May21, 2025, Newsletter

Dear Friends,

Tangents:
May 21, 1904:FIFA is founded as the governing body of football and takes responsibility for organizing the World Cup.
May 21, 1980: “The Empire Strikes Back,” the second movie in the “Star Wars” series, was released. Go to article

Alexander Pope, poet, b.1688.
Al Franken, comedian, b. 1951.

The International Booker Prize goes to …
Indian author Banu Mushtaq and her translator Deepa Bhasthi won the prize for fiction for “Heart Lamp,” a collection of 12 tales chronicling the lives of women in southern India. It’s the first time a short story collection has been honored.

After nearly 5 years, ‘Fortnite’ returns to Apple’s app store
Epic Games’ popular multiplayer shooter video game has been banned from the store since 2020. Apple claimed the gaming giant violated its policies by introducing a way for users to circumvent Apple’s in-app payment system. 

Speaking of ‘Fortnite,’ there’s a new controversy
Hollywood’s actors’ union has filed an unfair labor practice charge against Llama Productions, a subsidiary of Epic Games, for allegedly replacing actors’ work in “Fortnite” with artificial intelligence.

Who steals art off a tombstone? Well, people are strange.
A bust of Doors frontman Jim Morrison that once adorned his grave in the Père Lachaise cemetery in Paris disappeared 37 years ago. Last week, the sculpture was found during a police investigation.

‘It epitomises the strangeness of Sutton Hoo’: 6th-century bucket found at Anglo-Saxon ship burial holds human cremation
Archaeologists found a cremation burial while examining the inside of a bucket from Sutton Hoo, a 1,400-year-old boat burial site in England.

Hospital superbug can feed on medical plastic, first-of-its-kind study reveals
Pseudomonas aeruginosa is associated with 559,000 yearly deaths worldwide, and many of them come from hospital-acquired infections. A new study suggests it may be thriving in sterile environments by feeding on medical plastics.

PHOTOS OF THE DAY
Bangkok, Thailand
A lion dance troupe prepare for a performance at the Erawan Shrine
Photograph: Rungroj Yongrit/EPA

San Francisco, US
A paddleboarder passes a ship in the waters off Crane Cove Park
Photograph: Jessica Christian/San Francisco Chronicle/AP

locking willow sparrows in Turkiye’s Bursa
BURSA, TURKIYE – MAY 20: Willow sparrows, one of the migratory bird species, are seen flying in flocks on May 20, 2025 in Karacabey district of Bursa, Turkiye. (Photo by Alper Tuydes /Anadolu via Getty Images)
Photograph: Anadolu/Getty Images
Market Closes for May 21^st, 2025

International Markets

Bonds

Currencies

Commodities

Market Commentary:
“A great business at a fair price is superior to a fair business at a great price.” -Charlie Munger’s #1 Lesson of Investing.
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.8% at 25,839.17 in Toronto.
The move was the biggest since falling 3% on April 10 and follows the previous session’s increase of 0.3%.
Shopify Inc. contributed the most to the index decline, decreasing 4.2%.
ATS Corp. had the largest drop, falling 6.1%.
Today, 136 of 217 shares fell, while 79 rose; 10 of 11 sectors were lower, led by financials stocks.

