ERPE Excerpts 1.29.2026 Davos 2026

“A Spirit of Dialogue”
Davos 2026
Since 1971, the World Economic Forum (WEF) has stood at the intersection of geopolitics and cooperation, believing that the only viable path forward is to connect leaders across sectors, regions, ideologies and generations to make sense of global challenges and move the world forward together. According to the Forum’s website, the not-for-profit foundation (WEF) set out with a transformative point of view: that business should not only create economic value but also serve society and the planet. Since then, the Forum has grown into a globally respected platform for cooperation, bringing together leaders from business, government, international organizations, civil society and academia to shape progress on the defining issues of our time.
This year’s gathering in Davos, Switzerland ended last week. Nearly 3,000 leaders from more than 130 countries came together at the 56th Annual Meeting to explore cooperation and innovation, investing in people, new sources of growth, and building shared prosperity within planetary boundaries. Bringing together heads of state, business leaders, cultural figures, and voices from civil society and academia. This year’s theme was, “A Spirit of Dialogue.”  Here’s a short video highlighting Davos 2026. You will see some familiar faces and hear some passionate voices.
Before the meeting began, the Forum published the Global Risks Report 2026. Extreme weather events dropped from second down to fourth place in the ranking this year – not because they are any less urgent a risk, but because geo-economic fragmentation and societal polarization have become more pressing. Here’s the ranking as of this year’s WEF.
There is a challenge missing from the rankings above: Energy. There is a looming global energy problem, driven not only by population growth, urbanization and electrification, but by a new energy-intensive force: AI. In reading about this year’s WEF (no, I wasn’t invited to Davos…), that is the one the loudest lessons learned. The WEF wrote in a report titled, “Global energy in 2026 will be marked by growth, resilience and competition.” A focal point was AI and energy if 2026. The artificial intelligence energy surge is turning power into the new data-center bottleneck. That surge is already changing corporate priorities. Bloom Energy’s 2025 Data Center Power Report found that access to power is the leading factor in data center site selection, ahead of traditional concerns like connectivity. The report suggests that competition for grid connections and flexible, low-carbon power options will intensify in 2026. Locations able to offer affordable, reliable and clean electricity at scale will have a structural advantage in attracting AI-driven investment. The energy transition is no longer a niche climate project. The report said this year energy demands will be one of the main arenas in which countries compete, companies differentiate and societies negotiate what “prosperity” looks like in a hotter, more volatile world. The World Economic Forum closed with this,  “(We) support an integrated approach to energy solutions, including energy storage, advanced nuclear, clean fuels, hydrogen and carbon removal. No single technology will solve the energy transition alone; a mix of solutions will be needed. Different regions, industries and companies will have their strategies, but they must work together.”
Davos 2026 wasn’t just about billionaires in the snow; it made a loud and clear message: a new global era has started where energy security is a currency that may matter the most.
The AI-driven power surge has sent energy demand among developed countries sharply higher. The investment implication is clear: energy is no longer a defensive sector used purely for dividends; it is the primary theater of the Multipolar World.

TAKING PERSPECTIVE…
Proper Perspective:  In our hectic and often hard to comprehend world, it is very easy to lose perspective. You may agree it is sometimes difficult to see the big picture. The media often doesn’t help with this, but unfortunately instead encourages us to see things in a most negative light. Here is hopefully a pause to gain positive perspective.
Famous Quote For Today:  “No one has a right to feel that, having entrusted the tasks of government to new leaders in Washington, he can continue to pursue his private comforts unconcerned with America’s challenges and dangers”.
~~JFK, 1961
Today in Markets History – On this day in 1886, Karl Benz received German patent DRP No. 37435 for his “motorwagen,” a frail and ungainly vehicle with three wheels and a wooden chassis. It was the world’s first automobile.

