Welcome to 2025 and the first edition of The Pulse this year! I’d like to thank all of you who have supported us for the past year, and a special shoutout to our new subscribers who joined us over the holiday season! We’ve seen a surge in new subscriptions, and whether it’s part of your New Year’s resolution to focus on building wealth or simply a fresh start, I’m so glad you’ve chosen to be part of our growing community. Here’s to a year full of opportunities, growth, and success—let’s make it a great one together!

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The Week in Review

Weekly Market Recap: U.S. and Canada

Out with the old, in with the new! It was a shortened trading week with New Year’s Day falling on Wednesday this year, and markets saw mixed results as we shifted from 2024 to 2025. The TSX managed to eke out a small gain while US indices struggled, with tech stocks leading the decline. It looks like with lingering inflation concerns and the upcoming US administration’s policies, investors are taking a cautious approach.

In terms of performance, the TSX edged up 0.60%, leading the pack this week. On the US side, the S&P 500 dipped by 0.48%, and the Dow Jones fell by 0.56%. The Nasdaq 100 saw the biggest drop, down 0.80%, reflecting weakness in tech-heavy sectors.

S&P 500 Returns | Week At-a-Glance

TSX Returns | Week At-a-Glance

Major Economic Stories

In a slow economic release week, I’ve focused on manufacturing, both in Canada and in the U.S. This week’s economic data painted a mixed picture of growth and challenges. Canada’s manufacturing sector showed stronger expansion, while the US manufacturing sector took a small step closer to stability after months (and months… and months) of contraction. Meanwhile, jobless claims in the US surprised to the downside, reinforcing the view of a tight labour market. Inflation pressures and tariff concerns remain key themes as we head into the new year.

Here’s what happened as you were eating turkey and drinking eggnog:

Canada Manufacturing Growth Strengthens

Canada’s manufacturing sector posted its strongest growth since early 2023, with the S&P Global Manufacturing PMI rising to 52.2 in December from 52 in November.

The index has now expanded for four consecutive months.

This increase was driven by higher output and new orders, along with ongoing job creation. Export growth remained limited, though on a positive note, demand from US clients rose in anticipation of tariffs under the incoming US administration.

• PMI rose to 52.2, beating expectations of 51.9.

• December marked the fourth consecutive month of expansion.

• Postal and port strikes caused record stockpiles of finished goods.

• Input price inflation hit its highest level since April 2023.

US Manufacturing Sector Contraction Slows

The ISM Manufacturing PMI rose to 49.3 in December, indicating a softer contraction than expected and marking the best performance since March of last year.

New orders hit an 11-month high.

Production expanded for the first time in six months, and we saw supplier deliveries picking up ahead of the anticipated tariffs I mentioned above. Price pressures remain a concern, with input prices rising more than forecast.

• PMI increased by 0.9 points to 49.3.

• New orders index hit 52.5, the highest in 11 months.

• Production expanded for the first time since mid-2024.

• Price index rose to 52.5, indicating inflationary pressure.

US Jobless Claims Drop Sharply

US initial jobless claims fell to 211,000 last week, far below expectations, and now at the lowest level in eight months.

Continuing claims also dropped, another sign of continued strength in the labour market.

The decline was unexpected and leaves some room for the Fed to maintain higher interest rates if inflation remains sticky.

• Initial claims fell by 9,000 to 211,000.

• Expected claims were 222,000; the result was much better.

• Continuing claims dropped by 52,000 to 1,844,000.

• Claims hit their lowest level since March 2024.

Key Takeaways From this Week’s Economic News

Canada’s Manufacturing Sector Gains Momentum

It’s nice to see Canada’s manufacturing PMI continuing to rise, especially as we see growth across key areas like output and new orders. It’s encouraging to see the sector maintain this momentum even in the face of challenges like the postal strike and ongoing inflationary pressures. As I noted above though, the rise in input prices could weigh on margins if cost inflation continues. The boost in US demand ahead of tariffs is a short-term win, but the broader uncertainty around trade policy is a cloud on the horizon.

