Good Afternoon. If you’re wondering what actually changes this year, start here: taxes, housing, and the cost of everyday life. The IRS just opened the filing season with new deductions, while Apple’s succession chatter reminds everyone that even the steadiest giants still have key-person risk. Let’s get into it.

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1. Defense Budget Buzz, Tech Takes a Breather

The News: Markets rotated on Thursday: The Dow, S&P 500 and Nasdaq were mixed while small-caps outperformed. Defense names jumped after President Trump floated a $1.5 trillion U.S. defense budget for 2027 (vs. $901 billion approved for 2026), while fresh data showed initial jobless claims at 208,000 (vs. 210,000 expected) and the October trade deficit narrowing to $29.4B, the smallest since mid-2009. Oil stabilized after a choppy week as Venezuela policy headlines kept traders twitchy, and Asia risk got a jolt from reports China is tightening export licensing for some Japan-bound dual-use goods, including rare-earth-related items.

Why It Matters: This is the market quietly reminding everyone that “AI enthusiasm” isn’t a permanent exemption from valuation gravity, money can (and will) rotate to sectors with clearer revenue lines, like defense, when Washington starts talking in trillion-dollar increments. The macro signals were a mixed bag: low claims still signal a “not firing much” economy, while that trade-deficit plunge could help GDP math and hint at softer underlying demand (not exactly the same vibe). And if China’s export controls start hitting real-world components, “supply chain” may return to its usual role as the plot twist nobody asked for.

What to Watch: Friday’s U.S. jobs report is the next rate-sentiment landmine; any downside surprise can quickly flip “rotation” into “risk-off.” On policy: whether Congress treats $1.5T as a negotiating anchor or a real target and whether payout limits for contractors resurface which matters for defense multiples. And keep one eye on crude: sustained U.S. direction over Venezuelan barrels could change who gets discounted heavy oil (and who doesn’t).
Source: wsj.com

2. Tax Season Opens Jan. 26 and the New Deductions Come With Fine Print

The News: The IRS said the 2026 filing season opens Monday, Jan. 26, 2026, with the April 15, 2026 deadline for 2025 returns, and it expects about 164 million individual filings. This season also debuts a new Schedule 1-A to claim “One Big Beautiful Bill” deductions such as no tax on tips, no tax on overtime, car-loan interest (up to $10,000), and an enhanced senior deduction ($6,000 per eligible person, with income phaseouts). The IRS also noted it’s encouraging direct deposit as it phases out paper refund checks, and said Free File begins accepting returns Jan. 9 for eligible taxpayers.

Why It Matters: These changes can move real money for households, especially seniors and workers with tips/overtime, but they also add complexity (new form, eligibility rules, income phaseouts). One more twist: the IRS previously said it did not update withholding tables for tax year 2025 as part of phased implementation, which raises the odds some people effectively overpaid during the year and could see bigger refunds, while others may discover they don’t qualify for the new breaks and shouldn’t count on a windfall.

What to Watch: Early-season friction points: processing times, errors tied to the new Schedule 1-A, and how aggressively the IRS moves away from paper checks. For filers, the practical move is simple: gather documentation for tips/overtime and (if claiming car-loan interest) keep the loan details and vehicle eligibility handy because nothing kills a refund vibe faster than “please mail more info.”
Source: irs.gov

3. Gemini Breaks 20% Share as ChatGPT’s Lead Narrows

The News: Google’s Gemini crossed 21.5% of global gen-AI website traffic share in Similarweb’s first Global AI Tracker of 2026, up from 5.7% a year ago, while ChatGPT slipped to 64.5% from 86.7%. The shift accelerated after Google’s Gemini 3 launch on Nov. 18, 2025, with Similarweb showing Gemini visits up ~28% in December as ChatGPT traffic fell ~5.6%; December totals still favored ChatGPT (5.5B visits) vs. Gemini (1.7B), but the gap is tightening.

Why It Matters: Perhaps this is why Berkshire decided to invest in Alphabet. This is the moat question for consumer AI: does the best standalone product win, or does distribution win? Gemini’s biggest advantage is that it can live inside Google’s existing surfaces (Search/Android/Workspace), turning adoption into a default rather than a decision, while ChatGPT is still largely a destination. For OpenAI, and Microsoft by investment, traffic share isn’t just ego; it’s leverage for subscriptions, enterprise conversions, and developer mindshare. OpenAI reportedly treated the Gemini surge as serious enough to trigger a “code red” internally and pause some monetization work to focus on core ChatGPT improvements.

