S&P500 and Mag 7 Key Levels

Posted on February 16, 2026 by macromon
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Global Risk Monitor: Week in Review – Feb 13

Posted on February 15, 2026 by macromon

Sorry, no commentary this week. Stay tuned!

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Is Trump’s Manufacturing Comeback Real?

Posted on February 15, 2026 by macromon
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Global Risk Monitor: Week in Review – Feb 6

Posted on February 7, 2026 by macromon

The week ending February 6 was defined by rising internal stress beneath still-resilient headline equity levels, with sharp dispersion across asset classes and regions. U.S. equities experienced notable volatility, with the S&P 500 briefly touching record highs early in the week before selling pressure intensified midweek. A sharp Friday rebound, however, reversed much of the damage and caught short sellers off guard, restoring modest weekly stability .

Beneath the surface, market leadership continued to broaden away from mega-cap growth, as cyclicals and value-oriented sectors—particularly energy, industrials, materials, and staples—outperformed meaningfully. In contrast, the “Mag 7” (excluding Apple) posted significant losses, reinforcing a rotation away from concentrated AI-driven equity exposure. Credit markets also reflected rising stress, with widening spreads in lower-quality credits and notable deterioration in peripheral Europe, including Greece .

In commodities, gold strongly outperformed, finishing the week higher despite sharp early volatility, while silver lagged. This divergence underscored renewed demand for defensive, liquid hedges amid macro uncertainty. By contrast, Bitcoin underperformed sharply, ending the week down roughly 10% despite a dramatic $10,000 rebound on Friday, highlighting aggressive deleveraging across speculative risk assets.

Globally, leadership continued to shift outside the U.S., with select emerging markets such as Mexico posted outsized gains. Overall, the week reinforced a key theme: headline stability masking growing internal fragility, with positioning increasingly vulnerable to macro and policy surprises

Regional Performance Highlights

United States

  • S&P 500 endured deep midweek losses before a powerful Friday rebound
  • Market breadth continued to improve, favoring equal-weight and cyclicals
  • Homebuilders surged, benefiting from rate expectations
  • Energy, Industrials, Materials, and Staples were standout performers
  • Tech and software stocks lagged sharply, reflecting AI saturation concerns
  • Credit spreads widened in lower-tier credits, signaling rising risk aversion

Asia

  • South Korea stocks have emerged as a global leader, driven by AI-linked earnings momentum but was subject to some profit taking
  • Vietnam and Indonesia equities fell more than 4% on the week
  • Japan equities rose modestly, though yen weakness remained a key overhang

Europe

  • Core European equities were modestly higher
  • Peripheral stress increased, with Greek spreads widening
  • ECB tone leaned dovish as inflation dipped below target

Latin America

  • Mexico’s Bolsa surged nearly 5%, one of the strongest global performances
  • Broader regional equities supported by easing inflation trends

Commodities & Crypto

  • Gold outperformed decisively, reinforcing its defensive appeal
  • Silver declined despite broader metals volatility
  • Bitcoin fell ~10% on the week, even after a sharp $10k Friday bounce
  • Crypto weakness reflected forced deleveraging and speculative risk unwind

The Week Ahead

  • Productivity and AI-driven growth expectations move center stage as key macro drivers
  • U.S. markets face a rare data-heavy convergence: jobs, CPI, and retail sales
  • Markets remain vulnerable to spillover from crypto deleveraging
  • Expect continued sector dispersion, favoring defensives and cyclicals over speculative growth
  • Central bank messaging—especially from the Fed and ECB—will be critical in shaping risk sentiment
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Two Interesting Charts: Tariffs & Job Openings

Posted on February 7, 2026 by macromon

Wells Fargo published a pair of charts this week that appear to tell very different stories. On the one hand, higher tariffs are being promoted as a catalyst for job creation. On the other, job openings continue to slide meaningfully. It is increasingly difficult to reconcile those narratives. More plausibly, the growing drag on labor demand reflects the accelerating impact of AI, as productivity gains allow firms to do more with fewer workers.

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Global Risk Monitor: Week in Review – Jan 30

Posted on February 1, 2026 by macromon

Global markets ended the week with rising internal stress beneath still-resilient headline equity levels, setting up a fragile start to the new week. While U.S. equities held modest January gains, risk signals deteriorated meaningfully late in the week, culminating in a sharp weekend collapse in cryptocurrencies—a development likely to pressure risk assets at Monday’s open.

Beneath the surface, financial conditions remain extremely loose (see the NFCI in our Commodities Table), but cracks are emerging. The U.S. yield curve steepened sharply, with the 2s–10s spread widening to ~70 bps, signaling improving growth expectations but also greater sensitivity to inflation and policy risk. Equity leadership narrowed, small caps pulled back, and volatility rose into the month-end.

Globally, however, performance outside the U.S. was exceptional, led overwhelmingly by Asia. South Korea stood out as the best-performing equity market in the world, driven by massive capital inflows, AI-led earnings momentum, and its growing role as a global trading and technology hub. Taiwan and Brazil also posted outsized January gains, reinforcing the theme that global leadership is rotating away from the U.S. margin.

The most acute near-term risk comes from crypto markets, where Bitcoin fell nearly 10% over the weekend, confirming aggressive deleveraging at the far end of the risk spectrum. Historically, such moves tend to spill over into equities, particularly high-beta, small-cap, and speculative segments, raising the probability of a risk-off tone early in the week

Regional Market Performance Highlights

United States

  • S&P 500 briefly broke above 7,000 before retreating
  • Small caps lagged, with the Russell 2000 down ~2% on the week but still +5% in January
  • Yield curve steepened sharply (2s–10s +8 bps), now ~70 bps
  • Financial conditions remain extremely loose (See NFCI in Commodities Table), but increasingly vulnerable to market tightening shocks
  • Tech leadership fractured; volatility rose into month-end
  • Semiconductor ETF +12% in January

Asia (Clear Global Leader)

South Korea – Exceptional Outperformance

  • Up ~23% in January
  • Best-performing equity market globally over the past year (+99%)
  • Net foreign equity inflows of $96B since 2019, with $35B since 2025 alone
  • AI-driven rally led by:
    • Samsung Electronics (+186%)
    • SK Hynix (+287%)
  • Market capitalization surged to ~$3.1T, approaching Germany
  • Korea is increasingly viewed as a global AI and trading hub amid fading U.S. economic dominance

Taiwan

  • Equities up ~12% in January
  • Semiconductor strength remains a dominant tailwind
  • Benefiting from sustained global AI infrastructure demand

Japan

  • Equities softer on the week amid yen volatility and election uncertainty
  • FX dynamics remain critical for BoJ policy timing

Europe

  • STOXX Europe 600 modestly higher
  • Italy and UK outperformed; Germany lagged
  • ECB expected to hold rates with inflation near target
  • Growth stabilizing but still modest

Latin America

  • Brazil up ~13% in January
  • Central bank held rates but signaled possible calibration (cuts) ahead
  • LatAm equities supported by easing inflation and selective policy flexibility

Commodities & Crypto

  • Energy ETF +14% in January
  • Precious metals were highly volatile and hit hard late-week, but still up big in January
  • Crypto collapse is the dominant shock:
    • Bitcoin is down ~10% over the weekend
    • Represents forced deleveraging at the riskiest end of the spectrum
    • Historically precedes short-term pressure on equities and credit

Week Ahead: Risk Catalysts & Market Focus

  • Risk Markets Under Pressure at Monday Open
    • Crypto selloff likely to spill into equities
    • High-beta, small caps, and speculative tech are the most exposed
    • Defensive sectors are likely to outperform early
  • Key Macro Events
    • U.S. employment report (Friday)
    • ISM Manufacturing & Services
    • ECB, BoE, RBA, and Banxico policy decisions
  • Rates & FX
    • Yield curve steepening raises sensitivity to inflation surprises
    • USD volatility remains elevated amid geopolitical hedging and Fed transition
  • Central Bank Messaging
    • Fed: policy on hold, but easing optionality narrowing
    • EM Asia: easing bias persists despite market pricing for hikes
    • Japan: FX remains the key trigger for earlier BoJ action

Bottom line:
Markets enter the new week with strong global performance contrasts but deteriorating risk signals. Asia—especially Korea—remains the standout structural winner, but the crypto-led deleveraging shock materially raises near-term downside risk. Expect higher volatility, sharper dispersion, and a defensive bias until risk appetite stabilizes.

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The Speech – Must View

Posted on January 25, 2026 by macromon

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Global Risk Monitor: Week in Review – Jan 23

Posted on January 24, 2026 by macromon

This week’s global financial landscape was characterized by intense volatility and a continued and significant rotation across asset classes. A prominent trend is the marked shift toward small-cap stocks, as investors move away from the high-valuation mega-cap technology sector that dominated the previous year. This rotation has been underscored by the notable underperformance of technology stocks in January, with investors largely shying away from the sector amid concerns over AI-related valuations and higher interest rates. Conversely, the commodities market witnessed an extraordinary surge. Silver prices have skyrocketed, rising by over 44% this month alone, while gold has also shown strong gains. Energy markets were equally explosive, with natural gas prices spiking more than 70% this week, driven primarily by a severe cold spell.

In international markets, Asian equities—particularly in Korea—continued their impressive trajectory, with Korean markets up 18% in January following a massive rally in 2025. This occurs against the backdrop of a sharply declining U.S. dollar, with the DXY index dropping 1.80% over the week. While U.S. GDP growth was revised higher to 4.4%, persistent inflation and geopolitical tensions, specifically regarding trade threats, continue to weigh on market sentiment.

Summary

  • Risk Appetite and Credit Spreads: While credit spreads remain tight historically, the current week saw a shift in investor focus toward defensive commodities and rotational equity trades.
  • Asset Performance Divergence: A clear divergence has emerged between surging precious metals and natural gas versus a “hammered” U.S. dollar and Bitcoin.
  • Equity Rotation: Investors are increasingly moving away from mega-cap technology, testing support levels in indices like the Nasdaq 100 as they seek value in other sectors.

Regional Economic Insights

  • United States: The economy remains resilient with a revised Q3 GDP of 4.4% and an Atlanta Fed Q4 Nowcast of 5.4%. However, consumer sentiment, while improving monthly, remains 20% lower year-over-year due to high prices.
  • Europe: The Eurozone is facing renewed trade and geopolitical uncertainty, with the STOXX Europe 600 ending the week nearly 1% lower. Bulgaria notably adopted the euro currency on January 1st, despite internal political turmoil.
  • Asia:
    • Korea: Remains a standout performer, with gains reaching 18% for the month of January.
    • Japan: Markets are roiled by political uncertainty and proposals for temporary food tax cuts, leading to a spike in 10-year JGB yields to 2.26%, the highest since 1997.
    • China: Growth remains uneven, with the fourth quarter of 2025 seeing the slowest pace (4.5%) since the pandemic reopening.
  • Latin America: Brazil showed significant strength with markets up 8%, even as Colombia faces potential rate hikes due to a 23% minimum wage increase.

Inflation: CPI-PPI Divergence

  • PCE and Inflation Targets: The November core PCE price index rose 0.2% monthly and 2.8% annually, remaining consistently above the Fed’s 2% target.
  • Expectations: While one-year inflation expectations eased to 4.0%, long-run expectations ticked up to 3.3%, indicating that price pressures remain a long-term concern for the FOMC.

Valuations and the “Low Fuel Tank” Risk

  • Technology Sector Pressure: Software stocks are under particular pressure due to AI concerns and a broader rotation away from the mega-cap tech cohort.
  • Market Volatility: The CBOE Volatility Index (VIX) has fluctuated, and with major tech earnings (MSFT, AAPL, META, TSLA) and a Fed meeting scheduled for next week, the risk of a sharp repricing remains high.
  • Yield Curve Shifts: The U.S. Treasury yield curve ticked up slightly, with the 10-year yield hovering around 4.25%, reflecting shifting expectations for 2026 rate cuts.

