Daily Research Updates
Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
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.
On Taiwan, EVs, Europe & Earnings
President Trump’s Venezuelan gambit may give China cover to tighten the noose around Taiwan. That could slam global markets and supply chains, William writes, as well as unnerve global AI investors envisioning Taiwan Semiconductor winding up in China’s control. … Also: In the EV market race, BYD is running circles around Tesla. But whether that will remain the case is questionable. … And: In Europe, gradual fiscal stimulus is keeping the economic backdrop stable, Melissa reports, which is keeping stock markets moving higher. Forward P/Es have been capped around 15 since March. … Also: Joe says the absence of Q4 earnings warnings by managements of S&P 500 companies could set the stage for yet another epic earnings quarter.
Trump’s Tariffs: More Bark Than Bite
The bark of President Trump’s harsh tariff policy has been worse than its bite. While many of the rates are punishingly high, Trump’s tariffs have not hobbled the global economy or saddled the domestic economy with runaway inflation. William attributes this to the tariffs’ on-again-off-again nature, their many carveouts, and the workarounds that US trading partners have found to keep their export activity aloft. … Also: The Supreme Court soon may strike down the tariffs, ruling that the justification used for them is unlawful. If so, the administration has other justifications up its sleeve. … And: No “grand bargain” between the US and China is likely anytime soon, which suits China just fine.
The Gen-Shaped Economy
It’s an economic curiosity of our times: The US economy is undeniably strong, in fact remarkably resilient in the face of recent headwinds. Yet it’s in the midst of an affordability crisis that has hit Gen Zers and other lower-income folks especially hard. Even so, consumer spending is brisk, and Dr Ed expects it to remain so. What’s going on? The paradoxes can be explained largely by one distortive phenomenon: The largest generation in history is retiring and spending substantial nest eggs accumulated over decades of work. … Also: Dr Ed reviews “Goodbye June” (+).
On Utilities, Oracle & Data Centers In Space
Among the improbable accomplishments of artificial intelligence, it has turned sleepy Utilities stocks into hot commodities. Demand for electricity to power AI data centers is expected to soar. Jackie examines forecasts for electricity generation and what’s fueling them. … Also: Oracle has been spending with abandon on data center buildouts, feeding investors’ fears that such massive capex won’t pay off. All it took was the loss of a potential partner for a future project to send Oracle shares reeling. … And: Some visionaries see data centers in space solving a lot of problems, but do they have stars in their eyes?
On Brazil, Mexico & S&P 500 Earnings Revisions
As Brazil’s economy falters, its central bank has not eased, more determined to tame inflation than spur economic growth. Such Volcker-esque monetary policy has put bank chief Gabriel Galipolo in the hotseat, William reports, and at odds with President Lula. Will looser fiscal policy revive the swooning economy or will it be taken too far for political reasons? … Also: Tearing a page from Trump’s playbook, Mexico has imposed its own 50% tariffs on imports from Asia. Melissa explores the reasons Mexico doesn’t want to be China’s backdoor into US markets. … And: For a fifth straight month now, Joe reports, analysts’ earnings revisions have been net positive and to a strong degree.
On Challenges For China & Europe
It’s not China’s feared “Lehman moment.” But the psychological impact of Chinese property developer Vanke’s inability to pay its debt on time can’t be overstated, writes William. The situation is rattling investors who recall the 2021 default of China Evergrande Group and catastrophic aftermath. Now Vanke’s problems suggest the property sector’s troubles are far from over, putting the government’s GDP growth goals further from reach. Japan’s lost decades hold lessons for China, if only President Xi would heed them. … Also: The European Central Bank may be about to start tightening, notwithstanding the global challenges. This has stirred global debate about the limits of monetary policy to fix what ails an economy.
