TOP STORY
📈 US Market Has Its Best Week Since Election After Blowout Bank Earnings

🎢 It’s been a rollercoaster start to the year. One week the market is crashing and everyone is saying a recession is upon us, and the next the market is soaring again…

📈 This week was no exception - with the S&P 500 jumping +3.7%, the market’s best since the November election.

📊 Here’s how some of the other key indexes performed:

• S&P 500: +3.7%

• Nasdaq 100: +4.1%

• TSX: +1.8%

• Bitcoin: +9.2%

🟢 This means the market is now officially back in the green year-to-date, with the S&P 500 up +2.2% so far in 2025.

💸 Part of the jump is due to Wednesday’s ‘cooler-than-expected inflation report’ that showed core inflation slowed to 3.2% in December, increasing the likelihood of more interest rate cuts this year (which benefits stocks as discussed last week).

🏦 But another reason for the great week was the US Banks’ earnings - with the top 5 US banks reporting massive profit growth for Q4, fueling optimism for the market at large.

🗞️ So, before we dive into some of the other wild news this week (from the TikTok ban to Trump’s meme coin), let’s first take a look at what’s going on with the big US banks…

🏦 US Banks Soar After Record Earnings

All the top 5 major banks reported earnings with record profits across the board, leading to significant stock jumps this week:

• JP Morgan ($JP) up +8.4%

• Bank of America ($BAC) up +3.2%

• Citigroup ($C) up +12.6%

• Wells Fargo ($WFC) up +10.8%

• Goldman Sachs ($GS) up +12.0%

With nearly all the banks reporting gains of over 8%, the jumps were clearly driven by industry-wide factors, rather than the individual performance of any one bank. So why is the US financial sector performing so well?

Well first, it would probably help to explain how the banks make their money. If we take the largest bank by market cap, JP Morgan, its revenue breakdown for Q4 was:

• Consumer Banking: $18.1B (45% of revenues)

• Investment Banking: $11B (27% of revenues)

• Wealth Management: $5.1B (13% of revenues)

• Commercial Banking: $4B (10% of revenues)

• Other: $1.8B (5% of revenues)

While the % breakdown varies across each bank, it illustrates that the ‘consumer banking’ we often associate with banking, is only a piece of the pie. And while this segment performed well, it was actually the ‘Investment Banking’ segment that was the shining star of Q4 earnings.

🤝 Corporate Dealmaking

The #1 theme of the quarter for the banks was a surge in corporate dealmaking (i.e., mergers and acquisitions), increasing investment banking fees by 32% across the board (essentially the money banks make for helping facilitate and help finance these big deals)

Some banks saw even higher growth - with JP Morgan reporting a 49% increase, and Wells Fargo a 62% increase.

A huge driver of the recent bump in M&A activity (which drives investment banking revenues) is the expectation of lighter regulation with the incoming Trump presidency.

Strict regulation had led to companies not carrying out big deals, but with Trump as president, that is expected to change quickly. As the CEO of Goldman Sachs points out:

🧑‍⚖️ Expectations for De-regulation and Lower Capital Requirements

Trump’s victory didn’t just impact dealmaking - bank executives also expect that Trump will ease off some of the capital requirement and stress-testing rules that Jaime Dimon, CEO of JP Morgan, has said “produce results we cannot understand.” 

This will mean the banks won’t have to keep as much cash on reserve, and has led to expectations of more buybacks and shareholder payouts (such as Citigroup’s plans to repurchase $20B of its stock)

📈 Increased Trading Activity

Another big source of growth for the banks was trading revenue. As trading volume has picked up significantly (driven by post-election optimism), so have the fees the banks earn.

JP Morgan reported it’s trading revenue is up 21% while Goldman Sachs's reported a 16% increase in wealth management revenue driven by equity investments and high management fees. Citigroup’s wealth business also reported record revenues for the year.

💪 Strong Economy

Although consumer banking didn’t grow nearly as much as investment banking (with Bank of America for example reporting a 15% increase), it also performed well, with Jamie Dimon of JP Morgan saying the “US economy has been resilient and consumer spending has stayed healthy”.

JP Morgan reported 2 million new checking accounts opened in 2024 with debit and credit card sales volume up 8%. Bank of America also reported a 5% increase in credit/debit spending.

⭐ What This Means for the Stock Market at Large

Overall, whether you’re a shareholder of one of these banks or not, the Q4 earnings have signaled broad investor confidence for the year ahead - with many experts saying they are a good sign for the economy (and stock market) going into 2025.

As one expert sums up nicely:

But then again, it seems each week in 2025 has given us a new set of surprises, and with the market still in a state of fear according to the CNN Fear & Greed Index (which you can also find on the markets tab of Blossom), even with these great results from the big banks, I’m personally maintaining a cautious optimism and am excited to see what unfolds in the week ahead…

😎 Now, before a quick recap of some of the other top stories this week (including the TikTok ban, Eli Lily’s crash, and Trump’s meme coin), a quick word from this week’s sponsor Harvest ETFs!

PRESENTED BY HARVEST ETFS
⭐ 5 New Harvest High-Income Shares ETFs, including MicroStrategy and Tesla and an All-In-One Single Stock ETF

💡 Harvest ETFs has listened to your feedback. In response to your demand, we are launching 6 NEW Harvest High-Income Shares ETFs!

💸 Access the growth potential of these top US stocks, overlayed with Harvest’s covered call writing strategy that aims to generate high levels of monthly income.

