It's a big week – Earnings, the Fed and another possible shutdown

Stocks closed out the week relatively unscathed — and considering everything that was thrown at the market, that’s a win in my book. Friday’s action was constructive, even if the headlines tried to suggest otherwise. Perfect example is the Bloomberg Headline – Note the perspective –

“S&P 500 Posts It’s First Two-Week Losses Since June”

I mean, really? Is it me or is that a deliberate ‘negative’ headline? They could have easily written something like this –

“Markets Shrug Off the NOISE and Move On!”

I like the tone of that better – it’s about accentuating the positives.

The S&P 500 finished higher on Friday but modestly lower on the week. We opened the holiday-shortened week at 6,940 and closed at 6,915 — a decline of just 0.4%. Given the noise, the geopolitics, and the rate chatter, I’ll take that all day long.

Friday’s economic data came in right where you’d want it. Both Manufacturing and Services PMIs remained firmly in expansion territory, while the University of Michigan sentiment index surprised to the upside at 56.4 versus 54 expected. Is that still a “weak” number? Sure. But direction matters — and sentiment is trending higher, which is the important takeaway.

Yes, Leading Economic Indicators remain negative — but let’s be honest about what we’re looking at. That data reflects October and November conditions. We’re now at the end of January. Am I going to anchor portfolio decisions to stale, backward-looking data? No, I am not. Markets trade on what’s ahead, not behind - and right now, the forward-looking data continues to be fine.

At 4 pm – here is what it looked like - the Dow gave up 285 pts, the S&P added 2 pts, the Nasdaq added 65 pts, the Russell lost 49 pts, the Transports lost 257 pts, the Equal Weight S&P lost 36 pts, while the Mag 7 gained 348 pts.

Stocks are now consolidating — and that’s perfectly fine. After everything the market has digested, some sideways action is healthy and constructive. The next couple of weeks will be packed with key catalysts, starting with earnings.

This week we’ll hear from more than 100 companies — about 20% of the S&P 500 — across a wide range of industries. While every report counts, investor attention will be concentrated on a select group, with technology emerging as a key driver this week.

With Meta Platforms, Tesla, Apple, and Microsoft all reporting, this week is less about headline beats and more about the quality and durability of growth. For Meta, investors are focused on ad revenue growth, user engagement, and whether AI is materially improving monetization. For Tesla, while the long-term narrative is about AI, autonomy, energy, and robotics, this quarter still trades on autos — specifically vehicle margins, pricing, and free cash flow — which ultimately determine the earnings floor.

Apple must show that Services growth and margin strength can continue to offset slower hardware demand, particularly in China. And for Microsoft, it’s all about Azure growth, AI monetization, and margin discipline, as investors look for proof that massive AI investment is translating into profitable, scalable revenue. Together, these reports will shape whether the market believes growth and the AI narrative — is broad, durable, and self-sustaining.

Then we get Nucor (NUE), one of the purest reads on the real economy. Steel demand, pricing, utilization rates, and management’s tone on infrastructure, energy, and manufacturing will give investors an early look at whether cyclical momentum is firming or fading.

From there, the calendar fans out quickly. UnitedHealth Group (UNH) offers a window into healthcare utilization & cost pressures. Boeing (BA) is a proxy for global industrial demand, airline confidence, and defense backlog trends. NextEra Energy (NEE) speaks to regulated growth, clean-energy capex, and how utilities are navigating higher-rate realities. Together, they frame the state of capital spending and essential services.

Later in the week, attention shifts to the consumer and global activity. Visa (V) and Mastercard (MA) are critical tells on spending & travel. Add in Caterpillar (CAT) for infrastructure and heavy equipment demand, Lockheed Martin (LMT) for geopolitical and defense spending trends, and Exxon Mobil (XOM) for energy pricing — where crude is settling, how refining margins are trending, and whether demand is holding up — and capital discipline, meaning a focus on controlled spending, strong free cash flow, and consistent shareholder returns, and you have a week that tests whether growth is broad, durable, and self-sustaining or not.

So, while Tech may drive sentiment, in the end – earnings this week must confirm steady demand, controlled costs, and constructive 2026 outlooks. If they do then that supports the case that the market rally is expanding beyond a narrow leadership trade — and that’s what really matters.

We’ll also get a handful of economic data, including Richmond Fed manufacturing surveys, Dallas Fed services data, mortgage applications, factory orders, durable goods orders, and the December PPI. PPI is expected to remain sticky at +0.3% month-over-month and +2.8% year-over-year, reinforcing the idea that inflation pressures, while cooling, are not fully gone.

