North American equities capped off a third consecutive year of double-digit returns, while U.S. bonds delivered one of their strongest performances in recent memory. Trade tensions simmered throughout the year, recession fears lingered, and geopolitical conflicts persisted. Despite these headwinds—or perhaps investors learned to look past them—markets climbed steadily higher.
The North American economy surprised many who anticipated a sharper slowdown. Despite substantial federal workforce cuts and the tariff regime straining lower-income households, Figure 1 demonstrates how wealthier Americans have been an important buoy. Home prices in the U.S. have risen more than 50% over the past five years, and the S&P 500 has gained nearly 90% when including reinvested dividends. This wealth effect, along with income tax cuts, has given high-income households the confidence to spend freely.
Figure 1: Concentrated Consumer Spending
Share of U.S. consumer spending by income percentile
Source(s): Moody’s Analytics of Federal Reserve Data.
Diverging socioeconomic classes have contributed to an intriguing scenario where discount retailers and luxury lines have both seen success. The former is popular among a growing number of spend-wise consumers, while the latter’s customer base has little reason to revise their spending patterns. In absolute terms, the higher cost of living impacts both groups equally. In relative terms, one has far less capacity to withstand cost pressures.
This bifurcation hasn’t been limited to consumer behavior. In recent years, passive investment strategies and concentrated positions within the Magnificent Seven technology stocks have greatly outperformed more diversified approaches. During the tail end of 2025, however, winners have been more widely dispersed across sectors, geographies, and individual stocks. The return of volatility and diverging fundamentals has created opportunities for active managers seeking out quality, value, and overlooked pockets of the market.
And it is nowhere more apparent than in technology, which remained a dominant force despite turbulence along the way. DeepSeek, a cost-lean chatbot that launched in January of last year, initially shocked the market as it briefly challenged the necessity of Nvidia’s chips and hyperscalers’ massive spending plans, but the moment passed quickly.
Figure 2: The DeepSeek Disruption
Performance from January 22, 2025, to March 10, 2025
Source(s): Datastream, Goldman Sachs Global Investment Research.
While it proved to be a temporary episode, Figure 2 reminds us of the degree of susceptibility present in today’s concentrated market—narratives can shift quickly. Hundreds of billions in capital expenditures flowing into semiconductor chips, data centers, and power generation infrastructure have proven to be a driving force behind both economic resilience and equity returns. So much so that the market capitalization of the top ten U.S. technology stocks is now higher than almost any other country’s GDP or stock market. See Figure 3—there’s evidence that valuations may have decoupled from investment returns.
Figure 3: Countries & Corporations in Context
National GDP and market valuations as of October 8, 2025 (USD, trillions)
Interestingly, U.S. exceptionalism—a defining characteristic of the past decade—has shown signs of softening. Many international markets, particularly in Europe and parts of Asia, delivered superior returns in 2025 as investors questioned whether stretched U.S. valuations and policy uncertainty warranted such meaningful exposure.
While the usual suspects still occupied headlines, the broadening of global leadership hinted at a potential shift in where outperformance might emerge. Central banks across North America have now shifted toward easing monetary policy, providing tailwinds for both stocks and bonds. Money market funds—popularized due to high interest rates—experienced outflows as yields declined, adding further momentum to long-term assets.
Fixed income markets told a parallel story
Credit spreads—the additional yield investors demand to hold corporate bonds over government securities—rested near historic lows throughout 2025, implying either confidence in underlying fundamentals or a measure of complacency regarding potential default risk. With leverage rising and refinancing needs mounting, bond markets may be discounting a benign scenario that isn’t necessarily a foregone conclusion.
Many have declared artificial intelligence as the general theme of 2025; broad in nature, we propose our own framework to unpack it—Needs, Means, & Seams.
Needs. Capital allocation today is being shaped by infrastructure demands that are visible and immediate. Energy generation and transmission capacity must grow rapidly to support digitalization efforts. Defense spending and reshoring industrial supply chains are driving large-scale investment as globalization recalibrates. Meanwhile, the embedded physical networks that sustain nations—grids, ports, rail, highways—show clear signs of age after years of deferred maintenance. Far from marginal upgrades, these commitments stand to reshape the landscape.
