Market Overview - The U.S. stock market experienced significant declines, with over 70.7% of U.S. issues falling on Tuesday, while only 26.4% advanced [2] - The Nasdaq Composite and S&P 500 dropped by 2.39% and 2.06% respectively, with the Dow and Russell 2000 also showing losses of 1.76% and 1.20% [3] Earnings Reports - Major earnings reports expected today include Johnson & Johnson, Charles Schwab, and Prologis, with a focus on regional banks reporting in both premarket and aftermarket sessions [5] - The S&P Regional Bank ETF ($KRE) is anticipated to be particularly responsive to these reports, having risen over 14% since its lows in November 2025 [6]

Core Insights - U.S. stock futures are trading higher, indicating a positive market sentiment for the day [1] Company Summaries - **Johnson & Johnson (NYSE: JNJ)**: Expected to report quarterly earnings of $2.46 per share on revenue of $24.16 billion. Shares fell 0.3% to $217.50 in after-hours trading [1] - **GameStop Corp. (NYSE: GME)**: Shares rose after CEO Ryan Cohen disclosed the purchase of 500,000 additional shares at an average price of approximately $21.12 per share. Shares surged 3.7% to $21.88 in after-hours trading [1] - **Halliburton Co. (NYSE: HAL)**: Analysts expect quarterly earnings of 55 cents per share on revenue of $5.41 billion. Shares fell 0.2% to $32.01 in after-hours trading [1] - **Netflix Inc. (NASDAQ: NFLX)**: Reported better-than-expected fourth-quarter results but projected first-quarter revenue of $12.16 billion, slightly below the consensus estimate of $12.19 billion. Shares declined 4.8% to $82.84 in after-hours trading [1] - **Charles Schwab Corp. (NYSE: SCHW)**: Expected to post quarterly earnings of $1.39 per share on revenue of $6.37 billion. Shares rose 0.5% to $101.53 in after-hours trading [1]

Core Insights - The Schwab report categorizes the crypto market into three sectors, highlighting that most value is concentrated in foundational blockchains like Bitcoin and Ethereum [1][2] Group 1: Market Structure - The crypto market is divided into three layers: foundational networks (Bitcoin and Ethereum), infrastructure (software connecting blockchains), and products (exchanges and lending platforms) [2][3][4] - Foundational networks account for nearly 80% of the total crypto market cap, which is $3.2 trillion as of the end of 2025 [2] - Infrastructure software faces challenges due to low user interaction and ease of switching to competitors, impacting their business models [3] Group 2: Product Dynamics - Products in the crypto space, such as exchanges and lending platforms, have more loyal users and higher switching costs, making them more likely to become industry standards [4] - Examples of successful products include Aave for crypto lending and Lido for staking, although specific investment recommendations are not provided [4] Group 3: Comparative Analysis - The report draws parallels between the crypto market and the traditional software industry, likening foundational networks to cloud computing platforms like AWS and Microsoft Azure [5] - Products are compared to user-interactive software like Salesforce or Netflix, while infrastructure software is seen as less capable of commanding loyalty and pricing power [6] Group 4: Investment Framework - Schwab introduces a framework for evaluating cryptocurrencies based on four criteria: network effects, market share, scalability, and tokenomics [7] - Ethereum is highlighted as a case study, leading the smart contract sector with over 10 times the market share of its closest competitor, but facing concerns over transaction speeds and ownership concentration [8]

Core Insights - Charles Schwab Corporation is set to release its quarterly earnings on January 21, 2026, with Wall Street expecting an earnings per share (EPS) of $1.37 and revenue of approximately $6.37 billion [1][6] Financial Performance - The company's performance is anticipated to be driven by robust trading activity and a significant rise in net interest revenues (NIR), projected to increase by 23.7% year-over-year [2][6] - In the third quarter of 2025, Schwab's earnings exceeded the Zacks Consensus Estimate, supported by a strong asset management business and increased trading revenues [3] - Schwab has a history of earnings surprises, surpassing the Zacks Consensus Estimate in the last four quarters with an average beat of 6.6% [3][6] Valuation Metrics - The company has a price-to-earnings (P/E) ratio of approximately 22.77, a price-to-sales ratio of about 6.94, and an enterprise value to sales ratio around 6.83 [4] - The earnings yield is approximately 4.39%, indicating the return on investment [4] Debt and Liquidity - Schwab's debt-to-equity ratio is 0.56, suggesting a moderate level of debt compared to equity [5] - The current ratio is 0.50, indicating potential challenges in covering short-term liabilities with short-term assets [5]

Group 1 - The Charles Schwab Corporation (NYSE:SCHW) is considered one of the best debt-free stocks to buy currently, with TD Cowen raising its price target to $135 from $134 while maintaining a Buy rating [1] - Raymond James analysts also reiterated their Buy rating on Schwab, increasing the price target from $110 to $114, indicating confidence in the company's ability to manage net margin pressure from potential Federal Reserve interest rate cuts [3] - The stock has a strong Buy consensus, with a 1-year price target suggesting nearly 18% upside, reflecting a positive financial outlook for the company [4] Group 2 - TD Cowen remains optimistic about Traditional Asset Managers and is adopting a selective approach focused on higher-conviction names, while still maintaining exposure to alternative asset managers [2] - The company operates as a savings and loan holding company, providing a range of financial services including wealth management, securities brokerage, banking, asset management, custody, and financial advisory services both in the U.S. and internationally [4]

