We got a mid-week sell off surrounding Greenland tensions and the threat of new tariffs. However, as was the case last April, the tariff sell off was quickly mitigated. The framework of a deal regarding the U.S. use of Greenland appeased the market and much of the decline has been reversed. As you see in the chart, the S&P fell briefly below support but has now risen back up to the prior support (now resistance) level. Upcoming earnings will likely be the driver (either higher or lower) of this market. However, with Naval ships on the way to the Persian Gulf, tensions with Iran and any strikes could temporarily roil the markets.
The Nasdaq 100 shares a similar chart pattern. After breaking one level of support, the index is climbing again and nearing its 2026 highs. With tech earnings in focus next week, the Nasdaq will likely make a big move up or down depending on the results. We anticipate continued strong earnings and a continuation of the upward trend. Both the Nasdaq and S&P have small gains for the year. Small-caps (not shown) continue to be the star as they are up nearly 10% so far this year.
Our Point
This week was dominated by geopolitical events as President Trump threatened to levy large tariffs on Europe if they didn’t support the US position on Greenland. Greenland is a key strategic island. While the US has had a presence there, the White House would like more unilateral control of the island for national security. After much discussion this week in Davos, Switzerland, it appears that the US and Europe have agreed on parameters that will satisfy both parties. The market unease that resulted in a one-day significant decline has now been mostly reversed. Absent a change in heart by one or both parties, the Greenland kerfuffle is likely over. While one geopolitical drama is likely over, there is another one brewing in the Persian Gulf. With the US Navy sending an armada there, all eyes will be watching Iran. There is always something… Next week will be a huge week of earnings with several of the Mag 7 reporting. The results will largely determine whether or not this market surges forward or takes a breather. Microsoft, Meta and Tesla report next Wednesday with Apple reporting on Thursday. There will be a slew of other earnings but none as important as the results from these 4 stalwarts. The Fed will also meet next week. No interest rate changes are expected but the communicated path forward will be closely analyzed to determine if and how many interest rate cuts the market can anticipate over the coming quarters. Hold on, it could be an exciting week. Speaking of exciting weeks, grocery stores were buzzing this week as old man winter descends on much of the United States. The scenes of empty shelves and aggressive cart pushers brought back memories of Covid. It does appear that many of our readers will be affected. I honestly wasn’t too concerned until the forecast changed from mostly snow to the possibility of a significant ice storm. With very low temps on the other end of the storm and the rising possibility of power outages, our thoughts and prayers are with all in the path of this storm. We made no changes to our portfolios this week. With the generators out and ready, we will be working next week – power or not. Stay safe and stay warm. Hunker down, bundle up and enjoy your weekend wherever it finds you.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bills Asset Management (“BAM”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from BAM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BAM is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of BAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at www.billsasset.com.
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About Bo Bills
Founder and Chief Investment Officer at Bills Asset Management. With over 30 years of experience in managed risk investing, Bo has helped countless clients achieve their financial goals while preserving capital.
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