January 25, 2026

My Thoughts on
the Market

Weekly Edition

How did the markets do?

• Stocks had a rough week as the S&P 500 dropped from its recent highs. It ended down nearly half a percent for the week after recovering most of the losses from Tuesday’s selloff.
  • The Dow Jones, which measures large US industrial stocks, had an especially difficult Friday, falling over half a percent as investors grew nervous about trade policy uncertainty.
• Bonds performed better than stocks this week, finishing just slightly down.
  • We saw a return to the “Sell America” trade with US Treasury bonds falling significantly on Tuesday in the wake of bellicose political rhetoric and tariff threats concerning US demands for Greenland.

What headlines moved the markets?

• President Trump threatened new tariffs on European countries over Greenland disputes, but then backtracked on some of the more extreme ultimatums.
  • Trade uncertainty is never good for business, but companies have become more resilient to tariff headlines after navigating similar situations in recent years.
  • I'm keeping an eye on whether these threats translate into actual policy or are simply negotiating tactics. My hunch is that they will remain the latter.
• Fourth quarter earnings season kicked off with mixed results from major banks.
  • While some results disappointed, the overall banking sector remains healthy with strong capital positions.
  • Earnings volatility is normal; what matters is that the longer-term trend of corporate banking profitability appears to be continuing through the end of last year.

Quote of the week
“We are in the midst of a rupture, not a transition…The old order is not coming back. We should not mourn it. Nostalgia is not a strategy…From the fracture, we can build something better, stronger, and more just.” - quotes from Canadian Prime Minister Mark Carney’s speech given this week at the World Economic Forum in Davos, Switzerland

• Canadian Prime Minister Mark Carney gave an inspirational speech this past week at the World Economic Forum in Davos, Switzerland, decrying the desire to cling to the old post-WWII world order. He expressed that rules-based international institutions like the UN, NATO, and WTO that provided stability in the past are failing us now, and we are pretending that they still have value in today’s world.
  • Drawing from Czech dissident Václav Havel, Carney used the metaphor of a communist-era shopkeeper who puts up a "Workers of the world, unite!" sign every morning. The shopkeeper does not post the sign because he believes it, but rather to avoid trouble. Carney argued that countries have been doing the same thing with the "rules-based international order".
• According to Carney, great powers (like the US and China) are now using economic integration as a source of subordination. By using trade and tariffs as weapons, and supply chains as vulnerabilities to exploit, financial systems have become tools of coercion.
• Carney's solution for countries like Canada is to stop waiting for the old system to return and instead build coalitions of middle powers. He advocated for strategic autonomy (a decreased reliance on great powers like the US and China) and the creation of new institutions.
  • He emphasized that middle power countries must band together if they hope to maintain any influence in today’s world.

Conclusion

• Markets are likely to remain volatile in the near term, I don’t see any end to the political uncertainty until the mid-term elections. However don't let short-term headlines drive long-term investment decisions. Stay disciplined, be proactive not reactive, and feel free to reach out to me anytime you are unsure what to do.

Have a nice weekend!

Kevin