Monthly Letter – January 2026

In Granite News

CRM2

CRM2 is a Canadian initiative designed to improve transparency around fees and performance.

Your CRM2 report shows the actual dollar amount you paid in fees, how your portfolio performed, and how those costs relate to your results. The report provides a simple, consistent starting point for understanding your investments and asking informed questions. Greater transparency helps you make more confident decisions.

The Year Ahead

As we step into 2026, the Granite team is energized by the opportunities the new year brings. We’re excited to be launching several new initiatives designed to enhance our services, streamline communication, and continue delivering the high level of care and attention our clients expect.

January is also the time when we begin turning our focus to tax considerations for the 2025 year-end. Proactive planning can make a meaningful difference, and over the coming weeks our team will be reviewing strategies and opportunities tailored to each client’s situation.

As a reminder, the deadline to make RRSP contributions for the 2025 tax year is the end of February 2026. If you are considering a contribution, this is a good time to review your available room and determine the most tax-efficient approach.

In addition, the TFSA contribution limit for 2026 is $7,000. Making full use of your TFSA continues to be one of the simplest and most effective ways to grow investments on a tax-free basis over time. We look forward to working closely with our clients throughout the year and keeping you informed as our new initiatives roll out. As always, please don’t hesitate to reach out to the Granite team if you have any questions or would like to discuss your planning for the year ahead.

JANUARY 2026 YTD MARKET UPDATE

Summary of Index Performance

Notes:

Source : Bloomberg.

Returns are in C$ and assume the reinvestment of dividends and interest.

Market Sumary

Global equities started 2026 on a positive footing, though leadership was uneven and volatility increased beneath the surface. Emerging markets and developed international equities significantly outperformed North America, while fixed income delivered modest gains amid stable short-term rates.

Technology stocks experienced heightened volatility as investors reassessed the impact of AI on traditional software business models, including concerns around pricing power, margin durability, and accelerated AI-driven capex requirements. These dynamics contributed to sharp dispersion within the technology sector despite relatively calm headline index performance.

Comments from President Trump and his administration regarding global trade, tariff policy, and the Federal Reserve have contributed to heightened market volatility and will likely remain an ongoing source of disruption. These policy-driven fluctuations can be sharp and sentiment-driven in the short term; however, they often create selective opportunities to deploy capital at more attractive valuations. Over longer time horizons, periods of political and policy uncertainty have historically proven temporary within broader economic and market cycles.

Economic Overview

Developed international equities (MSCI EAFE +4.0%) benefited from improving regional economic momentum and a sector composition that is less heavily concentrated in mega-cap technology relative to the U.S. market. Meanwhile, MSCI Emerging Markets (+7.8%) led all major indices as risk appetite strengthened and capital rotated toward higher-beta regions with more cyclical exposure and comparatively attractive valuations.

January was also marked by an extreme and abrupt sell-off in precious metals. Gold declined approximately 10–12% in a single session late in the month, among the largest one-day drops in decades, while silver collapsed roughly 30–35% from its highs. The speed and magnitude of the move reflected a rapid unwind of defensive positioning. Notably, markets appear to have already moved on, with little residual focus on what was a historically significant dislocation.

Subsequent to month-end, SpaceX announced the acquisition of xAI, creating a combined private company reportedly valued at approximately $1.25 trillion. The announcement reignited speculative enthusiasm around next-generation AI infrastructure, including space-based data centers as a potential solution to terrestrial power generation and grid constraints. While innovative, these narratives reinforce concerns that bubble-like dynamics are emerging in parts of the AI ecosystem, where valuations increasingly discount distant and uncertain cash flows.

PERSPECTIVE & Positioning

Looking ahead, Granite continues to hold elevated levels of cash, reflecting a cautious stance amid stretched U.S. equity valuations, elevated concentration risk, and rising thematic speculation. During the month, Granite began adding selective exposure to emerging markets as a means of diversifying away from U.S.-centric risk. Emerging markets offer more attractive valuations, broader sector diversification, and materially less dependence on large-cap technology, providing a differentiated return profile should volatility in U.S. markets persist.

Overall, the focus remains on capital preservation, disciplined risk-taking, and opportunistic deployment as valuation gaps widen across regions and asset classes.