Game Of Thrones: The Mag-7 & The Fed
It has all the drama of “Game of Thrones”: The Magnificent-7 kingdoms, each surrounded by moats, rarely had threatened each other’s monopolies in the past. Now, with the advent of AI, they have been encroaching on each other’s previously sacrosanct fiefdoms, forcing one another to spend ever more to remain in the game. Amid the chaotic disruption, investors’ AI euphoria has given way to AI agita as confidence in the Mag-7 ebbs. Are their earnings inflated by accounting? Will returns justify their capital investments? Our take: AI will have a powerful impact on productivity in the economy. The winners may not be among the Mag-7 at all but the S&P 500’s Impressive 493 and the economy at large. … Today, Dr Ed enlists the help of Google’s Gemini AI assistant to extend the “Game of Thrones” metaphor to this disruption as well as the transition in the Fed’s Iron Throne. ... Also: Dr Ed reviews “Task” (+).
On Financials, Earnings & Distributed AI
Various Trump administration initiatives have showered love on certain industries in the S&P 500 Financials sector, helping to lift its ytd performance to fourth among the S&P 500’s 11 sectors. Jackie counts the ways they’ve benefited. … Also: A select few S&P 500 industries appear headed for dramatic earnings turnarounds next year. Read on for a peek at particular industries’ earnings growth prospects in 2026 relative to their 2025 forecasts. … And: “Look, Mom, no data centers!” A new way to train and run AI at much lower cost, but also less speed, is under development. Distributed AI is certainly an area to watch.
On Slippery Oil, Resilient Dollar & Q4 Earnings Outlook
Oil appears to be stuck in the mud. Melissa analyzes the bullish and the bearish forces keeping the price of Brent crude futures mired below the mid-$60s per barrel. We expect to see more of the same in 2026, barring a demand surprise or severe supply disruption. … Also: William addresses dollar bears’ arguments, defending our position that the dollar faces no great threat to its global supremacy. … And: Joe notes that the analysts following S&P 500 companies haven’t been cutting their estimates to the usual extent during “confession season.” That suggests Q4 will be yet another quarter of strong earnings growth.
A Challenging Year Ahead For Japan And Europe
High drama surrounds the Bank of Japan’s monetary policy decision next week, William reports. BOJ Governor Ueda is determined to end the many years of extreme monetary ease that have squelched Japan’s animal spirits. Prime Minister Takaichi is staunchly against his doing so now with Japan on the verge of a recession. The widespread expectation is a tightening move, which may put the two leaders on a collision course. … European Central Bank leader Lagarde is upbeat about the European economy’s resilience to recent months’ tariff chaos. But the economy will have to successfully navigate myriad risks to remain as well positioned in 2026.
2026: Another Year Of Living Audaciously!
The coming new year looks like another good one for stock investors. Dr Ed is adjusting his subjective odds of various stock market scenarios, including raising the odds of his base-case Roaring 2020s outlook to 60%. Associated assumptions for earnings and valuation levels produce an S&P 500 price target of 7700 by year-end 2026. Alternative scenarios include a bear case, triggered by a recession or recession fears (20% odds), and a stock market meltdown/meltup (trimmed to 20%). … Also discussed: Five winds at the economy’s back that support a continuation of the Roaring 2020s and six potential developments that could blow it off course. … Also: Dr Ed reviews “Sovereign” (+ +).
On Retail, Crypto & S&P 500 Earnings
The holiday selling season is off to a merry start for retailers. By most accounts, consumers gobbled up the post-Thanksgiving sales last weekend with more gusto than last year. … Also: Does the recent downdraft in the price of bitcoin suggest another cyrpto winter? Jackie parses the issues that bitcoin investors are wrestling with at this juncture, including two big headwinds and one helpful tailwind, courtesy of Uncle Sam. … And: Joe’s analysis suggests that 2026 may be a rare year in which analysts’ estimates for S&P 500 companies aren’t whittled down as the months pass.
Positive Spins On AI & On Australia
Investor concerns that AI may be costing more than it’s worth should be put into perspective, Melissa says. It is costing a fortune to build out AI infrastructure, and investors aren’t wrong to worry that OpenAI won’t make money for years, that depreciation practices unduly inflate earnings, that AI stocks may be overvalued. But compared to the GDP impact that ubiquitous AI will have as it sparks productivity growth economywide, the worriers are sweating the small stuff. AI will put our Roaring 2020s outlook into overdrive. … Also: Nvidia’s GPUs are facing new competition from TPUs, but the broader chip industry is expanding solidly. … And: William observes that Australia’s economic strength may be a bellwether for the global economy and bode well for the US.