MARKET ANALYSIS
INDICATORS OF INTEREST:
  • Market’s Current Signal: Confirmed Uptrend.  Analysis of the stock market over 130 years of history shows we can view it in terms of three stages -market in uptrend, uptrend under pressure and market correction.  Since the 1880’s, this perspective has led to investment out-performance relative to market indexes. This is due to trend analysis which determines risk reducing, return enhancing market entry and exit points. The U.S. stock market’s current signal indicates the market is in Confirmed Uptrend. That officially happened April 22 and is still intact. This has been the fastest market rebound from a bear market low in history. The uptrend is remains. October 12, 2025 was the 3rd anniversary of this bull market. As of today, though, an impactful industry group in the market is in bear market territory. Software. It’s recent weakness got worse today led lower by mega-cap Microsoft.
The Stock Market Trend: Confirmed Uptrend. The stock market powered higher Tuesday, April 22 and the Nasdaq and S&P 500 confirmed new rally attempts. That follow-through signaled a Confirmed Uptrend. In late June the major stock market indexes reclaimed levels set in late February and significantly above the pre-“Liberation Day” level. There were 38 new highs in 2025 for the SP 500. Volatility has since spiked in the U.S. equity market – notably starting with a trend breaker session on November 20. That quickly turned higher again. As is the new norm, the BTD (buy the dip) behavior resulted in a reversion back to a bullish trend in the ensuing days. While the SP 500 gained again in the last quarter of the year, it was noticeably flat as the last three month closing levels for the broad index were essentially unchanged. Convincing stock market strength in the month of the new year shows the bull on Wall Street is alive – but well is the increasing question. Today’s slip in software stocks has caused a quick give back of a good bit of the year’s gains so far.
Here are key market levels as of Monday, January 26:
Recapping Last Week
U.S. equity indices ended with mixed performance after a turbulent week in which President Trump’s pursuit of Greenland threatened to upend trade relationships. After opening the shortened trading week with a sharp 2% drop, the S&P500, Nasdaq Composite, and Russell 2000 indices recovered most of their losses. Although tensions between the U.S. and Europe eased somewhat by week’s end, investors’ move toward non-U.S. assets gained further momentum. The U.S. dollar suffered its worst weekly decline since June, while precious metals continued to soar. Gold, the traditional store of value in unstable times, jumped 8% to $4,980 and silver leapt 14% to break above $100 for the first time. Selling pressure in U.S. Treasuries pushed the 10-year yield up to a five-month high of 4.3% before backing off slightly. International equities have seen strong inflows in 2026, especially emerging markets which tend to benefit most from a weak dollar. U.S. sector performance was uneven, with rising oil prices supporting energy’s 3% gain while rate- sensitive sectors like financials, utilities, and real estate all fell more than 2%. Technology component Intel plunged 17% after the company posted a quarterly loss and worse-than- expected outlook. Turning to economic data, long-delayed core PCE price index data from November revealed a 2.8% YoY increase, only a modest uptick from the prior month. However, the recently released CPI report suggested that December’s core PCE reading—which will be released on February 20—could show a 3.1% rise YoY. U.S. business activity remained in expansion territory this month, though signals of slowing momentum emerged. The S&P Global Flash Composite PMI stood at 52.7 but job growth has stagnated while higher input costs have pushed up selling prices. The final January consumer sentiment index rose to a five-month high of 56.4 on economic optimism, though this figure is still 20% below its level a year ago. One-year inflation expectations fell only slightly to 4%.
Internationally, the Bank of Japan kept rates unchanged at 0.75% while retaining its hawkish inflation and economic growth forecasts. Prior to that decision, Japanese bond yields jumped to 27-year highs after Prime Minister Takaichi pledged to cut the consumption tax rate. This move stoked fears that the country could struggle to service its debt- to-GDP ratio, the highest among developed economies, and thus its financial stability. In China, GDP growth met the government’s 5% target last year largely by snatching a record share of demand for global goods, a strategy seen by many economists as unsustainable in the long run. Domestic consumption continued to weaken as the year went on. Finally, Eurozone business activity was stable at 51.5 this month, while UK inflation rose to 3.4% YoY in December but was not expected to derail rate cuts anticipated for later this year.
Current View
No new rate cuts was no big deal yesterday. But there was almost a big deal yesterday: The S&P 500 almost closed above 7,000 for the first time ever. The major index hit an intraday high of 7,002, but couldn’t hold the record high and closed slightly lower. The real big news of the day, and in the days and weeks ahead, is earnings. Three mega-cap tech stocks announced their quarterly earnings after the close yesterday and have triggered a sharp sell-off today. While Tesla and Meta gave the market reasons to buy the stocks, Microsoft offered a disappointing report and has so far been a major catalyst behind the selling pressure – especially in the software sector. The computer software industry group is now in a bear market. This is the most significant crack in the overall bull stock market that began in October of 2022. The software stock group is now down more than 20% from its previous high and on pace for the worst month since 2008.
I think the daily flow of financial, political and geo political news will have contribute to inordinate stock market volatility this year. At least that has been the case so far. Now we have meaningful shifts in the stock market and rotation from tech, at least software, as noted above.
Here’s my 2026 OUTLOOK.
  • Industry Group Strength:  BULLISH. As of yesterday, 141 out the 197 groups I monitor are up year-to-date. 56 are down.
  • New Highs vs. New Lows: BULLISH.  In yesterday’s session, there were 504 new 52-week highs and 132 new 52-week lows.
  • Dow Dividend Yield:  BEARISH. The current yield for the Dow Jones Industrial Average is 1.85%. The 10-year Treasury now 4.23%.
  • Volatility Index:  NEUTRAL. Volatility has been volatile. The “VIX” is now 18. The index is also known as the “Fear Index.” It is considered a contrarian indicator and therefore viewed as bullish as it rises indicating investors are becoming more fearful. The VIX:
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  • Fear / Greed Index: BEARISH.  Investors are driven by two emotions: fear and greed. Too much fear can create a condition of oversold/ undervalued stock prices. Too much greed can result in overbought/overvalued stock prices. The AAII Investor Sentiment Index is now neutral.   BE FEARFUL WHEN OTHERS ARE GREEDY. At 58, the Fear & Greed Index is up down 66 four weeks ago.
CLICK VIDEO FOR MORE ON THE “FEAR & GREED INDEX”
  • Bull / Bear Barometer:  BEARISH. This secondary market indicator should also be viewed with a contrarian perspective. As of yesterday, according to the latest survey of stock market newsletter writers by Investor’s Intelligence, the bullish tally is 61.5%, up from 53.6% two weeks ago. The bears are 15.4%, down from 17.8% two weeks ago. Consider this a contrarian indicator because the crowd is often wrong at market tops and bottoms. In other words, extreme bullishness has been seen near several market tops in the past, while extreme bearishness has been seen at market bottoms.
  • Put / Call Ratio: BEARISH. The ratio of put-to-call options is 0.71, about the same as 0.69 two weeks ago. The put-call ratio tracks the mood of what options investors are doing, not just saying. They typically buy puts if they think a stock will decline and calls if they think it will rise. If they’re buying lots of puts, they see the market declining. And if they’re loading up on calls, they’re generally bullish. Historically, market bottoms occurred when the reading spikes to 1.2 or more. Market tops are often made when the reading is 0.6 or less. Note how reliable this is with respect to the February record low coinciding with the market high. Keep in mind this is also a contrarian indicator.

