Latest / Markets with Megan: A Quick Financial Markets Update / Did January Really Predict the Rest of 2026? | S3 E117 | 02-03-26

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Did January Really Predict the Rest of 2026? | S3 E117 | 02-03-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Some people know that old saying, as goes January, so goes the rest of the year.
• 0:05
  Megan Horneman: It's Tuesday, February the 3rd, and this is Markets with Megan.
• 0:08
  Megan Horneman: If you like this podcast, please subscribe, hit the alarm bell, share it with your friends, family, or colleagues, anybody who's interested in what's going on in the markets, what it may mean for your investments for the long run.
• 0:20
  Megan Horneman: But today we're going to take a focus on looking at the month of January and how market and the economic and the economy performed for investors.
• 0:28
  Megan Horneman: But first we want to start with this very old saying is as goes January, so goes the rest of the year.
• 0:34
  Megan Horneman: And what that means is if the per what is whatever the performance is for the month of January tends to dictate what investors can be prepared for for the rest of the year.
• 0:45
  Megan Horneman: So let's look at that historical uh statement.
• 0:48
  Megan Horneman: When you go back to 1939, when the S P 500 is actually negative in the month of January, it does end up being negative on average for the rest of for the full calendar year, and it is negative about 60% of the time.
• 1:02
  Megan Horneman: But the good news is the SP ended the month slightly positive.
• 1:06
  Megan Horneman: It was up a little bit less than 2% for the month.
• 1:09
  Megan Horneman: But if you go back to that same time period when the SP 500 is positive in the month of January, even if it's less than 2%, it is up about 90% of the time for that calendar year.
• 1:22
  Megan Horneman: And the actual average return is about 16%.
• 1:26
  Megan Horneman: Now we did dig a little bit deeper, and when the return is, is that more muted less than 2%, still positive 90% of the time, but it is less than the 16%, more in those low uh double digits, but still positive for the year.
• 1:40
  Megan Horneman: But let's break down from the economic standpoint for the month of January.
• 1:44
  Megan Horneman: We did see the labor market data that we got.
• 1:47
  Megan Horneman: Um, job creation did slow.
• 1:49
  Megan Horneman: It's actually on a rolling 12-month basis now that US is creating about the least amount of jobs that we've seen since 2021.
• 1:57
  Megan Horneman: But because there's been some structural changes in the labor force, we are seeing the unemployment rate actually tick lower.
• 2:04
  Megan Horneman: Consumers do keep spending.
• 2:06
  Megan Horneman: We saw solid retail sales data.
• 2:08
  Megan Horneman: Inflation has been mixed.
• 2:10
  Megan Horneman: There is still some progress, but it's slowing significantly.
• 2:13
  Megan Horneman: And when you look at services, especially excluding energy, prices are still growing 3%.
• 2:19
  Megan Horneman: And then at the end of the month, we got the producer price index, which did surprise where that super core number is growing about 3.5% on a year-over-year basis.
• 2:29
  Megan Horneman: From an equity standpoint, it was not just about the US in the month of January.
• 2:34
  Megan Horneman: In fact, if you look at the MSCI All-Country World Index and you exclude the US, it outperformed the S P 500 by the most in 10 months.
• 2:44
  Megan Horneman: The international markets were primarily driven by Latin America, and that was due to the commodities rally that we saw for the month.
• 2:53
  Megan Horneman: When you look within the US, we did continue to see that rotation.
• 2:58
  Megan Horneman: Small and mid-cap stocks outperform large cap stocks.
• 3:02
  Megan Horneman: The Russell 2000, which is the gauge of the small cap stocks here in the US, it outperformed the Russell 1000, that large cap index, by the most in five months.
• 3:12
  Megan Horneman: And when you look at both the SP 500 and the NASDAQ, they actually had their slowest start to a year that we've since seen since 2022.
• 3:23
  Megan Horneman: In fixed income, again, it was the markets kind of um took the fact that the Fed, the Federal Hawkish Fed comments that we got from the meeting, and they uh interest rates did rise.
• 3:35
  Megan Horneman: The Bloomberg aggregate index was um relatively stable for the month.
• 3:40
  Megan Horneman: It was it was about up 0.11%.
• 3:43
  Megan Horneman: But again, we did see yields rise towards the end of the month.
• 3:46
  Megan Horneman: It was more of a municipal story.
• 3:48
  Megan Horneman: Um, we did see it's a big seasonal reinvestment month, so municipals did well.
• 3:53
  Megan Horneman: And while credit, both investment grade and high yield did rally, we started to see spreads widen out a little bit at the end of the month, and that's because that's when we got the volatility from the equity perspective.
• 4:04
  Megan Horneman: On a commodity uh basis, it was all about energy this time around.
• 4:09
  Megan Horneman: The precious metals did rally significantly, but we saw a big pullback at the end of the month.
• 4:15
  Megan Horneman: From the energy perspective, it was geopolitical tensions with Iran and then the the colds, the cold freeze that we're getting here in the United States that caused natural gas prices to surge the most since we've seen since 2022.
• 4:30
  Megan Horneman: So a big rally in the energy prices.
• 4:33
  Megan Horneman: But let's talk about the precious metal space.
• 4:36
  Megan Horneman: Um, gold itself did have its best uh start to a year since 1980, but we did see a big pullback at the end of the month.
• 4:45
  Megan Horneman: We saw both gold and silver decline the most.
• 4:48
  Megan Horneman: We've seen have some of the worst single-day declines in several decades.
• 4:53
  Megan Horneman: And that was because we had a stronger dollar when Trump nominated Kevin Walsh for the Federal Reserve chairman spot.
• 5:00
  Megan Horneman: And Kevin Walsh is considered by market said by market participants as a little bit more hawkish than some of the other picks that Trump had had.
• 5:09
  Megan Horneman: And also they are less concerned about some political persuasion in that Federal Reserve coming up in the when the new chairman takes takes place in May.
• 5:19
  Megan Horneman: So that did help the dollar.
• 5:20
  Megan Horneman: It caused a big decline in the precious metals.
• 5:23
  Megan Horneman: So it just shows you how much leverage there is out there on the precious metals.
• 5:27
  Megan Horneman: And while most people consider them to be the ultimate safe haven, when you see the precious metals rally like we have, it is something to be concerned about and get used to these major swings that can be dictated by headline news.
• 5:41
  Megan Horneman: That's all we have today.
• 5:42
  Megan Horneman: If you want a history of rap podcast, you go to Marcuswithmegan.fm.
• 5:46
  Megan Horneman: Thank you.