Time to Shine in the Darkness of Wall St.
All that you learned and prepped for will be needed now; cryptos pummeled, my realistic view Kevin Warsh and charting the markets.
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Rise, my tired, huddled masses. Stand. Rip those heads away from the warm comfort of that disgusting thing you refer to as a pillow. Throw off the warmth of that blanket. Leave the comfort of that well-worn mattress. For trouble calls this morning yet again. Trouble that you've trained for your whole professional life. Today, it won't just be the ugly stick that stalks your portfolio and the financial welfare of those you care for.
This morning, the ugly stick has brought with it the demons and monsters of your imagination. Good thing you and I were born for a desperate battle against incredible odds. You and I; we live for the thrill, the challenge. We live to see that fear reversed upon the oppressor. Do the right things today, and early this week, those children and grandchildren you love will never know that danger called, and you answered.
Out there, something wild screams. Out there, cold air stretches its evil embrace across the land. Out there, the things that own the night, move about unafraid. Things that slither, things that hunt, things that stalk, seeking victory through the lens of opportunity. As do we. As do you. We rose again this morning, with a happy heart, my friends, young and old. For today, again, we seek victory together. For today, again, we test our mettle. We test our ability to stand guard. We own the night. Not them. When you fall, I will reach for you. You will not stand on that hill alone. Not now. Not ever.
Meltdown
I am sure that most of you noticed the bloodletting across Bitcoin and the entire cryptocurrency space this weekend. That's because cryptocurrencies trade 24/7, right through the weekend. Gang, it's not just Bitcoin and it's not just cryptocurrencies. Risk assets as well as perceived safe havens have come under intense pressure as Sunday night has melted into Monday morning.
This morning, I see even gold and silver feeling around for support as Asian stocks sold off sharply. I see oil taking a pounding as Europe struggles to hold Friday levels as those markets open. On Friday, the CME Group announced that it would raise margin requirements for gold and silver. This makes sense.
Oh, and U.S.-based equity index futures are feeling the heat as well. The catalyst? Some point to Pres. Trump's selection of former Fed Gov. Kevin Warsh to be his nominee to become the next chair of the Federal Reserve Bank. True, Warsh has a hawkish history and may be less of a Keynesian theorist as an economist than were the other finalists for the job. True, at heart, Warsh may be more of an Austrian style economist than those others, but Ludwig Von Mises, he is not.
To see Kevin Warsh in that light is to assume that Pres. Trump would select someone who, as a monetarist, thinks differently, or sees the playing field differently than he does. This is how "they" shake out the "huddled" masses. This is how "they" create opportunity through profit taking, and momentum trading. Take advantage of the moment by all means. Do not (just one old dog's opinion) be driven by their fear factory.
How? Know your levels. Know where you want to be. Know how you want to be. Weigh strength against weakness. Puzzle pieces fit. Be patient. Don't miss when your piece shows up. Be decisive. Act with intention. Reach for that something greater. Be not afraid of being afraid.
Stand Alone?
Center thrown
How can it be?
We stand alone
You reach for me?
I reach for thee
Watching the time
Tick, tick, away....
From yesterday until today
Echoes in the head
Some distant scream
Can't breathe
Eyes like rain
Wash the unsure
Dissipate the pain
No need to strain
Comes easy
So Easy
Completion
By the Way...
The U.S. government partially shut down on Sunday morning, despite the Senate having passed a spending deal just a few hours prior. The U.S. Senate passed a package of five bills to include a two-week stopgap measure (kick the can down the road) that would allow legislators a little more time to iron out disputes over how to fund the Department of Homeland Security.
The House is likely, or should I say, is hopeful, that there will be a vote later today (Monday) in that chamber to pass this bill. The president has endorsed the deal. Speaker Mike Johnson backed the bill as well, but there did seem a lack of certainty on his behalf in regard to getting this bill to the president for an autograph. This is adding to the pressure applied to U.S. financial markets this morning.
The Week That Was...
The major U.S. equity indexes were hit rather hard over the latter part of last week. The week on the whole was mixed and on the weekly chart appeared to move sideways. From Wednesday on, the action did turn ugly. That said, there was a mid-day reversal to the upside on every one of those days that prevented anything resembling financial Armageddon. Amid all of those fun and games, this is how equity markets performed over the past week...
- The S&P 500 gave up 0.43% on Friday but still gained 0.34% for the week.
- The Nasdaq Composite was punished for 0.94% on Friday but only lost 0.17% for the week.
- The Nasdaq 100 took a 1.17% hit on Friday to lose just 0.21% on the week.
- The Russell 2000 was beaten up for 1.55% on Friday and 2.08% for the week.
- The S&P Small Cap 600 gave up 0.72% on Friday and 0.91% for the week.
- The S&P Midcap 400 lost 0.99% on Friday and 1.42% over the week.
- The Dow Transports surrendered 0.43% on Friday but gained 0.34% for the week.
- The Philly Semis were hammered for 3.87% on Friday but still added 0.51% for the week.
- The KBW Bank Index shaved 0.18% on Friday but still added a nifty 2.03% for the week.
On Friday, five of the 11 S&P sector SPDR ETFs closed out the session in the green, led by the Staples (XLP) and Energy (XLE) . Technology (XLK) easily led the losers followed by the Materials (XLB) .
For the week, seven of the eleven S&P sector SPDR ETFs traded higher, with Energy and Communication Services (XLC) way out in front. Health Care (XLV) wore the dunce cap for the week. There was no discernible pattern of out or under-performance among cyclical, defensive or growth type sectors.
The Charts
Danger lurks. Yeah, no spit, Sarge. I think you've covered that. I get it, kids. Stay with me. Readers will see that late last week, the S&P 500 created what is starting to look like a double top pattern of bearish reversal within a rising wedge pattern of bearish reversal. That could be a double dose of ugly.
