Commentary for January, 2026

Hello all - we hope you had a nice January.  Hard to believe it’s already 2026!  

With a lot of ups and downs, the markets closed the month in the green.  The Dow added 1.8%, the S&P 500 gained 1.5%, and the Nasdaq, which has a higher concentration of tech stocks, was up 1.0%.  

Theres an old Wall Street adage that says “So goes January, so goes the year.”  It means that if January is higher, the year will be higher, and vice-versa.  It has about an 85% accuracy rate, so as silly as it sounds, hopefully the positive January is a good sign for the year. 

Here’s a look at how the markets moved this month:

Here’s a look at how the various market sectors performed this month.

After extremely low volatility in the markets last month, volatility started ticking up this month.

Tech stocks saw a little more volatility this month, too.  The areas of tech benefitting from AI, like Nvidia or even Facebook, have held up well.  

On the other hand, companies where AI has the possibility of disrupting their business, like software stocks like Microsoft or Oracle or Adobe, did very poorly.  

Here’s a look at an index ETF focused on software-related companies:

Those big tech stocks have made up a bigger and bigger slice of the overall market.  However, the concentration of those 10 biggest companies in the market declined slightly this month.

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We continue to keep an eye on the commodity markets as there have been some interesting moves.  

The US Dollar continues to decline and now stands at the lowest level in four years.

When currencies do poorly, commodities and metals tend to do better.  Gold and silver continued on their incredible run, although a late-month selloff dented the performance slightly.

 

Here’s a look at gold, whose price continues to skyrocket:

Silver was even more remarkable.  It seems like an irrational bubble, but it keeps going higher.   It has benefited from the weaker currency, but it’s also used in many important products today, like AI data centers and electric cars.  China announced new restrictions on exporting silver beginning Jan. 1, so this also fed into the rapid rise.

Oil is starting to move higher, too.

Oil was initially lower after the Venezuelan government overthrow (yes, that was in January, but it seems so long ago!), since it meant the possibility of new oil eventually coming on the market.  

Below is a great chart showing how much Venezuela used to produce:

While Venezuela caused oil to move lower, new threats with Iran, plus the weaker dollar, caused oil prices to rise into the end of the month.  Look out for higher prices at the pump.

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MARKETS

So, what was going on with the markets this month?  Old causes of volatility returned, mostly coming out of Washington.  

The threat of tariffs reappeared in a big way this month, causing markets to drop sharply.

Stocks moved higher when the worst-case scenario was taken off the table, but the threat of tariffs being used as a tool in every foreign disagreement will stay in the back of investors’ minds. 

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GOVERNMENT SHUTDOWN

The threat of a government shutdown also resurfaced this month.  

As the month ended, it looked like some compromise might be in the works…

…but the betting markets still saw a very high chance of a shutdown occurring.

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FED

Then there was the Fed.  For the last several months, it’s been like an Apprentice-style reality show searching for the next Fed chief.  The various candidates bounced in and out of favor and were paraded on TV.

 

The candidates that seemed to be favored by Trump all supported lowering rate further, and the markets rose on those expectations.

However, it turns out the new Fed chief is likely to be Kevin Warsh.  To us, he always seemed less likely to lower rates, but he has a lengthy record as an economist and with the Fed and we thought he was the best choice.

Warsh never seemed to be in line with what Trump was looking for, so we aren’t sure why Trump picked him.  

Nevertheless, the market expectations for lower rates ended with the announcement and the markets reversed.  The dollar strengthened and the metals that had done so well, like gold and silver, all saw strong drops.  

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The Fed also held a policy meeting this month, announcing they were holding rates steady after lowering them at the previous three meetings.  This had little impact on the markets, though, because investors had expected this to me the case. 

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INFLATION

The inflation numbers released this month showed that on an annual measurement, inflation was mild.

However, when we look at inflation month-by-month, prices are clearly still rising. 

When excluding food and energy (what economists call the “core” inflation), prices are still higher every month.

Inflation at the business level came in higher than expected.

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OTHER ECONOMIC DATA

Other economic data releases were mixed this month, too.

