“Always do whatever’s next.” George Carlin
The streak continues- for the fourth decade in a row, the year ending in a ‘6’ has seen a 20”+ snow dump. Cody, who is a Morkie weighing 16 pounds, seems convinced he is part husky and only accepts his small size when he is shoulder deep ( or worse) in the snow. Good times......
So, honestly, I am not excited about this Super Bowl. I am so battered as a Jets fan that I cannot even muster animosity towards the Pats. I will note that,
, a guy the Jets drafted 2 years ago and released 5 weeks ago was the Pats player who blocked the Denver game-tying field goal.of courseSo we walk into the country recovering from a massive storm, drama at the top in China, rumors of major FX intervention, increasing domestic turmoil in the US, potential for huge US tariffs on Canada..and equities are basically unchaged in overnight trading. Just another Manic Monday.
Let’s talk about what the f-k is going on in this country. What we have learned is that many of the parameters, the implied national understanding of what the guardrails and boundaries are, the ( overused but sadly necessary) Overton Window for acceptable Governmental action, were simply assumptions, norms, and expectations. Not required. Not legally defined or proscribed. And this Administration has no qualms with doing whatever it deems necessary to achieve its goals. The expansive unitary Executive, the remaking of the govenment into one laid out in Project 2025. The explicit use of carrots and sticks to achieve short term objectives- which clearly and nakedly include self-enrichment- with minimal regard for the longer-term, strategic impact. Give us what we want or we will use political, military and economic force to make every decision a Hobbesian one. Sovereignty is a suggestion. The same for laws. You can literally hear the underlying ‘We can do this the hard way or the easy way’ and ‘that’s a beautiful (country/company/life) you have there, be a shame if something happened to it’
*leitmotifs.*We ‘need’ Greenland so give it to us. We want to arrest and deport illegal immigrants, so use of excessive force, illegal search and seizure and the Fourth Amendment, arrest of legal immigrants, mistreatment of children- all are just in the way and can be trampled upon.
You disagree? You-gasp-potest? You must be a communist, a ‘domestic terrorist’, a paid agitator.
Who ya gonna believe, me or your lying eyes??A judge issuing an order limiting activity? How dare an unelected offcial inerfere with the President’s orders ( despite the role of thatbranch of government**co-equalliterallybeing to ensure the guardrails are in place). Must be a radical leftie, and surely needs to be impeached.There is a ‘boiling frog’ element to this as well. If armed, masked law enforcement in the streets becomes ‘just another Wednesday’, will we notice when they expand their incursion into more and more civil rights? What about when election sites are populated by this masked private military in a naked attempt at voter intimidation? Where is the ‘red line’ for this government taking more stakes in public companies and demanding tribute?
I could go on, but no need to work myself or you into a Monday-morning froth. Suffice it to say I think this gets much worse, and I expect some more violence as opposition grows, including use of the Insurrection Act.
“Yes, It’s Fascism”
(The Atlantic)
Keep an eye: The American aircraft carrier USS Abraham Lincoln has arrived off the coast of Oman.
Possibility of a partial government shutdown increases; Senate Democrats have insisted that funding for the Department of Homeland Security be split off until Congress can agree on new guardrails for immigration enforcement
Trump threatened Canada with 100% tariffs on exports to the US if it makes a trade deal with China
The yen extended gains to as much as 1.5% against the dollar as traders are on heightened alert for authorities intervening in the market following its recent slide.
Gold above $5,000-an-ounce threshold, fueled by US President Donald Trump’s reshaping of international relations and investor flight from sovereign bonds and currencies.
Swiss Franc: Hit an 11-year high against the USD today (Safe-haven flow).
“OpenAI faces financial crunch point as huge supplier bills start to come due”
(IFR)Tesla/Microsoft: Report earnings Wednesday; seen as the “AI Legitimacy” test.
EU-Mercosur: EU signed a massive FTA with 31 countries, creating a market of 700M consumers to bypass U.S. trade friction.
Congressional Republicans showed signs of wavering on President Donald Trump’s immigration crackdown in the wake of another shooting of a US citizen in Minnesota.
“Xi’s Purge of Top General Spurs Questions on Taiwan, Succession” (bbrg)
“The “Sell America” Trade Isn’t A One-Off”
(QTR)“Huge Consumer Cash Piles Can Support Stock Rally: Equity Insight”
(Bbrg)“China’s Top General Accused of Giving Nuclear Secrets to U.S.”
(WSJChina’s top general, second only to Xi Jinping, the nation’s leader, in the military command, has been put under investigation and accused of “grave violations of discipline and the law,” the Ministry of National Defense said on Saturday, the most stunning escalation yet in Mr. Xi’s purge of the People’s Liberation Army elite.
The general, Zhang Youxia, is a vice chairman of the Central Military Commission, the Communist Party body that controls China’s armed forces. Another member of the commission, Gen. Liu Zhenli, who leads the military’s Joint Staff Department, is also under investigation, the Defense Ministry said. Its announcement did not say what either general was alleged to have done wrong.
General Zhang’s downfall — few if any Chinese officials placed publicly under investigation are later declared innocent — is the most drastic step so far in Mr. Xi’s years-long campaign to root out what he has described as corruption and disloyalty in the military’s senior ranks. It is all the more astonishing because General Zhang seemed to be a confidant of Mr. Xi, who has known him for decades. (Sources: nytimes.com, news.cn)
“The quant shop — AI lab convergence”
(FT)“US banks need to cut their credit card rates”
(Sheila Bair, FT)“How Trump’s Ally at the Fed Is Remaking Bank Oversight -- WSJ” (WSJ)
“Hedge Funds Sell Most Single Stocks in 4 Weeks: Equity Insight” (bbrg)
Prospect of the US actually joining Japan in FX intervention hitting dollar.
10year lower this morning/curve flatter
Crude has been lagging all other industrial commodities due to unique supply/demand dynamics and geopolitical issues. 62.25 is 200d moving average; through there, watch for a significant upside move
Now what?
Where is sentiment, you ask? According to my friend Claude:
AAII Sentiment Survey (Week ending January 22, 2026)
Bullish: 48.2%
Bearish: 24.1%
Neutral: 27.7%
Bull-Bear Spread: +24.1 points
Context: >30 point spread = euphoria (contrarian sell signal)
Current: At 24 points, approaching but not yet at extreme
Duration: 3 weeks above 45% bulls
Historical Pattern: When bulls >50% for 4+ consecutive weeks, 60% probability of pullback within 2 weeks
Hedge Fund Net Exposure (Estimated from Prime Broker Proxies)
Gross Leverage: ~220% (moderate)
Context: Historical range 180-260%
Interpretation: Not max levered, room to add
Net Exposure: ~52% long
Historical Avg: 48%
Interpretation: Long-biased but not extreme
Context: During bull markets, can reach 60-65%
I like my new friend!
S&P 500 state of Play
Positioning asymmetries favor tactical opportunities: Treasury shorts at 71st percentile (squeeze vulnerable if data disappoints), equity positioning moderate at 62nd percentile (room to run higher), gold longs crowded at 75th percentile (fade rallies if geopolitics ease).
MSFT/META options show elevated call skew (95th percentile) = earnings vulnerability to “good but not great” results.
The week ahead is a catalyst-dense inflection point: MSFT (Tue) and META (Wed) are mega-cap earnings with high bars. Consumer Confidence (Tue), GDP (Wed), Fed Beige Book (Wed) test “soft landing” narrative. Positioning suggests modest bullishness but not euphoria - VIX 16+ shows caution beneath surface optimism.
“The Hitchhiker’s Guide to Positioning: Part I”
(Market Hitchhiker)
