May 28th , 2025, Newsletter

Dear Friends,

Tangents:
May 28, 1936:  Alan Turing’s seminal paper, “On Computable Numbers,” is submitted for publication. Go to article. 
May 28, 1937: German automaker Volkswagen is founded to mass-produce a low-priced “people’s car”.  The company is originally operated by a Nazi organization.

May 28, 1892: Sierra Club founded.

Ian Fleming, writer, b. 1908.
Rudolph Giuliani, former NYC mayor, b.1944.

Watch mesmerizing 1,000-foot-tall lava fountains: Kilauea volcano erupting in ways not seen for 40 years.

James Webb telescope breaks own record, discovering farthest known galaxy in the universe .

Genomes from ancient Maya people reveal collapse of population and civilization 1,200 years ago.

Earth’s core is ‘leaking’ gold, study finds.

3 ancient Egyptian tombs dating to the New Kingdom discovered near Luxor.

Harry Potter TV show casts its stars
HBO has finally found a trio of young actors to play Harry Potter, Hermione Granger and Ron Weasley in its upcoming series about the magical world of witchcraft and wizardry. (HBO, like CNN, is owned by Warner Bros. Discovery.)

Stop stealing the stones, folks
A city in Belgium is asking tourists not to take a piece of its UNESCO-recognized medieval streets home with them. 
RIP
Rock guitarist/producer Rick Derringer dies
During his six-decade music career, Derringer released the hit singles “Hang On Sloopy” with his band The McCoys, and “Rock and Roll, Hoochie Koo” from his solo album “All American Boy.” He also worked with numerous artists — including Ringo Starr, Steely Dan, B.B. King and Barbra Streisand — and produced “Weird Al” Yankovic’s first six albums.

PHOTOS OF THE DAY

Hawaii, US
The Kīlauea volcano erupts, the latest in a series since Sunday
Photograph: M Patrick/United States Geological Survey/EPA

Woubrugge, Netherlands
A superyacht, built for the former Starbucks US chief executive Howard Schultz, heads to Rotterdam. The vessel, which is 101.5 metres (333ft) long and 13.5 metres wide, dwarfs the town
Photograph: Josh Walet/ANP/AFP/Getty Images

Rochefort, France
Commuters stand on a nacelle suspended from the metal deck of an aerial ferry bridge to cross the Charente River in western France. The bridge, inaugurated in 1900, was the main crossing over the river until 1967
Photograph: Christophe Archambault/AFP/Getty Images
Market Closes for May 28^th, 2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
No one can possibly achieve any real and lasting success or “get rich” in business by being a conformist. –J. Paul Getty, 1892-1976.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite advanced slightly to 26,283.45 in Toronto.
National Bank of Canada contributed the most to the index gain, increasing 3.8%.
Definity Financial Corp. had the largest increase, rising 11.3%.
Today, 116 of 217 shares rose, while 95 fell; 7 of 11 sectors were higher, led by materials stocks.

Insights
* This month, the index rose 5.8%
* The index advanced 18% in the past 52 weeks. The MSCI AC Americas Index gained 11% 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 1.7% in the past 5 days and rose 6% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 18.2 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$4.23t
* 30-day price volatility fell to 7.80% compared with 7.93% in the previous session and the average of 24.21% over the past month

