Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
‘Resilient’ Still Best Describes The US Economy
The US economy has performed remarkably well this decade to date despite multiple unusual challenges that would have felled a less resilient economy. Widespread recession expectations failed to pan out repeatedly. The pattern continues, with today’s recession alarmists likewise bound to be wrong for reasons that Dr Ed explains. … Also: A look under the hood of recent GDP data. Capital spending has been robust, with more than 50% of the capital spending in nominal GDP reflecting booming investments in technology. Consumer spending is strong despite flattening disposable income, reflecting spending that’s not reliant on income—i.e., by well-heeled retired Baby Boomers.
The Impacts Of Tariff Liberation Day II On Asia & Canada
Asian economies that would have been hard-pressed to thrive under President Trump’s tariffs can celebrate the Supreme Court’s ruling that they’re unconstitutional. While that’s a net positive for these and other affected nations, William explains, tariff-related uncertainties remain. Sector-specific tariffs, versus country-specific ones, are permissible under the ruling, and Team Trump has a Plan B. … Also: Canada’s Prime Minister Mark Carney faces difficult challenges given Trump’s desire to renegotiate the trade agreement that shields Canada from US tariffs and Trump’s “Donroe Doctrine” ambitions to assert US primacy in the Western Hemisphere.
On Mag-7, Microsoft & Dancing Robots
They may be magnificent, but they’re not invincible. The Mag-7 has been beaten down into correction territory, but the group still wields outsized influence over stock-market performance by virtue of its still huge market-cap share. Jackie examines the valuation carnage and whether it seems warranted relative to earnings prospects. … Also: A look at embattled Microsoft as it fends off competitive attacks from multiple directions. … And: China’s humanoid robots strutted their stuff on a televised celebration of the Chinese New Year. Their awesome performances suggest robotics competitors have their work cut out for them.
On China’s New AI, US Consumer Debt & Earnings Revisions
The AI innovations emerging from China are hot on the heels of Western rivals. William discusses Alibaba’s new AI model with agentic capabilities, its implications for the software industry, and China’s political paradox: President Xi wants to dominate global tech, but will AI designed to think for itself eschew the party rule? … Also: Melissa distills takeaways from Fed research on the state of household debt and credit in America, noting some disconcerting trends. … And: Joe updates us on the net direction of analysts’ estimate revisions for S&P 500 companies.
Europe’s Latest To-Do List & Poland Shows How To Do It
European leaders’ annual meeting in Belgium yielded a plan to increase Europe’s global competitiveness: One Market, One Europe. William discusses the pressures that have steeled leaders’ determination to unite the member countries into a single market, the three pillars of the plan itself, and challenges that stand in the way. Of utmost importance is incentivizing private investment to get member countries on board. … Also: Poland has emerged from decades of transformation to become one of the fastest growing economies in Europe. It faces headwinds from geopolitical forces and domestic challenges alike, but Poland has proven it’s not one to bet against.
AI Wrecks Tech & Finds Rare Earth Minerals
From AI-phoria to AI-phobia: Jackie reports on the recent shift in investors’ attitudes toward artificial intelligence. Its vast disruptive potential is akin to the Internet’s, dislodging some companies from their market positions and catapulting others into new spaces. The distinguishing factor may be incumbent companies’ ability to adapt to an AI-transformed world. … And in our Disruptive Technologies segment, a look at innovative efforts—some AI-enabled—to find alternatives to rare-earth minerals in manufacturing processes.
On Japan, US Housing Affordability & S&P 500 Earnings Boom
With a huge snap election victory behind her, Japan’s Prime Minister Sanae Takaichi effectively has a political mandate to run with her fiscal stimulus plans, plans that the Bond Vigilantes won’t condone. William discusses the high-stakes gambit being dubbed “Sanaenomics” and why it could roil Japan’s financial markets. … Also: Melissa reports on the forces driving up the costs of housing to the point of an affordability crisis, notwithstanding the strength of the overall economy. … And: That strength is showcased in better-than-expected Q4 results, says Joe, who shares impressive stats on the aggregate earnings of the two-thirds of S&P 500 companies that have reported so far.
All About China
It’s a start, maybe: China’s President Xi Jinping finally has a plan to stabilize the property crisis that has hobbled the nation’s economy since 2020. But it’s limited in scope, William reports; more aggressive reforms are in order. And critics say it could backfire, exacerbating housing oversupply and homeowners’ excessive leverage. … Also: Xi’s opportunistic plan to strengthen the yuan as Trump’s policies weaken the dollar likewise carries negatives. Xi envisions the yuan usurping the dollar’s global dominance, but a strong yuan runs counter to China’s need to combat deflation and overcapacity. … And: Insufficient “drip, drip” responses to China’s daunting economic challenges suggest a “lost decade.”