Economic Policy and Market Impact - President Trump's upcoming speech is expected to outline economic priorities and policy initiatives, with a focus on tax policy changes, infrastructure spending, regulatory approaches, and trade policy, particularly regarding China [1][2] - The speech's timing amid earnings season and critical economic data releases creates a complex backdrop for market reactions, as political rhetoric and corporate results will compete for investor attention [1][2] Economic Data Releases - Thursday will see a significant convergence of economic data, including the Q3 GDP revision and the November Core PCE Price Index, both released at 8:30am, which could lead to market volatility as investors assess growth and inflation data simultaneously [4] - The GDP revision will provide insights into consumer spending, business investment, and net exports, while the Core PCE Price Index will be crucial for understanding inflation trends [4] Company Earnings Insights - Netflix's earnings report will be critical for understanding the streaming industry's economics, including subscriber growth sustainability and content investment returns, especially in light of competition from platforms like Disney+ and Amazon Prime Video [5] - Intel's earnings will be a key indicator of its manufacturing transformation and competitive positioning in the semiconductor market, while GE Aerospace's results will provide insights into commercial aviation demand and defense spending trends [7] - Johnson & Johnson's earnings will offer perspectives on pharmaceutical demand and healthcare spending trends, while Procter & Gamble's results will assess consumer resilience in personal care and household products [8]

Core Insights - Charles Schwab (SCHW) is expected to report fourth-quarter and 2025 results on January 21, with anticipated year-over-year increases in earnings and revenues [1][9] - The company has a strong earnings surprise history, surpassing the Zacks Consensus Estimate in the last four quarters with an average beat of 6.6% [2] Earnings Expectations - The Zacks Consensus Estimate for fourth-quarter earnings is $1.34 per share, indicating a 32.7% rise from the previous year [16] - The consensus estimate for quarterly sales is $6.24 billion, suggesting a 17.2% increase from the prior-year quarter [17] Revenue Drivers - Trading revenues are projected to rise, with the Zacks Consensus Estimate set at $1.03 billion, reflecting a 17.6% increase year-over-year [4] - Net interest revenues (NIR) are expected to reach $3.13 billion, marking a 23.7% increase from the previous year [6] - Asset management and administration fees are estimated at $1.70 billion, indicating a year-over-year growth of 12.5% due to strong equity market performance [7] Market Conditions - Client activity and market volatility were solid in the fourth quarter, influenced by factors such as the longest U.S. government shutdown, a dip in consumer sentiment, easing monetary policy, and a dominant AI theme [3] - The average interest-earning assets for the quarter are estimated at $434 billion, reflecting a year-over-year rise of 1.9% [4] Expense Outlook - Operating expenses are expected to remain elevated due to regulatory spending, strategic acquisitions, and efforts to enhance business efficiency [8] - Management anticipates expenses for 2025 to rise by approximately 5.25% or slightly higher [10] Strategic Developments - In November, Schwab announced an agreement to acquire Forge Global Holdings, Inc. for $660 million, expected to close in the first half of 2026 [11] - This acquisition aligns with Schwab's strategy to enhance private market capabilities for retail and advisor clients [13]

Core Viewpoint - Analysts project that The Charles Schwab Corporation (SCHW) will report quarterly earnings of $1.36 per share, reflecting a year-over-year increase of 34.7%, with revenues expected to reach $6.3 billion, an 18.3% increase from the same quarter last year [1]. Earnings Projections - The consensus EPS estimate for the quarter has been revised upward by 3.3% over the past 30 days, indicating a collective reassessment by covering analysts [2]. - Revisions to earnings projections are crucial for predicting investor behavior and are strongly linked to short-term stock price performance [3]. Revenue Estimates - Analysts forecast 'Net Revenues- Net interest revenue' to reach $3.13 billion, indicating a year-over-year change of +23.7% [5]. - 'Net Revenues- Other' is expected to be $159.74 million, reflecting a year-over-year decrease of -8.7% [5]. - 'Net Revenues- Bank deposit account fees' are projected at $240.44 million, showing a slight decrease of -0.2% from the previous year [5]. - 'Net Revenues- Asset management and administration fees' are anticipated to be $1.70 billion, representing a year-over-year increase of +12.5% [6]. Client Assets and Trading Activity - Total client assets are projected to reach $11,803.17 billion, up from $10,101.30 billion year-over-year [6]. - Analysts predict 'Clients' Daily Average Trades (DATs)' to be 7.62 million, compared to 6.31 million in the same quarter last year [6]. - 'Average Interest Earning Assets' are expected to be $434.32 billion, slightly up from $426.44 billion year-over-year [7]. - 'Average Client Assets - Total managed investing solutions' is estimated at $811.94 million, an increase from $698.18 million in the same quarter last year [7]. Mutual Fund and Other Assets - 'Average Client Assets - Mutual Fund OneSource and other no-transaction-fee funds' are expected to reach $471.97 million, up from $363.02 million year-over-year [8]. - 'Average Client Assets - Schwab equity and bond funds, ETFs, and CTFs' are projected at $767.66 million, compared to $647.17 million in the same quarter last year [9]. - 'Average Client Assets - Schwab money market funds' are expected to be $680.04 million, up from $580.96 million year-over-year [10]. - 'Net new client assets' are projected at $133.72 billion, compared to $108.40 billion in the same quarter last year [10]. Stock Performance - Charles Schwab shares have increased by +5.5% over the past month, outperforming the Zacks S&P 500 composite, which rose by +1.6% [11].

