Weekly Newsletter 02/07/25

Good afternoon,

Happy Friday to all of you and thanks for checking in today. We are already into the second month of the year and there is lots going on so lets get to it. US equities lower in Friday trading, though stocks continue to pace for weekly gain. Comes after a mixed finish in a fairly uneventful Thursday session. Outperformers include OTAs (BKNG-US , EXPE-US ), China tech, industrial metals, hospitals, video games (TTWO-US ), casinos, and hotels. Underperformers include beauty and cosmetics (ELFUS), athletic apparel, pet products, energy, exchanges, homebuilders, and casual diners, Treasuries weaker across the curve, near worst levels following weaker-than-expected jobs report. Dollar index flat but still lower for the week. Gold up 0.9%. WTI crude up 1.1%.

Mixed bag from today's employment report, with January headline weaker but past two months revised up; average hourly earnings growth hotter than expected. Nevertheless, not sparking big shift in Fed rate expectations. Today's Michigan Consumer Sentiment also adding to narratives around weakening/reversal of disinflation traction, hawkish Fed. Earnings once again a mixed bag and while AMZN-US guide disappointed, FX was the big drag and capex comments fit with AI secular growth theme. Nothing incremental on tariffs as trade policy uncertainty continues to dominate the headlines. House Republicans reportedly made some progress on reconciliation bill, though still a lot of moving pieces and potential for taxes to be punted to a second bill. Somewhat hawkish comments from Fed's Logan, who expressed skepticism more rate cuts necessary.

Big release today the January nonfarm payrolls report; headline 143K undershot 170K consensus but prior two months revised up 100K. Unemployment rate ticked down to 4.0% from 4.1% while average hourly earnings stepped up to 0.5% m/m from 0.3%. Release noted no impacts from LA wildfires. Annual revisions were a net negative for 2024.

Preliminary February Michigan Consumer Sentiment missed, lowest since Nov-23. Current conditions down to lowest since Nov-24. Year-ahead inflation expectations up 1 pp to 4.3%, highest since Nov-23, while 5-10Y up 0.1pp to 3.3%, highest since Jun-08. Overnight, Dallas Fed's Logan said interest rates could already be near neutral, and 2% inflation might not necessarily allow Fed to keep cutting rates. Minneapolis's Kasharki flagged uncertainties about tariff policy and said next couple of inflation prints may be key.

Finally, my household has been busy. I have a high school senior and the choice of college is front and center. As we have toured some schools down here in the sunshine state, seeing what I see, I think I may have made going to college a career! She has some choices and the list varies from UTampa, FAU, OLE MISS, LSU, COLORADO. We are waiting on a few more. One thing I have learned is that if the kids put in the work and stay laser focused on their studies and achieve better than average results with grades they are rewarded handsomely with merit scholarships. Too bad she can’t pick like I did back in the day but she did get a glimpse of dads arm strength throwing a baseball as I couldn’t help myself when checking in on the baseball programs and an athletic scholarship would have bee nice. The link to our resources is attached. Have a great weekend.

Thank you,
Pasquale Evangelista
Sr. Vice President, Investments
Raymond James & Associates, Inc.
1421 Pine Ridge Rd. Suite 300
Naples, FL 34109
(239) 513-6528 Direct - (800) 843-2025 -Toll Free - (239) 938-4078 Cell -
(239) 596-5474 Fax
Pasquale.Evangelista@RaymondJames.com
www.raymondjames.com/evangelista

https://www.raymondjames.com/evangelista/resources

This material is being provided for informational purposes only. Expressions of opinion are those of Investment Strategy and not necessarily those of Pasquale Evangelista and are provided as of the date above and subject to change. Any information should not be deemed a recommendation. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the economy, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance does not guarantee future results.

Consumer Sentiment is a consumer confidence index published monthly by the University of Michigan. The index is normalized to have a value of 100 in the first quarter of 1966. Each month at least 500 telephone interviews are reconducted of a contiguous United States sample.

Personal Consumption Expenditures Price Index (PCE): The PCE is a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services. The change in the PCE price index is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior. The U.S. Dollar Index is an index of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies. The Index goes up when the U.S. dollar gains "strength" when compared to other currencies. Source: FactSet, data as of 6/16/2023

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated. The LBMA Gold Price and LBMA Silver Price are the global benchmark prices for unallocated gold and silver delivered in London. SS&P GSCI Crude Oil is an index tracking changes in the spot price for crude oil. Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.

Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary.