Lexicon Financial Group Weekly Update — February 11, 2026
“I am an exponent of the philosophy that the main objective of common stock investment should be pricing, not timing; and by pricing, I mean the endeavour to buy securities at prices which are attractive, letting timing take care of itself.”
From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel
ISSUE 215
Looking Around
We have been watching some of the Olympic coverage and can’t wait for short-track speed skating. It has to be one of the most dramatic events! Sometimes, a skater takes an early lead and cruises to an easy victory. Other times, that aggressive move sees them colliding with another athlete and crashing into the boards.
Australian short-track speed skater Steven Bradbury is best known for his 1000m gold medal in 2002. He was in last place behind four top favourites. On the final turn of the race, the top four collided with each other, careening into the padded boards. And Bradbury cruised to victory.
His win was so improbable that “Doing a Bradbury” is a slang phrase in Australia for an unexpected win based on the misfortunes of others. The reason we mention this is that, sometimes, the stock markets feel like that.
One thing we know for sure about the investment industry is that it thrives on two things: creating acronyms and putting things in neat little boxes. Take GICS as an example. GICS is the Global Industry Classification Standard, and it divides economies and markets into their individual components. For example, according to GICS, the benchmark large-cap index for large-cap stocks in the United States, the S&P 500 can be subdivided into 11 unique sectors.
You’ve heard of the sectors before – technology, energy, materials, and financials, to name a few. But, more recently, the popular press has been talking about sector “rotation.”
In simple terms, a “rotation” is the act of moving investments from one area of investment to another. An investor might “rotate” from energy stocks to technology stocks, for example. Rotations occur when a portfolio manager determines, based on the client’s unique investment objectives, that the new area of investment is more attractive than the current one.
Sometimes, this occurs after a period of strong returns (managers decided to take profits and move on), when the prospect for continued growth appears muted. Other times, decisions are made to balance the overall risk in a portfolio. A portfolio manager may “rotate” out of a well-performing asset class as part of a regularly rebalancing system. Currently, the broader market appears to be rotating ever-so-slightly away from the large-cap technology sector, with investors seeking greener pastures. (1)
Whether this is a risk-based decision or a growth decision is more difficult to ascertain, but technology today is the largest sector in the entire S&P 500 and brings with it some added measure of volatility and risk.
For years, the "Magnificent Seven" trade was a riskier investment that performed well for investors, but that may be starting to fray. Since mid-January, the technology sector has indeed moderately underperformed the broader market.
This may be signaling that market breadth is finally expanding beyond the tech sector. We see this as positive, as we have noted in past weekly updates that the reliance on the tech sector to generate the lion’s share of investment returns was akin to having most of your eggs in one basket. (2)
But if the broader investment landscape is modestly rotating away from technology, where is that money going? There is some evidence that the rotation may be into so-called real or old economy sectors such as energy, consumer staples, materials, and industrials. They have the early lead so far this year, but there is a lot of racing left ahead of them. Future rotation into non-tech stocks could eventually lift market gains but given the current market weights of the largest tech names, that process is likely to require sustained performance and earnings growth to meaningfully shift leadership. (3)
We’re not skating in the Olympics (and we never will). But we don’t want to end up crashing into the end board with client portfolios. That’s why we stay disciplined and diversified.
Go Canada!
Read and Watch
Want deeper insight into topics in your Weekly Update? Then, read and/or right click:
The US economy is growing - so where are all the jobs?
European stocks close higher as bumper earnings week concludes
Will Japanese Stocks Rally to Fresh Record Highs?
Scenic trains, cruises and concerts: China’s new plan to get consumers spending again
Looking Back
Stock markets in Canada and the U.S. saw gains last Friday.
The S&P/TSX composite index (TSX) ended the week up 1.7 per cent for the week and 2.4 per cent for the year. Much of the gain in the TSX came from the basic materials sector. The price of precious metals has seen a lot of movement recently; it still has been strong so far this year. These prices ran out of momentum last week, after jaw-dropping surges driven by investors clamouring for something safe to own amid worries about political turmoil, a U.S. stock market that is seen as expensive and huge debt loads for governments globally. Canadian investors also digested labour force figures for the month of January. According to Statistics Canada, fewer people were looking for work in January, which drove the unemployment rate lower despite job losses. The Canadian economy shed 25,000 jobs in January, compared to economists’ expectations for a slight gain. (4)
Last week was a volatile week for major U.S. stock markets, which finished mixed as large-cap technology stocks suffered their worst week since November, while small-cap and value-oriented stocks added to their year-to-date gains. Fears about the disruptive potential of AI, as well as concerns regarding potential overinvestment in the technology, have weighed on many of the high-growth stocks that have outperformed over the last few years. In contrast, some cyclical and value-oriented segments have outperformed, as investors rotated into the areas that have lagged firms with more AI exposure. Corporate earnings and geopolitical tensions also appeared to contribute to the week’s volatility.
