Financial News

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

January 18, 20264 min read

Morning Brief: SMCI +11% on $250B Deal; S&P Stalls at Valuation Wall

A massive $250B US-Taiwan trade pledge reignited the AI infrastructure trade, sending Super Micro Computer (SMCI) surging 11% to $32.66 while the broader S&P 500 stalled at 6,940. Despite strong earnings beats from JPMorgan ($46.8B revenue) and Bank of America (+18% EPS), financial stocks saw muted action, confirming that the "higher for longer" net interest income benefit is fully priced in. The divergence is stark: capital is aggressively rotating from value sectors back into hardware capex plays, even as the S&P 500 trades at a precarious 22.2x forward P/E—significantly above the 20.0x historical average. Elsewhere, ImmunityBio (IBRX) rocketed 40% on revenue data, signaling speculative appetite for organic growth outside the tech complex. Watch the 10-year yield as Fed Chair speculation shifts toward Kevin Warsh; a "hawkish institutionalist" appointment could challenge the valuation premium currently supporting the index.

2026 Outlook: From Valuation to Validation—Why S&P 7,000 Needs 15% Growth

Economy

January 18, 20266 min read

2026 Outlook: From Valuation to Validation—Why S&P 7,000 Needs 15% Growth

2026 opens as the 'Year of Validation': after a 16% multiple-driven rally in 2025, the S&P 500 (trading near 6,950) must now deliver 15% earnings growth to justify current valuations. Consensus expects a smooth path to 7,600 based on 2.5% US GDP and two Fed cuts, but this 'priced for perfection' scenario ignores the looming leadership vacuum at the Federal Reserve. With Powell's term ending May 15, the 'Battle of the Kevins' introduces political risk that a complacent VIX (15.86) has yet to price. The structural danger zone lies in the bond market: the 10-year yield at 4.23% is creeping toward the 4.5% threshold where equity risk premiums evaporate. While the $520B AI capex cycle remains a potent tailwind, the trade for 2026 isn't blind beta—it's long volatility while holding quality growth. Watch Q1 earnings guidance; any deviation from the 15% growth trajectory breaks the bull case math.