January 15th Market Overview

Happy Thursday

Oil tanked after Trump said he's backing off Iran. Not sure if the market called the bluff or what, but tensions were serious going into yesterday's close. VIX barely spiked.

TSMC raised capex to $56 billion, basically telling the market the AI buildout isn't slowing. Goldman and Morgan Stanley beat. Small caps hit another record. Labor market came in strong.

When everything lines up this clean, I usually get nervous. Today felt different. Real earnings, real data, not just headlines and hope.

Let’s dig in...

Today's Big Picture

Oil Drops as Iran Tensions Fade

Brent crude fell more than four points after Trump signaled he's backing off military action against Iran. Biggest single-day drop since the Israel-Iran ceasefire in June. Lower oil means cheaper gas, which helps consumers and gives the Fed breathing room.

TSMC Confirms the AI Buildout is Accelerating

Taiwan Semiconductor posted another record quarter and raised 2026 capex to as high as $56 billion. They're the bellwether. If TSMC is buying more machines, Nvidia, AMD, and Apple are selling more chips. Chip equipment stocks hit all-time highs across the board.

Wall Street Banks Cap a Record Year

Goldman Sachs and Morgan Stanley both beat estimates. Combined 2025 revenue for the six biggest U.S. banks hit $593 billion—a record. Morgan Stanley's CEO: clients have "no more time to waste" sitting on the sidelines.

Market Overview

Index Performance

Stock Spotlight

ASML $ASML ( ▲ 5.95% ) 
rallied because TSMC's spending plan means they need more lithography machines. The company is on track to close above $500 billion market cap.

Applied Materials $AMAT ( ▲ 6.53% ) 
hit an all-time high. Chip equipment is the picks-and-shovels trade of the AI buildout.

Nvidia $NVDA ( ▲ 2.3% ) 
bounced back after Trump clarified H200 chips can ship to China with a government cut. Regulatory clarity removes a key overhang.

Big Name Updates

Goldman Sachs $GS ( ▲ 4.55% ) 
delivered record annual revenue. CEO David Solomon mentioned the bank is exploring opportunities in prediction markets like Polymarket and Kalshi.

Morgan Stanley $MS ( ▲ 5.65% ) 
saw profits climb on a resurgence in investment banking. Wealth management continues to be the steady growth engine.

BlackRock $BLK ( ▲ 6.27% ) 
now manages over $14 trillion in assets. Adjusted earnings beat expectations at $13.16 versus $12.21 expected.

Costco $COST ( ▲ 0.53% ) 
got a vote of confidence from Bernstein with a $1,146 price target. They see long-term earnings growth in the low teens.

Other Notable Company News

Spotify $SPOT ( ▼ 3.6% ) 
is raising U.S. premium to $12.99 from $11.99. Stock traded lower—investors wanted more.

Ford $F ( ▼ 0.33% ) 
is reportedly in talks with BYD to supply batteries for hybrid vehicles built outside the U.S.

Boston Scientific $BSX ( ▼ 3.87% ) 
agreed to acquire Penumbra $PEN for about $15 billion to expand its stroke treatment portfolio.

Broadcom $AVGO ( ▲ 0.9% ) 
was upgraded at Wells Fargo on potential new orders for Google's custom chips. Target raised to $430.

Rocket Lab $RKLB ( ▼ 1.22% ) 
was downgraded at KeyBanc. Analysts think current prices already reflect upcoming growth catalysts.

Sector Watch

Bond Market

Yields ticked higher after jobless claims came in at 198,000, well below the 215,000 expected. The labor market isn't cracking.

Mortgage rates tell a different story. The 30-year fixed hit 6.06%, a three-year low, after Trump directed Fannie and Freddie to buy $200 billion in mortgage bonds.

• Traders now see 37% odds of just one cut or none this year, up from 26% at year-end

Policy Watch

Fed Independence

Multiple Fed officials defended Chair Powell this week amid the DOJ investigation.

• Chicago Fed's Goolsbee warned that threatening central bank independence invites inflation

• NY Fed's Williams called Powell a man of "impeccable integrity"

The Fed is circling the wagons.

Taiwan Trade Deal

Taiwan pledged $250 billion in U.S. investment including new TSMC factories in Arizona, in exchange for lower tariffs. Could be the template for other ally deals.

Greenland Talks

U.S.-Denmark discussions ended in "fundamental disagreement" on ownership. Trump doubled down that anything less than full acquisition is "unacceptable." Creating friction with European allies.

Canada-China

Prime Minister Mark Carney is in Beijing and meets Xi Jinping on Friday. Two-way Canada-China trade is about $80 billion versus nearly $1 trillion with the U.S. This is more symbolism than economic shift, but it's a direct response to U.S. protectionism.

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What to Watch

Housing Data Next Month

Mortgage rates just hit three-year lows. Now we find out if anyone actually buys a house. Pending home sales data in February is the tell.

Small Cap Momentum

Russell 2000 posted its second straight record close. Up roughly eight points year-to-date versus less than two for the S&P and Nasdaq. Money is rotating into risk, not hiding in mega-caps.

AAII Sentiment

Individual investor optimism hit 49.5% this week, highest since November. Contrarians hate this. When everyone is already bullish, who's left to buy?

Thanks for reading - you are now the more informed 🙂

- John

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