Insights
* This month, the index rose 4%
* The index advanced 15% in the past 52 weeks. The MSCI AC Americas Index gained 10% in the same period
* The S&P/TSX Composite is 1.1% below its 52-week high on May 20, 2025 and 20.4% above its low on June 17, 2024
* The S&P/TSX Composite is up 0.9% in the past 5 days and rose 7.6% in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 19.4 on a trailing basis and 16.3 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 capitalizationof C$4.21t 30-day price volatility fell to 20.85% compared with 21.38% in he previous session and the average of 29.03% over the past month
Index Points
Financials | -87.0047| -1.0| 8/16
Information Technology | -80.9998| -3.2| 1/9
Industrials | -42.3720| -1.3| 5/23
Energy | -19.2336| -0.5| 12/29
Consumer Discretionary | -10.5768| -1.2| 3/7
Real Estate | -9.6196| -2.1| 1/18
Consumer Staples | -8.2076| -0.8| 2/8
Communication Services | -2.2205| -0.4| 1/4
Health Care | -1.5554| -2.5| 0/4
Utilities | -0.7237| -0.1| 8/7
Materials | 46.0619| 1.3| 38/11
Shopify | -52.9500| -4.2| 8.2| -7.3
Brookfield Corp | -31.4900| -3.8| 78.6| -4.4
Constellation Software | -23.4700| -3.4| 25.2| 9.8
Nutrien | 3.5390| 1.3| 15.1| 28.6
Wheaton Precious Metals | 8.9110| 2.4| 36.1| 46.1
Agnico Eagle Mines Ltd | 12.5600| 2.3| 3.9| 42.5
The Toronto Stock Exchange fell for the first session in the last 11 on Wednesday, with traders taking profits after the index posted a series of record high closes in recent days, and also on some investor nerves as TD Bank will provide a picture on the health of the Canadian consumer and industry credit losses when it releases second-quarter earnings tomorrow.
The S&P/TSX Composite Index closed down 216.46 points to 25,839.17.
Among sectors, Health Care and Information Technology were the biggest decliners, down 2.64% and 2.32% respectively.
Of individual stocks, market focus is on Toronto-Dominion Bank (TD.TO, TD) which will launch the big banks’ second-quarter earnings season tomorrow, Thursday.
Analysts at National Bank said in a note last week that they forecast cash earnings per share of $1.81, compared to a consensus $1.75.
The FactSet forecast is $1.77 versus $2.04 a year earlier.
National Bank expects key themes in the TD result to include: another strategic review update; elevated expense growth (excluding AML remediation costs); and an indication that TD’s buyback pace is on track to meet objectives.
National Bank doesn’t expect a dividend increase.
Bigger picture, market focus is already on the Bank of Canada meeting set for June to see if it cuts the key benchmark interest rate, after holding it steady in April.
According to one Macquarie economist, the BoC is likely to await more data and assess the outlook before introducing any more rate cuts.
David Doyle, head of economics at Macquarie, noted Canada’s inflation data yesterday was mixed for April.
On the inflation outlook ahead, Macquarie expects an “uneven moderation” in underlying inflation in Canada.
It noted the unemployment rate has risen to 6.9% and private-sector wage growth has “moderated sharply.”
Moreover, Macquarie said, shelter inflation is likely to continue to subside with low population growth a driver.
In terms of the BoC’s outlook, Macquarie added yesterday’s data lowered the overnight index swap market’s implied probability of a rate cut on June 4 to near 30% (from 68% before the decision).
While Macquarie continues to see intermittent cuts of 75 bps from the BoC by year end, it said recent firm data leads it to push out the timing of its next expected cut to July from June.
In Macquarie’s view the BoC is likely to await more data and assess the outlook with a new Monetary Policy Report forecast in July.
Of commodities, West Texas Intermediate crude oil fell for a second day on Wednesday as rising inventories offset early buying that followed a report Israel is readying a strike on Iranian nuclear facilities.
WTI oil for July delivery closed $0.46 to settle at US$61.57 per barrel, while July Brent oil was last seen down $0.53 to US$64.85.
But gold prices rose for a third-straight session late afternoon on Wednesday on higher geopolitical risk following a report that Israel is planning to strike at Iranian nuclear facilities while the dollar weakened.
Gold for August delivery was last seen up US$36.50 to US$3,349.10 per ounce.
US
By Rita Nazareth, Denitsa Tsekova and Emily Graffeo
(Bloomberg) — Wall Street’s worries about a ballooning deficit that threatens America’s status as a haven were reflected in a $16 billion Treasury sale that saw lackluster demand – with stocks, bonds and the dollar falling.
Treasuries got hit after a weak auction of 20-year bonds, whose 5% coupon rate was the highest since the tenor was reintroduced in 2020.
Long-term debt bore the brunt of the selling, with 30-year yields jumping 11 basis points toward the highest since October 2023.
After almost erasing losses, the S&P 500 dropped over 1.5%.
The greenback slipped against most major currencies.
Bitcoin pared its advance but was still set for a record.
“The soft 20-year auction fueled additional weakness,” said Michael O’Rourke, chief market strategist at JonesTrading.
“It has a been a theme all week starting with the Moody’s downgrade.
Additionally, there is the deficit/budget debate being fought in the background of this environment.”
Traders have been piling into bets that long-term bond yields would surge on concerns over the US’s swelling debt and deficits, with Moody’s Ratings on Friday lowering the nation’s credit score below the top triple-A level.
For many, the message was: Unless America gets its finances in order, the perceived risks of lending to the government will rise.
The White House amped up the pressure on Republicans on Wednesday urging lawmakers to quickly approve President Donald Trump’s signature tax bill, adding that a failure to do so would be the “ultimate betrayal.”
Former US Treasury Secretary Steven Mnuchin said he’s more alarmed by the country’s growing budget deficit than its trade imbalances and urged Washington to prioritize fiscal repair.
“I’m very concerned,” he said during a panel discussion at the Qatar Economic Forum on Wednesday.
“The budget deficit is a larger concern to me than the trade deficit. So I’m on the side of, I hope we do get more spending cuts — something that’s very important.”
The S&P 500 fell 1.6%.
The Nasdaq 100 lost 1.3%.
The Dow Jones Industrial Average slipped 1.9%.
The yield on 10-year Treasuries rose 10 basis points to 4.59%.
A dollar gauge slid 0.3%.
The murky economic outlook is fueling hedging activity in Treasury options, with investors targeting higher rates on longer-dated bonds by the end of the year.
Those wagers echo sentiment on Wall Street, where strategists from Goldman Sachs Group Inc. to JPMorgan Chase & Co. are lifting their forecasts for yields.
At BTIG, Jonathan Krinsky says bonds finally appear to be getting equities’ attention.
“The move in the 10-year yield meaningfully above 4.5% is something that confirms a key change in long-term yields,” said Matt Maley at Miller Tabak.
“These higher yields make it much tougher to justify today’s very high valuation levels.  So, it’s something that will likely create some renewed headwinds for stocks.”
To George Saravelos at Deutsche Bank, it is hard for US equities to stay resilient in this environment.
“The 2023-24 period saw a combined rise in US yields and equities as the market was revising US growth expectations higher. This was entirely reasonable,” he said.
“Today is very different. It is hard to make the case that such a (negative) driver of the rising cost of capital is positive for risk assets.”
Saravelos also said that the most troubling part of the market reaction to the bond auction was that the dollar weakened at the same time.
“At the core of the problem is that foreign investors are simply no longer willing to finance US twin deficits at current level of prices,” he said.
“Washington developments will dominate the headlines for the rest of the week, amidst a lack of catalysts on the corporate earnings and economic data fronts,” said Jose Torres at Interactive Brokers.
Republicans made some headway in advancing Trump’s bill on Wednesday.
House Speaker Mike Johnson announced that he had an agreement with lawmakers from high-tax states to increase the limit on the state and local tax deduction to $40,000, winning a key faction of members who had threatened to block the legislation.
“The budget is like the bad news, good news, bad news joke,” said Chris Low at FHN Financial.
“The first bad news, it has been out of control for years — which is why Moody’s downgraded US debt.
The good news, the current budget is tracking to stabilize the deficit and could even reduce it.
The second bad news, the budget needs to shrink, not stabilize.”
While markets have benefited from softer rhetoric by the Trump administration around trade — particularly from the temporary truce with China – the stock recovery back to pre- tariff highs trails other major global indexes.
The S&P 500 is still below its Feb. 19 record, while the MSCI ex-US hit a new high this week.
US stocks are still laggards in global equity markets this year.
For them to sustain the rally and reclaim their usual spot at the top of the pack, Corporate America’s profit engine needs to rev back up, analysts at Bloomberg Intelligence say.
The S&P 500 has underperformed a gauge of 22 developed markets outside of the US since late last year as the pace of US earnings growth relative to the rest of the world narrowed, according to an analysis by BI’s Nathaniel Welnhofer.
The last time such a phenomenon occurred was in 2017, when the US stock benchmark’s earnings growth trailed its overseas peers.

