Each week, we break down the key events and market movements shaping the investing landscape. From economic data to investor sentiment and global headlines, this section captures what mattered most, and how it impacted markets.
Markets Take a Healthy Pause After Strong Run
Stock markets pulled back modestly this week, with technology shares leading the decline as investors took time to evaluate company earnings and future spending plans. This is a natural part of healthy market behaviour.
After strong gains in recent months, it makes sense that investors are becoming more selective about where they put their money rather than buying broadly. The good news is that this pullback has been orderly, not panicked, which suggests confidence in the economy remains intact. For our portfolios, this kind of environment plays to our strengths.
Companies with reliable earnings and solid financial foundations tend to hold up well during these periods of adjustment, which is exactly the type of business we focus on owning.
Big Tech Bets on AI Signal Long-Term Confidence
Amazon made headlines this week by announcing significant new investments in artificial intelligence and digital infrastructure, highlighting the enormous opportunity these companies see in transforming how businesses operate.
While the stock market focused on the short-term cost of these investments, Amazon’s leadership expressed strong confidence that these bets will generate substantial returns over time. We are seeing similar moves across major technology companies, all investing heavily in AI capabilities. The recent market reaction reflects concerns about timing, not about whether these technologies will succeed.
For long-term investors like us, this is an important distinction. Companies investing in transformative technologies today are building the competitive advantages that will drive growth for years to come, even if the market occasionally gets impatient with the pace.
Job Market Remains Resilient Despite Temporary Disruptions
Recent employment data showed a temporary uptick in unemployment claims, largely caused by severe winter weather that disrupted business activity across several regions.
Importantly, when we look past the weather effects, the broader employment picture remains solid. Employers are showing restraint rather than widespread layoffs, which is a healthy sign for the economy. This stability supports expectations for continued economic growth and helps maintain the current outlook for interest rates and corporate earnings.
For our portfolios, a stable employment environment means consumers can continue spending and businesses can continue generating profits. Staying diversified across sectors and styles remains the most effective approach to navigating these short-term fluctuations while capturing long-term growth.
Key Drivers To Our Outperformance
We believe in transparency when it comes to where outperformance is coming from. This section spotlights a top-performing company we hold, a sector where we’ve taken a winning position, and a strategy that has driven recent success across our portfolios.
Top Company: Merck & Co., Inc. (MRK)
Merck was one of our strongest performers last week, rising 10.5% as investors recognized the value of owning high-quality healthcare companies during uncertain market conditions.
Merck stands out because it combines two qualities we look for in every investment: a strong current business with predictable revenue, and a robust pipeline of new products that can drive future growth. Unlike companies whose fortunes rise and fall with the economic cycle, Merck’s healthcare focus means its products remain in demand regardless of what the broader economy is doing.
The stock’s impressive gain reflects growing investor appreciation for this kind of resilience. For our portfolios, Merck represents exactly the type of company that provides stability during market adjustments while still offering meaningful growth potential through its innovative drug development programs.
Top Sector: Consumer Staples
The Consumer Staples sector was our top-performing sector last week, with holdings across the group delivering strong returns. Walmart led the way with an 8.1% gain, followed by solid contributions from Costco, Procter & Gamble, Coca-Cola, and PepsiCo. What’s driving this strength? In times of uncertainty, investors recognize the value of companies that sell products people need every day.
These businesses benefit from consistent demand, strong brand loyalty, and the pricing power that comes from decades of building consumer trust. Cost pressures have also been easing for many of these companies, which means their profit margins are improving even as they keep prices competitive. Our Consumer Staples holdings provide an important anchor in the portfolio.
They offer the kind of predictable earnings and steady dividends that help smooth out returns during volatile periods, while still delivering attractive growth through market share gains and operational excellence.
Top Quant Strategy: Value
Our Value strategy was the strongest performer this week, with holdings that offer attractive valuations and strong cash flows significantly outperforming the broader market. Verizon led the group with an impressive 18.3% gain, while Merck, AT&T, Amgen, and JPMorgan Chase all delivered strong returns.
This performance highlights something important about today’s market: investors are increasingly rewarding companies that offer tangible financial strength and reasonable prices relative to their earnings. During periods when markets are reassessing growth expectations, businesses with visible near-term profits and solid balance sheets tend to attract significant investor interest.
Our Value holdings play a critical role in managing portfolio risk while still participating in market gains. These companies generate substantial cash, pay reliable dividends, and trade at prices that provide a margin of safety. In an environment where selectivity matters more than ever, this disciplined approach to valuation continues to prove its worth.
What To Look For This Week
We also look ahead to the economic reports, events, and earnings that may influence the week ahead. From inflation and jobs data to corporate updates from key market players, this section keeps you informed on what’s coming, and why it matters.
January Jobs Report, Wednesday, February 11
Wednesday brings one of the most closely watched economic reports: the monthly employment update from the Bureau of Labor Statistics. This report was originally scheduled for last Friday but was delayed by the brief partial government shutdown.
Economists expect the data to show a modest gain of around 60,000 jobs for January, following a similar pace in December. The jobs report matters because employment is the foundation of consumer spending, which drives roughly two-thirds of the U.S. economy.
We will be watching not just the headline number but also wage growth and labour force participation for clues about where the economy is headed. Given the recent softening in private-sector hiring data, this report could influence expectations for Federal Reserve interest rate decisions later this year. A stable employment picture would be reassuring for both stock and bond markets.
Weekly Jobless Claims, Thursday, February 12
Thursday morning’s weekly unemployment claims report provides our most timely look at how the job market is performing right now. Last week’s data showed claims rising to 231,000, a noticeable jump that was largely attributed to winter storm disruptions across several states.
We will be watching to see if claims return to their recent trend of around 200,000 to 210,000, which would confirm the weather explanation and signal continued labor market stability. Continuing claims, which measure the total number of people receiving unemployment benefits, will also be important to monitor after ticking up to 1.84 million.
Strong employment data supports consumer confidence and spending, which in turn supports corporate earnings and stock market performance. This weekly indicator helps us spot emerging trends well before they appear in the monthly reports.
January Consumer Price Index (CPI), Friday, February 13
Friday brings the Consumer Price Index report for January, also delayed from its original date due to the government shutdown. This inflation measure tracks changes in the prices Americans pay for everyday goods and services, from groceries and gasoline to rent and healthcare.
The most recent reading showed consumer prices rising at an annual rate of 2.7%, still above the Federal Reserve’s 2% target but well below the peaks we saw in recent years. This report is particularly important right now because it could shape expectations for whether and when the Fed might resume cutting interest rates.
Lower inflation readings would support the case for rate cuts, which tend to benefit both stock and bond prices. Higher readings could cause the Fed to remain cautious, potentially adding near-term volatility. Either way, this data helps us understand the economic environment and position our portfolios accordingly.
Source of All Economic Data: Bloomberg