Good morning, investors. Today we’re covering, how to invest under Trump 2.0, top stocks for January, the data center ecosystem, and much more.
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This Week’s Top Stories
NEED TO KNOW
How To Invest Under Trump 2.0
The S&P500 is up 13% since Trump’s became president.
And due to recent volatility, you’ve been asking one key question:
How will Trump’s policies impact the stock market in 2026?
1. Affordability Takes Center Stage
With midterms approaching, lowering living costs is a top priority. The government is pushing measures to reduce mortgage rates, drug prices, and credit card interest to ease pressure on households.
Investor impact:
Consumers may benefit, but banks and pharmaceutical companies could face profit pressure from tighter rules.
2. Defense and Strategic Resources
The U.S. is focused on military strength and securing key resources, while reducing reliance on China for rare earth materials.
Investor impact:
Defense spending should stay strong, supporting major contractors and companies in drones, satellites, and missile systems.
3. Tax Cuts Boost Spending
The One Big Beautiful Bill Act could deliver about $160B in tax breaks in 2026, leading to larger refunds.
Investor impact:
More disposable income may support consumer staples and essential retailers, at least temporarily.
4. Pressure on the Fed
Political pressure and high government debt are complicating the Fed’s job, especially with leadership changes ahead.
Investor impact:
Expect possible bond market swings, higher long-term rates, and a weaker dollar. Long-term bonds remain sensitive.
5. Crypto Regulation Advances
The GENIUS Act and proposed CLARITY Act aim to clarify stablecoin and digital asset rules. Stablecoins must hold safe assets like U.S. Treasuries.
Investor impact:
Growth in stablecoins could increase demand for Treasuries and support the dollar.
6. Health Care Stabilizes
There’s a chance ACA subsidies return before elections, reducing uncertainty in the sector.
Investor impact:
Insurance, biotech, and medtech companies could benefit from clearer policy and lower rate pressure.
7. Trade and Tariffs
A Supreme Court ruling on tariffs and USMCA renegotiations could drive headlines in 2026.
Investor impact:
Markets may see short-term volatility, but near-shoring and North American trade alignment could create opportunities.
Investing Under Trump 2.0
Favor:
Defense, energy, near-shoring themes, selective health care, consumer staples
Be cautious with:
Overvalued growth stocks and long-duration bonds sensitive to interest rate shifts
CHART OF THE WEEK
Shaky Market Investing
Software stocks are in their worst three-month stretch since 2002, falling 25% from their October peak.
At the same time, consumer staples are up double digits.
Is it time to consider “boring” stocks?
History shows, low-volatility and defensive companies tend to fall less during market crashes.
In 2022, when the S&P 500 incurred an ugly 18.1% loss, the iShares and Invesco low-volatility funds slipped 9.4% and 4.8%, respectively.
And we’re entering a period with:
Record valuations
Massive AI capital spending
Political pressure on the Fed
High deficits
Gold at record highs
Commercial real estate stress
Defensive sectors outperforming
Remember, when uncertainty rises, capital moves from excitement to resilience.
January’s Top 10 Stocks
Morningstar just released its latest Best Companies list (Morningstar).
Each name trades at a meaningful discount to Morningstar’s fair value estimate.
Here is what stands out.
Most stocks carry Medium uncertainty ratings. Not speculative bets.
Several have Exemplary capital allocation.
The list leans toward durable cash-flow businesses.
Many are in “boring” or infrastructure-like sectors.
This is aligned with the defensive rotation we’re seeing in 2026.
This isn’t an AI momentum list.
It’s a valuation-driven list.
Amazon Quick Dive
Since 2016, Amazon is up 514%.
However, over the last 5 years, Amazon is up just ~20%. And the S&P 500 is up 86%.
Furthermore, the divergence between the price and earnings suggest something is off.
Let’s dive deeper into the latest report.
Amazon isn’t growing from just one place. North America revenue was up about 10%, international about 13%.
AWS is still the moneymaker. It grew around 20% for the year, made $45.6B in operating income (more than half the company’s total), and growth sped back up to 24% in Q4.
Profits are scaling faster than sales. Operating income jumped from $68.6B to $80B, and EPS climbed over 30% to $7.17.
Cash flow hit $139.5B, up 20%. Free cash flow dipped only because Amazon is spending big on AI and cloud.
Still, the market may be pricing Amazon like a mature retailer.
Data Center Investing
By 2030, companies are expected to deploy $6.7 trillion into global data center infrastructure (McKinsey).
More than 40 percent of this spending will be invested in the United States.
This is physical infrastructure.
Cables. Transformers. Substations. GPUs. Cooling systems.
And once this kind of capex cycle starts, it doesn’t reverse quickly.
In 1999, companies overbuilt internet infrastructure.
Today, they are overbuilding AI infrastructure.
But massive capex waves come with risk:
• Overcapacity
• Margin compression
• Power bottlenecks
• Policy/regulatory intervention
Remember, when capex outpaces real demand for too long…
History gets uncomfortable.
Other Big Things
💼 Ray Dalio – Updates portfolio positioning amid shifting macro trends.
🚗 Chinese Automakers – Eye U.S. expansion despite political headwinds.
🚀 SpaceX IPO – The good, bad, and ugly for rival space stocks.
📊 U.S. Economy – Consumer prices rise 2.4% in January, below expectations.
🥇 Gold – Reclaims $5,000 as softer inflation boosts Fed rate-cut hopes.