The Fed leaves rates unchanged… when we might get the next cut… consumer confidence plummets… but 401(k) wealth soars… how to be on the right side of this divideAs I write on Wednesday afternoon, the Federal Reserve just wrapped up its January FOMC meeting. The decision went exactly as expected – no rate cut.The Fed held its benchmark rate steady at 3.50% to 3.75%, marking the first pause after three straight cuts in the back half of last year.Now, the real question wasn’t what the Fed would do today. It wa ...

What studies show about returns after hitting “Top Dog” status… why the Mag 7 stocks are effectively, Top Dogs… where Eric Fry is looking for outperformance… Luke Lango and how to invest in the government’s “Genesis Program”Heavy lies the crown…especially in the stock market.For investors, “Top Dog” status – the #1 company by market capitalization – is often “dismayingly unattractive.”That conclusion comes from billionaire investor Rob Arnott, founder of Research Affiliates, whose research shows that market ...

Natural gas has its best day in four years… an arctic blast across the country… why the opportunity is much bigger… Eric Fry’s top stock… how to catch a free replay of “Prediction” 2026As I write Wednesday afternoon, stocks are rallying sharply after President Trump announced he and NATO Secretary General Mark Rutte have “formed the framework of a future deal with respect to Greenland.”The relief comes from Trump saying that as a result of this negotiation, he would no longer impose the punitive tariffs on ...

Inflation and Federal Reserve Policy - The Consumer Price Index (CPI) inflation data came in below expectations, indicating that inflation is not accelerating and is moving towards the Federal Reserve's target of 2.0% [1][2] - The overall inflation rate is reported at 2.7% year-over-year, with core CPI at 2.6%, both figures slightly below forecasts [7] - The Federal Reserve is likely to maintain its current interest rate policy in the near term, with a "wait-and-see" approach expected to continue [3][4] Future Rate Cuts and Fed Chair Nomination - Market expectations suggest that the first potential interest rate cut could occur in June, with a 47% probability of a 25-basis-point cut [5] - Louis Navellier predicts at least two additional interest rate cuts in 2026, contingent on the confirmation of Kevin Hassett as the next Fed Chair [6][8] - The nomination process for the next Fed Chair is competitive, with concerns about maintaining the Fed's independence amid political pressures [9][10] Market Valuation Concerns - The CAPE Ratio ended the year at 40, historically indicating negative 10-year real returns when above this level [16][17] - Elevated valuations and narrow market leadership could lead to stagnation in returns, reminiscent of the "Lost Decade" from 2000 to 2009 [18][19] - A shift from a "buy-and-hold" strategy to a selective, "sniper" approach may be necessary to navigate potential market challenges [24] Investment Strategies - The Seasonality Tool developed by TradeSmith identifies specific periods when stocks tend to rise or fall, providing a strategic advantage in volatile markets [20][21] - Staying nimble and opportunistic in investment strategies may be crucial for achieving financial goals in the current market environment [25]

Group 1 - In 2025, investors could have achieved 42% returns by investing in the top 10 performers of 2024, significantly outperforming the S&P 500's 16% gain [2] - Hindsight investing can lead to significant losses, as seen with Signature Bank and Ford Motor Co. in 2022, where they experienced declines of 63% and 42% respectively [3] - Current trends that drove growth in 2024 and 2025 are becoming less reliable, prompting a need for investors to adapt to new trends in the next 60 to 90 days [5] Group 2 - The anticipated trend of rate cuts in 2026 may be underestimated, with betting markets suggesting at least three cuts, which could benefit Rocket Cos. Inc. (RKT) [8][9] - Rocket Cos. is positioned to capitalize on potential refinancing activity if mortgage rates fall below 6%, following a recent upgrade to an "A" grade in the Stock Grader system [12][13] - Gene editing technologies are emerging as a significant trend, with Crispr Therapeutics AG (CRSP) being a leading company in this space, expected to see substantial revenue growth from its sickle-cell therapy [14][20] Group 3 - Evolv Technologies Holdings Inc. (EVLV) is positioned to benefit from increased demand for security solutions, particularly in public spaces, as it offers advanced weapon detection technology [22][24] - Evolv has shifted to a subscription model and improved its operations following a scandal, which may lead to better-than-expected growth in 2026 [25][26] - The overall market is showing signs of potential downturns, with historical parallels to previous market collapses, indicating that current optimism may be misplaced [27][28]