Index Points
Materials | 19.7999| 0.6| 34/13
Financials | 18.8633| 0.2| 14/11
Consumer Staples | 4.3855| 0.4| 7/3
Consumer Discretionary | 3.4397| 0.4| 5/5
Industrials | 2.8333| 0.1| 19/9
Information Technology | 1.1144| 0.0| 2/8
Health Care | 0.4195| 0.7| 2/1
Real Estate | -0.4025| -0.1| 10/9
Communication Services | -3.7511| -0.6| 0/4
Utilities | -5.3222| -0.5| 6/9
Energy | -26.9361| -0.6| 17/23
National Bank of Canada | 13.5300| 3.8| 136.2| 2.5
Bank of Montreal | 11.4000| 1.5| 34.3| 5.4
Agnico Eagle Mines Ltd | 8.1850| 1.4| -1.8| 45.0
Bank of Nova Scotia| -6.2910| -1.0| 35.9| -6.5
Canadian Natural Resources | -7.3730| -1.2| 58.9| -4.1
Enbridge | -8.7130| -0.9| -35.2| 3.4
The Toronto Stock Exchange just about posted a third successive record intraday and closing high on Wednesday, buoyed by the financial sector as Canada’s big banks have, thus far in to their second quarter earnings period at least, generally beat market expectations and not given too much cause for concern around consumer and business credit.
At the end today’s session, the TSX was up a modest 14.5 points at 26,283.45, but this was after it quickly recovered from dipping into negative territory in the closing minutes.
The index is now up 15 of the last 16 sessions.
Most sectors were lower, but there were gains for Health Care (+0.36%), Financials (0.22%) and Industrials (+0.1%).
Of commodities, The Wall Street Journal noted gold futures settled the day lower, unable to break out of a negative stretch, with gold finishing lower in three out of the past four sessions.
The front-month contract closed down 0.2% to US$3,293.60 a troy ounce.
Separately, The WSJ noted oil futures rebounded from the previous day’s selloff as the OPEC and non-OPEC ministerial meeting ended with agreement to keep quotas in place through 2026.
WTI settled up 1.6% at US$61.84 a barrel, and Brent rose 1.3% to US$64.90 a barrel.
On sectors and individual stocks, market watchers continue to keep a close eye on second quarter results currently coming from Canada’s big banks, with CIBC (CM.TO) and RBC (RY.TO, RY) next slated to release their financials tomorrow morning.
In a preview note published earlier this month, National Bank said it expected CIBC to report an EPS of $1.93 versus a consensus $1.88.
It didn’t at the time expect CIBC to announce a dividend increase.
National Bank in looking at key themes for CIBC said a “relatively conservative” provision build was expected; a “bullish domestic growth outlook could be dampened”; and noted the pace of buybacks had decelerated “modestly.”
On provisions, National Bank expected CM to be “one of the more conservative banks” in terms of adding to performing provisions this quarter.
It noted that since the end of 2023, the bank has boosted its performing ACL ratio by 5 bps, above the 4 bps peer average (2 bps ex. BMO).
This increase included 9 bps of performing PCLs during Q1 2025, which is on par with National’s expectations for the group this quarter.
For what it’s worth, National Bank said CIBC was also more conservative during the early stages of COVID.
During Q2 2020, it added 24 bps to its performing ACL ratio, which was higher than the 20 bps group average.
It was also a bank that took a more moderate approach to releasing provisions when economic conditions changed/improved, National Bank added.
In terms of the domestic growth outlook, National Bank noted CM delivered strong domestic loan growth during Q1 2025, highlighted by 8% Y/Y (3% Q/Q) commercial loan growth, with management expressing optimism on strong lending pipelines.  Additionally, card balances rose 10% Y/Y (+3% Q/Q).
“However, given the volatile macro environment and uncertainty related to the tariff situation that is affecting both consumers and businesses, the growth outlook could dampen this quarter,” National Bank added.
On buybacks, National Bank noted CM implemented a 20 million share buyback program in September 2024.
Over the first three quarters of the program, CM has repurchased 5 million, 3.5 million and 2.4 million shares, respectively.
At this pace, National said it is unlikely that CM will repurchase its total program capacity, especially if management cites the macro environment as a factor to explain a more conservative capital retention strategy.
National notes that CM’s Q1 2025 CET 1 ratio of 13.5% is above its minimum target range of 12.75%-13% (i.e., the base level assumption behind its 15%+ medium-term ROE objective).
National Bank said it expected RBC to report an EPS of $3.26 versus a consensus $3.13.
At the time, it expected RBC to announce a dividend increase.
National Bank in looking at key themes for RBC said updated ‘peak PCLs’ timing was expected to be pushed to 2026; the Capital Markets business should be strong, but with one caveat; and it noted the buyback pace accelerated during the quarter.
At a conference in January 2024, National Bank noted that RBC stated that it expected “peak PCLs” to be experienced at the end of that fiscal year.
“At the time, there were questions related to potential performing provision releases, which would only take place subsequent to the bank believing it had experienced the highest losses in the current credit cycle.
That timing has since been pushed back to year-end 2025.
And now, National Bank believes RBC will be pushing back “peak PCL” expectations to sometime during fiscal 2026.
“Of note,” it said, “weak economic activity and a rising domestic unemployment rate make it highly unlikely that we will see a positive shift in the credit cycle this year.”
National Bank noted that “favourable” trading conditions resulted in RBC reporting $1.6 billion of trading revenues during Q1 2025, a figure that represented a 36% Y/Y increase and the highest figure reported by RBC since Q3 2020.
It said investors expect a similarly strong outcome.
National Bank added: “The one caveat, in our view, is that RY may experience some hits to its trading revenues if it is required to book any losses on its High Yield origination business.