Corporate Highlights:
* Walt Disney Co. notified Florida-based employees who are losing temporary legal residency in the US that their jobs would be terminated next month after the Supreme Court ruled Monday that the Trump administration could revoke protections for 350,000 Venezuelans.
* Alphabet Inc. climbed after the company said it will offer “AI mode” in search to all US users, showing its commitment to redesigning its core business to keep pace with new rivals in the artificial intelligence age.
* Nvidia Corp. chief Jensen Huang blasted the “failure” of US restrictions intended to contain China’s technological ascent, calling on the White House to lower barriers to AI chip sales before American firms cede that market to up-and-coming rivals such as Huawei Technologies Co.
* OpenAI will acquire the AI device startup co-founded by Apple Inc. veteran Jony Ive in a nearly $6.5 billion all-stock deal, joining forces with the legendary designer to make a push into hardware.
* United Airlines Holdings Inc. Chief Executive Officer Scott Kirby told shareholders that the carrier is seeing “at least a stable revenue and booking environment” heading into the Memorial Day weekend and start of the summer travel season.
* Target Corp. cut its sales forecast following a sharp pullback in spending and a hit from tariffs, boycotts and consumer confidence.
* Lowe’s Cos. comparable sales beat expectations during the latest quarter as shoppers-maintained home spending despite weakening consumer sentiment and economic turbulence.
* TJX Cos. executives said the company’s global network of vendors and flexibility on price and merchandise will help the company manage tariff pressures.
* UnitedHealth Group Inc. tumbled after the Guardian reported the insurer secretly paid nursing homes bonuses to reduce hospital transfers for ailing residents.
* Boeing Co. has told customers that it’s approaching a key production target that would signal manufacturing of its all-important 737 jet is back on track following last year’s harrowing mid-air accident.

Some of the main moves in markets:
Stocks
* The S&P 500 fell 1.6% as of 4:01 p.m. New York time
* The Nasdaq 100 fell 1.3%
* The Dow Jones Industrial Average fell 1.9%
* The MSCI World Index fell 1.1%
* Bloomberg Magnificent 7 Total Return Index fell 1%
* The Russell 2000 Index fell 2.8%
Currencies
* The Bloomberg Dollar Spot Index fell 0.3%
* The euro rose 0.3% to $1.1316
* The British pound rose 0.1% to $1.3413
* The Japanese yen rose 0.5% to 143.76 per dollar
Cryptocurrencies
* Bitcoin rose 1.7% to $108,745.73
* Ether was little changed at $2,512.58
Bonds
* The yield on 10-year Treasuries advanced 10 basis points to 4.59%
* Germany’s 10-year yield advanced four basis points to 2.65%
* Britain’s 10-year yield advanced five basis points to 4.76%
Commodities
* West Texas Intermediate crude fell 1.1% to $61.33 a barrel
* Spot gold rose 0.9% to $3,318.67 an ounce

Have a lovely evening.

Be magnificent!
As ever,

Carolann
The chief cause of failure is substituting what you want most for what you want now. –Zig Ziglar, 1926-2012.

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