This podcast is being brought to you by John Hancock Investment Management Distributors LLC, member FINRA, SIPC. The views and opinions expressed in this podcast are those of the speakers, are subject to change as market and other conditions warrant, and do not constitute investment advice or a recommendation regarding any specific product or security. There is no guarantee that any investment strategy discussed will be successful or achieve any particular level of results. Any economic or market performance information is historical and is not indicative of future results, and no forecasts are guaranteed. Investing involves risks, including the potential loss of principal.

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John

Hello and welcome to the Portfolio Intelligence podcast. I’m John Bryson, Head of Investment Consulting and Education Savings at Manulife John Hancock Investments. Today is January 16th, 2026, and the year is certainly off to an interesting start. To help us navigate all the headlines and market-moving news, I've asked Matt Miskin and Emily Roland, our Co-Chief Investment Strategists here at Manulife John Hancock Investments, to join today’s podcast. Matt, Emily, welcome.

Emily

Hey John, thanks for having us.

Matt

Yeah, thanks for having us, John.

John

You got it. Hey, Matt, before I dig in, I gotta give credit where credit’s due. Earlier this year, you were telling me these Patriots are real. So, so far, so good. You got plans for the weekend?

Matt

Big game, John, big game. But, you know, I mean, the Texans are looking good. You know, every game, it's every given Sunday. No one knows, but it should be fun to watch.

John

All right. Very good. Emily, you ready for it?

Emily

I’m so excited, John. I think it's gonna be a big defensive battle. As you and I have talked about, Patriots are favored by three. You know, I think it's gonna be a low-scoring game, but I think we're gonna be able to pull it out in the end. I can't wait.

John

I love it. I love it. I think we'll have another podcast series going around the Patriots if they continue to streak.

But today, let's come back to the markets and what's going on in the investment world. Hey, Emily, I want to start with you. There's a lot of economic numbers coming in this week. It's an exciting week. Tell us what's posting and how things are looking.

Emily

Yeah, sure. So we started the week with some inflation data. We got CPI for the month of December. So we're finally getting some kind of clean reads on the data after the government shutdown. And then it came in just a touch below expectations. Core CPI that excludes food and energy was 0.2% on a monthly basis, 2.6% annually. If you look on a headline basis, 0.3%, and that brings the year-over-year reading to 2.7%. So right in line with expectations.

This continues to be all about the shelter component. So shelter or housing comprises 35% of the CPI index and dwarfs every other category. And it's like Groundhog Day. The BLS continues to tell us that shelter prices are elevated. They had it at 0.4% in December, by far the biggest factor, and 3.2% year-over-year. We like to use more real-time measures of housing because we think the BLS is very lagged, and we look at things like Zillow home prices. They've got shelter up 0.5% year-over-year. So if you actually plug those Zillow estimates…or that Zillow data into the CPI data, you're well below the Fed's target of 2%. So we think that that's a really important element that's driving the disinflation that we expect over the course of 2026.

So, some other data that we got outside of inflation—actually, just adding to that—PPI or producer price index was also flat, which is the tamest that we've seen in about three months. So inflation readings are pretty tame here.

Retail sales rose a little bit more than expected. You know, we saw some rebound in auto sales. You know, we're coming off a pretty strong holiday season. Really, what we're seeing is that the higher-end consumer continues to spend. We're in this what's called a K-shaped economy, where you look at things like the top 10% of earners being responsible for about 50% of spending in the United States. Those are also people that tend to own stocks. Consumer net worth is at a record high of $167 trillion right now, and for the first time since 1999—and briefly in 2020—consumers actually own more stocks than real estate. It's pretty unusual, and that's really helped drive spending. So you see this appreciation of markets contributing to outsized returns in portfolios, and that's being fed right back into the economy. And I think you can see that evidence in things like auto sales.

