Today
Equity futures are moving higher as investors react to the release of the delayed January jobs report. Job growth in the U.S. came in stronger than expected in January, with nonfarm payrolls rising by 130,000 (almost double forecasts), while the unemployment rate unexpectedly dipped to 4.3%, signaling continued labour-market stabilization at the start of the year. Wage growth also remained firm, with average hourly earnings climbing 0.4% month over month, slightly above estimates. However, an annual benchmark revision showed the labour market was weaker than previously thought, with nearly 900,000 fewer jobs created over the prior year than initially reported, tempering the headline strength. Adding to this, the January NFIB Small Business survey signaled broad-based softness among small firms with the optimism index slipping to 99.3 and both hiring and capital spending plans declining for a second straight month. Overall, the reports suggests a still-resilient but cooling job market that may influence the Fed’s timing on future rate cuts.
What’s old is new again. The recent volatility in tech stocks has pushed investors to rethink heavy exposure to the AI trade and rotate into “old economy” sectors, helping drive a broader market rally outside Silicon Valley. While the Nasdaq has struggled with volatility and crowded positioning, non-tech names have rallied, lifting sectors like energy, materials, industrials, and consumer staples. Years of dominance by mega-cap tech have left portfolios concentrated, making smaller and value-oriented stocks more attractive as earnings growth broadens across the market. Data show the average non-tech stock is under-owned by funds, while the Mag Seven tech giants remain more vulnerable to pullbacks. Although the market isn’t abandoning tech altogether, it seems that many investors are trimming overweight positions and diversifying, which can be seen in the Dow Jones which has continued to move higher.
Evolving playbook. Portfolio hedging strategies built on old assumptions that bonds rally in risk-off periods, safe havens stay stable, and diversification works automatically, have been challenged in recent years. Inflation risk, fiscal strain, geopolitics, and rapid technological change have disrupted traditional correlations. Bonds did not protect portfolios during the latest bout of inflation, while assets like gold, once considered stable havens, have grown more volatile due to speculative flows. Because of this, investors are shifting from broad, directional hedges toward more targeted statistical hedges that are designed to offset specific risks such as exposure to Chinese equities or select commodities, based on observed correlations. Because correlations can change quickly, diversification in this framework requires ongoing reassessment rather than set-and-forget allocations, meaning protection must be intentionally designed around evolving risks rather than assumed from traditional asset labels alone.
U.S. delinquencies climbed to their highest level in nearly a decade, pointing to growing strain among lower-income and younger borrowers. Data from the Federal Reserve Bank of New York showed 4.8% of all outstanding household loans were in some stage of delinquency in Q4 of last year, the most since 2017, as missed payments increased across mortgages, credit cards, auto loans and student debt. Mortgage troubles were concentrated in lower-income regions, while student-loan delinquencies rose after pandemic-era payment pauses ended. Credit-card balances also rose, with 12.7% of accounts at least 90 days late, the highest since 2011, and auto-loan delinquencies are now nearing post-financial-crisis peaks. Total household still debt rose 1% to $18.8 trillion, suggesting borrowing continues even as repayment capacity for some weakens, reinforcing the idea of a K-shaped economy, where wealthier households remain resilient while financially vulnerable groups struggle.
As investors gradually return to China, policymakers are trying to create a steadier, more sustainable investment environment, pairing market-friendly reforms with tighter oversight to curb excess. Regulators have cracked down on leverage, pump-and-dump schemes, high-frequency trading, and margin financing. Officials in China are trying to boost longer-term investor confidence through policies that limit equity fundraising, encourage dividends and buybacks, and support a gradually stronger yuan, aligning with Xi Jinping’s goal of building a sturdier financial system and boosting the currency’s global role. Strategists are calling this a slow bull, which they see as a way to increase household wealth, fund tech development, and attract foreign inflows as investors diversify away from the U.S. These efforts seem to be helping so far, with Chinese shares up about 18% this year, outperforming the S&P 500, with foreign ownership climbing to multi-year highs, possibly signaling renewed confidence.
Short track speed skating is a heart racing sport for spectators and viewers at home, just imagine the athletes. Canada’s mixed team delivered exactly that in Milan, earning silver in a thrilling final yesterday. The Montreal-based team of Kim Boutin, Pascal Dion, Steven Dubois, William Dandjinou and Florence Brunelle came in with gold ambitions, but the silver medal did not disappoint, especially given the alternative. The Canadian team started in third, a less than ideal spot, and dropped to fourth during the race. With only a few laps remaining, Boutin delivered a decisive push to Dion, who found the smallest opening and slipped past two competitors in a split-second move to secure the country’s first silver of the Games. Blink and you would have missed the exchange. The finish captures everything that makes short track so compelling, and if you missed it, the clip is worth the watch. Go Canada!
Diversion:
I’ll take that, to go
