For all the talk and hype over the broadening of the rally, big moves in small caps, and equal-weight beating cap-weighted S&P 500, when the market needs that extra oomph, it falls on the biggest names to step to the plate. But just as Ronnie Coleman took the Mr. Olympia baton from Lee Haney, and Haney took it from Arnold, new muscle-bound names are emerging…

…and saving the day!  Yesterday, Technology (XLK) led the way, and was in turn led by semis and hardware names.

The Chip Has Sailed

VanEck Semiconductors ETF (SMH) continues to blaze a trail higher, as each day brings actual good news and developments. This isn’t hype. That major move, which began last summer, shows no signs of slowing down.

When we featured Micron Technology (MU) as a long idea in the model portfolio, I had no idea it would soon be seen by ‘smart money’ as the next “Nvidia.” For someone who lived through the tech bubble and subsequent ups and downs in memory and storage names, it was far-fetched. But perhaps  it's not.

The Gates Are Open

After the close, Seagate Technology Holdings plc (STX) wowed them with a monster number, record margins, and strong guidance.

The FOMC Decision

Ahead of today's Federal Open Market Committee (FOMC) decision, the economic backdrop is providing cover for a rate cut, though it’s a foregone conclusion that will not happen. Inflation is coming down much faster than the data the FOMC uses.

A big problem for the Fed and the White House is that people feel rotten. Even given the political bias that skews the numbers, consumer confidence is too low and doesn’t reflect the positive things happening in the economy. It does, however, reflect the hard time the Fed has given small businesses and middle-class earners, living paycheck to paycheck.

The market has begun to discount surveys and other forms of “soft data,” which have been in a tailspin, as “hard data” has been edging higher, and now has upside momentum.

Pass the Buck

 

The U.S. Dollar (DXY) took a hit yesterday when President Trump gave a calm response to a question about its recent weakness. He says the dollar is ‘great.’  If you want to know why “soft data” is under so much stress, it's these kinds of stories spinning weakness in the dollar, as a signal that ‘American Exceptionalism’ is over.

The administration told everyone who was paying attention that it needed a weaker dollar as part of its overall plan to rebalance trade (as reflected in Stephen Miran's November 2024 paper (see below).  There is no doubt we have abused the privilege of the world’s reserve currency, but the sun isn’t setting on it yet.

Today’s FOMC decision and Q&A session shouldn’t shake up the market as much as the last several meetings.

Today’s Session

Semiconductors continue to live in an orbit all on their own.

Comments

Every morning I wake up to my home screen which is Yahoo full of 15-20 bad news stories about market and economy. Then I switch to FOX and all the stories are great news. Ugh! my Brain! TimInTx Tim in Texas on 1/28/2026 10:41:31 AM

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