And then finally, just sort of back to the housing market. We look at the NAHB Housing Market Index, and we saw the first decline since August. We're hearing that builders are reporting cutting prices for the first time really since 2020. Median existing home prices were up a touch year-over-year but down 1% in December. Again, we're seeing that inventory falling, and that's a trend that we see likely to continue into 2026, bringing down home prices, helping inflation retreat, and then helping investors benefit from positions in fixed income. So I know that was a lot there, but it was a big week for the macro. Next week will be a little bit quieter, and we'll be focused on earnings.

John

Okay, perfect. I'm going to pivot to that. But before I do, you mentioned the high-end consumer and the K-shaped economy. I do want to check in with you—with Saks Fifth Avenue going bankrupt, are you okay? Are you okay with this?

Emily

I'm unwell. I'm, you know, I'm a very frequent shopper at Saks. There are some other options out there, but I think I'm going to be able to figure out how to continue to get the things I need. So it'll be okay.

John

All right. I'm a little bit worried, but I'm glad. I'm glad you're battling through.

Emily

Thank you.

John

Hey, Matt. Emily mentioned earnings season and it started. So tell us what's happening so far.

Matt

Yeah, I mean, it's one of the most wonderful times of the year for us here. The bottom-up has just been the right thing to focus on. The top-down is a mess. It's really hard to glean a trend out of the top-down macro, but the bottom-up has been pretty straightforward. Right now, the consensus estimate for all the S&P 500 companies aggregated together…the street’s looking for about 8% earnings growth. That looks pretty manageable to us. Over the course of 2025, earnings growth came in at about 12%. Estimates were always around 7% to 8%, and then as earnings came in, they were about 5 percentage points above that. We'll have to see if Q4 was that strong. The base effects, though, are starting to go up. So basically, base effects are, you know, year-over-year is how earnings are always reported...in the prior year, the economy post-election started to accelerate. You started to see more investment, markets started to rebound or do really well, and then as we go into next year—sorry, now we're in 2026, I've still got to get my years right here—the bar goes up.

So the street is looking for earnings growth estimates to start the year around 13%, and then it goes all the way to 18% by Q4. We are really early on in Q4 reporting; only 6% of companies have reported. So far, semiconductor companies have blown out earnings, so basically the AI investment theme at the end of the year was really strong. Financials have come in a bit mixed. The wealth management businesses have been doing great. Regional banks have been doing well on a steeper yield curve, but some of the other banks—the comps were tough. You know, last year at this time, they had a really good Q4, and they're seeing kind of modest growth. So it's been a bit of a mixed bag there. But tech earnings are still looking good. The earnings engine is still on. Productivity is a huge part of it—doing more with less—but we continue to watch here. We've still got a long ways to go, so we're focusing on the bottom-up.

John

All right, very good. I mentioned at the beginning, there's a lot of headline risk in today's markets. I feel like by the time this podcast is posted, we'll have another topic. But two I do want to hit on are the geopolitical uncertainty we're seeing and the criminal investigation into Fed Chairman Powell.

Emily, I think I'm going to start with you. Talking about all the geopolitical uncertainty, how are equity markets responding, and how should we help advisors and investors manage that volatility?

Emily

Yeah, John, it's been really remarkable, the number of headlines that have come through. Just kind of reflecting on the last few months, we had the government shutdown. We had headlines around Venezuela. We've got this really stunning message out from Jay Powell on Sunday, sort of alerting us about criminal probes. Political uncertainty is near an all-time high right now, and it's really tough for us to use as an input into making investment decisions. It hasn't helped much. In fact, even if you get some of these outcomes correct, the market reaction can be almost exactly the opposite of what you would think.

You know, if you had told me at the beginning of last year that we were going to impose these punitive tariffs, especially on China, and that China was going to be one of the best-performing equity markets in the world last year, I would have been really surprised to hear that. If you pull out your textbooks and try to understand how tariffs work, it would tell you that the country imposing the tariffs should see their currency appreciate. Meanwhile, the U.S. dollar fell 10% last year, which was one of its weakest years in modern history. So really, the market reaction can be completely the opposite of what you might expect.