Another concern was the Labor Department’s Job Openings and Labor Turnover Summary, which revealed that U.S. job openings declined to about 6.542 million in December—the lowest since September 2020—while hires edged up modestly and layoffs rose. Elsewhere, the Labor Department reported that initial U.S. jobless claims came in at 231,000 for the week ended January 31, which was above consensus estimates and an increase over the prior week’s reading of 209,000. In related news, consulting firm Challenger, Gray & Christmas reported that U.S.-based employers announced over 108,000 job cuts in January – a 118 per cent year-over-year increase and a 205 per cent hike from the previous month. January’s announced layoffs were the most for the month since 2009.
The pan-European STOXX Europe 600 Index made a new intraday high and gained 1.00 per cent last week. Optimism about the eurozone economy underpinned investor sentiment, helping to offset the impact of recent market volatility. Further support came from the mood among consumers and businesses, which was more upbeat at the start of 2026, with the European Community (EC) sentiment indicator rising to 98.2 in January, slightly below the long-term average. Confidence improved across all sectors, apart from construction, where it held steady. Sentiment in France strengthened markedly, thanks to subsiding political tension after the 2026 budget was adopted. Other major European stock markets also ended higher last week.
Japan’s stock markets rose last week as domestic sentiment was largely one of optimism ahead of the country’s lower house election on February 8, where indications were that Prime Minister Sanae Takaichi’s Liberal Democratic Party appeared to be on track for a stand-alone majority of seats. Globally, investors grew concerned about the potential for innovative artificial intelligence technologies to encroach on the operations of many software services providers, dampening risk appetite. Investor concerns about Japan’s financial standing, given its already high debt burden, sent the yield on the 10-year Japanese government bond (JGB) to its highest levels - at around 2.23 per cent - since 1997.
Japanese households have been cutting back on spending, as inflationary pressures continue to erode their purchasing power. Inflation is among the key issues for voters going into the February 8 election, and Takaichi recently pledged to reduce the consumption tax on food to zero per cent for two years in an effort to lower living costs.
Stock markets in China ended last week lower, as volatility in commodity markets and weakness in tech stocks weighed on major indexes. Private survey data compiled by S&P Global indicated a modest uptick in China’s economic activity in January – it rose 0.3 points month over month to 52.3. This is the highest reading in three months spurred on by stronger growth in new business, which was in turn supported by a fresh increase in new export orders. The manufacturing sector PMI also showed expanding activity for the second straight month, climbing to 50.3 from 50.1 in December, highlighted by higher new orders, a rise in employment, and the first increase in output charges in 14 months.
However, according to Bloomberg, PMI data from the country’s statistics bureau painted a different picture, suggesting a broad-based economic slowdown during the month. This private survey tends to skew more toward export-oriented private firms, which has led to it producing stronger readings than the official poll recently, as China continues to struggle to spur domestic consumption. Economists polled by Bloomberg broadly expect the People’s Bank of China to ease monetary policy this year. (5)
The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.
"What Is ‘Rotation’ in Investing and Why and When Does It Matter?", Simon McConnell, Head of Portfolio Construction and Implementation, Netwealth, February 9, 2022
The Great Rotation: Wall Street’s ‘Old Economy’ Giants Overtake Tech Titans in 2026 Shift, MarketMinute, The Chronicle Journal, January 20, 2026
Sector rotation is picking up—but big tech still dominates the S&P 500, Martin Baccardax, MSN, February 10, 2026
Canada, U.S. stock markets rebound on Friday, with the Dow Jones topping 50K, The Canadian Press via BNN Bloomberg, February 6, 2026
Global markets weekly update - Jobs data signal continued cooling in U.S. labor market, T. Rowe Price
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Looking to Learn?
If you want to know more about some of the topics we wrote about this week, just click on the links below:
Stock Sectors: What Are They? How Are They Used?
The Great Rotation: Small Caps Surge as Trump Trade 2.0 Redraws the Market Map
