What Happened Last Week
- Trump Eases Threats: Markets staged a recovery as the President backed off his rhetoric about Greenland.
- Rate Checks: Indications point to an intervention in Japanese currency markets.
- Tensions with Canada: The President has renewed tariff threats against Canada over a proposed Canada-China pact.
What We’re Watching This Week
- Earnings Week Three: Industrials, card companies, oil majors, and Big Tech are set to report in the biggest earnings week by market cap.
- Global Monetary Policy: The Fed’s Wednesday meeting is likely to be a non-event, but we may soon learn who Trump’s pick for the next Chair is.
- Government Shutdown: Events in Minnesota have increased the likelihood of a government shutdown when the current funding package expires Saturday.
Investment Management Team’s Views
Global equity leadership remains outside of the U.S. mega-cap complex. The S&P 500 finished nearly flat after a sharp mid-week selloff, despite last week’s volatility driven by geopolitical noise around Greenland and stress in Japanese bond markets. Beneath the surface, market breadth continues to improve. Small-caps and the average large-cap stock pushed to new all-time highs, while the Mag 7 and Nasdaq 100 remain below their October peaks. International equities extended their leadership, closing at new highs alongside continued strength in cyclical and commodity-linked markets.
In our view, the dollar remains the primary release valve for U.S. policy risk. Renewed tariff threats toward Europe triggered the dollar’s largest weekly decline since last May, reviving concerns around a “sell America” trade. Weekend rhetoric aimed at Canada is producing a similar response to start the week. Gold is now up almost 145% over the last two years, breaking firmly above $5,000 per ounce. While fund flows do not yet signal a broad exit from U.S. assets, shifts in global capital allocation tend to begin incrementally, and we remained focused on the data. Continued pressure on the dollar may be another tailwind for international equities and bonds relative to domestic assets this year.
Over 30% of the S&P 500 by weight is set to report fourth quarter earnings this week. The schedule is heavy on industrials names, consumer-exposed companies like card platforms, and four of the “Magnificent Seven.” Earnings from Caterpillar, Nucor, and the defense primes will help fill in the mosaic for non-AI capital expenditure, and the durability of the outperformance of the average S&P stock. Card issuers are expected to give sanguine economic commentary like their banking peers. Within the mega-cap tech space, updates from Microsoft, Meta, and Apple could galvanize rotation within the cohort. The oil majors will also issue updates as the energy sector has outpaced all others in the early days of 2026.