Hello everyone,

There’s always a lot going on in the world. Headlines move fast, opinions move faster, and it’s easy to feel like everything matters all at once. But when we zoom out, there are really only a few big themes that consistently drive markets. Much of the rest falls into the category of short-term noise.

Political theatre, macro speculation, and geopolitical headlines all matter to some degree — but markets ultimately respond to trends, not talking points. Right now, a few trends are becoming more entrenched, and in some cases, accelerating.

The first is a familiar one: don’t fight the Fed.

Over the coming months, we’re likely to see a meaningful shift at the Federal Reserve. With a new chair expected, it’s reasonable to assume policy will become more accommodative. Lower interest rates and a weaker U.S. dollar have been clearly telegraphed priorities, particularly as the administration looks to support growth and improve sentiment heading into the midterm elections.

The Fed has an enormous toolkit at its disposal, and history shows it’s willing to use it when needed. Markets are already reflecting this reality. While we do see periods of volatility and pullbacks, those declines continue to be met with strong buying. As long as the broader trend remains higher, it’s not something we want to fight — even while staying mindful of the risks.

Closely related to this is liquidity.

Despite years of discussion around tightening financial conditions, liquidity continues to find its way into the system. While quantitative tightening has been underway, it has never been a straight line. Liquidity is often withdrawn in one area and added in another.

What’s notable is how quickly policymakers have responded when stress begins to appear. Recent moves to resume asset purchases — even at relatively modest levels in the context of the U.S. economy — are telling. They reinforce the idea that central banks remain highly sensitive to market functioning and are prepared to act early rather than late.

This environment is broadly supportive of risk assets. A lower U.S. dollar also tends to benefit international markets, emerging economies, and global trade more generally, which adds another layer of support.

Looking ahead, midterm election years are often more volatile. Political rhetoric ramps up, and uncertainty increases as both sides jockey for position. That volatility can feel uncomfortable, but in most cases it has proven temporary. While extreme outcomes — such as government shutdowns — are always possible, they are still best viewed as short-term disruptions rather than long-term market drivers.

Overall, the backdrop remains constructive.

This is not a time for complacency, but it’s also not a time to be overly defensive. Markets have had a strong run, and it’s natural to feel uneasy when prices sit near all-time highs. At some point, something will derail the market — that’s inevitable. What’s unknowable is what that catalyst will be or when it will arrive.

That uncertainty is exactly why we manage portfolios the way we do: staying invested in long-term trends while remaining prepared for volatility when it shows up.

I’ll be linking a few recent market predictions and commentary I shared on CBC for those who are interested.

I hope everyone had a great winter break and enjoyed some well-deserved time with family. I’ll be taking a short vacation next week and will be back on the 20th, rested and ready to see how the year continues to unfold.

As always, if you ever want to talk markets, portfolios, or emerging themes like AI — which I spend a lot of time thinking about — feel free to reach out.

To hear Mark’s CBC interview on his 2026 predictions please listen here.