More selling in Tech and rotating into other areas going on today as small-caps outperform large-caps. AMD getting crushed after beating estimates but disappointing guidance, hurting Semis. ISM Services report was mixed, New Orders and Prices going the wrong way but the headline figure was fine.

The destruction in the Software industry continues, with the S&P 500 Software industry down -26% from its Oct. 28th peak. That's why the S&P 500 is now basically unchanged over that time. Per Bloomberg, Software (~10% index weight) has knocked -2.6% from the S&P 500 return by itself, worst by far.

Big Tech getting knocked down today, mostly Semis and Software, which is dragging the broader market down. Bitcoin/crypto is also down sharply again, with Bitcoin down to $74K, touching lowest since Nov 2024. Oil is up somewhat on news from Iran (drone shot down), but not a major market mover.

Australia raised rates today, as many had expected, now clearly going against the trend of other major central banks except Japan. Inflation in Australia is still elevated vs target (3.4%), and the labor market there is fairly tight. Another hike in May now looks likely.

Rate cuts looking less likely globally in the next few months. Current market pricing: US Fed: nothing until at least June, maybe a 2nd cut in H2 Bank of Canada: nothing all year European Central Bank: nothing all year Bank of England: maybe 1 rate cut by April, no more than 2 all year

Sad that apparently we are going to have another delay in the monthly jobs report due to the current partial government shutdown that affects the Bureau of Labor Statistics. Unclear so far exactly how long the delay will be and if data collection will be significantly affected.

Despite the continued wobbles in precious metals and crypto, stocks (which have earnings) have rebounded pretty well today so far, with Tech positive (though split) and small-caps leading. Energy is lagging on the sharp drop in crude as tensions around Iran have (again) eased.

Looks like we are again all metals and crypto traders today. Stocks, silver/gold, and crypto all moving together, and the only thing connecting them is speculative positioning (margin calls) and sentiment. Earnings reports have been pretty good overall for Q4 so far.

While the news about Warsh is heavily outweighed in markets by other things lately (metals, Big Tech/AI), he is often cited as worrying a lot about the Fed's balance sheet. But the Fed has already reduced its balance sheet a lot relative to the stock of Treasuries, seems like a misplaced worry.

Weekend backgrounder from Mill Street’s stock selection work, which uses earnings estimate activity as key driver. Indeed, our global stock selection tool is called MAER, from its original name, the Monitor of Analysts Earnings Revisions. Not the best name, but descriptive . . .

Bitcoin is plunging today in thin trading (currently ~$78K) along with the broader crypto market. No obvious reason for it, but it's not really my space. Bloomberg's article about it today does a nice job of summarizing how Bitcoin/crypto has failed to meet oft-stated objectives lately.

Looks like the broad stock market actually held up better than might have been expected given the insanity in the momentum space in metals and memory makers, and on a Friday. Equal-weight S&P 500 (RSP) down -0.2% is not bad, cap-weighted indices were worse, with both NDX and Russell 2000 down 1%+

Stocks down today, small-caps lagging. Biggest contributors to the S&P 500 at the moment: Negative META, KLAC, AMD, NVDA, APP Positive TSLA, VZ, LLY, AVGO, GE Fed news not a big market mover, precious metals and Tech earnings are the drivers.

Clients often ask about earnings season results, so I have put together broader data from Factset on “beat rates” for US and global stocks in our database (beyond just the usual S&P 500 figures). Big story so far is US small-cap results better than recent quarters, large-caps fine but less strong.

Perhaps less of a focus, but PPI out today came in above consensus. Yr/yr inflation for December was 3.0% for headline (final demand), 3.3% ex food and energy, and 3.5% ex food energy and trade. Inflation data still noisy after the shutdown but supports the view of no Fed rate cuts.

My view for a while has been that fiscal policy (broadly defined) is more important than monetary policy for the economy, but markets often focus more on monetary policy since it is easier to bet on and more salient. Still true now. Taxes/spending/trade/immigration/etc will dominate rate changes.