From a geopolitical disruption standpoint, typically what we're watching is commodity prices, oil prices. If there is some type of event that disrupts the flow of oil from the supply side, you could see an impact on inflation there. So higher oil prices are a key element that could push inflation higher. It's not something that we're seeing right now, but it would impact the Fed. It would probably challenge them in terms of the one or two rate cuts that are priced into the market right now. So that's always something to watch.

Just finally, as it relates to the Fed in general, we will have a new Fed chair in May, but we have to remember that the FOMC is a committee. In order for the fear of the Fed being very much influenced by politics, a lot of those seats would need to change hands. So it's not just about the chairman here. The other element too is that we might have a lot more clarity about the economy. Matt mentioned things are just about as clear as mud as it relates to the macro picture right now.

The Fed has a dual mandate. They want to maximize employment and maintain price stability. Right now, the labor market's okay. There are some cracks, but we're in this sort of no-hire, no-fire zone. It's not weak enough to be completely clear that the Fed should be cutting aggressively. And the same thing on the inflation front. We're still not back down to the Fed's 2% target, but they're cutting anyway. So we think that we should know more one way or the other—how inflation plays out and how the labor market plays out—in May. It might be just abundantly clear what the new Fed chair needs to do, politics aside.

John

Okay, great. Thanks, Emily.

Matt, I want to dig a little bit deeper, specifically around the Fed's independence and how the markets have responded. Will the bond vigilantes, if you will, kind of take control anyway? So maybe it's not as big of an issue. So broaden us out on that if you could.

Matt

Yeah. You know, at the end of the day I think about the song 'Comfortably Numb' by Pink Floyd because the market has not priced in much risk at all as it relates to this. And that's what I struggle with is because if you're going to say that the Federal Reserve is going to dramatically change its way of doing things, then the bond market should be pricing that in. The two-year Treasury yield has actually risen a bit, pricing in actually more tightening. Versus if the two-year Treasury yield was falling, it would be pricing in more easing over the next two years. The curve has flattened a bit. So what does that mean? That means the two-year yield has gone up as the 10-year yield has gone up too, but just not as much.

And then high-yield spreads—this is just another measure of risk in the market—actually tumbled to 2.53%. To put that in context, that is the lowest in 10 years. So that's the difference between a junk bond, a below-investment-grade corporate bond, and a Treasury bond yield. So the yield differential is super tight, pricing in very little risk. The curve is actually steep still, but really, I think that's been more an indication of growth. But as this new information hit even this last week, it flattened a bit.

So, I think about the two-year yield as our best way of kind of a proof check on this. You know, or as my daughter would say, 'Talk to the hand.' I try to say, 'Talk to the two-year yield.' Yeah, it's a tough time, but until the two-year yield says something different—that, you know, the Fed has drastically changed its outlook or, you know, everything's changed as it relates to the Fed—to me, it goes over all these headlines that are just so much to consume and digest. It's easy to get turned around on it. We're watching the data, and it hasn't signaled any change yet.

John

Okay. Very good. Hey, last question for both of you. As we look forward to 2026, what are the big themes and advice and guidance you're giving to investors? Emily, start with you.

Emily

Oh, sorry. Want to go with me?

John

Yes, please.

Emily

I was just going to start by saying I don't think anybody said 'talk to the hand' since like 1993, but your girls are bringing that back. Matt, I'm excited about it, and I'm going to start bringing that back in my house, too.

