Viljoen and Chiranjivi Chakraborty.

Have a lovely evening.

Be magnificent!

As ever,

Carolann
It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. –Charles Darwin, 1809-1882.

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