Although conditions haven’t been as bad this quarter as they were during prior periods that exhibited a material widening of high yield spreads (e.g., Q2 2020, Q3 2022), we believe there could still be some unwelcome volatility affecting this business during Q2 2025.”
National Bank noted RBC implemented a 30 million share buyback program on June 12, 2024.
Buyback activity was tepid in the initial phases of the program, with only 2.8m shares repurchased by the end of Q1 2025.
National Bank believes RBC was retaining capital in anticipation of improved organic growth volumes, having emphasized organic growth potential (mainly in its U.S. business) during the Q4 2024 earnings call.
However, National Bank said, the macro/tariff situation has depressed credit demand.
National believes RBC shifted its capital deployment priorities during Q2 2025, having repurchased 3 mln shares (i.e., 10% of program capacity).
“Similar to our expectations from other banks with active buyback programs, we will be monitoring commentary regarding buyback appetite in the coming quarters,” National Bank added.
Price: 26283.45, Change: +14.5, Percent Change: +0.05
US
By Rita Nazareth
(Bloomberg) — Wall Street halted its rebound in the run-up to results from Nvidia Corp. — the last of the “Magnificent Seven” mega caps to report.
Treasuries pared losses after a solid $70 billion US sale.
Following a rally in the previous session, the S&P 500 fell.
The Trump administration is moving to restrict the sale of chip design software to China, people familiar with the matter said, as the US government evaluates a broader policy announcement on the issue.
Cadence Design Systems Inc. and Synopsys Inc. tumbled over 9.5%.
Nvidia wiped out a 1.3% advance.
“Wednesday’s Nvidia earnings report is pivotal not just for Nvidia but for the entire stock market, as it can rejuvenate investor optimism across the board and help investors to focus on the power of AI and less on headlines out of Washington on tariffs and taxes,” said James Demmert at Main Street Research.
At Interactive Brokers, Steve Sosnick says he doesn’t think it’s an exaggeration to say that Nvidia’s earnings are the most- consequential report of any given quarter.
“It is no coincidence that the recent bull-market run started in late 2022, almost exactly coinciding with the release of ChatGPT,” he said.
“And no stock has epitomized the AI gold rush more than Nvidia.”
As expected, minutes of the latest Federal Reserve policy meeting reflected a wait-and-see approach from officials.
The S&P 500 fell 0.6%.
The Nasdaq 100 slid 0.45%.
The Dow Jones Industrial Average lost 0.6%.
Tesla Inc. is poised to begin its long-awaited robotaxi service in Austin on June 12, according to a person familiar with the matter.
The yield on 10-year Treasuries rose three basis points to 4.48%.
A dollar gauge added 0.3%.
Oil climbed as traders weighed risks to Iranian and Russian supplies.
Read: Why Is Nvidia the King of AI Chips, and Can It Last?:
“It’s hard to recall a time when so many investors were so focused on the earnings outcome of a single stock,” said Ryan Grabinski at Strategas Securities.
“We have no clear view on how Nvidia’s earnings will land given the many variables at play, but what is certain is the persistent attacks from both the US and China leaves the company highly sensitive to headline risk.”
Nvidia and fellow megacaps were among the biggest decliners in last month’s rout that sent the S&P 500 to the brink of a bear market.
Many of the stocks have recouped much of the losses after President Donald Trump temporarily paused the stiffest levies and earnings showed demand remains intact.
The chipmaker’s surge from its April lows hasn’t been accompanied by high volumes, suggesting some investors might have missed out on the rally.
An upbeat earnings report would bode well for US stocks as investors have about $7 trillion parked in cash funds, BBVA strategists have estimated.
Traders also kept a close eye on the latest headlines around global trade negotiations.
The European Union’s trade chief, Maros Sefcovic, plans to speak to US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer Thursday, seeking to fast-track negotiations to reach a deal before a July 9 deadline.
Trump bristled at suggestions that Wall Street believed he was ultimately unwilling to follow through on extreme tariff threats, saying Wednesday his repeated retreats were strategic efforts to exert trade concessions.
“The latest trade developments remain in line with our base case that pragmatism will ultimately prevail over confrontation,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
“So far, the Trump administration has appeared to temper its more strident tariff policies in response to signs of distress in markets.”
Assuming trade tensions continue to ease, she sees room for the equity market rally to resume into 2026, with the S&P 500 reaching around 6,400 by June of next year. The gauge hovered near 5,900.
“Headline risk obviously remains a short-term driver of the tape, creating volatile back-and-forth action,” said Dan Wantrobski at Janney Montgomery Scott.
“We thus anticipate further choppiness for the remainder of the year along these lines, but with a general upward bias above the 5,500-5,750 range and the potential for new highs at some point.”
Investor exposure to equities is still low enough that the “path of least resistance” for the market is higher, according to Barclays Plc’s Emmanuel Cau.
Absent a volatility shock, “systematic buying could continue to help equities to grind higher,” he wrote in a note.
“The reactivity of the market continues, with a surge following the delay of the tariff implementation, though the equity market has settled into a range that suggests the panic from April is behind us, but further catalysts are necessary to drive the next phase of the bull market,” said Mark Hackett at Nationwide.