Finally, this week brings the January FOMC meeting, with the policy decision being released Wednesday at 2:00 PM, followed by the press conference at 2:30 PM. Do not expect a rate cut — and do not expect Chair Powell to provide guidance on the timing of the next move. The message will remain the same: the Fed is “data dependent.” My gut says we don’t see another rate cut until a new Fed chair takes over in May.

And on a side note — have you seen the latest odds on my dark horse pick for FED Chair, Ricky Reider? Things are getting interesting.

Kalshi now has him at a 50% probability, up from just 20% last week, while Kevin Warsh slid to 30%, down sharply from 63%. That’s a meaningful shift in a very short period of time — Oh boy… I love this.

Bonds moved higher on Friday – the TLT and TLH advancing +0.3% and +0.20%, respectively. Treasury yields, however, were largely unchanged. The 10-year fell by 3 bps to end the day at 4.21% and the 30-year finished at 4.81%.

Oil rose on Friday and is up again this morning due to those ‘supply’ disruptions – caused by the massive weekend storm that we talked about last week. This morning, oil is up $0.25 to $61.25 – We are now north of long term trendline resistance – something I think will be short-lived. But no matter what I think – oil is now in the $58.50/$62.20 trading range.

Gold just keeps pushing higher, blowing through the $5,000 trading up $100 at $5,090. The move is being fueled by ongoing ‘momo’ buying and a broader reshaping of the global risk landscape — geopolitical tension, central-bank demand, and ongoing uncertainty around currencies and policy.

My sense is that it’s also being reinforced by rising social and political unrest at home, specifically about what’s unfolding in Minnesota. While it’s easy to dismiss that as a purely U.S. issue, markets don’t think in local terms — they think in stability, confidence, and contagion and when uncertainty starts to feel layered and interconnected, gold becomes the default hedge, and that’s exactly what this price action is reflecting.

European markets are mixed….no dramatic moves in either direction – Spain up 0.5% while France is down 0.4%. Now that Davos is over and Greenland is resolved and earnings season is in full swing, investors will be focusing squarely on results.

U.S. futures are lower this morning — Dow -17, S&P -11, Nasdaq -85, Russell -6 — and volatility is starting to stir, with the VIX up 6.25% to 17.10. This is a pivotal week for markets, never mind the renewed threat of another government shutdown on Friday that could ignite a fire in either direction. Whether this turns into a melt-down or a melt-up will come down to how earnings, guidance, and macro signals ultimately land — and we’re about to find out.

The S&P 500 closed yesterday at 6,915, up 2 pts. Trendline support is at 6,838 – but remember – last week we breached it to trade as low as 6,789 – so 6,789 is the level to watch….a break there, would see us test intermediate support at 6,757 and if that does not hold – then don’t be surprised to see us test the November low at 6,534. Now unless the earnings completely disappoint, I do not think we are going there…but external catalysts - headline-driven events unrelated to earnings or fundamentals - can cause short term chaos (think downside) no matter what the earnings say, and that, my friends, should be viewed not as a reason to panic, but as a long-term opportunity.

Pasta faggioli

OK – so I am in NYC and was holed up in my apt during the storm, so I made a big pot of Pasta Faggioli – because why not? It was sooooo good! You can see it on my X account.

For this you will need: ½ box of Elbow Pasta, Cannelloni beans, water, olive oil, garlic, onions, celery, carrots, can of crushed plum tomatoes, Chicken Broth, pancetta, a parmegiana cheese rind (I used a Pecorino rind yesterday) and s&p.

Begin by sautéing some crushed garlic in olive oil on med heat – careful not to burn the garlic – Now add in the diced Pancetta – for more flavor. Sauté for 3 – 5 mins..

Next add the diced onion, carrots and celery – sauté some more – maybe 10 mins.

Next - in the same pot add 2 cans of Cannelloni beans – do not strain. Add the small can of crushed tomatoes, the cheese rind and enough chicken broth to cover it all. Season with s&p - bring to a boil and then turn heat to simmer. Stir occasionally.

Add the pasta directly to the pot – now remember, the pasta grows and sucks up the sauce – so either you add ½ box or you add one whole box but then you need to add more broth.

Turn the heat off after about 7 mins…. leaving the pasta a bit undercooked – Let it sit for another 3 mins and it’s all done! Serve immediately in warmed bowls with plenty of fresh grated Parmigiana or Pecorino cheese. – depending on which rind you chose to use.