On other thing to note is the accumulation of finished goods. If these bottlenecks persist, they could damper further growth.

US Manufacturing Shows Signs of Stabilizing

It’s been a very tough period for the ISM PMI numbers, but the latest release suggests the worst may be over for US manufacturers. Yes, I do get that the index is still in contraction territory, but new orders and production rebounding are promising signs. The resilience is notable in light of the headwinds of restrictive Fed policy and global economic uncertainty.

All that said, those pesky rising input prices could complicate the Fed’s inflation fight. If manufacturing continues to recover, it might contribute to inflationary pressures, and that will keep the Fed on high alert. The potential tariffs from the new administration add another layer of complexity that could disrupt supply chains and cost structures in the coming months.

Jobless Claims Signal a Tight labour Market

The sharp drop in US jobless claims once again reinforces the ongoing strength of the labour market, and this resilience provides a buffer for the Fed to keep rates higher for longer without immediately worrying about unemployment.

That said, it does also complicate the inflation story. A strong labour market can lead to wage growth, which could further fuel inflation. As we head into 2025, the Fed will be walking a fine line between managing inflation and avoiding unnecessary damage to employment. As the saying goes, same old, same old.

THIS WEEK’S POLL QUESTION
(Results in Next Week’s Newsletter)

It’s not a lead story this week, but in the “Other News” section near the end of this edition you’ll find a link to the story about Amazon’s “Return to Office” policy, requiring employees to come in to the office every day. This is a big shift from the more employee-friendly pandemic policies that encouraged remote work. Which side of this argument are you on?

Please answer this week’s poll question and don’t forget to share your thoughts!

Comments of the Week

Note: There were an overwhelming number of comments attached to votes this past week, and for that I thank you. Because of space, I’ve had to whittle it down to just a few responses for each category. If you left a comment but don’t see it here, I’ve read it! Thank you!

Better

“I am going on a bucket list trip for my 65th, that I have been saving for for 3 years. That alone will make up for the reduced hours at work, and the loan payments I will have to make on my daughter's loan I co signed for. I am an optimist.” - suebeeseed

“I hope it will get better because if it gets any worse, my fam is living on the streets lol
All jokes aside, I have faith that 2025 will be a better year. I'll make it happen.” - thea.m.vunguyen

“With continued learning and investment knowledge through The Pulse, Blossom, Market Briefs, and other sources. This is a win for the pocket book and for generational wealth in my family.” - dangerfernie

“I appreciate your newsletter! I love the quick overviews that I can see at a glance and your forecasts have been spot on. I’m in investing for the long haul, so a few bumps won’t deter me. I’m seeing a brighter future ahead; better than sitting in a bank account (anyway).” - gardens_1

Worse

“Falling Canadian Dollar. Rising inflation due to tariffs. Political uncertainty.” - swaayne46

“My biggest fear is inflation will increase in 2025. Oil prices are low right now, but I suspect it will rise to over $80 by mid year 2025, coupled with the low Canadian $ which I think will remain at or near these levels for most of 2025. In addition, the rhetoric coming from the US on trade tariffs could put additional pressures on prices in 2025.” - thompsond1951

“Happy Holidays to you Marc & the rest of the Beavis family. I admittedly had a difficult time answering this question... I'm an optimist at heart, but looking at the big picture for 2025, I can't help but feel this next year will be worse than 2024.

- Stock Market... Will be difficult to do better than 2024 IMHO.
- Financial... For a number of reasons, I'm expecting to make less progress towards my critical mass $number$ in the year ahead (see above & below for why).
- Personal... Aging parent & in-laws needing more assistance, both physically & financially. Not complaining, just current reality.
- General... Concerned where things are headed in this world of ours', both on my home soil & abroad.

With all that said, I can only control what I can control and I'm confident I'll continue on the right path, even if it's a bit bumpier with some unexpected obstacles to maneuver around and thru.

