The Russell 2000, which tracks small-cap companies, has now outperformed the S&P 500 for 13 consecutive sessions. We have not seen a streak like this in decades. Investors are betting that we have entered a macroeconomic "sweet spot," with strong GDP growth and manageable inflation.
To be sure, the bear side of the market would argue we are simply seeing the year-end reversal from 2025, known as the "January Effect." This is where fund managers buy back the tax-loss losers they sold in December. Skeptics also point to the "Maturity Wall" for a large portion of the small-cap universe as cause for concern. A large amount of loans come due for small caps, which could hamper margins later this year. (we covered here)
Time will tell, stick to high-quality names with low-debt. If you want a specific equity report or research on a name, please reach out, I'll be happy to help. Thanks for reading this week, we are keeping it short and sweet for today, we'll be back Monday for more insights.
The Mid-Cap Bellwethers ($2B – $10B)
Alaska Air Group (ALK)
The Seattle-based carrier flew past expectations this quarter, reporting earnings of $0.43 per share on $3.63 billion in revenue. Premium leisure demand is strong. Travelers are paying up for legroom and flexibility, and the carrier’s integration of recent routes is moving faster than Wall Street anticipated. Shares rose ~4 percent pre-market.
Webster Financial (WBS)
The bank reported an adjusted profit of $1.59 per share, beating estimates. Their deposit costs are stabilizing, and their Health Savings Account (HSA) business remains a unique growth engine.
Ericsson (ERIC)
The Swedish telecom giant offered a surprise profit of $0.23 per share.
Ericsson is a bellwether for the global 5G supply chain. Its return to growth is a massive bullish signal for mid-cap optical and hardware suppliers that have been battered by a two-year spending freeze.
The Small-Cap Signals (<$5B)
Independent Bank Corp (INDB)
A solid beat from this Massachusetts lender confirms that the "Main Street" economy in the Northeast is holding up. Credit quality remains pristine, validating the soft-landing thesis.
1st Source Corp (SRCE) Beat. EPS of $1.67 (vs. $1.61 est). A strong print from this Indiana-based bank highlights the resilience of the Midwest industrial economy. Their specialty finance division (trucking and construction equipment lending) showed surprising strength, contradicting the "freight recession" narrative seen elsewhere.
Movers and Shakers
- Capital One (COF): A bid to acquire fintech unicorn Brex was confirmed on Thursday, Jan 22. The deal is valued at $5.15 billion.
The Briefing
Data to Watch Today
1. S&P Global Flash US PMI (9:45 AM ET) The most important number of the day.
- What it is: A survey of purchasing managers in both Manufacturing and Services. It’s the earliest read we get on economic activity for January 2026.
- What to Watch:
- Manufacturing: Expected to be in contraction (<50.0). If this comes in above 50, expect bond yields to spike as it signals the industrial sector is heating up again.
- Services: Expected to remain expansive (~51-52). This tracks the health of the consumer.
- If both numbers come in above estimates, it dampens the hope for an early Fed rate cut.
Today's Fun
The "Ghost" Ticker
We often talk about tickers that spell words (like "LUV" for Southwest or "EAT" for Brinker), but some tickers tell a history lesson.
Question: Which major telecom company still trades under a single-letter ticker that references its 19th-century founder?
A) AT&T (T)
B) Verizon (V)
C) Sprint (S)
D) Loews Corporation (L)
(Scroll down for the answer)
Thank you for spending part of your morning with me. See you Monday. -Marques
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Answer: A) AT&T (T). "Ma Bell" still trades as simply "T" on the NYSE, a reference to its historic name "Telephone" (and often associated with the dominance of the original Bell System). (Note: Verizon trades as VZ, and V is Visa).