Precious Metals: Gold & Silver

  • Recent Trends: Gold surged 8% this week, while silver has seen an extraordinary 15% weekly gain, bringing its total January increase to over 44%.
  • Market Drivers: A “hammered” U.S. dollar, with the DXY index dropping 1.80%, has acted as a significant tailwind for dollar-denominated metals.
  • Forecast: Continued dollar weakness and lingering geopolitical scars from recent trade threats could sustain the “safe haven” bid for precious metals.
  • Supply/Demand Impact: While demand is rising as a hedge against inflation and dollar depreciation, the rapid monthly ascent in silver suggests potential for high volatility or a technical cooling period if the dollar stabilizes.

Energy: Natural Gas

  • Recent Trends: Natural gas prices spiked 70% this week, the most significant gain among major commodities.
  • Key Factors: Extreme price action was primarily driven by a cold spell, which significantly tightened the short-term supply-demand balance.
  • Forecast: Investors should monitor the EIA Natural Gas Inventories report on Thursday (Jan. 29) for confirmation of inventory drawdowns.
  • Supply/Demand Impact: Current demand is heavily weather-dependent; any signs of moderating temperatures could lead to a swift retracement of this week’s 70% gain.

Energy: Crude Oil

  • Market Outlook: While not matching the volatility of natural gas, crude oil remains sensitive to broader macroeconomic sentiment and the declining dollar.
  • Significant Events: The EIA Crude Oil Inventories report is scheduled for Wednesday (Jan. 28). Additionally, Friday’s earnings reports from energy giants Chevron (CVX) and Exxon Mobil (XOM) will provide critical insights into production levels and capital expenditure trends for 2026.
  • Supply/Demand Impact: Resilient U.S. economic growth (revised to 4.4% in Q3) supports the demand side, but investors remain cautious about potential shifts in global trade policy.

Industrial Commodities & Agriculture

  • Trends: Durable goods orders (forecasted to rise 5.4%) and upcoming data on manufacturing and factory orders will serve as proxies for industrial commodity demand.
  • Factors to Watch: The “AI and space race” between the U.S. and China, along with a global supply chain reset, is expected to sustain demand for industrial inputs and high-tech manufacturing materials throughout 2026.
  • Supply/Demand Impact: Protectionist surges worldwide and the risk of new tariffs (though currently tempered) create uncertainty for international trade flows and commodity supply chains

Week Ahead

The upcoming week is expected to be marked by “Higher Volatility” as investors navigate a dense schedule of high-impact earnings from the technology sector and a pivotal Federal Reserve meeting.

Major Economic Indicators

  • Durable Goods Orders (Mon, Jan. 26): Forecasted to rise 5.4% in November, driven by a rebound in Boeing orders and a broadening of investment across various industries.
  • Consumer Confidence (Tue, Jan. 27): This report will provide further insight into whether the recent improvement in sentiment can be sustained despite ongoing pressures on purchasing power.
  • EIA Crude Oil and Natural Gas Inventories (Wed & Thu, Jan. 28-29): Following massive weekly spikes in natural gas prices, these inventory reports will be critical for gauging whether supply constraints persist.
  • Trade Balance (Thu, Jan. 29): Analysts forecast a modest narrowing of the trade deficit to $23 billion, though data remains limited due to previous government disruptions.
  • Producer Price Index (Fri, Jan. 30): This wholesale inflation gauge will be closely watched for signs of “sticky” input costs that could impact future consumer prices.

Key Earnings Releases

  • Mega-Cap Technology (Tue–Thu): Microsoft (MSFT), Meta Platforms (META), Tesla (TSLA) , and Apple (AAPL) all report this week. These results are expected to be the “primary driver of investor sentiment”.
  • Semiconductor & Software (Wed–Thu): ASML, ServiceNow, SanDisk, and Western Digital will offer a “better sense of the state of tech,” particularly regarding AI demand and memory chip market health.
  • Industrial & Transportation (Tue–Thu): Boeing (BA), General Motors (GM), Union Pacific (UNP), and UPS will provide a pulse check on manufacturing, labor, and logistics.
  • Energy & Finance (Fri): Chevron (CVX), Exxon Mobil (XOM), and American Express (AXP) will round out the week, highlighting trends in consumer spending and energy sector profitability.

