Cover:
-Five years ago, the GameStop phenomenon nearly caused a collapse of the global financial system, highlighting vulnerabilities in financial markets. This event, described by Thomas Peterffy of Interactive Brokers as a time of intense fear, was fueled by retail investors purchasing GameStop shares on margin, allowing brokers to lend these stocks to short sellers. Despite initial calls for substantial regulatory reforms, the essential mechanisms that could have exacerbated the situation remain largely unattended to. In the aftermath, while regulators worked to address systemic weaknesses, brokerage firms adapted to a new landscape where retail trading surged. Trading volumes remained high as individuals embraced investing with increased enthusiasm, frequently participating in speculative activities in various markets. The GameStop stock reached a record high of $120.75 on January 28, 2021, coinciding with brokerages like Robinhood pausing purchases due to rising deposit demands from clearing corporations, underscoring ongoing regulatory challenges.
Interview:
-Joseph Dominguez, the President and CEO of Constellation, spoke about various global energy topics during an interview at the World Economic Forum in Davos, Switzerland. He highlighted the significant growth in the electric vehicle (EV) industry, indicating a consistent increase in demand. Additionally, Dominguez addressed President Donald Trump's proposal for an emergency power auction aimed at lowering electrical bills in the Mid-Atlantic region, emphasizing unprecedented levels of energy demand not observed in a long time. He also discussed the impact of hyperscalers on the energy system, reflecting on the evolving landscape of global energy needs and strategies.
Tech Trader:
-Artificial-intelligence companies anticipate that by 2026, autonomous agents—software utilizing AI language models—will be able to execute complex tasks based on simple instructions. However, this technology introduces significant security risks, particularly through prompt injection attacks, which exploit agents' autonomy and data access. According to CrowdStrike President Michael Sentonas, prompts could evolve into a new form of malware, posing dangers as agents gain access to sensitive systems. Companies like Microsoft and Salesforce are keen on promoting these agents for workflow automation, while consumer-focused tools also emerge. The risk of prompt injection stems from untrusted sources, where misleading commands can be concealed, leading agents to execute harmful actions if they possess adequate permissions.
The Trader:
-Geopolitical uncertainty has become a defining characteristic of global security, particularly during President Donald Trump’s second term, influencing the defense sector, which has seen a 55% increase in value over the past year. With global military spending surpassing $2.5T in 2025 and projected to exceed $3T by 2027, there is significant growth potential in defense stocks. Increased military activity is beneficial for defense companies, while the perception of the US as an "unreliable ally" could ultimately favor the European defense industry, though the effects may take time to materialize. Prominent recommendations in the US include General Dynamics, known for its submarine and tank manufacturing, and L3Harris Technologies, a leader in defense electronics which is in the process of spinning off its missile division into a separately traded public entity. This spinoff is anticipated to attract a $1B investment from the US Department of War, enabling expansion operations. Analyst Sheila Kahyaoglu from Jefferies perceives that this transaction could yield a 30% combined gain for L3Harris and the new missile-focused entity, as missile businesses typically command higher valuations than their more diversified counterparts.
-Shares of Birkenstock, the German footwear brand, have stagnated since their 2023 IPO, experiencing a 25% decline in value in 2025 and a further 4% drop in 2026, currently priced at $39.38. Despite a first-quarter revenue growth announcement matching expectations, external factors such as the depreciated U.S. dollar against the euro and concerns over potential European tariffs have negatively impacted investor sentiment. The upcoming investor day is anticipated to introduce new multiyear targets that may refresh revenue and profit forecasts, providing a possible catalyst for stock recovery. Analyst Matthew Boss from J.P. Morgan predicts a strategic plan to increase revenue by $1 billion over the next three years, likening this to a necessary reset for the company. Although enthusiasm for the stock is low, projections suggest a 10% earnings-per-share growth for the current fiscal year and a 20% increase for the next, with shares trading at 13 times the anticipated EPS for 2027, slightly below the historical average.
