January Monthly Portfolio Pulse - Path of Least Resistance

Equity market momentum has shifted to small and mid-cap equities – up 7.2% year-to-date (Russell 2500) vs. large cap equities’ 1.4% return (S&P 500). Emerging-market equities have also gotten off to a hot start – up 5.8% (MSCI Emerging Markets). Given the strong economic growth (4.3% in Q3 with the Atlanta Fed GDPNow 4Q estimate at 5.3%) and stabilizing inflation (consumer price index up 2.7% year-over-year as of 12/31/2025), the path of least resistance for equity markets is likely higher. As we await the Federal Reserve’s next move (likely to announce a pause at its January 28 press conference), we maintain a modest preference for equities and a modest bias to U.S. large-cap and emerging-market equities over international developed.

Click to read: January Monthly Portfolio Pulse: Path of Least Resistance