Global Events & Factors

  • Federal Reserve Monetary Policy Meeting: While no interest rate change is expected , the meeting is “in focus” as markets weigh the timing of potential cuts later in 2026.
  • International Central Bank Decisions:
    • Bank of Canada (Wed, Jan. 28): Focusing on economic fallout from trade strains with the U.S..
    • South African Reserve Bank (SARB): Analysts expect a 25-basis-point rate cut.
    • Central Bank of Colombia (Fri, Jan. 30): Expected to hike rates by 25 basis points following a massive 23% minimum wage increase.
  • Geopolitical Resilience: Market confidence remains sensitive to trade policy headlines, particularly following recent volatility surrounding Greenland and global tariff threats.
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The Best MLK Weekend Of All-Time

Posted on January 18, 2026 by macromon

In celebration of MLK Weekend, we are reposting a repost of a repost of post in honor of Dr. King, one of our most outstanding Americans, a true patriot, and a modern-day saint.  Hard to believe it’s been thirty years.

Originally Posted on January 21, 2019

During my Lehman days as a young bond strategist, the firm’s research group would do a January roadshow in many of America’s major cities to present our ideas to institutional investors.   One particular year, we were in Atlanta at end of the week and scheduled for another “greatest show on earth” in Chicago the following Tuesday.

A Weekend In The Peachtree Hyatt

Rather than flying home to New York, I decided to stay over in Atlanta and migrate north on Monday evening.   It was MLK weekend, and I wanted to attend services at the Ebenezer Baptist Church, where Martin Luther King, Jr. was baptized as a child and gave his first sermon. If my memory is correct, I believe his father also pastored the church.   His mother was shot and killed while she played the organ in that church in 1974.

Dr. King’s tomb is located just outside the side door of the church in the middle of a reflecting pool.

dr. king

Three Memories Of Ebenezer

I recall my three main takeaways from that Sunday morning.

First,  I was maybe one of ten whites out of 600-700 people sitting in the pews.  Sadly, as Dr. King said almost 60 years ago.

I think it is one of the tragedies of our nation, one of the shameful tragedies, at 11 o’clock on Sunday morning is one of the most segregated hours, if not the most segregated hour in Christian America.  – MLK, Jr  Meet the Press, April 17, 1960

Nevertheless, I felt incredibly welcome and never — not for one nanosecond —  was conscious about such a silly thing as the difference in the color of my skin.  During the greeting time, the Ebenezers made me feel so welcome and a part of their family.

Second, not to contradict Dr. King, but I believe the service started at 9:30 AM and went to almost 1:00 PM!  Maybe it was an exceptional MLK weekend service.  The pastors in the primarily white churches I have attended have trouble keeping the congregation’s attention for more than 20 minutes.

Third, the sermon differed entirely from those I had experienced in middle-class white churches.  Less doctrine, though similar theology, and more authentic life experiences.  The struggles of raising children in poverty.  Grandparents raising their grandchildren. Troubles with children with drug addiction. The struggles of being black in white America, all of the life struggles which are just as ubiquitous in the white and all communities of color.  No pretense of sinless and perfect, no holier than thou vibe, judgment, condemnation, guilt, or shaming.  All love, compassion, kindness, and forgiveness.  Just like the real Jesus.

Also, the sharing of the same joys and blessings.  New babies, college graduates, marriages, medical recoveries, and others.

“Daddy King” was referred to several times.

It truly echoed the genius and saintliness of Dr. King.

I walked away convinced the Church for the African-American community was much more — that is a considerable part of their life — than what I had experienced in white evangelical America.