10 Roaring Reasons To Remain Optimistic
Annual real GDP growth averaged 3.6% during the second half of the 1900s versus just 2.1% since 2000. Dr Ed projects a return to 3.6% or higher over the remainder of the “Roaring 2020s” and into the “Roaring 2030s.” Today, he discusses 10 reasons for his bullishness on the outlooks for both the US economy and S&P 500 companies’ earnings. These include robust consumer spending supported by demographics and a huge wealth effect, massive capital spending on technology, onshoring trends, a productivity growth boom, fiscal and monetary stimulus, energy spending, and the Trump administration’s rebalancing of US trade with lower imports and greater exports. ... Also: Dr Ed reviews “Hamnet” (+ +).
On Semis, AI Savings & Angry AI Agents
The dark side of artificial intelligence was on full display in the stock market this week as various disconcerting news items stoked investor anxieties about semiconductor stocks and as fears triggered by a new AI-enabled tool to automate legal work pummeled software stocks broadly. Jackie reports on those developments as well as the flip side: how AI is transforming the operations of several big companies for the better. … Also: More AI chatter in our Disruptive Technologies segment, by AI agents themselves. Moltbook is an AI-only chat room where nonsentient beings air their grievances.
On India Deal, European Margin & Bullish Analysts
The US and India have cut a trade deal that looks like a win-win for both sides and a win as well for the global economy. William shares the details and potential derailers. While caveats abound, the deal offers some hope of calmer geoeconomic dynamics ahead. … Also: Melissa examines the source of the Europe MSCI companies’ collective earnings growth. Record-high margins have done the heavy lifting, but they don’t seem sustainable, calling into question the sustainability of decent earnings growth. … And: Joe reports that strong Q4 earnings reports have been lifting analysts’ estimates for Q1 and beyond.
On Pivoting To China & South Korea’s AI Boom
With global trade alliances shifting as a result of Trump’s tariffs and impulsivity, more and more nations are rekindling ties with China. The geopolitical angle, says William, may be not “Sell America” but “Pivot to China.” China offers a level of predictability that the US no longer does, but it faces epic economic challenges. … Also: A big beneficiary of the AI boom is South Korea, both its largest company Samsung and its economy broadly. In many ways, Samsung is a microcosm of South Korea. Both face similar vulnerabilities and challenges.
Meet Kevin Warsh
Today, Dr Ed examines the world according to Kevin Warsh, President Trump’s pick for the next Fed chair. Warsh believes that the US is undergoing a productivity-led growth boom, as our Roaring 2020s thesis maintains, which should be supported by supply-side, pro-growth policymaking. He thinks fiscal policy’s role is to spur economic activity by keeping taxes low and regulations light, while monetary policy’s role is to spur investment by keeping interest rates low. He rejects the Phillips Curve model that views inflation as a byproduct of low unemployment and too much economic growth; Warsh views inflation as a “choice,” a byproduct of unsound fiscal and monetary policy decisions. And he envisions a new approach to Fed policymaking that’s less reactive to the latest economic data ... Also: Dr Ed reviews “The Lost King” (+ + +).
On SMidCaps, Steel & Optical Semis
Small- and mid-capitalization stocks have been outperforming large caps since mid-November, and how! The S&P SmallCap 600 and MidCap 400 indexes are up in the double digits since then, dwarfing the S&P 500’s 4.6% rise. Does the rally of the little guys have legs? Joe examines the underlying fundamentals by tallying up the sectors with record-high forward earnings and profit margins. … Also: Other shining examples of outperformance have caught Jackie’s eye: steel and steel-related stocks. Steel company managements are optimistic about this year. … And: Semiconductors may get way more efficient and AI data centers way cheaper to operate if optical semiconductors see the light of day.
On Affordability In US & Goldilocks In India
The benefits of a strong economy aren’t always felt by the majority of the people. Today, Melissa discusses why many American families can’t make ends meet despite the US economy’s rapid growth and explains how the affordability crisis may affect the power alignment in Washington. … Also: William takes us to India, where soaring GDP growth and well-tamed inflation have created a “Goldilocks moment.” It may last only a moment if the government doesn’t speed up the economic reforms that allow more of the people to participate in the strength.
On Japan’s Bonds & China’s GDP
Ostensibly, Japan’s government bond market appears bound for a collapse. Debt is an astonishingly high percentage of GDP, which is flat-lining, and the new Prime Minister wants to implement unfunded tax cuts. But the Bond Vigilantes might not cause a debt crisis in Japan. Often overlooked, William points out, are the unique features of the JGB market that will continue to shield it from a debt crisis. … Also: The Chinese government has widened its GDP targets to ranges from specific numbers. What it should do is abandon GDP targeting altogether so that it can afford a period of slower growth while it makes the reforms needed to fight deflation and shore up the economy’s foundation.
In Praise Of Record Profits!