Core Viewpoint - The Schwab U.S. Small-Cap ETF (SCHA) offers lower expense ratios and broader diversification compared to the iShares Core S&P Small-Cap ETF (IJR), while IJR provides a slightly higher yield and less severe drawdowns in recent years [2][9]. Cost & Size Comparison - SCHA has an expense ratio of 0.04%, while IJR has a slightly higher expense ratio of 0.06% [4][5]. - As of January 12, 2026, SCHA reported a one-year return of 19.9%, compared to IJR's 13.5% [4]. - IJR has a larger asset under management (AUM) of $88.0 billion, while SCHA has $19.3 billion [4]. Performance & Risk Analysis - Over the past five years, IJR experienced a maximum drawdown of 28.02%, while SCHA had a drawdown of 30.79% [6]. - A $1,000 investment in IJR would have grown to $1,373 over five years, compared to $1,351 for SCHA [6]. Portfolio Composition - SCHA tracks a broad small-cap index with 1,742 stocks, primarily in financial services (18%), industrials (17%), and technology (15%) [7]. - IJR holds a more concentrated portfolio of 632 companies, with similar sector weights in financial services (18%), industrials (17%), and technology (14%) [8]. Investment Implications - Both SCHA and IJR are viable options for investors looking for small-cap market exposure, having produced similar total returns over one, five, and ten years [10]. - Currently, both ETFs trade at a discount, with earnings multiples of 18 times, compared to the S&P 500's 28 times [10].

Core Insights - The investing landscape is rapidly evolving, with Robinhood Markets and Charles Schwab competing for market share in digital investing and wealth management [1][2] Robinhood's Position - Robinhood has transformed retail investing with its tech-first, commission-free trading platform, attracting 13.8 million monthly active users in Q3 2025 [3][4] - The company is expanding internationally, acquiring PT Buana Capital Sekuritas and PT Pedagang Aset Kripto to enter Indonesia and offering tokenized U.S. stocks and ETFs across 31 EU/EEA countries [4] - Robinhood is also venturing into prediction markets by acquiring a 90% stake in MIAX Derivatives Exchange, planning to launch a dedicated futures and derivatives exchange by 2026 [5] - The company is evolving into a full financial ecosystem with new offerings like IRAs, crypto wallets, and cash cards, enhancing user engagement and revenue per customer [6] - Operating on a lean, cloud-based infrastructure allows Robinhood to maintain low costs and efficient trade execution, which is expected to drive margins as the user base grows [7] Schwab's Position - Charles Schwab holds nearly $12 trillion in total client assets, benefiting from strong client relationships and recurring revenue streams, solidified by its acquisition of TD Ameritrade in 2020 [8][10] - Schwab is expanding its physical presence by opening 16 new branches and hiring over 400 branch-related roles, while also acquiring Forge Global Holdings, Inc. for approximately $660 million [9] - The company has a diversified revenue base, with rising net interest income (NII) due to increased interest rates, and a focus on repaying high-cost bank funding [11] - Schwab is modernizing its platform to attract younger investors, planning to launch spot Bitcoin and Ethereum trading by mid-2026 [13] Earnings Estimates - For Robinhood, the Zacks Consensus Estimate indicates an earnings growth of 86.5% for 2025 and 20.2% for 2026, with current estimates at $2.00 for 2025 and $2.40 for 2026 [14][15] - Schwab's earnings estimates suggest growth of 48.6% for 2025 and 16.4% for 2026, with current estimates at $4.83 for 2025 and $5.62 for 2026 [17][19] Stock Performance and Valuation - In 2025, Robinhood's stock surged by 203.5%, significantly outperforming Schwab's 35% gain, indicating stronger investor sentiment towards Robinhood [10][20] - Robinhood is trading at a price-to-tangible book (P/TB) ratio of 12.96X, while Schwab is at 7.76X, suggesting Schwab is trading at a discount compared to Robinhood [21][22] Investment Considerations - Robinhood is viewed as a higher-risk, higher-reward option for 2026, with its rapid evolution into a broader fintech platform and international expansion [23][24] - Despite its high valuation, Robinhood's growth potential and earnings estimates trending higher may justify investment, while Schwab's established position and diversified revenue model provide stability [24]