ECONOMIC UPDATES
Global Economic Indicators & Analysis:
POSITIVE INDICATORS
Jobless Claims Stable, Still: The number of Americans who applied for unemployment benefits in late January stayed in the low 200,000s, a historically low figure that shows relatively few layoffs in the economy. New claims totaled 209,000 in the seven days ending Jan. 24, the government said today. These so-called continuing claims fell by 38,000 to 1.83 million, touching the lowest level in almost a year and a half. Not long ago, continuing claims were pushing toward the 2 million mark for the first time in 10 years — excluded the COVID-19 pandemic era . If there were big trouble brewing for the economy, a telltale sign would be rising jobless claims. Instead, layoffs are extremely low.
GDP Up: The economy expanded at zippy 4.4% annual pace in the third quarter of 2025, an updated estimate showed, to keep the U.S. on track to score the fifth straight year of above-average growth. Gross domestic product, the official scorecard of the economy, was revised up from the original 4.3% reading, the government said last Thursday. It was the strongest quarter of growth in two years. The economy’s upper speed limit is generally seen to be around 1.8%. Yet growth is likely to easily top 2% in 2025 for the fifth year in a row. The final piece of the puzzle, fourth-quarter GDP, won’t be available for another month. Early estimates point to another healthy rate of growth, but the record 43-day shutdown in October and November could depress the final result.
Durable Goods Up: Business investment has been an unexpected source of strength for the U.S. economy. A report Monday showed spending on new technologies drove biggest rise in investment in three years. The key measure of business investment rose strongly in November for the fourth time in five months, according to a report delayed by the government shutdown last fall. So-called core orders climbed 0.7%. The increase in these orders — which omit transportation and defense — has topped 5% in the past 12 months and hit the highest level in three years.
FOMC Holds Interest Rates Unchanged: Yesterday’s Fed meeting on the state of the economy did not deliver any surprises. The Committee left rates unchanged. Fed Chair Powell points to improved economy, stable labor market to justify keeping rates unchanged. Elevated inflation is a prime mover behind the Fed’s decision to leave interest rates unchanged, but a seeming rebound in the labor market also reassured top officials. Powell left the door ajar for rate cuts this year. He said most of the upward thrust from inflation came from goods and tariffs and these effects should subside sometime around June.

WEAK INDICATORS
Consumer Confidence Down: Americans are in a foul mood despite a seemingly strong U.S. economy. Consumer confidence falls to a 12-year low in January, according to a report Tuesday from the Conference Board. Here’s some highlights: Present Situation – Consumers’ views of current business conditions worsened in January. 17.9% of consumers said business conditions were “good,” down from 19.8% in December 17.8% said business conditions were “bad,” up slightly from 17.6%. Consumers’ views of the labor market were also weaker in January. 23.9% of consumers said jobs were “plentiful,” down from 27.5% in December. 20.8% of consumers said jobs were “hard to get,” up from 19.1%. Expectations Six Months Hence – Consumers were more pessimistic about future business conditions in January. 15.6% of consumers expected business conditions to improve, down from 18.7% in December. 22.9% expected business conditions to worsen, up from 21.3%.
Services Sector Slowing: The economy got off to a decent start in the first month of 2026, new surveys show, but growth appeared to cool due to ongoing stress from U.S. tariffs. A survey of service-oriented companies that employ most Americans — banks, retailers, hospitals and the like — was basically flat in January. S&P Global said its services index inched up to 52.8 from 52.7 in December and remained near an eight-month low. A survey of manufacturers was also basically flat at 51.9. Any number above 50 signals the economy is still expanding, but S&P said there hasn’t been much progress since the end of last year. Businesses are still coping with high U.S. tariffs, rising costs and weaker demand for their goods and services. Inflation and affordability remain a widespread concern among businesses.
Protect & Prosper