Macro

A hostile policy year: RFK Jr. as HHS Secretary rattled vaccine makers and FDA credibility, Trump's most-favored-nation order threatened to slash US drug prices to foreign levels, tariff threats loomed, and UnitedHealth crashed on a DOJ probe and guidance cuts. Broad…

Mortgage rates on 30-year fixed loans are hovering in the low-6% range, with the average at 6.16% as of January 8, 2026. Forecasts from the Mortgage Bankers Association and Fannie Mae project rates will stay near 6% through 2026 and into 2027, with a drop below 6% unlikely until late 2026 at the earliest. The median U.S. home price was $410,800 in Q2 2025, making monthly principal and interest payments about $2,505 at current rates. Analysts say lower rates depend on reduced inflation, rising unemployment, and clarity on tariff impacts, while a potential Federal Reserve leadership change in May 2026 adds uncertainty.

Trump's tariff escalation raised construction and material costs and kept inflation and rates elevated, leaving housing sluggish and office CRE still distressed though bottoming in some markets; a grinding, modestly negative year for owners.

Trump's sweeping April tariffs (10% plus reciprocal, China to 125%) raised import costs and hammered retailer and auto margins; the May US-China truce gave partial relief, but the tariff drag and September EV-credit repeal weighed all year…

Mortgage rates on 30-year fixed loans are hovering in the low-6% range, with the average at 6.16% as of January 8, 2026. Forecasts from the Mortgage Bankers Association and Fannie Mae project rates will stay near 6% through 2026 and into 2027, with a drop below 6% unlikely until late 2026 at the earliest. The median U.S. home price was $410,800 in Q2 2025, making monthly principal and interest payments about $2,505 at current rates. Analysts say lower rates depend on reduced inflation, rising unemployment, and clarity on tariff impacts, while a potential Federal Reserve leadership change in May 2026 adds uncertainty.

A turbulent year, Trump's tariff escalation (the April 'Liberation Day' crash), threats to Fed independence (firing attempts at Cook and the BLS chief), and a crypto plunge from its peak whipsawed markets, while LA wildfires slammed insurers.

Trump's tariff escalation was double-edged — protecting domestic producers but shocking supply chains and inviting retaliation (April 'Liberation Day' plunge) — yet accelerating reshoring and a roaring data-center power/electrical-equipment cycle drove strong order books…

Israeli attacks on Iranian nuclear and military targets killed top commanders and triggered missile exchanges, with Brent jumping the most since 2022. Markets weighed Strait of Hormuz risk while defense stocks rallied and equities proved surprisingly resilient.

Energy sector sentiment turned modestly bullish this month, driven by a sharp but short-lived spike in oil prices following Israel’s strike on Iran’s nuclear facilities, which raised immediate concerns over regional supply stability. The subsequent ceasefire, reinforced by U.S. actions at Fordow, quickly eased tensions and pulled prices back to pre-conflict levels, but the brief volatility underscored persistent sensitivity to Middle East geopolitical risks. Despite the round-trip in prices, the episode reinforced value in short-term energy positioning amid flashpoint-driven uncertainty.

Recovery; Meta/Alphabet AI-ad strength

Meta has entered a 20-year agreement to purchase 1.1 gigawatts of nuclear power from Constellation Energy's Clinton plant in Illinois, ensuring its continued operation and supporting relicensing efforts. The deal marks Meta's first major nuclear partnership, aligning with its 100% clean electricity goal amid rising data center energy demands. This follows broader tech industry trends, with companies like Microsoft, Google, and Amazon also investing in nuclear to power AI infrastructure, boosting sector confidence and Constellation's market valuation.

Tech sentiment is modestly positive this month, driven primarily by Meta’s 20-year nuclear power agreement with Constellation Energy, a signal of long-term commitment to energy-intensive AI infrastructure and stable operating costs. The deal underscores growing sector confidence in scalable, clean power solutions to support data center expansion, reinforcing investor optimism despite broader macro uncertainty.

The late-January DeepSeek shock briefly crashed our AI-power trade on fears demand was overstated, but the data-center buildout and nuclear and gas-turbine supercycle reasserted themselves, keeping owner sentiment strong through tariff-driven volatility.

Gold topped $4,000 for the first time on the debasement trade, silver and precious metals surged, and China's sweeping rare-earth export controls handed pricing leverage to Western critical-minerals producers, a euphoric year for hard-asset owners.

Israel launched airstrikes on Iran's nuclear and ballistic missile program - hitting the Natanz enrichment site, leading nuclear scientists and senior military commanders - and Iran retaliated with missiles the same day, opening direct state-on-state war. US crude jumped 7.3% to $72.98 and Brent 7% to $74.23, the biggest one-day gains since March 2022, as traders feared escalation could disrupt Middle East supply and that Iran could threaten the Strait of Hormuz, through which a fifth of the world's oil passes. The IEA said 1.2 billion barrels of emergency stocks were available, and analysts noted no oil infrastructure had yet been hit.

Defense spending momentum accelerates as NATO allies commit to a higher 5% defense spending target, directly boosting procurement and modernization budgets across the alliance. Geopolitical tensions linked to the Israel-Iran conflict are amplifying demand for military readiness and force projection, while also lifting oil prices—raising operational costs but reinforcing the strategic imperative for defense investment. The sector is buoyed by concrete policy shifts and elevated global risk, driving a strongly positive sentiment.