Markets are near all time highs, but for many it still feels like a bear market. The laundry list of uncertainty seems endless.
- Renewed threats of global tariffs
- US military intervention in Venezuela and threats towards Greenland
- Trump pressures life insurers, asset managers and credit card companies
- Intensifying US-Iran tensions
- Fears of an AI bubble and overspending
- Investor rotation out of Mag 7 ‘tech’ stocks
- Reports of labour and low income consumer stress
- Concerns of a Private Credit crunch
And we are only in February!
Within the last month, CNN’s Fear and Greed Index has titled from a ‘neutral’ to a ‘fear’ rating.
That said, under the hood, markets and fundamentals have remained resilient.
The results of the Q4 2025 Corporate Earnings season has been encouraging. Approximately 75% of companies exceeded both profit and revenue expectations. Earnings are on track to grow 14% relative to last year and sales are on track to rise 9% relative to last year. This is a backdrop that investors should cheer because in the long run, stock prices are meant to reflect the fundamental growth of earnings.
Although we have seen a large underperformance in the Mag 7, the broader markets still hover around all time highs. This is an impressive feat as these seven companies represent ≈35% of the entire stock market. The expectation was that the broader market would swing in whichever direction these technology companies swayed. However, impressively, the remaining 493 stocks in the S&P500 have picked up the slack. Industrials, energy, materials, consumer staples, and utilities have all provided double digit returns in 2026 YTD. As a result, the “S&P500 equal weight index” is at all time highs. To see this broader participation in the market should be interpreted as an extremely constructive and bullish signal.
Finally, we should also recognize there has been a reawakening in the international markets after 15 years of underperforming the US. We have seen bull markets in Japan, South Korea, Taiwan, Mexico and Australia. Large cap European indexes are also showing strength and outperformance.
Taken all together, a sector and globally balanced portfolio should be well positioned to endure the headlines and negative sentiment. We continue to see 2026 as a year that will be rewarding for those investors who can remain patient and diversified in their approach.