After a strong start to the year, equities are taking a pause this morning after indexes hit fresh all-time highs yesterday. The TSX, S&P 500, and Dow all closed at record highs, after investors largely brushed off geopolitical concerns following the U.S. action in Venezuela. While equities are rising, we are also seeing some investors gradually diversifying exposure after years of outsized stock market performance, shifting towards commodities and fixed income as bond yields edge higher. Investors are now turning their attention to U.S. labour numbers which showed private-sector hiring rebounding modestly in December but still coming in below expectations. ADP data showed employers adding 41,000 jobs after a decline in November, undershooting economists’ expectations and signaling a cooling but stable labour market heading into 2026.
Cautious repricing. Investors are reassessing Venezuela after the U.S. capture of Maduro, with some seeing the potential for value to be unlocked in a country long viewed as too risky to invest in. Venezuelan government and oil-company bonds jumped sharply, delivering an as markets began to price in the possibility of future debt restructuring and improved access to the country’s oil sector. Energy companies, hedge funds, and private capital firms are exploring opportunities, encouraged by signals from the U.S. administration around potential investment in Venezuela’s oil infrastructure. That said, significant obstacles remain, including U.S. sanctions, low oil prices, and ongoing political uncertainty, meaning any economic or investment recovery would likely be uneven and take years to materialize.
Tensions between China and Japan escalated after Beijing imposed export controls on dual-use items that have potential military applications bound for Japan. The move comes after Japanese Prime Minister Sanae Takaichi suggested that Japan could respond using militarily force if China makes any moves against Taiwan. China didn’t take too kindly to those comments and demanded they be withdrawn. China’s controls may extend to tighter reviews on rare earth exports, a sensitive issue given Japan’s heavy reliance on Chinese supplies and their importance to defense and high-tech manufacturing. It seems like China took a page out of Trump’s playbook, with the ambiguity of the measures leaving the threats open ended although analysts note that Beijing does have leverage to apply economic pressure on Japan if needed.
This is not going to help all the traffic, but good for the economy. Canadian light vehicle sales rebounded last year to their highest level since 2019, with roughly 1.9 million vehicles sold, up 2% from 2024. The rise is more surprising considering trade disruptions and auto tariffs between Canada and the U.S. While the recovery marks a return to pre-pandemic levels, sales remain 7.1% below the 2017 peak, even as Canada’s population has grown significantly since then. General Motors narrowly led the market ahead of Ford, while several brands including Audi, Hyundai, Kia, Toyota and Volkswagen posted record Canadian sales. One company (or person) was not too popular last year though, with Tesla seeing a sharp drop in deliveries although it did begin to recover towards the end of the year.
Investors this year are expected to pivot from overheated AI tech stocks toward undervalued opportunities across multiple asset classes. Strategists see U.S. small-cap stocks rebounding, while gold could continue its rally, supported by central bank buying. Healthcare and financials are also set to growth from policy boosts, M&A, and AI-driven efficiency, while EM may attract inflows amid a weaker U.S. dollar, though political risks remain. High-yield and corporate bonds remain in demand due to strong deal-making and capital needs for AI infrastructure.
The housing market in Toronto closed out on a soft note in 2025, with both sales and prices declining as buyers contend with lingering economic uncertainty tied mostly to U.S. trade tensions. Home sales in December slipped 0.4% from November, while the benchmark price fell 0.7% to about $962,000, capping a year in which total sales dropped 11.2% and prices fell 6.3%. Despite lower interest rates and a growing supply of homes, with new listings jumping 5.5% in December, buyers remained cautious, held back by concerns over tariffs, slower economic growth, and job security. Experts aren’t expecting a quick turnaround either, with trade negotiations still unresolved and confidence fragile.
Smart kid. Some fans may not be ready for more Blue Jays news yet, with the what-could-have-been memories of a Game 7 World Series loss still feeling raw (writer included), but this one might help heal the wound. The Jays have added a major bat to the lineup, signing Kazuma Okamoto to a four-year, US$60 million deal, and the story comes with a genuinely sweet twist. Before committing, Okamoto laid out the logos of all 30 MLB teams and asked his young daughter which one she liked best, and she pointed to the Toronto Blue Jays (the kid knows). The 29-year-old six-time NPB all-star and three-time home run champion brings middle-of-the-order power and defensive versatility across third base, first base, and the outfield after a decorated career with the Yomiuri Giants. Okamoto said he is “very happy” to join Toronto and has his sights set on a World Series. The signing adds to the aggressive Jays offseason thus far, giving fans another reason to get excited about the upcoming season. Who else is thinking…what about Bo?
Diversion: Sometimes you catch a fish, sometimes the fish catches you