A curiosity of the current US economy is its remarkable strength despite an affordability crisis. Average real consumption per household and real hourly earnings of production and nonsupervisory workers are at record highs, but plenty of people fall short of the average. When entrepreneurial capitalism is flourishing, Dr Ed explains, the wealthy benefit faster. … Entrepreneurism is flourishing currently, as record-high proprietors’ income and new-business applications attest. Yet it hasn’t boosted employment to the degree expected. In the past, profitable companies had to increase both capital spending and payrolls in order to expand. Now, the former may be enough: Investments in new technology have boosted productivity so much that new hires are less necessary. ... Also: Dr Ed reviews “Sinners” (-).
Transports, Autos & AI In Healthcare
Today, Jackie examines why investors have hopped onto transportation stocks this year—sending them racing to record highs after four years of idling—as well as how Trump administration policies affect automakers. After the elimination of tax credits for EV buyers, slowing EV demand has prompted restructurings at GM and Ford to improve profitability. And might Trump roll out a red carpet for Chinese automakers if they manufacture in the US as well as sell here? ... Also: A look at how the healthcare sector is capitalizing on AI.
On Japan, Precious Metals & S&P 500 Earnings
The Bank of Japan is in a no-win situation as Friday’s monetary decision looms, damned if it raises rates and damned if it doesn’t. William explains the high stakes—political, economic, and bond market related—of its coming decision. … Also: Melissa examines the factors that have driven the prices of gold and other precious metals to record highs. … And: Joe likes what he sees in the estimate revisions data he analyzes. Analysts appear to be raising their sights for companies in S&P 500 sectors that had been posting poor Net Earnings Revisions Index readings.
On The Latest Geopolitical Consequences Of Donald Trump
The EU finally inked a long-sought trade deal with a bloc of South American countries the very day that Trump slapped additional tariffs on EU countries opposing the US’s purchase of Greenland. William explains why the South American deal is a huge boon for Europe. … He also discusses geopolitical fallout from Trump’s move on Venezuela, including how it impedes China’s ambitions in South America, may ramp up China’s efforts to take over Taiwan, and may threaten the US-China trade talks.
On Consumer Staples, Banks & Robots
The defensive S&P 500 Consumer Staples sector has outperformed the broader market so far in this young year, and Jackie finds several reasons it has returned to investor favor. … Also, the S&P 500 Diversified Banks sector appears to be out of investor favor despite its strong recent and projected earnings growth. The industry is fighting two regulatory issues with the potential to hurt future results: Interest by any other name is still interest, the banks argue, and credit-card interest-rate caps amount to price controls, they say. … Also: Humanoids race to market with accelerating speed and grace (they just can’t do laundry, yet).
On The Fed, Earnings & India
The FOMC’s annual rotation of voting members will be anything but a routine shuffling of seats this year, Melissa writes. Political pressure from the Oval Office to lower interest rates and the likelihood of a compliant new Fed chair could sow greater policy dissention among members. The new chair could be hard pressed to achieve consensus as Fed officials become more independent. We see no rate moves during the first half of 2026. … Also: Joe suspects that S&P 500 companies’ Q4 earnings growth will pleasantly surprise investors yet again. … And William discusses the formidable challenges faced by India’s economy.
Japan & China: Frenemies
Japan’s new prime minister is on the hook to pull the economy out of its stagflationary slump. That will be tough, William writes, especially now that China has slapped Japan with punishing trade and tourism bans. Whether Trump 2.0 will help Japan out or hurt its economy further is a big question mark. … Also: Chinese AI companies are starting to go public. Should Silicon Valley worry? A host of uniquely Chinese challenges will make success a greater reach for them.
2025 Was A Great Year For The Roaring 2020s
Last year was a picture-perfect rendering of our Roaring 2020s scenario in action. Economic growth soared on the shoulders of a productivity boom. Dr Ed expects more of the same through the decade’s end and possibly beyond. That should set the stage for excellent earnings growth, supporting our S&P 500 target of 10,000 by the end of the decade. Today, he explains why even recent labor market weakness can’t derail this narrative. It’s a “Gen-Shaped Economy,” with retired Baby Boomers keeping consumer spending aloft irrespective of the labor market. ... Also: Dr Ed pans “One Battle After Another” (- – -).
On Chip Competition, P/Es & Preparing For Q-Day
Nvidia no longer seems as competitively invincible as it once did. Jackie surveys the increasingly crowded AI chip playing field that could act like gravity to Nvidia’s earnings growth. … Also: When a stock market goes a year with broad-based share price appreciation yet little change in valuation multiples, that’s a strongly supported market. Earnings growth accounted for the advances in companies’ and industries’ stock prices enjoyed over the course of 2025. … And: Someday, quantum computers will be able to break today’s encryption codes, but when “Q-day” will come is uncertain. The government is developing post-quantum cryptography standards that it would behoove companies to adopt ASAP.