Yes, maybe some of us attend more than just Sunday services, but many, such as yours truly, often do so with the dubious motive of seeking the blessings of personal peace and personal prosperity.  The community of the Church, as it is for the African-Americans, though not always, is secondary.

I spent the next day, Martin Luther King Jr Day across the street at the King Center.

More Empathy, Less “Being A Dick“

What great memories from that unforgettable MLK weekend.

I grew up in the middle-class white suburbs of Los Angeles, attending an all-white high school.  Fortunately, I had a father who was politically left of the salad fork (out of a rebellion,  I became a conservative in college),  and also spent my first 25 years playing sports, fighting in the baseball trenches with, pulling for, breaking bread, and downing brewskies with my teammates of color; or as I grew to learn colorless.

I am very thankful for those experiences.  It helped me integrate into and see the real greatness of America.

I feel sad for my many brothers and sisters who have not had the same privilege and are stuck still watching black and white television, unable or unwilling to embrace and enjoy the tremendous diversity of this great country.

Ditto for the similar ignoramuses from other races and ethnic groups.

tv

I can’t imagine eating steak and potatoes every day and every night.

Ignorance And Racism Know No Boundaries

Let me finish by qualifying all of the above.

Racism is a prominent feature of so many human societies that some evolutionary psychologists have concluded it is “natural” or “innate.”  We don’t know about that but are sure it is not just a “white thing,” a “black thing, or a “brown thing,” etc.

I have shared the story of my brother who was murdered by an undocumented worker, who stated, after stabbing him, “all anglos need to be exterminated.”   This sociopathic asshole killed my brother not because he was brown or undocumented but because he was one sick and crazy mother f$@ker.

Now, more than ever, it is time to commit to expanding our menu.  Let’s make it a point to understand and enjoy the perspectives and cultures of all the different races and ethnic groups.

Allegorically and literally, let’s eat more balaedas, falafel, babaghanoush, borscht, moussaka, and bouilli, among others.  The steak and potatoes will taste sooo much better.

Sorry to end on a note that violates the spirit of Dr. King but I can’t help myself.

Any white man (probably less so for a white woman) who thinks he knows what it is like to be an African-American growing up and living in America, has his head…well…you know where.

head

Bring it on!

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Global Risk Monitor: Week in Review – Jan 16

Posted on January 17, 2026 by macromon

January market action reflects a clear rotation away from narrow mega-cap leadership toward broader equity participation, a shift that is both cyclical and allocational in nature. Small-cap stocks have emerged as standout performers, with the Russell 2000 and S&P MidCap indices significantly outperforming large-cap benchmarks. Most notably, the S&P 500 Equal Weight Index has outpaced the cap-weighted S&P 500 by nearly a factor of three, underscoring a broadening of market leadership rather than a deterioration in risk appetite

In contrast, technology—particularly AI-adjacent software and select mega-cap names—has lagged, as investors reassess valuation risk, competitive disruption from generative AI platforms, and the sustainability of earnings dominance. This underperformance appears less like a regime shift and more like early-year portfolio rebalancing, as institutional allocators rotate exposure following an outsized 2025 tech rally.

Outside equities, silver prices surged an extraordinary 25% in January, reflecting renewed interest in real assets amid geopolitical uncertainty, easing inflation momentum, and strong industrial demand signals. Lumber prices also jumped sharply, hinting at nascent reflationary and construction-related demand.

Geographically, Asia stands out as the strongest regional performer, with Korea, Indonesia, Japan, and the Philippines delivering impressive equity gains, supported by currency dynamics, export resilience, and improving domestic growth expectations. Overall, January’s market behavior signals rotation, not retreat, a constructive but fragile setup heading into a policy and data-heavy February.

