May 27th, 2025, Newsletter

Dear Friends,

Tangents:
May 27, 1851:  The world’s first chess tournament is held in London.  Adolf Anderssen, a maths teacher from Wroclaw, wins the event.
MAY 27, 1937: The Golden Gate Bridge connecting San Francisco and Marin County, Calif., opened. Go to article.
May 27, 1930: Scotch tape is patented.

Isadora Duncan, dancer, b.1878.
Rachel Carson, writer, b. 1907.
Hubert H. Humphrey, politician, b. 1911.

American submarine, lost for over a century, discovered ‘remarkably intact’ off the coast of San Diego
A submarine that sank over 100 years ago during WWI has been surveyed off the coast of San Diego. Read More

Scientists may have discovered the most powerful particle collider in the universe
Scientists may have discovered the most powerful particle colliders in the universe — and they’re strewn throughout our galaxy just waiting to blow. Read More.

Groundbreaking amplifier could lead to ‘super lasers’ that make the internet 10 times faster
Scientists have designed an amplifier that can transmit 10 times more information per second than current fiber-optic systems can, which could be helpful for medical treatment and diagnosis. Read More.

Team USA takes gold in Sweden
For the first time since 1933, the US men’s hockey team triumphed at the IIHF World Championship tournament. During the trophy presentation, Team USA held up the jersey of Johnny Gaudreau, the former USA and NHL player who died last year, along with his brother, after they were fatally struck by a suspected drunken driver.

Billie Eilish triumphs at AMAs
Although she didn’t attend the American Music Awards ceremony in Las Vegas, Eilish won all seven awards she was nominated for, including artist of the year, album of the year and song of the year.

And the Palme d’Or goes to …
Iranian director, screenwriter and producer Jafar Panahi, who had previously been imprisoned by the Iranian government, received the top prize at the Cannes Film Festival for his new movie.

Lorde of the dance
Fans attending a Lorde-themed club night in Sydney, Australia, were shocked and thrilled when the Grammy-winning singer showed up.

PHOTOS OF THE DAY

Rio de Janeiro, Brazil
A vendor walks with his hats and beachwear along Ipanema beach
Photograph: Bruna Prado/AP

Bangkok, Thailand
An employee cleans mirrored floors at the Mahanakhon Skyverse digital art exhibition at King Power Mahanakhon
Photograph: Lillian Suwanrumpha/AFP/Getty Images

Texas, US
The sun sets as SpaceX’s mega rocket Starship is prepared for a test flight from the Space X Starbase
Photograph: Eric Gay/AP
Market Closes for May 27^th, 2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Never invest in anything that eats or needs repainting. –Billy Rose, 1899-1966.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite rose for the fourth day, climbing 0.8%, or 195.87 to 26,269.00 in Toronto.
The move was the biggest gain since May 15.
Today, financials stocks led the market higher, as 10 of 11 sectors gained; 137 of 217 shares rose, while 76 fell.
Shopify Inc. contributed the most to the index gain, increasing 2.9%.
Inter Rent Real Estate Investment Trust had the largest increase, rising 14.8%.

Insights
* This month, the index rose 5.7%
* The index advanced 17% in the past 52 weeks. The MSCI AC Americas Index gained 12% in the same period
* The S&P/TSX Composite is at its 52-week high and 22.4% above its low on June 17, 2024
* The S&P/TSX Composite is up 0.8% in the past 5 days and rose 6.3% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.1 on a trailing basis and 15.9 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$4.2t
* 30-day price volatility fell to 7.93% compared with 8.23% in the previous session and the average of 24.99% over the past month