You know, when we think about key themes into 2026, it's really our mantra: trying to find quality at a reasonable price. Looking at quality value. There has been an incredible amount of risk-taking in this market. 2025 was really driven by technicals, momentum, and sentiment moving markets. We've seen kind of junkier, lower-quality areas really accelerating, especially towards the end of last year—unprofitable stocks, retail favorites, and looking overseas at some markets that just saw extraordinary outsized returns, the best returns in years. We want to think about trimming some of those areas that have run too far too fast. Really emphasizing quality—companies with great balance sheets and lots of cash. We think margins are going to get challenged this year. It's companies that can really maintain their margins the best that are going to do well. We do expect earnings—Matt talked about this earlier—earnings growth to broaden out. So it's not just about technology stocks this year. We're already starting to see participation from other areas of the market. It's looking down into mid-cap stocks for opportunities. There's still a good way to protect against the valuation risk that's inherent up in market cap. And then, thinking about some of the macro developments around the dollar. Right-sizing international positions. If you look at the All Country World Index, 35% of it is comprised of companies outside of the United States. I have not met anybody yet that has that much of their portfolio allocated to international stocks. We think there's an opportunity to think about expressing some of those views as well. And then maybe I'll pass it over to Matt just to wrap it up with some thoughts on fixed income and alternatives.

Matt

Yeah, thanks, Emily. You know, one of the big things we're seeing that we think the market is not pricing in at all, frankly, and what is a bit non-consensus, is inflation, in our view, is moderating more than the market thinks. So, Emily talked about housing prices at the get-go. Housing prices, again, according to Zillow, if you took rent and housing prices together, they're saying it's up about 0.5% year over year. The Bureau of Labor Statistics still says over 3% year over year. Real-time housing, you're not seeing much inflation there. Year-over-year price gains are very modest. Another one: wage growth just isn't what it used to be. So in 2022, when we had really bad inflation, wage growth was CAGR-ing at 6% per year, and that was when everybody could quit a job and go to another job. I don't know if that was really that fruitful in the end, but everybody was competing for more wage growth because there wasn't enough labor. We were trying to get the economy back up and running after COVID. We're on the other side of that. The pendulum has swung actually the other way now. No one is quitting, or very small amount of people are quitting their jobs and looking for another job for wage growth. Wage growth is growing at just about 3% instead of 6%.

And then energy prices—you know, we have these pops sometimes on geopolitical risk on oil, but overall, oil was $120 a barrel in 2022. It's now just about $60 a barrel. Gas prices hit their lowest level since 2021 to end 2025.

So we're seeing all these things that are saying disinflation. We have alternative resources. There's a website called Trueflation. They're saying inflation is about 1.5% right now. They're trying to give alternative resources on inflation. And so, but the bond market is not pricing that in. The 10-year yield just keeps going up, staying firm. The two-year yield is going up. And so we're sitting here saying, now we're getting this nice real yield as a bond investor. So after inflation, we're able to get some really nice income. We're able to get a nice steep curve. So the curve has steepened even though it flattened a little bit as of late. And so we’ve this roll-down, we've got attractive income in the intermediate part of the curve relative to the lower end. So our conviction in bonds just keeps going up, and we keep looking at this saying, if you want to give us greater yield here and the market wants to present that, we'll take it. So after a nice year in bonds last year, 7% to 8% total return, we think actually this little backup in yields here could offer another income-oriented return driver as we go into 2026.

John

Excellent. As always, great insights from the both of you. I want to thank you for joining. Folks, if you found this episode helpful and even if you're not a Patriots fan, please subscribe and share it with others who you think would benefit. If you want to learn more about all things investing and practice building, please visit our website. As always, thanks for listening to the show.

John

This podcast is being brought to you by John Hancock Investment Management Distributors, LLC. Member FINRA, SIPC. The views and opinions expressed in this podcast are those of the speaker, are subject to change as market and other conditions warrant, and do not constitute investment advice or a recommendation regarding any specific product or security. There's no guarantee that any investment strategy discussed will be successful or achieve any particular level of results. Any economic or market performance information is historical and is not indicative of future results, and no forecasts are guaranteed. Investing involves risks, including the potential loss of principal.

The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The Producer Price Index (PPI) tracks the average price changes received by domestic producers of their output. The Consumer Price Index (CPI) tracks the average change of prices over time by urban consumers for a market basket of goods and services. It is not possible to invest directly in an index.