Means. Meeting those requirements has demanded an extraordinary mobilization of capital. In 2025, using debt to meet infrastructure ambitions beyond what internal cashflows could sustain has come into vogue. Despite growing deficits, North American governments added further support through fiscal incentives—tax refunds, expensing provisions, and targeted sector relief.
Seams. It’s in the overlap of these dynamics that opportunity—as well as risk—begins to surface, while market dispersion has created a more complex field for active managers. Yet those same seams expose potential fault lines: vendor-financing chains that embed counterparty risk, limited energy supply that could curb AI deployment, and debt burdens that now need durable returns to justify. Whether these tensions evolve into openings for selective investment or early cracks in the cycle is likely to be one of the defining questions of 2026.
Source(s): Bloomberg Finance L.P. As of December 31, 2025.
Promus Advisors, an SEC-registered investment adviser, is an affiliate of Bellwether Investment Management, Inc. (“Bellwether”). Promus Advisors provides fee-based asset management and advisory services. Bellwether and Promus Advisors have entered into arrangements in which Bellwether may refer clients with financial advisory needs to Promus Advisors. Please note that SEC registration does not constitute an endorsement of the firm by the Securities and Exchange Commission, nor does it indicate that the adviser has attained a particular level of skill. Promus Advisors and its investment adviser representatives are in compliance with the current filing requirements imposed upon SEC-registered investment advisers by those states in which Promus Advisors maintains clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable, equal any corresponding performance level(s), or be suitable for any specific client’s portfolio. Promus Advisors does not guarantee that any benchmark or indices used by Bellwether will match a given portfolio. Furthermore, asset allocation and/or diversification does not necessarily improve an investor’s performance or eliminate the risk of investment loss.
Promus Asset Management, LLC is a registered investment advisor. Investment Advisory Services are offered through Promus Asset Management, LLC, which is independently owned and operated, and separate from Promus Advisors, LLC. Promus Asset Management, LLC will never be paid on products, commissions or referrals.
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01-29-2026
Quarterly Insights Pt. 1: Market Stories Q4 2025
North American equities capped off a third consecutive year of double-digit returns, while U.S. bonds delivered one of their strongest performances in recent memory. Trade tensions simmered throughout the year, recession fears lingered, and geopolitical conflicts persisted. Despite these headwinds—or perhaps investors learned to look past them—markets climbed steadily higher.
The North American economy surprised many who anticipated a sharper slowdown. Despite substantial federal workforce cuts and the tariff regime straining lower-income households, Figure 1 demonstrates how wealthier Americans have been an important buoy. Home prices in the U.S. have risen more than 50% over the past five years, and the S&P 500 has gained nearly 90% when including reinvested dividends. This wealth effect, along with income tax cuts, has given high-income households the confidence to spend freely.
Figure 1: Concentrated Consumer Spending
Share of U.S. consumer spending by income percentile
Diverging socioeconomic classes have contributed to an intriguing scenario where discount retailers and luxury lines have both seen success. The former is popular among a growing number of spend-wise consumers, while the latter’s customer base has little reason to revise their spending patterns. In absolute terms, the higher cost of living impacts both groups equally. In relative terms, one has far less capacity to withstand cost pressures.
This bifurcation hasn’t been limited to consumer behavior. In recent years, passive investment strategies and concentrated positions within the Magnificent Seven technology stocks have greatly outperformed more diversified approaches. During the tail end of 2025, however, winners have been more widely dispersed across sectors, geographies, and individual stocks. The return of volatility and diverging fundamentals has created opportunities for active managers seeking out quality, value, and overlooked pockets of the market.
And it is nowhere more apparent than in technology, which remained a dominant force despite turbulence along the way. DeepSeek, a cost-lean chatbot that launched in January of last year, initially shocked the market as it briefly challenged the necessity of Nvidia’s chips and hyperscalers’ massive spending plans, but the moment passed quickly.
