Financial News

In-depth reporting and analysis on markets, the economy, and everything affecting your money.

January 18, 20264 min read

Quarterly Outlook: S&P 7,000 vs. 4.24% Yield—The Valuation Buffer Is Gone

Q1 2026 faces a critical valuation test: Can earnings justify the S&P 500 near 7,000 while the 10-year yield pushes 4.24%? With rate cuts repriced to June and the yield curve steepening to +65 bps, the valuation buffer is gone; the "easy money" multiple expansion phase has ended. Early Q4 results reveal a stark divergence: Financials are leading the rotation (JPM +7% revenue), yet "sell the news" reactions in strong performers like BAC suggest the bar for beats is dangerously high. The variant view: Consensus treats strong growth as bullish, but in this "No Landing" regime, robust data is bearish for multiples because it keeps the Fed sidelined. The trade is shifting from duration to economic sensitivity and pure AI infrastructure (SMCI, MU). Watch the 4.50% yield level—a break above this zone historically triggers rapid multiple compression, making the upcoming PCE print and March FOMC dot plot decisive for the quarter's trajectory.

Monthly Wrap: Bond Vigilantes Return—10Y Hits 4.23% as Trump Trade Stalls

Markets

January 18, 20263 min read

Monthly Wrap: Bond Vigilantes Return—10Y Hits 4.23% as Trump Trade Stalls

The "Trump Trade" hit a wall in January as bond vigilantes drove the 10-year Treasury yield to a 4-month high of 4.23%, overshadowing a strong start to earnings season. Despite JPMorgan ([[JPM]]) and Morgan Stanley ([[MS]]) beating estimates and inflation data softening, the S&P 500 stalled at 6,940 as markets priced in rising fiscal and personnel risk. The divergence is extreme: The Semiconductor Index (SOX) gained 1.15% on a historic $250B US-Taiwan trade deal, while Constellation Energy ([[CEG]]) plunged 10% on grid overhaul fears—confirming that policy proximity, not just macro, is driving alpha. The variant view: rising yields despite cool inflation signals a supply problem, not a price problem. Watch the Fed Chair nomination closely; continued ambiguity regarding Kevin Hassett could push the 10-year through 4.30%, a level that likely breaks the equity valuation floor regardless of Q4's +8% earnings growth.

Market Close: S&P 500 Knocks on 6,000 in Best Week Since Nov

Markets

January 18, 20263 min read

Market Close: S&P 500 Knocks on 6,000 in Best Week Since Nov

The S&P 500 surged 1.0% to close at 5,996.66, falling just three points short of the historic 6,000 milestone but securing its best weekly gain (+2.9%) in two months. A "Goldilocks" Retail Sales print (+0.4% vs. +0.7% est) fueled the risk-on tone by tempering rate fears without signaling recession, keeping the 10-year yield anchored at 4.61%. While the Nasdaq (+1.5%) led on renewed AI strength and Intel (+9.3%) M&A rumors, the Russell 2000 lagged (+0.4%)—a divergence suggesting investors are prioritizing mega-cap liquidity over small-cap exposure ahead of the long weekend. With U.S. equities closed Monday for MLK Day, the primary sentiment gauge shifts to Bitcoin, which broke out above $105,000. Watch the $105k level over the weekend; holding it would signal strong risk appetite heading into Tuesday’s post-inauguration session.

Monthly Outlook: Bond Vigilantes Return at 4.23% to Cap AI Rally

Markets

January 18, 20264 min read

Monthly Outlook: Bond Vigilantes Return at 4.23% to Cap AI Rally

The "January Effect" has collided with a reality check as the 10-Year Treasury yield spikes to a four-month high of 4.23%, threatening to cap equity valuations despite robust AI fundamentals. While Taiwan Semiconductor (TSM) surged 4.4% on blowout earnings and Micron (MU) rallied 7.8%, the S&P 500 stalled at 6,940 as rate-sensitive sectors capitulated—Constellation Energy (CEG) plunged 10% on fears of a Trump administration grid overhaul. The variant view: Consensus dismisses the Fed Chair selection as noise, but the bond market is violently pricing in a "Warsh Premium"—a hawkish pivot that could reprice the curve higher. The next two weeks are critical: with Q4 GDP tracking at a scorching 4.3% (due Jan 22) and Netflix (NFLX) earnings on Tuesday, a "good news is bad news" print could push yields through 4.30%, triggering systematic de-leveraging.

Year in Review: The Broadening Bull—S&P +18% as Mag 7 Grip Loosens

Economy

January 18, 20264 min read

Year in Review: The Broadening Bull—S&P +18% as Mag 7 Grip Loosens

The "Recession Godot" never arrived in 2025. Instead, the S&P 500 posted a +17.9% return, securing a rare "hat trick" of double-digit gains as the market broadened beyond the Magnificent 7. While the Mag 7 still performed, their contribution to total returns dropped to 42.5%—the lowest since 2021—as investors rotated into Communication Services (+33.7%) and Industrials (+19.4%). The year's true anomaly was Gold ([[GC=F]]), which surged 60% despite positive real rates, shattering historical correlations; conversely, Bitcoin ([[BTC-USD]]) decoupled from the risk-on rally to finish down 6.3%. Macro resilience was the driver, with Q3 GDP hitting 4.3% and allowing the Fed to cut 75bps into strength. We enter 2026 with Goldman Sachs forecasting another +12% upside, but with valuations elevated, the burden of proof shifts to corporate earnings growth.