Features:
-AIG stock experienced a significant decline of 7% in early January 2026, after CEO Peter Zaffino announced his upcoming resignation, which has contributed to a 14% year-to-date drop. Currently trading below its book value of $75 per share and at a price-to-earnings ratio of nine times estimated earnings for 2026, AIG appears undervalued compared to its peers. The company targets a 20% annual increase in earnings per share from 2025 to 2027 and raised its dividend by 12.5% in 2025. Despite the decline in stock price, which recently reached a 52-week low of $72, investment professionals see the company as a potentially cheap investment opportunity, given its successful turnaround from the near-collapse during the 2008-09 financial crisis. Colin Hudson, a co-manager of the Oakmark Equity and Income fund, acknowledges Zaffino’s pivotal role in enhancing the company's performance and expresses confidence in AIG's future stability under Zaffino's continued chairmanship.
-BJ’s Wholesale Club Holdings has established itself as a leading discount retailer, attracting 8M members across 260 locations, with successful expansion efforts into new states like Alabama and Texas. Jefferies analyst Corey Tarlowe has a bullish outlook on the stock, setting a price target of $120, which signifies a 27% upside from the current trading price of $94.65. This optimism is supported by BJ’s innovative growth strategy, which has resulted in 12 consecutive quarters of market share gains and a rise in club traffic, alongside increasing same-store sales contributing to record profits. Despite this success, the stock is trading at a price-to-earnings ratio of 20, significantly lower than industry peers such as Costco and Walmart, indicating a potential undervaluation. With shares down 22% from their 52-week high, this presents a promising buying opportunity for investors ahead of expected growth in 2026 and beyond.
Europe:
-Treasury Secretary Scott Bessent characterized Denmark's investment in US government debt as "irrelevant," pointing to its shrinking stake compared to larger European counterparts like Belgium and France. While Denmark's $9.88B Treasury holdings are small, the recent decision of a Danish pension fund to divest its $100M in Treasuries is significant as it may embolden other nations to consider alternatives. Denmark has reduced its US debt holdings from $18.69B in 2020, reflecting waning reliance over time. Although Denmark's influence on the $30.3T Treasury market is limited, a broader trend of selling by larger countries could challenge US financial stability. President Trump indicated a strong adverse response to any such actions by Europe, asserting that the US has "all the cards." Nonetheless, the US dollar's prominence remains robust, with 57% of global foreign-exchange reserves held in dollars, indicating that complete divestment from US assets is impractical for Denmark or any country. Denmark's central bank maintains the option to hold Treasuries but is not obligated to do so.
Emerging Markets:
-No update
Commodities:
-Silver has experienced a remarkable surge, increasing over 200% within the past year, including a 34% rise in January. It currently trades around $94/oz., significantly outperforming gold, which has risen by 74% in the same period. Unlike gold, silver's appeal stems not only from its status as a safe-haven asset but also from its industrial applications, with 60% of demand now linked to its use in electronics, solar panels, and electric vehicles. This increasing industrial demand is coupled with potential supply shortages since most silver is produced as a byproduct of other metal mining, leading to a persistent demand-supply deficit, which stood at 18% last year. However, silver's price rise may not be entirely justified by these fundamentals, as it often behaves like a volatile small-cap stock, showing a beta of 1.4 against gold.
Market analysts express concerns regarding silver's current valuation, noting that at $94, it is more than double its 200-day moving average of $46. As David Morrison from Trade Nation remarks, the market appears to be in a precarious position, hinting at the potential for significant price fluctuations moving forward.
Streetwise:
-A decade ago, AbbVie faced a significant patent cliff, signaling the end of exclusivity for its blockbuster drug Humira. Despite initial concerns, the company’s stock has surged 460% since then, outperforming the market significantly. Launched in 2002 by Abbott Laboratories, Humira was pivotal in the development of monoclonal antibodies, effectively targeting immune-triggered inflammation across multiple autoimmune diseases. Although US drug patents last around 20 years, with actual sales exclusivity typically shorter, AbbVie strategically managed Humira's patent expiration in December 2016, which accounted for 63% of its revenue at that time, through a complex web of additional patents, delaying competition by two years. Humira's sales peaked at $21.2B in 2022, surpassing expectations from the original patent cliff year. This robust cash flow enabled AbbVie to invest in next-generation autoimmune treatments, Skyrizi and Rinvoq, which are projected to generate combined sales of $31B this year, increasing to $50B by 2030. Despite Humira's eventual decline, AbbVie’s stock rose from a low forward price/earnings ratio of 11 to a healthier 21. Other drug companies like Merck and Bristol Myers Squibb face similar patent expirations but may not replicate AbbVie's success.