By the time January 2026 came to a close, it was hard to argue that investors were short on headlines. “Military operations in Venezuela, threat of intervention in Iran, a hostile takeover bid for Greenland, new tariff threats against Europe and Canada, criminal investigation against the current Federal Reserve Chairman… quite a January for the U.S. administration.”
And yet, despite this extraordinary geopolitical backdrop, the market’s response was not panic—but continuity.
As Martin Lefebvre, Chief Investment Officer at National Bank Investments, frames it plainly1, “the apparent ‘rupture in the world order’ has not triggered a rupture in equity markets.” What it has triggered is something more subtle, and potentially more important for portfolio construction: “a rupture of performance rankings across regions — to the detriment of U.S. assets.”
This distinction sits at the heart of Lefebvre’s February 2026 Asset Allocation Strategy. The world may feel disorderly, but markets are not behaving irrationally. Instead, they are re-pricing leadership, recalibrating currency risk, and slowly rotating capital away from long-dominant U.S. assets—without abandoning risk altogether.
The Big Picture: Stability With Friction
Lefebvre’s baseline scenario remains intact: “sustained economic activity, but tinged with heightened geopolitical risks.”
That balance—resilience paired with friction—explains why the firm continues to argue for “a moderate overweighting of equities,” while stopping short of adding incremental risk. The internal Market Sentiment Indicator “does not justify either adding or reducing risk” at this stage.
In other words, this is not a call to retreat. It is a call to stay invested—but stay alert.
Equity Markets: The Bull Lives, Leadership Doesn’t
One year after the inauguration of the 47th U.S. president, equities are still delivering gains. But they are no longer doing so evenly.
January extended a trend that dominated 2025: “significant geographical dispersion in equity returns.” International markets outperformed, with “overseas markets outperforming (EAFE region, Emerging Markets), while the United States ranked last amid waning enthusiasm for technology sectors.”
Canada, meanwhile, benefited from old-economy tailwinds. The S&P/TSX continued to be pushed higher by “Materials, which is composed mainly of gold miners,” alongside strength in Energy as oil prices rose.
The message is clear: this is not a risk-off market—it’s a rotation market.
A Structural Shift—or Just a Pause?
Lefebvre does not dismiss the possibility of a U.S. rebound. But he is notably cautious about assuming one.
After shifting U.S. equities from underweight to neutral in December, he notes that “the gap between their long-term relative trend and the rest of the world… has widened even further, now reaching its most extreme level in 21 years.”
That matters, because it raises a bigger question: “we may be witnessing a structural turning point in the U.S. leadership that has characterized most of the last 15 years.”
This is not framed as a forecast—but as a risk worth respecting.
The Dollar Breaks, Gold Soars, and History Rhymes
Currency dynamics are central to Lefebvre’s narrative. The U.S. dollar “depreciated sharply in January,” weighed down by “the unpredictability of U.S. economic and trade policy.” More importantly, it fell below its five-year moving average—something Lefebvre flags as potentially significant.
He writes: “the sharp decline in the Greenback… could mark the beginning of a prolonged cycle of U.S. dollar (and relative U.S. equities) weakness.”
Gold’s surge fits neatly into this framework. After recording “its biggest annual increase since the late 1970s,” gold appears to be responding to the same forces: geopolitical instability and diversification away from the dollar.
But here, Lefebvre’s tone shifts from descriptive to cautionary. While parallels to the 1970s are “easy to draw,” he warns that “the speed at which prices have risen recently suggests that speculative activity is beginning to take over.” As a result, he “continue[s] to advise caution with regard to precious metals in the near term.”
The Economy: Quietly Holding Together
Beneath the noise, the economic data remain constructive.
The U.S. Economic Surprise Index stays positive, inflation “hasn’t reignited fears,” and wage growth appears to be “slowing down ‘just enough’,” stabilizing within the Federal Reserve’s comfort zone.
Even the labor market tells a nuanced story. Hiring rates are soft, but “layoff rates also remain very low by historical standards.” Corporate earnings, particularly among large publicly traded companies, remain “spectacular.”
This disconnect—booming profits alongside a stagnant job market—raises uncomfortable social questions. As Lefebvre observes bluntly: “the feeling of being left out is becoming increasingly prevalent among the U.S. population.”
Politics: Predictably Unpredictable
Politics, however, refuse to fade into the background.
Lefebvre describes the Trump administration’s governing style as increasingly familiar: “the unpredictability… is becoming increasingly… predictable.” The pattern is clear: “making colossal threats, carrying out at least some of them, then engaging in negotiations.”
Tariffs remain a central risk, particularly with CUSMA renegotiations approaching. But the economic reality is harder to ignore. According to the Kiel Institute, “96% of the tariff bill was absorbed by importers (i.e., Americans).”
In a midterm election year—where “79% of those who voted for Mr. Trump said that the cost of living was their number one motivation”—this acts as a powerful constraint on policy escalation.
Portfolio Positioning: Where Lefebvre Stands
Against this backdrop, Lefebvre’s strategy remains disciplined:
- Equities: Moderate overweight maintained
- Geography: Overweight Emerging Markets and Canada, neutral U.S.
- Currencies: Monitoring for extended U.S. dollar weakness
- Gold: Caution warranted after an extraordinary run
- Risk: No justification to add or reduce at current sentiment levels
The guiding principle is patience—not complacency.
Key Takeaways for Advisors and Investors
- Geopolitical chaos has not broken markets—but it has reshuffled leadership.
- Equity risk remains justified, but returns are increasingly driven by geography, not beta alone.
- U.S. dollar weakness is a central macro variable, with implications across equities, commodities, and diversification.
- Gold’s surge reflects real structural forces, but speculative excess is rising.
- Policy noise matters—but cost-of-living realities constrain outcomes more than rhetoric suggests.
Bottom Line
Lefebvre’s conclusion is measured, not dramatic: “Our baseline scenario… remains intact.”
In a world that feels unanchored, markets are behaving with surprising discipline. The challenge for investors is not to predict the next headline—but to recognize when long-standing assumptions, particularly around U.S. leadership and currency dominance, may be quietly shifting beneath their feet.
Footnote:
1 CIO Office. Martin Lefebvre, CIO. “Asset Allocation Strategy February 2026 | A new world order?" National Bank Investments, 2 Feb. 2026.