AND there's always the chance that I'll be wrong, which I welcome.” - callawayguy

HOUSING

Ottawa’s Mortgage Rules Could Lead to Bigger Debt  

• New rules make 30-year mortgages more common.

• Younger buyers will pay more interest over time.

• Taxpayers face bigger risks with insured loans.

• Changes may drive up already high home prices.

As we move into 2025, I thought I’d cover a couple of mortgage and housing related stories to kick things off. First up, Canada’s new mortgage rules, which have just come into effect, are designed to make homeownership easier, especially for younger people. The changes include longer amortizations (up to 30 years) and higher price caps for insured mortgages, going from $1 million to $1.5 million. These adjustments lower monthly payments and down payment requirements, but there’s a catch that I’m very worried about—they also make borrowing more expensive in the long run.

Bank of Canada Deputy Governor Carolyn Rogers put it simply:

A 30-year mortgage might mean lower monthly payments, but it also adds tens of thousands in extra interest. It’s great for banks, but not so much for first-time buyers.

The Risk for Taxpayers

For background, mortgage insurance is backed by the government, which means taxpayers are on the hook if borrowers default. With $590 billion in insured mortgage debt already out there, the relaxed rules increase the risk of exposure.

I also think that these changes also miss another big piece of the puzzle: housing supply. Lowering the bar for buyers without adding more homes to the market only drives prices higher, making affordability worse. It’s a double-edged sword.

Better Ways to Help Buyers

Instead of encouraging more debt, the government could focus on helping Canadians save. Raising limits for first home savings accounts would give people a better chance to make meaningful down payments. That’s a safer path to homeownership than stretching out debt.

The bottom line? Quick fixes like these don’t address the bigger issues and might leave future homeowners—and taxpayers—paying the price.

Read the Full Story here.

HOUSING & MORTGAGES
2025 Mortgage Predictions: What’s Ahead    

• Fixed rates may stabilize, but affordability stays challenging.

• Variable-rate borrowers have a decision to make.

• Housing prices may soften but aren’t expected to drop sharply.

• Analysts call for government action to ease pressure on buyers.

Staying on the housing theme, mortgage rates are in focus this year with a wave of renewals coming up, and with fixed rates likely stabilizing. That’s some relief for buyers locking in new mortgages, but I think the harder decision will be for variable-rate borrowers. The Bank of Canada is expected to lower rates further as we move into the year, and this would be good for variable-rate borrowers. However, if inflation doesn’t ease and the Bank of Canada either holds off on cuts or raises rates in response, this could put a squeeze on these borrowers.

Rising Costs Squeeze Buyers

The gap between housing prices and affordability feels like it’s widening. Even if rates stabilize, home prices aren’t coming down fast enough to make much of a difference for most buyers. It’s clear that anyone looking to get into the market will need to make some tough compromises.

The Role of Government

If conditions don’t improve, we’ll possibly see more pressure on Ottawa to step in, whether through incentives or direct action to address supply issues. For now, though, it’s looking like another tough year for anyone hoping to buy their first home.

Read the Full Story here.

ARTIFICIAL INTELLIGENCE
Microsoft’s AI Push Fuels Data Center Expansion

• Microsoft investing heavily in data centers for AI services.

• Focused on meeting demand for AI-powered solutions like ChatGPT.

• Prioritizing energy-efficient technology to address sustainability concerns.

• Competition from Google and Amazon intensifies in the AI race.

Microsoft is going all in on AI with its latest push to expand its data centers. The demand for services like ChatGPT has skyrocketed, and Microsoft is trying to get ahead of the curve with a planned USD $80 billion investment in data centers in fiscal 2025. What’s also impressive is their focus on sustainability—a critical factor as the tech industry’s environmental impact comes under increasing scrutiny.

Meeting Skyrocketing AI Demand

The surge in AI-powered tools has changed the game, and Microsoft’s expansion shows they see this as the next big frontier in tech. Not to be overly dramatic, but to me, this feels like it could be a make-or-break moment for any company in the space. You either scale up or risk falling behind the competition. And $80 billion in one fiscal year is a huge commitment, even to a company as large as Microsoft.

