A wave of headlines from the White House sparked outperformance across select subsectors last week. December jobs data was released Friday, nonfarm payrolls grew by 50,000 in December, trimming the unemployment rate to 4.4% from 4.6% in November. Meanwhile, Canada added a modest 8,200 net new jobs following three months of outsized gains; its unemployment rate rose to 6.8% from 6.5% as labor participation increased. In the markets, the S&P 500 notched a fresh record close while the Nasdaq hovered near all-time highs. Small caps led the U.S. advance alongside a rally in international markets. Consumer Discretionary emerged as the week’s top-performing sector, leaving Utilities as the sole detractor.
Fixed income also enjoyed a strong week as 10Y yields fell by 3 bps in the US and 9 bps in Canada following the weaker labour data. In currency markets, the Canadian dollar sold off by 1.3% against the greenback. Meanwhile, commodities rallied amid significant geopolitical volatility; oil markets rallied afte the leadership transition in Venezuela and growing instability in Iran, where citizens have taken to the streets to protest the current regime.
In a surprising turn, the Republican administration spent the week floating variety of populist changes aimed at the private sector. These moves are likely less about immediate legislation and more about threats to force corporate concessions. As we head into the 2026 midterm cycle, the President is making a calculated bet on affordability, attempting to reposition the GOP as the champion of the ordinary citizen’s wallet. Companies that cater primarily to the bottom 80% of US households may be uniquely positioned to benefit from this shift in policy.
Sunday night it was revealed that Trump is also threatening Jerome Powell. I think this confirms that Trump will nominate to the Fed someone who will take his requests and ease monetary conditions. I thought this only happened in emerging markets…(link to video)
President Trump has established a new precedent for the frequency of executive orders since the start of his second term. Entering 2026, that momentum has only accelerated, with the administration outpacing its previous record for unilateral action. (Goldman)
Following the recent operation in Venezuela, the White House has pivoted back to Greenland, signaling a renewed push for acquisition. President Trump has justified the move as a necessary step to secure the Arctic against a growing Russian and Chinese naval presence, even suggesting that military options remain on the table if a diplomatic “deal” cannot be reached. (BofA)
Trump’s tariff policy has been fairly effective in increasing duty revenues. (FT)
However, these duties don’t make a dent relative to the size of the deficit or even as a total of US federal receipts. (FT)
Do you remember headlines? Time is a flat circle. Uber drivers were once attacked by taxi drivers as lightly regulated competition moved into markets.
Well, the Uber drivers are now protesting against self driving cars. The next evolution of inequality could be catalyzed by AI. I think we see more and more protests against tech as human jobs are displaced.
In the US, labor's share of GDP has steadily declined since 2000 due to manufacturing outsourcing and companies leveraging technological efficiencies. AI's potential will likely accelerate this trend. (Bloomberg)
As labour lost, capital won. S&P 500 margins are at record highs. (Goldman)
And tech itself might not be immune from disruption, as tech employment as a share of total employment is declining. (Goldman)
