Groundhog Day
Groundhog Punxsutawney Phil saw his shadow this past week, which means six more weeks of winter are in store. Phil’s track record is less than a coin-flip longer term, although cold weather and snow are indeed forecast in the Northeastern U.S. over the next week, so we will defer to Phil’s prognostications. In the movie Groundhog Day, Bill Murray’s weatherman character relives the same day over and over again. After repeating the same day many times, Bill Murray finally decides to use his knowledge of repeating events to his advantage. After two strong years of stock market gains, it is likely that investors expect continued strong gains in 2025. January did manage a 2.7% gain for the S&P500 and and a 1.6% increase for the Nasdaq Composite. In fact, all sectors except Technology posted gains. After a positive January, many times a positive full year return follows, though the track record is mixed and many factors can influence the outcome.

While Phil was out looking for his shadow, President Trump hit Canada and Mexico with a 25% levy on imported goods over the weekend. The U.S. also issued a 10% tariff on Chinese goods. The news sparked a major global sell-off, with equities in the U.S. and abroad tumbling. The market rout was short-lived however as markets staged a major comeback, recovering steep losses from earlier in the session after President Trump said tariffs against Mexico would be paused for one month. The 30-stock Dow Jones Industrial Average ended Monday down 0.28%. At its lows of the day, the Dow was down 1.5%. The S&P 500 slid 0.76% and the Nasdaq Composite slumped 1.2%. Mexican stocks rebounded to close more than 2% higher and stocks completely recovered the week’s downdraft by yesterday.

JOLTS report
Stocks strengthened and bond yields fell after the latest report on job openings came in much weaker than expected. The JOLTS report showed job openings of only 7.6 million in December, well below the 8 million consensus estimate. The 10-year yield traded as high as 4.57% before the JOLTS data came out, but then quickly turned lower and sits around 4.4% now.

The Federal Reserve is still in a position where it wants to see Goldilocks-like job growth that is not too hot and not too cold. At the conclusion of last week’s Fed meeting, Chairman Jerome Powell noted some recent softness in the labor market, which should help the Fed in its fight to get inflation back near 2%. At one point Tuesday, there was a 64% chance that the next quarter-point rate cut would be at the June meeting. Traders currently expect the Fed to continue to pause at the March and May meetings.

You can still “Google it.”
Google parent Alphabet# reported fourth quarter earnings ahead of expectations on Tuesday, although there was some disappointment that revenue growth slowed to 12% year over year. Cloud-related revenue growth hit 30%, but was slightly below expectations. Spending to keep up with AI development continues to grow, and Alphabet guided for $75 billion in 2025 capital expenditures alone. The company’s core Search business is doing well along with ad spending on YouTube. Google Search grew 13%+ despite all the concerns about competitive pressures. While the stock sold off a bit, it had been up 9% this year and up 44% over the last 12 months compared to a 22% gain in the S&P500.

There you go again
The pausing of the tariffs on Mexico reinforced the bullish view of some investors that tariffs could be Trump’s negotiating tool and that investors should not overreact. We would not be surprised to see this behavior repeated to similar effect. The Nasdaq composite, S&P 500 and Dow Jones Industrials are holding near all-time highs in anticipation of a soft landing for the U.S. economy. Despite some headwinds for the stock market, including potential tariff plans, the action in individual stocks has generally been strong.

While discussing repeating trends, we have seen the Kansas City Chiefs win the last two Superbowls in a row. The Chiefs’ quarterback has made an appearance in five of the last six Superbowls. The Chiefs also beat the Eagles two years ago in the Superbowl, so a rematch is afoot. This year we are rooting for Bill Murray to wake up on a non-Groundhog Day and see the Eagles win! Go Birds!

Singer Axl Rose turns 63, and actor Charlie Heaton (Stranger Things) turns 31. However, this was an auspicious day in history as Babe Ruth, Ronald Reagan, and Bob Marley all share this same birth date.

Christopher Crooks, CFA®, CFP® 610-260-2219

Tower Bridge Advisors manages over $1.3 Billion for individuals, families and select institutions with $1 Million or more of investable assets. We build portfolios of individual securities customized for each client's specific goals and objectives. Contact Nick Filippo (610-260-2222, nfilippo@towerbridgeadvisors.com) to learn more or to set up a complimentary portfolio review.

# – This security is owned by the author of this report or accounts under his management at Tower Bridge Advisors.

Additional information on companies in this report is available on request. This report is not a complete analysis of every material fact representing company, industry or security mentioned herein. This firm or its officers, stockholders, employees and clients, in the normal course of business, may have or acquire a position including options, if any, in the securities mentioned. This communication shall not be deemed to constitute an offer, or solicitation on our part with respect to the sale or purchase of any securities. The information above has been obtained from sources believed reliable, but is not necessarily complete and is not guaranteed. This report is prepared for general information only. It does not have regard to the specific investment objectives, financial situation or the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed in this report and should understand that statements regarding future prospects may not be realized. Opinions are subject to change without notice.