Index Points
Financials | 85.8863| 1.0| 23/2
Information Technology | 37.4354| 1.5| 7/3
Consumer Staples | 27.0891| 2.7| 8/2
Real Estate | 11.9047| 2.6| 18/1
Utilities | 11.5818| 1.1| 12/2
Consumer Discretionary | 10.7391| 1.2| 6/4
Industrials | 8.0591| 0.2| 16/11
Energy | 4.9001| 0.1| 18/21
Communication Services | 4.0921| 0.7| 3/2
Health Care | 1.2327| 2.0| 4/0
Materials | -7.0466| -0.2| 22/28
Shopify | 35.5600| 2.9| -23.1| -3.6
Couche-Tard | 18.3800| 4.9| 58.9| -8.7
RBC | 14.6800| 0.8| -17.4| 2.6
Agnico Eagle Mines Ltd | -3.3520| -0.6| 17.5| 43.0
Celestica | -4.0470| -2.9| -7.7| 23.8
Wheaton Precious Metals | -4.2970| -1.1| 21.8| 46.2
The Toronto Stock Exchange on Tuesday achieved a second successive day of record intraday and closing highs while taking its winning run to 14 out of the last 15 sessions, even as credit guidance from Canada’s big banks and tax moves in the United States are seen potentially weighing on the financial sector.
Tuesday’s gains on the resources heavy TSX were also achieved despite lower commodity prices, but with all sectors higher.
The index closed up 195.87points at 26,269.
Of commodities today, The Wall Street Journal noted with gold the front-month contract closed down 1.9% to US$3,299.10 a troy ounce as the U.S. dollar index trended higher.
The WSJ also noted oil futures settled lower with expectations of further OPEC+ production increases in July outweighing the easing of trade tensions between the U.S. and the EU, which lifted equities.
WTI settled down 1% at US$60.89 a barrel, and Brent fell 1% to $64.09.
Among sectors, Health Care (+1.9%) and Utilities (1.1%), followed by Financials (+0.9%) led the way.
In relation to sectors and stocks, one potential stumbling block for the overall market may lie in wait within the second quarter results currently coming from Canada’s big banks.
Scotiabank (BNS.TO, BNS) earlier today missed market expectations for its second quarter as the bank put aside more money for potentially bad loans ahead.
Bank of Montreal (BMO.TO, BMO) is slated to follow with its Q2 update on Wednesday morning, and National Bank in a preview note published earlier in May noted “credit guidance has been a moving target” for that bank.
“Commercial loan growth outlook likely weakens,” National Bank said, while also noting BMO’s buyback activity was “tracking program capacity.”
National Bank is forecasting earnings per share from BMO of $2,60 versus a consensus $2.49, but no dividend increase.
On credit guidance, National Bank wrote: “We believe BMO investors are still wary of the bank’s credit performance, especially in light of fiscal 2024, during which actual loan loss provisions exceeded expectations by 60%.
” To be fair, National Bank said, BMO has turned a corner, with Q1 2025 PCLs down nearly 35% quarter over quarter from the Q4 2024 peak.
It noted management has guided to an impaired PCL ratio on par with 2024’s 47 bps ratio, albeit improving over the course of the year.
“Given the economic outlook clouded by U.S. tariff plans, we believe investors are bracing for yet another shift in credit guidance given BMO’s elevated exposure to both commercial lending and to the U.S. market (i.e., where rate cuts may be pushed back),” National Bank added.
In terms of commercial loan growth, National Bank wrote: “Overshadowed by the credit trends over the past year has been BMO’s lacklustre loan growth, notably in the commercial portfolio.
Over the past 12 months, the U.S. P&C segment has seen a decrease in commercial balances of 1%, providing little evidence of Bank of the West revenue synergy potential.
In Canada, growth has been a positive surprise, with the portfolio expanding by 7% over the past year with no discernible trend of deceleration. However, this positive trend may shift.”
National Bank noted that at its Annual Financial Services Conference in Montreal this past March, the bank’s head of Commercial Banking provided some updated perspective on commercial loan growth.
In the U.S., BMO continues to anticipate positive loan growth in the second half of the year.
Meanwhile, in Canada, it expects “moderate” loan growth, which implies from recent levels.
On buybacks, National Bank noted BMO announced a 20 million share buyback program on January 17, 2025.
The bank repurchased 1.2 million shares in the last month of Q1 2025 when the program first began and repurchased another 7 million shares in Q2.
At an average price of $137.5, or 2.5% below its current price, this quarter’s buybacks were a “good/opportunistic” use of capital, in National Bank’s opinion.
National will look for shifts to BMO’s buyback plans, which may be dictated by the macro backdrop, provisioning activity (e.g. the level of performing build during the quarter) or organic growth considerations.
Meanwhile, on another topic that could impact Canada’s financial sector, Rosenberg Research sees tax policy changes in the United States having a “significant set of implications” for Canadian tax payments to the U.S., for both investors and firms.
“In their search for revenue,” the research said, “House Republicans cobbled together a strange and vague grab bag of tax changes, many of which affect foreign individuals and multinationals.
Most of these policies conflict with existing Canada-U.S. tax treaties (clearly not a major priority for the Trump team or Congress) and layer on even more uncertainty on top of the trade file.”
Rosenberg Research noted Canada’s Digital Services Tax on U.S. multinationals, “a recent irritant to bilateral relations”, seems very likely to be a trigger for planned tax retaliation.
Section 899 of the bill has a mechanism that retaliates for “discriminatory or unfair taxes,” and the response would raise the current 5% withholding rate by +5 percentage points per year, up to a maximum of 50%, keeping this measure in place until the “unfair” tax is removed by the targeted country.
The research said: “This would have clear negative implications for Canadian firms, especially those in the Financials sector.
Individuals could also be hit with the same change (with withholding taxes going from 15% to 50% over several years).
The undertaxed profits rule is also ambiguously written but could affect certain types of Canadian multinationals.”
It added: “This would have unpredictable consequences — likely leading to lower equity valuations in the short run, but potentially leading Canadian investors to “return home” and develop a stronger home bias for domestic equities.
US
By Rita Nazareth
(Bloomberg) — Wall Street kicked off the week with a rally in stocks as consumer confidence rebounded sharply while the US and the European Union sped up trade talks.
A global surge in bonds also helped sentiment.
As equities halted a four-day slide, the S&P 500 climbed 2%.
Nvidia Corp. paced gains in megacaps ahead of its results.
Treasuries got a boost, pushing the 30-year yield below 5% on signs Japan will be ready to calm jittery debt markets.
The moves in the US extended after a sale of two-year notes was met with solid bidding metrics.
The dollar rose against all developed-market currencies.
President Donald Trump noted he was encouraged the EU is speeding up negotiations on trade, days after he said the bloc would face 50% tariffs if they fail to reach a deal with the US.
Trump extended a deadline for those taxes to take effect to July 9 after a call with European Commission President Ursula von der Leyen.
“The EU tariff reprieve until July 9 is an important step in the overall resolution of this trade situation, as it increases the chances that trade deals will continue to come to fruition, which is the exact messaging that the market is hoping for,” said Robert Ruggirello at Brave Eagle Wealth Management.
Meantime, global bonds rallied as Japanese authorities signaled, they are considering adjusting their debt plan after a selloff that drove the nation’s long-term borrowing costs to the highest levels in decades.
Worries about the ability of governments to cover massive budget deficits weighed on developed-market debt in recent days.
The Nasdaq 100 climbed 2.4%.
The Dow Jones Industrial Average added 1.8%.
Nvidia rallied over 3% while Apple Inc. halted its longest selloff in more than three years.
The yield on 10-year Treasuries fell seven basis points to 4.44%.
The Bloomberg Dollar Spot Index rose 0.5%.
The yen sank 1%.

