Fed Meeting Kicks Off As Corporate Earnings Hit The Tape

Good morning investors,

Markets continued their post-Davos momentum Monday with the S&P 500 rising 0.5%, the Nasdaq gaining 0.4%, and the Dow up 0.6%. Gold smashed through $5,000 per ounce, hitting the milestone just over 100 days after breaking $4,000 in October, far earlier than Wall Street expected. The Fed kicks off its January meeting today with no rate change expected Wednesday, but the real focus this week shifts to mega cap earnings with Microsoft, Meta, and Tesla reporting tomorrow after the close. The earnings calendar today offers crucial reads across industrials, healthcare, transportation, and defense, providing a comprehensive snapshot of the economy ahead of Big Tech's results.

S&P 500 ($SPY ( ▲ 0.72% )) futures modestly higher as investors prepare for a heavy slate of corporate results. Boeing reports this morning after delivering 600 airplanes last year, nearly double 2024 and the most since 2018. General Motors, UnitedHealth, UPS, RTX, NextEra Energy, Texas Instruments, Union Pacific, and American Airlines round out a packed calendar.

Conference Board consumer confidence arrives this morning with expectations at 90.9 versus 89.1 prior, alongside regional Fed activity readings.

Gold continues its historic run above $5,000, up 15% year to date after surging 65% in 2025. The precious metal is a key part of what's been called the "debasement trade," with investors flocking to assets that can protect them from the erosion of purchasing power as governments around the world take on more debt.

While gold's rally appears sustainable, silver's recent price action stands out as a warning sign. The metal posted two 4-sigma moves in the same day, rising and falling 14%. A 4-sigma significance represents a 0.003% likelihood of a statistical fluctuation, which is extraordinarily rare.

I'm starting to think we are near a top in silver. There is no guarantee with a short squeeze like this, but signs are starting to present themselves. Silver has experienced a parabolic move over the past two to three months, a pattern that historically signals the later stages of a rally rather than the beginning. This will be very volatile and could continue higher, but I expect a lot of chop at these levels. Gold offers a cleaner risk-adjusted hedge here.

Less than a month into the new year, Congress is bracing for another shutdown fight and so are markets. Legislation to fund much of the government is again under review, creating real risk that a partial shutdown arrives Friday.

Kalshi's shutdown odds have jumped from 8% last week to almost 78% after federal agents shot and killed an American citizen in Minneapolis, sparking opposition from Senate Democrats who have called for ICE overhauls and vowed to block funding.

Another stoppage would add insult to injury given Wall Street is still recovering from the information void generated by the last 43 day shutdown. The Labor Department could be affected, once again denying traders, economists, and the Fed crucial data like the monthly jobs report and CPI.

Historically, government shutdowns have introduced temporary uncertainty but have consistently proven to be buying opportunities rather than lasting market threats. I would treat any shutdown driven weakness as an opportunity.

General Motors beat Q4 expectations with adjusted EPS of $2.51 versus $2.20 expected on revenue of $45.29 billion. More importantly, 2026 guidance of $13 billion to $15 billion in adjusted EBIT exceeded analyst expectations, with the midpoint above the $13.39 billion consensus.

GM announced a 20% dividend increase and a new $6 billion share repurchase authorization, continuing its effort to reduce outstanding shares and boost stock price. The company had 904 million shares outstanding at year end, down from 1.2 billion at the end of 2023. Stock rose more than 4% in premarket trading.

Despite $7.2 billion in special charges largely related to its EV pullback and China restructuring, CEO Mary Barra said GM remains in a strong position to return capital to shareholders. North American operations continue leading results while China losses narrowed significantly to $316 million from $4.4 billion in 2024.

UnitedHealth posted a modest Q4 beat with adjusted EPS of $2.11 versus $2.10 expected, but revenue guidance disappointed at $439 billion versus $454.6 billion expected. This marks the first time in a decade UnitedHealth has guided for declining revenue, reflecting membership reductions, divestitures of international operations, and the final year of Medicare's V28 coding transition.

The company is banking on shrinking membership, raising prices, cutting benefits, and increasing transparency to restore profitability. For 2026, UnitedHealth expects its medical benefit ratio to improve to 88.8% from 89.1% in 2025, indicating better cost control.

Shares fell almost 12% as investors digested both the soft guidance and Monday's news that CMS proposed nearly flat payment rates for Medicare Advantage, which now covers more than half of all Medicare beneficiaries.

Boeing reported revenue of $23.95 billion, beating the $22.6 billion estimate, as deliveries reached their highest level since 2018. Cash flow of $400 million was roughly double expectations. CEO Kelly Ortberg told staff there's "a lot to be optimistic about" in 2026 while acknowledging that "with progress comes expectations."

