US job report in January shows weaker-than-expected job growth, with just 143,000 new jobs added compared to the 169,000 forecast. Revised data also showed 589,000 fewer jobs over the past year. However, despite the lower job gains, the unemployment rate ticked down to 4% as labor force participation rose. These mixed results don’t really shine any light on what the Fed may do next but most still anticipate they will hold rates steady again.

Meanwhile, Canada’s jobs report tells a different story. Employment surged by 76,000 in January, more than what economists had expected while cutting the unemployment rate to 6.6%, the second straight month of decline after peaking at 6.9% in November. Manufacturing led the gains, driven by US demand, but wage growth cooled to 3.5%. With inflation steady, the Bank of Canada may have more room to hold rates, offering a contrast to the Fed’s uncertainty.

China’s growing influence in AI is driving a rally in Chinese tech stocks, with the Hang Seng Tech Index surging 20% from January lows, marking a bull market. Companies like Alibaba and Xiaomi are benefiting from the AI wave, both jumping over 30% since DeepSeek shaked the market. This optimism is sparking renewed investor interest in Chinese tech stocks, especially as analysts predict China could outpace global competitors in the coming years.

Analysts are turning bearish on GM and Ford despite their low valuations, as concerns grow around slowing profits, rising costs, and risks from uncertain tariffs. They also face longer-term challenges as they transition into the EV and autonomous driving market, where competitors like Tesla and BYD are ahead. Analysts warn the stocks may be value traps—cheap but with weak fundamentals. But I think it's more of just a bearish call because value traps feel questionable—valuations haven’t dropped much, and earnings haven’t surged.

Eaton Vance’s recent outlook suggests midcaps—especially in industrials and tech—may benefit from a global recovery in PMIs. It highlights how midcaps could be the next growth opportunity as market gains broaden beyond large-cap tech. Calvert US Mid-Cap Core Responsible Index ETF (CVMC) was specifically suggested as an interesting way to access midcaps with a focus on responsible business practices, but other broad-based midcap ETFs can also work if you’re betting on a global recovery.

Vanguard announced massive fee cuts last week and while that reinforces its dominance in the low-cost ETF space, it also helps identify areas for growth. By cutting fees, it’s not just helping investors save—it’s turning up competitive pressure on rivals. Sector ETFs and active strategies appear to be key targets since those areas are still led by competitors like Fidelity and State Street. Vanguard could aim to expand its market share in these categories while continuing to push its low-cost advantage, especially where it’s not yet the leader.

This article is a reminder about how investors should stay calm in the face of market uncertainty, like unexpected tariffs or economic shocks. It used the Apollo 13 mission as a metaphor and highlights that while you can’t control external events, the key to successful investing is how you react—staying levelheaded rather than panicking when markets or media overreact.

That's it for today! You can reply to this email if you have any comments or feedback.

Thanks,
Thomas

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