Core Insights - The article warns of a potential "Hidden Crash" in the market, reminiscent of the "Lost Decade" from 2000 to 2009, where stocks stagnated rather than experiencing a dramatic collapse [1][4][10] - Market leadership is narrowing, with a small group of mega-cap companies dominating performance, which may lead to stagnation in returns as earnings momentum slows [2][11][12] Historical Context - The "Lost Decade" saw the S&P 500 essentially go nowhere, with notable companies like Microsoft, Cisco, and Intel failing to regain their previous highs [4][5] - During this period, new market leaders emerged, such as Monster Beverage and Google, which delivered significant gains while established companies stagnated [7][8] Current Market Analysis - The current market shows signs of a similar setup, with earnings momentum across major stocks beginning to slow, potentially leading to a Hidden Crash by 2026 [10][12] - The concentration of growth among a few mega-cap stocks raises concerns about future returns, as sustaining rapid growth becomes increasingly difficult [11][12] Investment Strategy - Investors are advised to identify stocks that are becoming "dead money," where capital is trapped without meaningful returns, and to reposition towards companies with accelerating growth [19][21] - A three-step framework is proposed: exit stagnant stocks, position for growth in innovative companies, and continuously monitor market conditions to adapt [17][21][24] Warning Signs - The article emphasizes the importance of recognizing early signs of stagnation to avoid being trapped in underperforming investments, which can lead to years of lost opportunity [16][25] - Specific companies identified as potential dead money are highlighted, urging investors to reassess their portfolios before 2026 [20][25]

Group 1 - The U.S. is experiencing a hiring recession, with job openings at 7.15 million, below the estimated 7.6 million [1][2] - The hiring rate has fallen to 3.2%, one of the weakest since the Great Recession, and the quits rate is at 2%, indicating worker caution [2] - Employers announced 1,206,374 job cuts last year, a 58% increase from 2024, marking the highest level of annual job cuts since 2020 [3][4] Group 2 - The unemployment rate rose to 4.6%, the highest in over four years, with forecasts suggesting it may peak at 6% this year [5][6] - Despite rising unemployment, GDP growth is predicted to soar to 5% in 2026, driven by key interest rate cuts and a booming data center sector [8] - Fourth-quarter earnings are expected to increase by 8.1%, with projections for earnings to accelerate to a 14.5% annual pace in 2026 [9] Group 3 - The relationship between labor and productivity is changing due to AI, allowing for strong GDP growth even with rising unemployment [10][11] - The economic divide is widening, with asset owners feeling confident while those without assets face financial stress [13][27] - Legislative proposals targeting investment wealth are anticipated, reflecting the growing economic split and potential policy risks for investors [33][35]