Yikes.
Check this out though...
The Nasdaq Composite, despite having been under greater pressure than the S&P 500 of late, while also showing the possible development of a double top pattern, also looks to be putting in an ascending triangle. That's a pattern of bullish continuance. That would make this weakness more of an opportunity. As I wrote that I would, I added to my long position in SoFi Technology (SOFI) on weakness and in size on Friday. I am not afraid to add further.
Earnings
As of Jan. 23, according to FactSet, for the fourth quarter, Wall Street sees a year-over-year blended (results and projections) earnings growth for the S&P 500 of 11.9%, up sharply from 8.2% last week. Wall Street also sees revenue growth of 8.2%, up from 7.8% a week ago. With 33% of the S&P 500, 75% of S&P 500 member firms have reported earnings beats while 65% have beaten consensus for revenue generation. For the full year (2025), the street now sees earnings growth of 13.2%, up from 12.4% last week on revenue growth of 7.3%, up from 7.2%.
At the moment, Technology, at earnings growth of 26.2% and the industrials at growth of 25.9% (up incredibly from -0.5% in one week's time) are the only sectors projected to experience double-digit bottom-line growth for the fourth quarter. Presently, three sectors (discretionaries, energy, and health care) are projected to suffer a year-over-year earnings contraction. In addition, the staples are projected to grow earnings by less than one percent from the year ago period.
Valuation
Still using data provided by FactSet, the S&P 500 ended last week trading at 22.2-times 12 months' forward-looking earnings, up from 22.1-times a week ago. This is well above the five-year average of 20.0-times for the index as well as well above its ten-year average of 18.8-times.
The S&P 500 also ended last week trading at 28.6-times trailing 12 months' earnings, up from 28.4-times. That also stands well above the five-year (24.9 times) and ten-year (23.0 times) averages for the index.
Nine of the eleven sectors are still trading above their five-year average valuations, led by Consumer Discretionaries (29-times) and Tech (25.9-times). Only the Utilities (at 18 times) and the REITs (at 17.6-times) are not historically overvalued relative to their five-year averages.
The GDP Game
Last week, the Atlanta Fed revised their GDPNow model estimate for Q4 economic growth down to growth of 4.2% from 5.4% (q/q, SAAR). Among other regional central bank district branches running close to real-time Q4 GDP models, the New York Fed left their Q4 model unrevised at growth of 2.74%.
The Cleveland Fed also left their model unrevised, at growth of 3.08%. However, the St. Louis Fed, which has missed the mark quite badly on a regular basis throughout 2025, revised their Q4 model upward from -0.02% to +0.1%. Though, finally in positive growth territory, St. Louis remains the outlier.
Fed Funds Futures
Fed Funds futures trading in Chicago are currently pricing in a 14.9% probability for a quarter point rate cut at the next FOMC policy meeting on March 18. The next rate cut is priced in for June 17th at this point. At present, there are still a half percentage point worth of additional rate cuts fully priced in (70% chance, up from 67%) for all of calendar 2026.
On The Docket...
The week ahead will very likely be another trial by fire gang. We've got some high-profile earnings, and this is jobs week, so there will be no time for lollygagging or dilly dallying. Your mothers and the nuns that I am sure helped school some of you would be proud.
.... The Federal Reserve Bank's FOMC will start crawling out of their holes with last week's policy meeting out of the way. I do not see any speakers of influence on the docket at this time. We'll hear from Atlanta Fed Pres. Raphael Bostic and Richmond Fed Pres. Tom Barkin this week, neither of whom holds 2026 voting rights this week. We'll also hear from current Vice Chair Philip Jefferson and Fed Gov Lisa Cook, neither of whom is considered to be very influential in economic circles.
.... The macroeconomic calendar will be active this week. Friday is "the big" day. That's when the Bureau of Labor Statistics will publish their almost always highly inaccurate results for their month of January employment surveys. Humans would understand that these surveys are often wonky. Algorithms have no common sense. Markets will move. We'll also see January survey results from the Institute for Supply Management covering the U.S. Manufacturing (late today) and Service (Wednesday) sectors this week.
.... The earnings calendar will be very active again this week and will include quite a few headline-level names. This morning, we'll hear from the Walt Disney Company (DIS) followed this evening by Palantir Technologies (PLTR) . On Tuesday, Merck (MRK) and PepsiCo (PEP) will publish ahead of the opening bell followed by Advanced Micro Devices (AMD) and Amgen (AMGN) after the close.
Wednesday morning, Eli Lilly (LLY) , GE Healthcare (GEHC) and Uber Technologies (UBER) will report. Later on, Wednesday, Alphabet ( (GOOG) , (GOOGL) ) and Arm Holdings (ARM) will go to the tape. Thursday morning, old Stocks Under $10 holding Peloton Interactive (PTON) ) and Ralph Lauren will drop their digits as that afternoon, Amazon (AMZN) and Fortinet (FTNT) post. Finally, another SU $10 name, Under Armour ( (UA) , (UAA) ) will go to the tape on Friday morning.
Economics
(All Times Eastern)
09:45 - S&P Global Manufacturing PMI (Jan-F): Flashed 51.9.
10:00 - ISM Manufacturing Index (Jan): Expecting 48.4, Last 47.9.
The Fed
(All Times Eastern)
12:25 - Speaker: Atlanta Fed Pres. Raphael Bostic.
Today's Earnings Highlights
(Consensus EPS Expectations)
Before the Open: (TSN) (.94), (DIS) (1.58)
After the Close: (NXPI) (3.31), (PLTR) (.23)
At the time of publication, Guilfoyle was long PLTR, SOFI, AMD, PTON, AMZN, UA equity.
