January | 2026 | Envision Asset Management

MARKET RECAP

US stocks +1.81%, international +1.69%, bonds +0.31%. The SP500 closed at an all-time high. Small stocks had a really big week, +4.6%.
50,000 new jobs were added in December, less than the 70k expectation. Manufacturing jobs fell for the 8th time in a row. The unemployment rate fell to 4.4%.
The ISM PMI for manufacturing fell to 47.9 from 48.2. Economists were looking for 48.3. It was the 10th month in a row projecting a contraction in manufacturing activity.
Economists at the Federal Reserve Bank of San Francisco, looking for at data from 1886 to 2017, found that tariff increases have tended to lower inflation and raise unemployment in the short run. A 1% increase in tariffs lowered inflation by 0.6%. This was due to an “aggregate demand shock.” Tariffs create economic uncertainty and a negative wealth effect (for example, falling stock prices). Because the economy is impacted negatively, unemployment rises.
GDPNow estimates Q4 growth at a blistering 5.1%.
Trump issued an executive order placing restrictions on executive pay and stock buybacks for defense contractors “until such time as they are able to produce a superior product, on time and on budget.”

SCOREBOARD

MARKET RECAP

US stocks were up by 1.05%, for 2025, +17.10%. International stocks +1.23% and +32.35% for the year. Bonds -0.17% and +7.19% for the year.
Trump took out Venezuelan Dictator Maduro in a stunning midnight attack. He was a bad guy; the country had fallen deeper and deeper into economic despair, millions had to flee the country and lost everything; he deserved to be removed. He was given opportunities to leave on better terms, but he refused. Now, we determine whether the Administration has a plan and whether it will work.

Markets & Investor Sentiment

U.S. equity strategists broadly expect continued market gains in 2026, despite elevated valuations, driven by earnings growth expectations and anticipated rate cuts
Late-December trading volumes were thin due to holidays, amplifying short-term market moves and profit-taking
Stock Trader Almanac’s Santa Claus rally is measured by the last five-days of the trading year and it ended in the red, with a 0.87% loss. This is one of three indicators that run through the end of January that supposedly gives a signal for the upcoming year. That made it three years in a row, first time since 1950.

Markets remain focused on Fed guidance for 2026, following multiple rate cuts in late 2025
Debate continues over the pace and extent of further easing, with inflation risks still monitored closely

Global growth outlook for 2026 remains cautiously optimistic, led by the U.S. and China, though valuation risk and geopolitical uncertainty persist
China announced ~$8.9B in consumer stimulus funding for 2026 to support domestic demand (electronics, EVs, appliances)

Private equity exit activity remains constrained; record use of continuation vehicles highlights valuation gaps and slower deal flow
Analysts flag potential liquidity and pricing stress in private credit and leveraged assets entering 2026

U.S. economists highlight material economic impact expected from 2026 tax policy changes, including rate and deduction adjustments, that should help the economy.

SCOREBOARD