Figure 2: The DeepSeek Disruption
Performance from January 22, 2025, to March 10, 2025
While it proved to be a temporary episode, Figure 2 reminds us of the degree of susceptibility present in today’s concentrated market—narratives can shift quickly. Hundreds of billions in capital expenditures flowing into semiconductor chips, data centers, and power generation infrastructure have proven to be a driving force behind both economic resilience and equity returns. So much so that the market capitalization of the top ten U.S. technology stocks is now higher than almost any other country’s GDP or stock market. See Figure 3—there’s evidence that valuations may have decoupled from investment returns.
Figure 3: Countries & Corporations in Context
National GDP and market valuations as of October 8, 2025 (USD, trillions)
Interestingly, U.S. exceptionalism—a defining characteristic of the past decade—has shown signs of softening. Many international markets, particularly in Europe and parts of Asia, delivered superior returns in 2025 as investors questioned whether stretched U.S. valuations and policy uncertainty warranted such meaningful exposure.
While the usual suspects still occupied headlines, the broadening of global leadership hinted at a potential shift in where outperformance might emerge. Central banks across North America have now shifted toward easing monetary policy, providing tailwinds for both stocks and bonds. Money market funds—popularized due to high interest rates—experienced outflows as yields declined, adding further momentum to long-term assets.
Fixed income markets told a parallel story
Credit spreads—the additional yield investors demand to hold corporate bonds over government securities—rested near historic lows throughout 2025, implying either confidence in underlying fundamentals or a measure of complacency regarding potential default risk. With leverage rising and refinancing needs mounting, bond markets may be discounting a benign scenario that isn’t necessarily a foregone conclusion.
Many have declared artificial intelligence as the general theme of 2025; broad in nature, we propose our own framework to unpack it—Needs, Means, & Seams.
Needs. Capital allocation today is being shaped by infrastructure demands that are visible and immediate. Energy generation and transmission capacity must grow rapidly to support digitalization efforts. Defense spending and reshoring industrial supply chains are driving large-scale investment as globalization recalibrates. Meanwhile, the embedded physical networks that sustain nations—grids, ports, rail, highways—show clear signs of age after years of deferred maintenance. Far from marginal upgrades, these commitments stand to reshape the landscape.
Means. Meeting those requirements has demanded an extraordinary mobilization of capital. In 2025, using debt to meet infrastructure ambitions beyond what internal cashflows could sustain has come into vogue. Despite growing deficits, North American governments added further support through fiscal incentives—tax refunds, expensing provisions, and targeted sector relief.
Seams. It’s in the overlap of these dynamics that opportunity—as well as risk—begins to surface, while market dispersion has created a more complex field for active managers. Yet those same seams expose potential fault lines: vendor-financing chains that embed counterparty risk, limited energy supply that could curb AI deployment, and debt burdens that now need durable returns to justify. Whether these tensions evolve into openings for selective investment or early cracks in the cycle is likely to be one of the defining questions of 2026.
Promus Advisors, an SEC-registered investment adviser, is an affiliate of Bellwether Investment Management, Inc. (“Bellwether”). Promus Advisors provides fee-based asset management and advisory services. Bellwether and Promus Advisors have entered into arrangements in which Bellwether may refer clients with financial advisory needs to Promus Advisors. Please note that SEC registration does not constitute an endorsement of the firm by the Securities and Exchange Commission, nor does it indicate that the adviser has attained a particular level of skill. Promus Advisors and its investment adviser representatives are in compliance with the current filing requirements imposed upon SEC-registered investment advisers by those states in which Promus Advisors maintains clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable, equal any corresponding performance level(s), or be suitable for any specific client’s portfolio. Promus Advisors does not guarantee that any benchmark or indices used by Bellwether will match a given portfolio. Furthermore, asset allocation and/or diversification does not necessarily improve an investor’s performance or eliminate the risk of investment loss.
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