Market Note
It's a bull market, stupid!
January 16th, 2026
Chart Source(s): Topdown Charts, LSEG
Geopolitical risks be damned; the US government has come out swinging this year to put America first and to do everything within its power to push risk-taking sentiment to extremes by fueling optimism around defense spending and housing recovery and affordability. Small-cap US equities have outperformed large-cap US peers for 10 consecutive days, the longest streak since 2008.
Sometimes equities climb a wall of worry and sometimes they just vault over all concerns due to ample liquidity and a robust economic setup. With global headline inflation relatively subdued and ex-US equity valuations having substantial room for catch-up, its risk-on.
However, tail risks are growing from risk-taking consensus skewed to the upside. The Trump-put equity floor from "TACO-ism" still exists, but the dependability of the put is slowly eroding due to radical policy announcements.
Global Markets & Economic Data
- US: Dec. CPI data was in-line to slightly lower than expectations. Regional Fed surveys showed rising growth and sticky price pressures. Q4 housing reflected an improving situation from multi-decade low levels.
- Switzerland/UK/Europe: Swiss inflation hit 0.0% y/y levels. UK growth and retail data was stable, but a BOE cut in March is still possible. Eurozone inflation data trended lower and investor sentiment data is picking up.
- China/Japan: Recent data suggests Chinese deflation is slowing. Japanese household spending figures are improving and a 25bps hike to 0.75% is expected at the Feb BoJ meeting.
Index Returns Summary
| Asset Class | MTD | YTD |
|---|---|---|
| MSCI World | 1.84% | 1.84% |
| MSCI Asia Pacific | 1.89% | 1.89% |
| MSCI Europe | 2.03% | 2.03% |
| MSCI China | 2.87% | 2.87% |
| Bloomberg Barclays Global Aggregate Index | -0.16% | -0.16% |
| Bloomberg Commodities Index | 2.30% | 2.30% |
| HFRX Global | 1.17% | 1.17% |
| HFRX Macro/CTA | 2.12% | 2.12% |
| HFRX Equity Hedge | 1.42% | 1.42% |
Index data as of January 9, 2026
Market Spotlight: Active vs. Passive
Chart Source(s): Goldman Sachs
Investor appetite for ETFs is seemingly insatiable. 1,000 ETFs were launched in the U.S. last year ETF industry assets to hit $13.5T. In fact, WSJ claims that there are now more ETFs than individual stocks in the US equity market. The Investment Company Institute found that $3T flowed from traditional mutual funds to ETFs from 2015 to 2024.
Market Spotlight: Bond Market Vol collapsed
Chart Source(s): The Daily Shot
Bond trading these days is like watching the paint dry. A top macro RV fixed income trader told me the other day that day to day there is just nothing to do. All of the dislocations caused by a normal functioning market environment were quashed as the Fed ended QT and started stealth QE.
Market Spotlight: Commodity Supercycle 2.0!?
Chart Source(s): Topdown Charts, LSEG
As China/EM growth ignited the "commodity supercycle" 20 years ago, we stand today on the precipice of the next step-function higher in commodity prices to meet the insatiable demands of a roaring global economy.
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Contact UsDisclaimer: This material has been prepared by MASTERPIECE ADVISORS for informational purposes only and should not be construed as financial advice. Investments in hedge funds are speculative and involve a high of risk. This material is confidential and may not be disclosed without the express written approval of MASTERPIECE ADVISORS.