Saakshi Mehta

The end of the year is a special time. The slowing modulation of the markets gives many an analyst time to unplug, which inevitably leads to reflection about what the next year will bring. And as ideas begin to take shape, convictions start to form and a general sense of where the market is headed is reached.

It is almost always a humbling exercise.

For instance, just consider a subset of the important macro/​market events from this year

Canada’s latest budget marks a major pivot toward long-term growth, with C$115B in infrastructure spending alongside substantial allocations for defense and housing. Alongside those investments, the Feds are encouraging private sector participation via regulatory streamlining and tax incentives.

A long position equal-weight in U.S. equity cuts reliance on a small group of names needing to remain perfect. And as AI-related technologies diffuse into other sectors, there’s a strong case for broader earnings growth this year.

Ever been to a really good party that you didn’t want to end? Remember that feeling you get when the lights start to come back on, the bar is closing and the music is winding down? There’s a slight wistfulness that the fun is over and it’s time to go home – even if you feel like it’s still a bit too early and want to keep dancing.

This is the second quarter for our Tax efficient portfolio.* This portfolio is meant to follow the same fundamental framework as our Balanced Portfolio, though the instruments are adjusted to be more tax efficient for Canadian investors.

The North American fixed income space remains at a crossroads. In the front-end, U.S. yields are expected to be under some pressure given the potential for additional Federal Reserve (Fed) cuts (due to a deteriorating labour backdrop) while Canadian dollar (CAD) yields are likely to better supported. The big caveat for the latter is (of course) the status of the United States – Mexico – Canada Agreement (USMCA) trade deal in the coming quarters.

With Q4 2025 earnings largely complete and 75% of S&P 500 companies beating expectations, fundamentals remain constructive. That said, market leadership in 2026 looks very different than in 2025. Energy leads at +23% year-to-date (YTD), while Technology is down -3.4%, highlighting a clear rotation away from last year’s growth leaders.

We are still in the early days of the 2025 Q4 earnings season, but the market’s tone has already shifted. January marked a decisive move away from the narrow leadership that defined much of last year and toward broader participation across sectors.

It’s the beginning of the year and we’re witnessing a rotation into cyclicals. Industrials and Materials were up over 7% in the past month. Utilities and Consumer Staples were down close to 2% during the same period. This reflects a risk-on tone as investors position for growth.