The Competitive Landscape

Google and Amazon are also racing to grow their cloud infrastructure, and this is clearly shaping up to be a battle of the heavyweights. Personally, I think whoever nails scalability and sustainability first will lead (possibly dominate) the market for years to come. Microsoft’s early focus on both gives them a strong edge, but the race is far from over.

Read the Full Story Here.

TRADE
Biden Set to Block Nippon Steel’s $14.9B Purchase   

• Biden administration likely to block Nippon Steel’s acquisition.

• Concerns raised over national security and competition risks.

• Deal involves critical US steel production assets.

• Reflects Biden’s focus on economic protectionism.

In what will probably be one of the last major trade-related decisions of this term, the Biden administration is expected to block Nippon Steel’s $14.9 billion acquisition of US Steel, citing national security concerns. As you probably know, steel plays a crucial role in infrastructure and defense, so I can see why this takeover by a foreign entity would raise alarms. Even with Japan being a close ally, handing over control of key assets could set a precedent that the US isn’t willing to risk.

National Security in the Spotlight

This decision is another step in Biden’s push to put national security and self-reliance at the center of economic policy. While it’s hard to argue with protecting critical supply chains, any administration has to make sure that it takes care of the homeland while at the same time trying not to discourage healthy foreign investment in less sensitive industries. Only time will tell what the incoming Trump administration will bring when you factor in its “America First” agenda.

Future Deal Implications

Blocking the deal will send a strong message to foreign buyers: even allies will face heightened scrutiny. It makes me wonder how this might impact US-Japan relations in the long run or whether similar deals will now shift to less protected markets. Here at home, it also brings Alimentation Couche-Tard’s pursuit of Japanese Seven & I back into the spotlight. Not a national security issue, of course, unless maybe you put Slurpees into that category. 😏

Read the Full Story Here.

OTHER NEWS FROM THE PAST WEEK

AI-Powered Robotic Arms Revolutionize Construction
AI-driven robotic arms are transforming the construction industry by automating labour-intensive tasks. These innovations promise to boost efficiency, reduce costs, and address labour shortages in the sector.

Tesla Sales Drop Despite Strong EV Market
Tesla reported a decline in sales, falling behind market expectations. Analysts cite increased competition and economic uncertainty as factors weighing on the company’s growth prospects.

Two Years of ChatGPT: Generative AI’s Impact
Two years after its launch, ChatGPT has revolutionized industries from customer service to education. However, experts question whether businesses have fully harnessed its potential beyond basic applications.

BlackRock’s Bitcoin ETF Sees Record Outflow
BlackRock’s Bitcoin ETF faced record outflows after a stellar 2024. Analysts suggest profit-taking and market uncertainty led to the selloff, despite long-term optimism for cryptocurrency.

Canada’s Top CEOs Earn $13.2M Average in 2023
Canada’s top-paid CEOs earned an average of $13.2 million in 2023, a stark contrast to the average worker’s salary. Critics say the growing pay gap raises concerns about inequality.

Air Canada and WestJet Improve On-Time Performance, But…
Air Canada and WestJet made progress in improving their on-time performance in 2024, though both remain the lowest-ranked airlines in North America for punctuality.

Amazon’s Return-to-Office Order Sparks Debate
Amazon’s new return-to-office policy has sparked concerns among employees. While the company argues it’s about collabouration, some see it as cost-cutting disguised as culture-building.

Market Movers

Top 10 Weekly Gainers

Top 10 Weekly Losers

10 Most Overbought Stocks

10 Most Oversold Stocks

The Relative Strength Indicator (RSI) can provide a signal that suggest a stock is either overbought or oversold.
📈A stock that has an RSI over 70 is considered to be in “overbought” territory. This might suggest that the stock is due for a pullback, however it is not a recommendation to sell.
📉A stock that is trading with an RSI below 30 is considered to be in “oversold” territory. This might suggest that the stock is due for a recovery, however it is not a recommendation to buy. Always perform your own due diligence.

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