Job Market Analysis - Job creation has significantly slowed, with ADP's report indicating only 77,000 jobs added in February, down from a revised 186,000 in January and below the consensus estimate of 148,000 [3] - The slowdown is attributed to policy uncertainty and reduced consumer spending, leading to layoffs and hiring hesitancy among employers [3][4] Market Sentiment and Tariff Impact - President Trump has granted a one-month tariff exemption to major U.S. automakers, which has positively influenced stock market sentiment [5][6] - Despite this, uncertainty remains regarding the long-term impact of tariffs on corporate profits and consumer spending, which continues to weigh on market performance [4][7] Historical Market Corrections - The S&P 500 has experienced approximately 38 market corrections since the 1950s, averaging a correction every 1.84 years, with the last one occurring in 2022 [8][9] - Historical data suggests that after a market correction, the S&P 500 typically rebounds, averaging over 8% gains one month later and more than 24% one year later [11] Gold Mining Sector Insights - Gold miners are currently trading at historically low valuations despite gold prices nearing all-time highs, with the VanEck ETF trading at just over 12 times forward earnings, a 44% discount to the S&P 500 [14][16] - The disconnect between gold prices and miner valuations is seen as an anomaly that is expected to correct, leading to potential gains for gold stocks [16] Investment Opportunities - Recommended gold mining companies include Agnico Eagle Mines (AEM) and Alamos Gold (AGI), which are generating substantial free cash flow [18] - A suggested trade involves buying QQQ when its price is 10% or more off its 20-week range high, which historically has yielded an average return of 13.5% over six months [20] Market Psychology - The current market sentiment is characterized by "Extreme Fear," suggesting a potential opportunity for investors to consider buying [19][24] - Historical perspectives emphasize that discomfort in investing often leads to profitable opportunities, highlighting the importance of maintaining a long-term view [24]

Core Insights - The November Consumer Price Index (CPI) report showed a decrease to 2.6%, down from 3.0% in September, indicating cooling inflation and potentially paving the way for more rate cuts than previously expected in 2026 [2][10][15] - Wall Street reacted positively to the CPI data, interpreting it as a signal for the Federal Reserve to prioritize labor market stabilization over inflation control, thus increasing the likelihood of earlier and deeper rate cuts [6][10][11] Inflation Data - The CPI report for November, which excludes volatile food and energy prices, came in at 2.6%, below market estimates [2] - The report did not provide month-over-month changes for October and November for most items, complicating the analysis of recent economic performance [5] Federal Reserve Outlook - Following the CPI report, traders adjusted their expectations for rate cuts, with nearly 47% odds for a quarter-point cut in March 2026 and almost 12% odds for a 50-basis-point cut [7] - The potential nomination of a dovish Federal Reserve Chair by President Trump could lead to significant rate cuts, with predictions of up to 100 basis points [8][10] Economic Conditions - The current economic landscape is characterized by cooling inflation and rising unemployment, which may prompt the Fed to act more decisively than previously anticipated [10][20] - The unemployment rate has risen to 4.6%, exceeding earlier projections, indicating a potential need for the Fed to intervene to prevent further deterioration [21][25] Market Reactions - The positive market response to the CPI report reflects a shift in sentiment, as investors now see a clearer path for supportive monetary policy in 2026 [10][26] - The combination of softening economic conditions and easing inflation is viewed as a favorable backdrop for growth and AI-driven markets [15][26]

Core Viewpoint - Oil prices have reached their lowest levels in nearly five years, with Brent Crude falling below $60 per barrel and WTI dropping into the mid-$50s, primarily due to overwhelming supply despite robust demand [1][2][3]. Oil Market Dynamics - Over the past six months, Brent and WTI prices have decreased by 23% and 25%, respectively, driven by record U.S. crude output, sustained production from OPEC+ members, and softer demand signals, particularly from China's slowing economy [2][3]. - JPMorgan forecasts Brent to fall to $58 and WTI to $54 next year, with a continued downward trend expected through 2027, indicating a prolonged period of depressed prices [4]. Electricity Demand and AI - In 2023, U.S. data centers consumed approximately 176 terawatt-hours of electricity, accounting for about 4.4% of total U.S. electricity use, with projections suggesting this could double or triple by the end of the decade due to AI workloads [5]. - The majority of U.S. electricity is generated from natural gas, renewables, nuclear power, and coal, with oil playing a minor role in grid power generation, indicating a lack of correlation between data center power consumption and crude oil demand [6][7]. Investment Implications - Investors should recognize the distinct markets for electricity and oil, as the demand for electricity driven by AI does not translate to increased oil demand [8]. - Investment opportunities in the electricity sector include utilities and independent power producers, nuclear and uranium investments, and energy storage solutions [8][9][10]. - The financial risks associated with AI expansion are growing, with major tech companies extending depreciation schedules and utilizing creative financing structures to mask long-term liabilities [21][22][23][25].