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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.

Weekly Wrap: Small Caps Surge to Records as Yields Stall the S&P

Markets

January 18, 20263 min read

Weekly Wrap: Small Caps Surge to Records as Yields Stall the S&P

The 'everything rally' fractured into a violent rotation this week as the 10-Year Treasury yield climbed to 4.23%, stalling the S&P 500 (-0.38%) but igniting a 2.0% surge in the Russell 2000 to fresh records. The catalyst was twofold: a 'Warsh Premium' pricing into bonds on rumors of a hawkish Fed Chair pick, and a domestic growth trade that favored small caps and semiconductors (Micron +7.8%) over broad tech. While JPMorgan anchored financials with a 7.6% earnings beat, the macro data flashed a hidden warning: Core Retail Sales rose 3.58% YoY, yet unit demand fell 1%—a classic stagflationary signal where revenue growth is purely inflationary. The variant view: the market is mispricing the risk of a trade war, with new tariff threats on Europe (Greenland dispute) largely ignored by consensus. Watch the 4.30% yield level next week; an official Warsh nomination could trigger a repricing that challenges the 6,900 support on the S&P 500, testing the durability of the soft landing narrative.

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.

Morning Brief: TSM Confirms Supercycle, but 'Warsh Premium' Spikes Yields

Markets

January 18, 20264 min read

Morning Brief: TSM Confirms Supercycle, but 'Warsh Premium' Spikes Yields

Taiwan Semiconductor ([[TSM]]) confirmed the AI supercycle with a massive $52-56B capex commitment, yet the S&P 500 finished the week flat as the "Warsh Premium" drove 10-Year yields to a 4-month high of 4.23%. While TSM consolidated Friday, the hardware complex ignored the rate spike—Micron ([[MU]]) surged 7.8% and Super Micro ([[SMCI]]) jumped 10.9%—validating the infrastructure buildout thesis. The variant view: The Russell 2000 hitting a record high despite rising yields signals that "animal spirits" and M&A hopes are currently overpowering cost-of-capital headwinds, a divergence that typically resolves violently. A key confirmation signal emerged in Micron, where an insider purchased $8 million in stock near all-time highs. Watch the 4.30% yield level next week; a breach likely triggers algorithmic selling in risk-parity funds, threatening the rotation trade.