The company delivered 63 jetliners last month, with 44 being 737 Maxes. Boeing outsold Airbus with 1,173 net orders in 2025 versus 889 for its European competitor, as airlines secure delivery slots into the 2030s.

Boeing still has work ahead getting FAA approval for further Max production increases beyond 42 per month and certification for the Max 7, Max 10, and 777X. But the worst appears behind them after burning through roughly $40 billion since the 2019 crisis through Q3 2025.

American Airlines projected its premium focus will "begin delivering results in 2026," guiding for nearly $2 improvement in adjusted EPS at the midpoint over last year and 7% to 10% revenue growth in Q1.

Q4 results missed with adjusted EPS of $0.16 versus $0.34 expected, impacted by the government shutdown reducing revenue by approximately $325 million. This weekend's winter storm caused a 1.5 percentage point reduction to Q1 capacity guidance and an estimated $150 million to $200 million revenue hit.

Premium product offerings continued outperforming main cabin, validating the strategy even as American trails Delta and United in profitability.

Microsoft unveiled Maia 200, its next generation AI chip, joining Google and Amazon in the race to reduce dependence on Nvidia. The chip will run in Microsoft's own data centers before outside customers can access it.

The tech giants are racing to produce internally developed chips to diversify AI supply chains and get more flexibility to power and customize their AI services. Analysts say the chips will be useful to their home companies but won't pose a threat to Nvidia selling to other, smaller firms.

The U.S. government took a stake in USA Rare Earth, providing $1.6 billion from Commerce in exchange for equity, plus a $1.3 billion Energy Department loan and $277 million in federal funding. Shares rose close to 20%. The partnership highlights the strategic importance of rare earth minerals for defense, AI, data centers, advanced manufacturing, and energy.

Nvidia invested $2 billion in CoreWeave, sending the AI infrastructure company's stock up 6%. CoreWeave noted the funds will go toward land, power, and personnel rather than buying Nvidia products, addressing criticism about circular flows in the AI trade.

India and the EU closed a landmark free trade agreement, creating a market of 2 billion people and granting the EU trade access to almost all of Latin America. For India, facing 50% U.S. tariffs, this is a much needed alternative market for exports.

The S&P 500 is running out of earnings surprises, and at this stage, that's the point. After two years of repeatedly smashing expectations, U.S. stocks are shifting to a new phase where profits are still growing but investors must remain confident enough to keep paying for them.

At the start of 2025, analysts expected $274 per share. Actual profits tracked within about 1% of that estimate, an unusual feat considering tariff uncertainty. That follow through has emboldened forecasts for 14% growth in 2026 and 15% in 2027.

The S&P 500 currently trades at about 22 times this year's expected earnings and 19 times next year's, both above the 10-year average. Further gains don't require moonshot assumptions beyond steady growth and sustained investor confidence. Earnings growth will support stocks, but that's unlikely to be what propels prices dramatically higher.

Precious metals have established themselves as a legitimate asset class over the past three years. The strength in gold and silver is being driven by geopolitical risk, currency weakness, and a more dovish global central bank stance. Importantly, these same forces are not inherently negative for equities. A weaker dollar and easier monetary conditions tend to support asset prices broadly.

Dollar weakness remains a meaningful tailwind for large multinational companies with significant overseas revenue exposure. This currency effect is expected to support earnings growth at a time when valuation multiples have already compressed.

Crypto markets are still digesting the impact of October's major deleveraging event, which significantly reduced leverage, liquidity, and speculative activity. While prices have lagged, underlying fundamentals have improved materially. There is a clear competitive dynamic between precious metals and crypto for investor capital. When gold and silver rally sharply, they absorb risk capacity. Historically, pauses or corrections in precious metals have often preceded renewed strength in Bitcoin and Ethereum.

Banks have faced selling pressure following earnings, driven more by political and regulatory headlines than deteriorating fundamentals. Interventions such as proposed caps on credit card rates and restrictions on institutional home buying have weighed on sentiment. Despite this, banks are seeing meaningful productivity improvements driven by AI, tokenization, and blockchain adoption. Over time, this could lead to a rerating closer to technology style valuation frameworks, making recent weakness potentially opportunistic.

Individual stock volatility should be viewed in context. Large drawdowns following earnings guidance revisions can appear dramatic in isolation but often sit within strong longer term trends. Sharp short term declines do not negate substantial gains achieved over the prior year.

The key takeaway is that metals, equities, and crypto are not operating in isolation. Dollar weakness and policy support are broadly constructive, earnings growth remains the foundation for equity upside, and shifts in capital allocation between asset classes tend to be cyclical rather than permanent.

Big Tech earnings tomorrow will set the tone for the next leg of this market. Stay focused on execution and guidance rather than the political noise.

As always, feel free to reach out with questions about positioning.

Dan Sheehan

[email protected]

This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.