The unemployment picture still looks weak as very few jobs are being added.

 

The manufacturing side of the economy showed another decline, while the service side saw another increase. 

Retail sales saw a nice improvement.

Durable goods looked good, too.

Consumer confidence continues to be an issue as it keeps falling. 

Small business optimism rose slightly, too.

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Where does the market go from here?

In the very short term, looking out a few weeks, we’re a little expensive and may have just started a short leg lower.  We’d need to see it go much lower before dipping our toes in again.   

One note for the year, historically the midterm year for a president is a decent year.

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.

Commentary for December, 2025

Hello all - we hope you had a nice December.  It sure went quick!  

The markets were roughly flat this month.  The Dow added 0.7%, the S&P 500 gained a slight 0.06%, and the Nasdaq, which has a higher concentration of tech stocks, was down 0.5%. 

Here’s a look at how the markets moved this month:

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We also wrapped up a solid 2025.  The Dow was up 13%, the S&P 500 gained 16%, and the Nasdaq rose a nice 20%.  

Here’s a look at how the market did this year.  You can see it’s still hanging in the trading range that started after the April tariff announcements. 

Here’s a look at how the various market sectors performed this year. The top-performing sector, “Comm. Services” is communications stocks, which includes names like Google, Facebook, and Netflix.

Market volatility hit the lowest levels of the year this month.

One concern we have with the current market is the concentration – a handful of large stocks make up the bulk of the index.  This is not a healthy sign for the market. 

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We don’t spend much time on commodities, but the currency and metals markets were very interesting this year.  

The US Dollar had its weakest year since 2017, down over 9%.  There were several reasons for this.  Most notably, investors widely see a more dovish Fed (more likely to take a stimulative approach) in the coming months and years based on the likely Trump Fed replacement.  Rate cuts are coming next year, which brings borrowing rates down but the currency does not do well.  

There's also the massive debts and the Fed vs. Trump bickering that also weighed on the currency. 

When currencies do poorly, commodities and metals tend to do better.  Gold and silver had incredible runs this year.  

Here’s a long-term look at gold, where the rapid rise in 2025 is easy to see:

Silver was even more remarkable.  It benefited from the weaker currency, but it’s also used in many important products today, like AI data centers and electric cars.  China announced new restrictions on exporting silver beginning Jan. 1, so this also fed into the rapid rise.

 

This is not an area we would be excited about putting new money into, as it’s showing all the characteristics of a bubble.

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FED

The Fed also had an impact on the markets this month, where they held a policy meeting and announced another reduction in interest rates and will buy more bonds to keep rates down. 

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ECONOMY

We had some very positive economic reports released this month, but there’s also some reason to worry.

First, the GDP report showing the strength of our economy came in surprisingly strong. 

The employment report was also positive, albeit only slightly.

This is the concerning part.  Employment seems to be weakening.  Right now, there aren’t a lot of jobs being lost, but there aren’t a lot being added, either.  When looking at hiring on an annual basis, we’re roughly flat.

There has been an increase in the amount of job cut announcements, too.

A lot of these leading indicators have been declining and tend to foreshadow a recession.  This can be seen in the red line in the chart below.  Every time this line declined in the past, a recession followed.

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INFLATION

The government shutdown has distorted the inflation metrics released this month, but when looking at inflation on a year-over-year basis, inflation is moving lower.

However, when we look at inflation month-by-month, prices are clearly still rising. 

When excluding food and energy (what economists call the “core” inflation), prices are still higher every month.

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OTHER ECONOMIC DATA

Other economic data releases were mixed this month, too.

The manufacturing side of the economy showed another decline, while the service side saw another increase. 

Retail sales were exactly flat, but when you exclude auto sales, the retail sector looks a little better.

Durable goods took a turn lower.

Consumer confidence continues to be an issue as it continues to fall.

Small business optimism rose ever-so-slightly.

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Where does the market go from here?

In the very short term, looking out a few weeks, we may need to move a little lower before turning higher.  We’re still on the expensive side looking out a little further, so we would stay a little more cautious at this time.  




This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.