📊 NEW Single Stock ETFs:

• Harvest MicroStrategy High Income Shares ETF (MSTY:TSX)

• Harvest Coinbase High Income Shares ETF (CONY:TSX)

• Harvest Palantir Enhanced High Income Shares ETF (PLTE:TSX)

• Harvest Tesla Enhanced High Income Shares ETF (TSLY:TSX)

• Harvest Meta Enhanced High Income Shares ETF (METE:TSX)

Investors who want more diverse holdings can own all 7 Harvest Enhanced High Income Shares ETFs as well as MSTY and CONY with our one-ticket solution Harvest Diversified High Income Shares ETF (HHIS:TSX).

For more on Harvest High Income Shares ETFs, visit our website.

^{_{* Most recent distribution of USD series are available. For each fund offered in USD the distribution per unit is in USD. **Announced distribution payable on March 7, 2025 with record date as of February 28, 2025.}}

ALSO IN THE NEWS
🗞️ Other Key Headlines this Week

😅 Each of these are massive stories on their own and I wish I had the time to devote another feature story for each, but in the interest of both your time and mine, I’ll try to give a concise recap of the key things you need to know to stay up to date!

🤡 Trump Launches Meme Coin Worth Over $10B Overnight

• Donald Trump launched a new meme coin $TRUMP, announcing the coin on Truth Social and X this Friday.

• Since the launch, the coin has soared to a ~$13B market cap.

• The Trump Organization controls 80% of the supply, with 200m tokens issued and another 800m to be released in the next three years.

• Critics are accusing Trump of ‘cashing in on the presidency.’

📉 Eli Lily Crashes 8% After Disappointing Weight Loss Drug Sales

• Eli Lilly's ($LLY) plummeted 8% after forecasting weaker-than-expected Q4 sales for its weight-loss drug, Zepbound (a competitor of Ozempic)

• Analysts had forecasted Q4 sales of $13.94B, but after Q3 sales fell short of expectations, Eli Lily has forecasted only $13.5B for Q4.

• The Tuesday stock drop was Eli Lilly's most significant single-day drop in nearly four years, reflecting investor concerns over the company's growth prospects in the competitive weight-loss drug market.

• Eli Lily’s revenue forecast still amounts to a 44% year-over-year revenue growth from the previous year, but with the stock up 420% over the past 5 years, expectations are very high.

🚫 TikTok Officially Banned in the US, Trump Vows to Save It

• TikTok went offline late Saturday after the US law banning the app went into effect.

• Trump announced plans to issue an executive order to temporarily lift the ban, aiming to negotiate a deal that allows TikTok to operate while addressing national security concerns.

• Trump proposed a potential solution involving a 50% ownership stake in a joint venture, though details regarding the involvement of the U.S. government or U.S.-based companies remain unclear.

🧑‍⚖️ Elon Gets Sued by the SEC for Securities Fraud Over Failing to Report Twitter Ownership

• The SEC is suing Elon Musk for securities fraud, alleging he failed to disclose his ownership of Twitter stock in a timely manner in early 2022 before acquiring the company.

• The SEC claims Musk's delayed disclosure allowed him to underpay by at least $150 million for shares purchased after surpassing the 5% ownership threshold, violating US securities laws.

• Musk's attorney, Alex Spiro, criticized the lawsuit as a "sham," reflecting ongoing tensions between Musk and the SEC over regulatory compliance and enforcement actions.

🤖 TSM Jumps 4% This Week After Beating Q4 Estimates on AI Chip Sales

• Taiwan Semiconductor ($TSM) - the world's largest contract chip manufacturer of AI chips - reported a 57% increase in Q4 net profit, reaching NT$374.68 billion (approximately US $11.6 billion), surpassing analysts' expectations.

• The company's revenue rose 39% year-over-year to NT$868.46 billion, driven by strong demand for advanced chips utilized in AI applications.

• The results reflect accelerating demand for advanced chips in AI and machine learning, and are good news for the AI industry overall (Nvidia also jumped 6% this week, likely in part due to TSM’s strong earnings)

PRESENTED BY RBC INVESTEASE
💸 Go further with RBC InvestEase

💰 Open a low-cost, actively managed ETF portfolio online with RBC InvestEase and you can get up to 500,000 Avion points* – worth up to $10,000 in travel value¹ — plus $300 cash*.

📊 RBC InvestEase is a digital-first platform that combines professional portfolio management and dedicated human advice, without all the work or high fees. It’s Time to Trade Up.

_{^{*Offer ends March 3, 2025. Terms and conditions apply. $15,000 investment minimum. (1) Travel value dependent on product held. $10,000 based on Elite tier travel redemption using the Air Travel Redemption Schedule.}}

_{^{RBC InvestEase is registered as a restricted portfolio manager in all provinces and territories in Canada, and provides access to model portfolios. RBC InvestEase and Royal Bank of Canada are separate corporate entities which are affiliated. The services provided by RBC InvestEase are only available in Canada.}}

IN PARTNERSHIP WITH CBOE CANADA
🚨 New ETF Alert: BlackRock Launches New Bitcoin ETF “IBIT”

📈 This week, as Bitcoin soared back about $100,000 USD, BlackRock launched its popular Bitcoin ETF, the iShares Bitcoin ETF (IBIT) in Canada.

🎯 IBIT seeks to reflect generally the performance of the price of bitcoin, before payment of IBIT’s expenses and liabilities.

🍁 IBIT USA has been available since January 5, 2024 (and is one of the most popular Bitcoin ETFs on Blossom), but this new launch brings the ETF to Canada in Canadian dollars.

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

👇 Click to see the full post!