January 2026 - Your Monthly Update

Hi,

 

Hope this note finds you and your family well as we launch into the new year.

 

Your portfolio experienced positive performance during the twelve months of 2025.

 

December reinforced the constructive economic trends around stability and broad-based growth in North America driven by the domestic economy in the United States (U.S.).

 

The most recent reading for the U.S. economy registered a +4.3% annualized growth rate. This is an acceleration from the +3.6% upwardly revised figure of the second quarter. Underneath the surface, there are several categories that point to a continuation of this positive trend into 2026:

 

• Consumer spending (+3.5%) and non-residential business investment (+2.8%) have been advancing ahead of the forecast for the past couple of years

 

• The pace of expansion of the services sector (largest part of the U.S. economy) accelerated in December to a fourteen month high

 

• Earnings growth for U.S. companies averaged (+15%) and was fifty percent ahead of analyst expectations set in December of 2024

 

• Inflation in both Canada and the U.S. continues to trend towards central bank targets of +2%

 

What’s more, the positive and lagging effects of lower interest rates and energy prices are just starting to filter into the economy. Look no further than gasoline prices the next time you fill up at the pump.

 

These fundamental drivers of the domestic North American economy reflect easier financial conditions for the private sector and benefit the real economy in 2026 and beyond. Collectively, they represent the normal pace of economic expansion that is now underway.

 

Our investment strategy is sound and unchanged: Own a properly diversified portfolio of high-quality investments aligned with the positive trends.

 

You remain in a strong position financially.

 

The view from Brent Joyce, BMO Wealth’s Chief Investment Strategist:

“Resilience and feedback are two words that best sum up 2025. The year may also go down as the “t” year: tariffs, tensions, trade, TACO and Trump all featured prominently. However, “t” words also dominated the latter half of the year: turnaround, terrific and all-time highs… In our opinion, the single most important development of the year was the crucial feedback the U.S. bond market delivered to the Trump administration, paving the way for a recalibration of its tariff policies… "Are we in a bubble?" is a question that has been top of mind for us and for our clients over many months... As for the broader crowd, it’s encouraging that the question of bubbles is so prevalent. Manias require a blindness of faith that prices will forever go up with no limits. Everywhere I go – from TV studio to Ubers, Bay Street to Main Street – people ask me if we’re in a bubble. That’s a good thing – it means that investors are aware of a potential bubble and are on guard against the dangers of that happening. And it isn't just about asking the question. The price action in equity markets also points to healthy discipline. If the Magnificent Seven stocks in the S&P 500 are the centrepiece of the bubble talk, recall that, as a group, they have endured two sharp selloffs (17% and 28%) over the last 18 months. Individually, investors cut Tesla shares in half in early 2025. Shares of all the others (except Microsoft) have experienced drawdowns of 30% or more in 2025 alone. It’s sensible – not mania or bull-market genius behaviour – to question debt levels and circular financing arrangements within AI-related businesses. Lastly, yes, the bull market has broadened out, but we don't see this as a sign of mania. It’s a healthy development if the broadening is supported by solid earnings growth – which it is. Annual earnings growth expectations for 2026 across the major equity market indices of Canada, the U.S., Europe, Japan and emerging markets range between a solid 12% and 16%. We haven't seen that level of uniform strength for at least five years.”

 

• Stocks in your portfolio that made a new 52 week high this past month: Johnson & Johnson, Royal Bank*, S&P500, TD Bank*

• Stocks in your portfolio that made a new 52 week low this past month: Costco*, Proctor & Gamble*, Telus*, Thomson Reuters*

• The Loonie gained nerly one and a half cents versus the U.S. dollar to $0.73

 

Thank you,

Ian, Gab, Kaitlyn, Naina, and Meeral