Corporate Highlights:
* President Trump said that the US government would retain guarantees and an oversight role over Fannie Mae and Freddie Mac even as he pursues a public offering for the mortgage giants.
* Macy’s Inc. posted better-than-expected quarterly results — a sign the company’s strategy of focusing on its best-performing locations is paying off despite weakening consumer sentiment and tariff volatility.
* Abercrombie & Fitch Co. upped its full-year outlook, suggesting confidence in its ability to navigate the changing tariff landscape.
* Dick’s Sporting Goods Inc.’s chairman pushed back on criticism of its pending acquisition of struggling footwear chain Foot Locker Inc.
* Vail Resorts Inc., a ski resort operator, said Executive Chairperson Rob Katz will return to the role of chief executive officer, replacing Kirsten Lynch, who stepped down.
* Honeywell International Inc. agreed to cooperate with Elliott Investment Management and add a member of the activist shareholder to its board as the industrial firm prepares to split into three companies.
* The Trump administration issued a stripped-down license to Chevron Corp. to remain in Venezuela, allowing the company to conduct minimal maintenance on equipment but prohibiting it from producing oil in the sanctioned South American nation.
* Bank of Montreal topped estimates as net interest income came in higher than expected even as the company set aside more money to cover loans that are still in good standing, highlighting growing concern about the fate of the North American economy.
* BCE Inc., Canada’s largest telecom company by revenue, will set up a network of artificial intelligence data centers across the country, mirroring the aggressive AI infrastructure build- out happening in the US and abroad.
* DeepSeek said it has upgraded the R1 artificial-intelligence model that helped propel the Chinese startup to global prominence earlier this year.
* Shein Group Ltd. is considering switching its planned initial public offering to Hong Kong from London, people familiar with the matter said, representing the latest twist in the fast- fashion retailer’s turbulent pursuit of going public.

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.6% as of 4 p.m. New York time
* The Nasdaq 100 fell 0.45%
* The Dow Jones Industrial Average fell 0.6%
* The MSCI World Index rose 1.4%
Currencies
* The Bloomberg Dollar Spot Index rose 0.3%
* The euro fell 0.3% to $1.1290
* The British pound fell 0.3% to $1.3465
* The Japanese yen fell 0.4% to 144.89 per dollar
Cryptocurrencies
* Bitcoin fell 2.5% to $106,914.73
* Ether fell 1.9% to $2,617.86
Bonds
* The yield on 10-year Treasuries advanced three basis points to 4.48%
* Germany’s 10-year yield advanced two basis points to 2.55%
* Britain’s 10-year yield advanced six basis points to 4.73%
Commodities
* West Texas Intermediate crude rose 1.1% to $61.55 a barrel
* Spot gold fell 0.1% to $3,296.98 an ounce
Have a lovely evening.

Be magnificent!
As ever,

Carolann
Don’t mind anything anyone tells you about anyone else.  Judge everyone and everything for yourself. – Henry James, 1843-1916.

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