Below is a summary of some of the relevant news items from the Capital Markets and the Economy from the past week extracted from RBC Global Insights and FactSet Research.

You can catch up on the past four weeks’ Weekly Update in the link to my Blog.

Read my latest Smart Investor newsletter on my website. The Q1 2025 edition covers Market Review for 2024, a discussion about the main themes for 2025, and some long-term multi-decade trends. Shiuman’s Corner is a list of books I read last year.

 

Markets

Market scorecard as of close on Friday February 7, 2025.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	25,443	-0.4%	2.9%
U.S.	S&P 500	6,026	-0.2%	2.5%
U.S.	NASDAQ	19,523	-0.5%	1.1%
Europe/Asia	MSCI EAFE	2,385	0.1%	5.5%

Source: FactSet

• Within equities, the S&P/TSX Composite experienced weak trading following the initial announcement amongst names with large U.S. export exposure. That said, as tariffs were delayed, investors repurchased the previously sold-off names. The S&P/TSX was down 0.4% for the week.

• Despite a volatile start to the week, U.S. equities have fully recovered from Monday’s tariff-induced sell-off. The S&P 500 is down 0.2% for the week. Tariff volatility has businesses and investors scrambling for clarity. Tariffs have quickly become a dominant theme over the past several months, with the number of mentions by S&P 500 companies in recent calls and transcripts spiking since Trump was elected in November.

 

Economy

Canada

• While prolonged, broad-based tariffs would severely impede Canadian growth if not result in an outright recession, RBC Global Asset Management has pointed to “partial tariffs or substantial but temporary tariffs” as the highest probability outcomes.

• Canadian economic activity declined in November, but advance estimates indicate a recovery to close out 2024. Statistics Canada’s advance estimates for December suggest a 0.2% GDP expansion; if realized, this would bring Q4 GDP growth to 0.4% and full-year growth to 1.4%.

U.S.

• Investors and businesses alike were caught off guard over the previous weekend when the administration announced that tariffs on China, Mexico, and Canada would go into effect on Feb. 4, only to be thrown for another loop on Monday when the administration abruptly pulled back on its tariff plans for Mexico and Canada. While the 30-day pause offers temporary relief, the longer-term outlook remains murky at best.

• The exceptional run of U.S. labour market strength persisted in January, even with a small miss in payroll employment gain. The unemployment rate dropped to 4% and wage growth among private sectors remained elevated. Friday’s report confirms our expectations that a stable and strong U.S. jobs market does not need support from further Fed rate cuts.

 

Further Afield

• The additional 10% across-the-board tariffs imposed by the Trump administration on imports from China took effect on Feb. 4. In response, China announced it will retaliate with tariffs of 15% on U.S. coal and liquefied natural gas and 10% on crude oil, farm equipment, and some cars.

• We think China’s retaliatory measures are relatively restrained, carefully designed to send a message to the U.S. administration while minimizing potential damage and leaving room for de-escalation.

 

 

Notes About Companies in Model Portfolio

• Alphabet (GOOG) reported solid fourth-quarter earnings, with the firm's sales and operating margins growing 12% and 460 basis points year over year, respectively. Along with financial results, management gave an initial guidance of $75 billion for 2025's capital expenditures (above estimates by analysts’ $58 billion). GOOG immaterially missed overall top-line, driven largely by Cloud partly offset by upside from Advertising (w/ Search beating by 1.3% and YouTube also seeing a modest beat).

 

Feel free to contact me with any questions and/or to discuss investment ideas.

I appreciate the opportunity to serve you and look forward to continuing to help you accomplish your long-term financial goals.

 

Regards,

Shiuman