Q4 PIMG Commentary: A Surprisingly Good Year

08.01.26

2026 will be remembered as another year that proved how difficult it is to forecast the market. What started with optimism quickly turned to extreme pessimism and swung back to cautious optimism. Despite universal calls for a tariff-induced global recession, the economy and markets managed to shrug off concerns. While economic data was mixed, generally, companies found a way to produce good results. Geopolitics remained front and center, and the AI boom continued to capture investor attention. All in all, in the fourth quarter, markets were quite rewarding for those who remained committed to their long-term investment plan.

Canadian GDP growth remained subdued, with a slight uptick in November after earlier weakness. Inflation hovered near the Bank of Canada’s 2% target, prompting rate cuts from 3.00% to 2.25% over the year. The Bank of Canada held steady in December, signaling a pause. In the United States, the Federal Reserve maintained its policy rate at 4.25–4.50%, projecting gradual normalization and inflation trending toward 2% by 2027.

Global equities delivered strong returns in 2025. International markets outpaced U.S. equities, led by Asia—South Korea surged on AI-chip demand, while Japan and China posted double-digit gains. Europe also rallied, supported by easing inflation and improving growth prospects. Canadian markets were buoyed by the rise in precious metals, which were the standout leader all year.

AI and the bubble concerns remained on investors’ minds in Q4. Gold and silver and related equities continued to shine, reflecting monetary debasement and geopolitical risks. Other themes related to tariffs and newly forming alliances continued to weigh on multinational corporations.

During the quarter, as we saw volatility and opportunities arise, we actively deployed capital into high-quality equities and longer-duration bonds. We initiated a position in Estée Lauder following better-than-expected earnings and improved margin guidance. Our thesis is that Estée Lauder’s strong brand portfolio and global reach position it to rebound as discretionary spending normalizes and travel retail recovers. The company’s focus on premium skincare and emerging markets provides a long-term growth runway.

We also added Nike, a global leader in athletic apparel with unmatched brand equity and innovation. Despite near-term sales softness, we see long-term growth driven by digital channels, direct-to-consumer strategies, and global sports trends. Nike’s ability to leverage data analytics and sustainability initiatives strengthens its competitive advantage. We can expect to see many swooshes in the upcoming Olympics and World Cup. Tourmaline Oil was another addition, reflecting our constructive view on North American energy. As Canada’s largest natural gas producer, Tourmaline benefits from LNG export growth and strong free cash flow generation. Its low-cost operations and strategic acquisitions make it a compelling play on global energy transition dynamics and rising natural gas demand.

In fixed income, we increased exposure to longer-term bonds, taking advantage of attractive yields and positioning for potential rate cuts in 2026. This enhances diversification and provides stability amid equity volatility.

While the outlook remains constructive, several factors could introduce volatility in the year ahead. Economic growth may slow further in Canada and Europe, putting pressure on corporate earnings. Inflation, though easing, could remain stubborn, prompting central banks to delay anticipated rate cuts. Geopolitical tensions—particularly in global trade and energy markets—pose risks to supply chains and commodity pricing. Finally, elevated valuations in technology and AI-related sectors leave markets vulnerable to sharp corrections if growth expectations falter. To manage these risks, we maintain a diversified portfolio, emphasize high-quality companies with strong balance sheets, and incorporate fixed-income exposure to provide stability and downside protection.

Despite market swings, our actions reflect conviction in companies with strong fundamentals and our commitment to balancing growth with risk management.

Please reach out with any questions or comments.

Your Plena Wealth Advisory Team

This newsletter has been prepared by Plena Wealth Advisors. Statistics and factual data and other information in this newsletter are from sources Raymond James

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