Interesting. Tillis (key vote on Senate Banking Committee that deals with Fed Chair confirmation) apparently is right out there still saying he will hold up any confirmations until Trump's stupid legal threat to the Fed is ended. (h/t @ivanthek.bsky.social for not making me look at X)

So apparently Trump has picked Kevin Warsh as the new Fed Chair. His reputation is as a hawk (leans to tighter monetary policy), but Trump wants easy policy, so his views may have "evolved". Stock and bond markets seem ok with it thus far, stocks mostly responding to earnings news.

After all that, a flattish day in the end for stocks, and gold ended up about where it started this morning. The S&P 500, both equal- and cap-weighted, was little changed, as was the Russell 2000. 7 sectors up, 4 down, Tech the big drag but down much less than this morning.

MSFT and NOW getting much of the attention in the Software space today, but it is indeed a very broad-based decline. 20 of the 22 stocks in the S&P 500 Software industry are down. Only Applovin and Fair Isaac (earnings beat) are up.

The metals reversal may be tied to Iran trying to de-escalate with talks in Turkey, per this article. Presumably if geopolitical risk was an excuse for precious metals buying, this would be an excuse to sell. Momentum trades don't have to make perfect sense www.theguardian.com/world/2026/j...

All the metals suddenly plunged, which seems to be making the stock market decline worse. Dollar up and VIX rising. Not sure what the catalyst is aside from a reversal of massive (!) momentum moves in metals lately alongside the Tech earnings news last night . . .

Wow, people really did not like what Microsoft had to say. Down 11% this morning to lowest since May 1st (a big gap up then, big gap down today). Huge drag on the major indices, but small-caps are up today as the R2K/NDX rotation continues. Meta up 8% and offsetting MSFT somewhat.

The MSCI Emerging Markets index ETF (EEM) has returned 23.7% since Sept. 2 (in USD), outperforming the MSCI World (developed markets, URTH) by a huge 13.5%. But like the US market had been last year, the leadership is quite narrow in a few big Tech names . . .

Weekly unemployment claims out this morning were up a bit, but remain quite low overall, with the 4-week avg. at 206K This is part of why the Fed views the labor market as decent enough that no more rate cuts are needed: not much hiring, but still not much firing.

The occasional reminder of why US large-caps have outperformed small-caps and, until the last year or so (ahem), outperformed the rest of the world. Profit margins for the S&P 500 are at historic highs and have been rising for years now. This is not true for mid-caps, and especially not small-caps.

Seems like the initial reaction to Tech earnings just out is: META up, despite increased capex, earnings strong MSFT down, earnings fine but less impressive, capex a concern TSLA up, despite first decline in annual revenue, mixed bag of earnings news. TSLA investing $2B in xAI.

Fed left rates unchanged as everyone expected, though there were 2 dissents from Miran and Waller who wanted a rate cut (again). Miran is Trump's guy who always wants lower rates, and Waller wants to be Fed chair, so he does too. No political comments from Powell.

Today is continuing the recent reversal of the "small-caps over big Tech" trend that came out of the gate strong to start the year. Russell 2000 down -0.5% today while NDX +0.6%. The YTD return difference has narrowed from +8.4% (favoring R2K) on Jan. 21 to +3.5% currently.

Bank of Canada holds rates steady, as the Fed will almost certainly do today too. Central banks globally are slowing or pausing the rate cut trend of the last 2 years as inflation and growth concerns are more balanced globally now.

A very strong report from ASML (big Dutch semi equipment maker) is joining news from Seagate and Texas Instruments to boost Tech this morning. So some AI "picks and shovel makers" are doing well, will see when Microsoft and Meta report after the close how the "gold miners" are doing.

S&P 500 Tech names reporting after the close, Seagate and Texas Instruments both reported results that Wall Street seems to like, and are trading up significantly after-hours. Positive for storage and chips. Software has been the concern, and Roper disappointed today. NOW and MSFT tomorrow.

The MSCI Emerging Markets index (EEM) has had a strong start to the year (+10%), outperforming developed markets (URTH) by 7% YTD. But it is mostly EM markets outside China that are doing best, as China (MCHI) is lagging EM, has much weaker earnings estimate trends, and is not particularly cheap.

Dollar is down again today, with the DXY hitting its lowest since early 2022. Some of this is the big yen move on possible intervention, but the euro, pound, and Canadian dollar are also gaining sharply vs USD. Clearly a "sell dollar" theme, but not necessarily bad for US large-cap stocks.

