• Current read is 55 on the fear greed index vs 45 last week.

• Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (consider buy puts/sell calls/sell shares)

• I like to be bullish when there is extreme fear

• I like to be bearish when extreme greed.

• Opportunity is out there, just gotta find it!

• 30 year fixed mortgage rate fell to 5.95% Today, vs 6.19% last Sunday.

• 10 year treasury bond yield fell to 4.17% Today, vs 4.19% last Sunday.

• 2 year treasury bond yield climbed to 3.54% Today, vs 3.47% last Sunday.

• Bonds were mostly flat this week, but mortgage rates moved lower after Trump pushed for increased buying of mortgage backed securities. Higher demand for MBS drives prices up and yields down, which translates into lower mortgage rates.

• As I always say, interest rates are gravity!

• As interest rates/bond yields DECREASE, stocks become MORE attractive because bond yields go DOWN which makes the risk free bond look LESS attractive.

Let’s Break It Down:

Upcoming Week Market Outlook | Monday, January 12

Starting this week off with Today (Monday)

• Today is mostly about Fed speakers. Normally, I do not put much weight on what individual Fed governors or regional presidents say. The market ultimately listens to the Fed chair. That said, this week is a little different.

• There has been increasing noise around Jerome Powell and pressure from Trump, who is frustrated that interest rates are not being cut. There are reports that Trump is looking for potential reasons to challenge or remove Powell before his term ends in May. Whether that actually happens or not, this type of headline risk can create short term volatility in the market.

• From my perspective, this is more noise than signal. Once May arrives, there will be a new Fed chair anyway. What happens between now and then may move markets short term, but I do not see it as a major long term needle mover.

Tuesday is much more important:

• We get JPMorgan earnings, and for banks I care most about net interest margins, credit card delinquencies, and overall loan quality. This gives us insight into the health of the consumer and the impact higher rates are having on borrowing behavior.

• We also get Delta Airlines earnings. Airlines are a great read on discretionary spending. I am paying close attention to travel demand and seat upgrades. When people are not only flying but upgrading from economy to premium seating, that tells you consumers have money and are willing to spend it. That is an important signal for the broader economy.

• Tuesday also brings CPI inflation data. Inflation is one of the biggest drivers of interest rates, and interest rates act like gravity on the stock market. When rates fall, higher valuations are easier to justify. When rates rise, valuations compress.

• Historically, this relationship is very clear. In 1980, interest rates were near 20% and the S&P 500 traded around a 9 PE ratio. Today, rates are closer to 3.5% and the S&P 500 trades near a 30 PE ratio. Lower rates support higher valuations, and CPI helps shape where rates are headed.

Wednesday is important:

• We get Bank of America and Wells Fargo earnings, along with retail sales data and producer price index data.

• Retail sales are slightly delayed due to the government shutdown, but they are still important. They tell us whether consumers are spending and whether confidence remains intact.

• Producer price index can act as a leading indicator for inflation, so it helps us understand what may be coming next on the CPI front.

Thursday is a big day for AI:

• We get initial and continued jobless claims, which show how many people are being laid off and how long they are staying unemployed. This gives us a real time read on the labor market.

• We also get TSM earnings pre market. This is a major needle mover for the entire AI ecosystem. TSM sits at the center of advanced chip manufacturing, so their guidance matters not just for one company, but for the entire AI supply chain.

• On top of that, we get earnings from Goldman Sachs, Morgan Stanley, and BlackRock, which helps us understand capital markets activity, asset flows, and institutional sentiment.

Friday is relatively quiet: 

• But at that point we will have enough data to step back and look at the full picture. The economy, the labor market, inflation, AI spending, and valuations all need to be viewed together. Making decisions based on one data point or one earnings report is not enough.

Overall thoughts:

• Looking at the big picture, my thesis has not changed. AI spending remains strong, demand continues, and the overall market is roughly 15% overvalued. That said, markets do not move in straight lines. A swing from 15% overvalued to 15% undervalued is entirely possible, which would imply a drawdown of around 30% from current levels.

• As always, I will be breaking everything down in Discord in real time. We will continue to capitalize on opportunities and focus on beating the market over the long term in a low risk and sustainable way. No day trading. No swing trading. No covered calls. No cash secured puts.

• We build a strong base portfolio, sell long duration portfolio secured puts on companies trading below intrinsic value with moats, pricing power, and durable competitive advantages. Those puts are typically 1 to 2 years out. We take a portion of that premium and deploy it into call options & a portion into shares. Then we wait patiently and let the probabilities work in our favor.

• Happy 2026, the year of market volatility!

• One final housekeeping note. These newsletters will now be sent on Mondays instead of Sundays, which is why you are getting this today.

As always, I am rooting for you and want nothing but wealth & health for you & your family!

See you in next weeks newsletter!

-Brandon

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