Global Market Strategy Analysis

Cross-Asset Market Signals

  • Equity leadership is broadening, with small caps and equal-weight indices leading performance rather than mega-cap concentration

  • S&P 500 Equal Weight Index outperforming cap-weighted S&P by ~3x YTD highlights healthy internal market breadth 

  • Technology and AI-linked equities lagging, particularly software, as valuation sensitivity rises

  • Silver +25% in January, signaling renewed inflation hedging, industrial demand optimism, and geopolitical risk pricing

  • Lumber prices surged last week, reinforcing early-cycle and reflationary signals

Equity Rotation & Style Dynamics

  • Small caps “rocking” after prolonged underperformance in 2025

  • Rotation appears allocational rather than fundamental, driven by:

    • Early-year portfolio resets

    • Valuation dispersion

    • Catch-up trade dynamics

    • Too early to declare a lasting regime change; positioning is likely still fluid

AI enthusiasm remains structurally intact

  • Software names under pressure amid disruption fears

  • Mega-cap tech is experiencing valuation digestion
  • Semiconductors are more resilient than software, supported by infrastructure demand

Likely near-term consolidation before selective re-entry

Regional Equity Performance

Asia – Clear Outperformance

  • Japan: Strong equity rally on fiscal stimulus expectations and yen weakness

  • Korea: Semiconductor exports and improving global demand are driving gains

  • Indonesia & Philippines: Benefiting from EM capital inflows and domestic growth resilience

  • Asia ex-China continues to attract incremental global capital 

Europe

  • Modest gains, supported by easing inflation but capped by weak growth momentum

United States

  • Rotation-driven gains beneath flat headline indices

  • Value, small-cap, and cyclical exposure outperforming growth

Macro & Policy Backdrop

  • Markets are currently filtering out policy noise, focusing instead on:

    • Cooling but resilient U.S. inflation

    • Stable labor market

    • Earnings durability

    • Upcoming risks:

      • President Trump’s Davos speech

      • Fed leadership uncertainty

      • Shifts in rate-cut expectations could test market complacency

Strategic Takeaways

  • This is rotation, not risk-off

  • Broadening participation is constructive, but momentum is vulnerable to policy shocks

  • Commodities—especially silver—are quietly signaling macro regime hedging

  • Asia remains the cleanest relative growth and equity story in the near term

  • Maintain flexibility: early-year moves often exaggerate signals before fundamentals fully assert themselves

Week Ahead: Key Risks, Catalysts, and Market Tests

  • Policy & Central Bank Focus

    • Markets will be tested on their ability to continue filter out the noise  as several high-profile policy events approach.

    • President Trump’s Davos speech represents a key event risk, particularly around:

      • Trade rhetoric

      • Tariff policy

      • Fed independence narratives

    • Any escalation in policy uncertainty could challenge the recent risk-on rotation, especially in small caps

  • Federal Reserve & Rates

    • Recent developments have reduced the probability of near-term dovish outcomes.

    • Chair Powell’s resistance to DOJ-related pressure increases the likelihood he remains a Fed governor beyond May, reinforcing continuity.

    • Markets will closely watch Fed communications for signals on:

      • Rate-cut timing

      • Tolerance for renewed financial easing

    • A renewed rise in long-end yields could disproportionately pressure small caps after their sharp January rally.

  • Economic Data Watch

    • U.S. releases on GDP, jobless claims, housing activity, and consumer sentiment will shape near-term rate expectations.

    • Data strength is likely to be interpreted asymmetrically:

      • “Good data” may revive rate volatility

      • “Soft data” would reinforce the broadening equity trade

  • Earnings Season Acceleration

    • Upcoming earnings from tech, industrials, and consumer names will be critical in determining whether:

      • AI underperformance is a pause or a deeper reset

      • Small-cap optimism is supported by forward guidance

    • Any downside surprises in tech could further favor equal-weight and value exposures.

  • Global & Geopolitical Considerations

    • Ongoing Middle East tensions (Iran-related trade risks) remain a latent tail risk.

    • Asia-focused investors will monitor:

      • Japan’s political developments

      • Export data from Korea and China

      • EM Asia capital flow sustainability

Bottom line:
The coming week is a stress test for January’s rotation narrative. If markets can absorb policy headlines and macro data without a sharp rise in yields or volatility, the broadening trade likely persists. If not, a short-term consolidation—particularly in small caps—becomes increasingly likely.

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