Why This Year Started Strong
Despite ongoing geopolitical tensions around the world, the stock market is showing remarkable strength to kick off the year. Here’s what’s driving this positive momentum and what it means for investors.
The U.S. economy has entered LEAD 1—strong growth paired with cooling inflation. This combination is creating favorable conditions across multiple asset classes and setting the stage for broader market participation.
Key Market Shifts to Watch
Broadening Market Leadership
- The dominance of mega-cap tech stocks (like NVIDIA, Apple, Amazon, and Google) is giving way to smaller players
- Small-cap companies and emerging markets are getting their moment to shine
- The equal-weight S&P 500 is outperforming, meaning more companies are contributing to gains
Commodity Surge
- Precious metals (gold, silver) and industrial metals (copper, palladium, platinum) are seeing dramatic price increases
- Some metals are posting 5-7% daily moves—unprecedented volatility
- This creates opportunity but requires caution due to the potential for sharp reversals
Dollar Weakness Benefits
- A declining dollar supports international and emerging market investments
- Bond yields are trending downward, further supporting equity markets
- Banks are positioned to perform well in this environment
The Bottom Line
This is shaping up as one of the strongest starts we’ve seen in years for the combination of economic growth and falling inflation. While geopolitical risks remain and market conditions will evolve throughout the year, the current environment favors a diversified approach that looks beyond just the largest tech companies.
As always, staying flexible and ready to adjust as conditions change is key to navigating these opportunities successfully.