Big Tech is leading again today, with Semis gaining 2.7%. Financials sector the worst performer so far today alongside Health Care. Not due to Banks, as the insurance-related names (BRO, AJG, AON) are down alongside the health insurance stocks tied to the negative Medicare payment news yesterday.

No major macro news today, but tomorrow is the FOMC meeting. No one expects a change in rates, but this will be the first meeting since the Trump administration served subpoenas threatening legal action against Powell and the Fed, and Powell responded with a video calling Trump's BS out explicitly.

Client Q: what are your favorite out-of-favor Tech names? The top-ranked large-cap US Tech names in our MAER ranking model right now that have lagged the market recently include: Broadcom (AVGO) NVIDIA (NVDA) IBM (IBM) Marvell Technology (MRVL) More info: www.millstreetresearch.com/sample/Mill%...

The UBS Speculative Growth index surged 28% in the first two weeks of this year, following a big correction from its peak in October. The index is down -6.5% today, and down 8% from the Jan. 16 peak. Lots of positioning-driven reversals to start the year, but may be fading now.

More rotation from Russell 2000 (small-caps) back to Big Tech today. The S&P 500 Tech sector is up 1% while R2K is down -0.2%. Broader market is mildly positive. Precious metals still going bonkers, silver up to $115/oz and gold pushing $5100. Bond yields stable so it's not an inflation thing.

Software stocks (IGV) are finally getting a bounce, up the last 2 days after some heavy selling. This has been entirely multiple compression, as earnings estimates (for next 12 months) have held up fine, even improving vs S&P 500. So IGV now looks very cheap vs SPY compared to the last 10 years.

US stocks have been lagging ex-US stocks in the major indices (S&P 500 vs MSCI ACWI ex-USA index), and the main reason is the stark underperformance of US Tech vs ex-US Tech (the rest of the market is better). This is not an earnings issue, it's valuation compression for US vs ex-US Tech.

Looks like another "Big Tech vs small-caps" rotation, with Big Tech in favor today after a long stretch of small-cap outperformance. Oil is on on news of Trump threatening Iran again, and precious metals making new highs yet again. US bonds steady and dollar off a bit.

Solid economic data and rebound from Trump's latest TACO move in Greenland/Europe (or is it Iceland??) have brought the S&P 500 just about back to where it was on Friday. The Russell 2000, meanwhile, is well above its Friday close. Bond yields mostly steady today but dollar down.

Stocks opening higher, with small-caps again leading as the TACO trade continues. Weekly unemployment claims were again low at 200K, still showing low levels of layoffs. Income and spending for October and November also out, mostly in line with consensus.

In other "fending off Trump" news, the Supreme Court seems to be skeptical of allowing Trump to fire Fed Governor Lisa Cook over made-up allegations of mortgage fraud. The threat to the Fed's independence from the President seems to be the key issue.

Stocks have been bouncing around today, trying to recover from yesterday's sell-off. News just hitting that Trump has a "framework of a deal" (i.e. TACO?) about Greenland and the tariffs on Europe he threatened. This has produced a renewed bounce, will see if it holds.

According to the Supreme Court watchers at Bloomberg, the Court's failure to rule on tariffs today likely means it will be late next month before a ruling comes, as they are going on a 4-week recess. Feb. 20th is the next official session when they might rule on tariffs.

Stocks resuming their downtrend today after a mild bounce attempt, though small-caps are holding up better than large-caps. Gold and silver are jumping yet again on the geopolitical concerns and weak US dollar, as well as ongoing momentum chasing. Bond yields holding at higher levels.

With Trump threatening new tariffs on Europe (for bizarre and stupid reasons), the uncertainty is intensified by the potential ruling this week from the Supreme Court about the IEEPA ("emergency") tariffs. Many expect the Court to rule against them, though what happens next is unclear.

Markets very unsettled today across asset classes. Trump causing mayhem again with threats to Greenland and new tariffs on Europe. Japan's bond market came unglued overnight with no obvious news, pushing long-term yields up sharply there with knock-on effects on US yields.