Our January Roundup
January, as ever, arrived with resolutions, nerves, and a great deal of optimism delivered by firms who will quietly revise their views in February. In the US, equities spent the month oscillating between confidence and sanity checks. Investors entered the year believing clarity was finally imminent: on rates, growth, earnings, pick your variable. Instead, January reminded us that markets rarely reward certainty, only adaptability. The broad takeaway was less about direction and more about dispersion. Stock-picking mattered again. Some names were treated like heirlooms, others like last season’s fast fashion.
Technology, predictably, remained the center of gravity. But the tone shifted. This wasn’t last year’s breathless sprint toward anything labeled “AI.” January felt more like a continuous audit, punctuated by swift corrections. Investors seemed less interested in moonshots and more focused on operating leverage, margins, and whether growth could survive without narrative adrenaline.
Amid this backdrop, small cap stocks offered a unique perspective trading at valuations not seen since 1999. The Russell 2000 just outperformed the S&P 500 on each of the past 14 straight trading days. Small caps are steadily crushing large caps, as the rotation continues away from tech, growth and the almighty Mag 7.
Financials and industrials too are having their moments, buoyed by the idea that perhaps economic activity might remain sturdier than feared. Consumer brands, meanwhile, told a more subtle story. Spending hasn’t collapsed entirely (despite ‘no buy January’ resolutions), but it’s become selective, and markets noticed. Luxury behaveddifferently from mass market. January made clear that the consumer is no longer a single character in this play.
Across the Atlantic, European equities entered the year with lower expectations and, paradoxically, a calmer temperament. Valuations began January already humbled, which helped. Investors gravitated toward companies with pricing power, global revenue exposure, and balance sheets built for patience rather than perfection. Energy and industrials continued to draw interest, not because Europe suddenly feels confident, but because resilience is a form of growth.
Over the month, there was also a quiet reassessment of Europe’s relevance. For much of last year, it played understudy to America’s confrontational exuberance. For many investors, January provided a welcome change in tone as they dialed up exposure to regions outside of the US. The bet is as domestic leadership continues to waffle, diversification across earnings cycles, currencies and sectors will smooth returns.
All in, the month wasn’t exactly bullish or bearish. It was skeptical but investors were engaged. They were curious, though not convinced. Markets didn’t surge so much as they leaned in, listening carefully. Which, for the first month of the year, is probably the healthiest start anyone could ask for.