Corporate Highlights:
* An upbeat earnings report by Nvidia on Wednesday would bode well for a rally in US equities as investors have about $7 trillion parked in cash funds, according to BBVA strategists.
* Salesforce Inc. has agreed to buy Informatica Inc. for about $8 billion, sealing the deal on a software firm that had seen its shares plunge by as much as 59% since the companies’ first talks failed last year.
* The US government is poised to receive a so-called golden share in United States Steel Corp. as a condition for approving Nippon Steel Corp.’s proposed acquisition of the American company.
* Advanced Micro Devices Inc. was upgraded to hold from reduce at HSBC, which cited “the recent re-rating on the back of the Saudi AI deal, as well as tariff de-escalation.”
* The Swiss National Bank sold its entire stake in oil producer Chevron Corp. because it now considers investments in the stock to breach its portfolio guidelines, according to a person familiar with the matter.
* Temu owner PDD Holdings Inc.’s sales and profit missed estimates, underscoring how trade tensions between Beijing and Washington are taking a toll on its business.
* Bank of Nova Scotia missed estimates after setting aside more money than expected for bad credit as tariffs hit its Canadian and Mexican operations.
* The US Supreme Court cleared a major obstacle to Rio Tinto Plc’s construction of North America’s largest copper mine, rejecting an appeal by a Native American group that said the Arizona project will destroy a sacred area.

Some of the main moves in markets:
Stocks
* The S&P 500 rose 2% as of 4 p.m. New York time
* The Nasdaq 100 rose 2.4%
* The Dow Jones Industrial Average rose 1.8%
* The MSCI World Index rose 1.4%
* Bloomberg Magnificent 7 Total Return Index rose 3.2%
* The Russell 2000 Index rose 2.5%
Currencies
* The Bloomberg Dollar Spot Index rose 0.5%
* The euro fell 0.5% to $1.1330
* The British pound fell 0.4% to $1.3505
* The Japanese yen fell 1% to 144.33 per dollar
Cryptocurrencies
* Bitcoin rose 0.3% to $109,916.53
* Ether rose 4.7% to $2,688.59
Bonds
* The yield on 10-year Treasuries declined seven basis points to 4.44%
* Germany’s 10-year yield declined three basis points to 2.53%
* Britain’s 10-year yield declined two basis points to 4.67%
Commodities
* West Texas Intermediate crude fell 0.9% to $61 a barrel
* Spot gold fell 1.2% to $3,304.56 an ounce

–With assistance from Andre Janse van Vuuren.

Have a lovely evening.

Be magnificent!
As ever,

Carolann
When your work speaks for itself, don’t interrupt. –Henry Kaiser, 1882-1967.

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