What to Watch: Whether this is a durable rebalancing or a post-launch spike: Similarweb’s tracker measures web traffic (not native apps), so the next tell is whether engagement and retention follow across platforms. Also watch OpenAI’s counterpunch, product UX, multimodal quality, and distribution partnerships, because the fastest way to lose “first-mover advantage” is to assume you still have it.
Source: vertu.com

4. Apple’s Succession Drumbeat Gets Louder

The News: Apple’s CEO succession planning is moving from “eventually” to “actively,” with the New York Times profiling hardware chief John Ternus as a leading internal front-runner to succeed Tim Cook. Reporting via 9to5Mac says Apple accelerated planning last year, and Cook (now 65) has told senior leaders he’s tired and wants to reduce his workload; if he steps down, he’s expected to become board chairman. The Times profile also lists other plausible internal candidates, Craig Federighi, Eddy Cue, Greg Joswiak, and Deirdre O’Brien, but frames Ternus as the steady operator who threads the needle between product upgrades and margins, with deep supply-chain and hardware execution chops.

Why It Matters: For investors, Apple is the definition of “management continuity trade,” so credible succession signals can reduce key-person risk but they also spotlight the next strategic question: does Apple want a product-and-operations CEO (Ternus) or a platform/software/services CEO (Federighi/Cue) as AI, regulation, and geopolitics reshape the business? The CEO’s skill set matters more now that Apple’s biggest risks look less like “can they ship iPhones” and more like “can they navigate policy, ecosystems, and new computing paradigms without denting margins.” In other words, this isn’t just a corner-office story, it’s a roadmap story.

What to Watch: For visible signals: expanded public-facing roles for Ternus, changes in reporting lines, or a leadership reshuffle that clarifies who owns AI, services growth, and regulatory strategy day-to-day. Also watch whether Cook’s “eventual” timeline starts attaching to concrete milestones (new product cycles, major legal/regulatory outcomes, or board changes). Succession planning is like Apple product launches: the rumors are constant, but the real tell is when the calendar starts to lock.
Source: nytimes.com

5. Costco Pops on Holiday Strength

The News: Costco shares jumped Thursday after the retailer posted a stronger-than-expected December sales update: net sales for the five weeks ended Jan. 4, 2026 rose 8.5% to $29.86 billion, while total comparable sales climbed 7.0% and digitally enabled comps surged 18.9% (or 6.2% excluding gas and FX).

Why It Matters: Costco’s results are a clean read on consumer resilience, especially among higher-income shoppers, while the 18.9% digital jump suggests members are keeping the Costco habit even when they don’t feel like navigating a parking lot that doubles as an endurance sport. For investors, it reinforces the bull case: a membership model that drives repeat visits and pricing power (through renewal and mix), plus improving e-commerce momentum that can broaden the addressable basket without sacrificing Costco’s value pitch.

What to Watch: Whether the sales strength translates into margins and membership metrics when Costco reports next. Its Q2 FY2026 earnings call is scheduled for March 5, 2026.
Source: investor.costco.com

1. UN Sees 2026 Growth Cooling as Tariffs and Geopolitics Tax the Outlook

The News: The UN forecast global GDP growth will slow to 2.7% in 2026 (from an estimated 2.8% in 2025), citing the drag from higher U.S. tariffs and geopolitical uncertainty on trade and investment, in its World Economic Situation and Prospects 2026 report released Jan. 8. The UN also sees growth rebounding modestly to 2.9% in 2027, but that’s still below the 3.2% pre-pandemic average (2010–2019).

Why It Matters: A world stuck below 3% trend growth is a problem disguised as a forecast: it means weaker demand, tougher debt dynamics, and less room for policymakers to cushion shocks, especially in developing economies with limited fiscal space. For markets, slower trade growth is the tell: it pressures export-heavy sectors and reinforces the premium on “domestic demand” stories.

What to Watch: Whether tariffs broaden or ease (that’s the fastest lever on the UN’s trade call), and whether inflation really cools enough to justify the monetary easing the report assumes is supporting activity. Also keep an eye on divergence: if the U.S. holds higher while Europe lags and China slows, capital flows, and currency volatility, tend to do the talking.
Source: un.org

2. Africa’s Dollar Bonds Get Smacked

The News: African sovereign dollar bonds sold off hard on Thursday, Jan. 8, after the Trump administration said it plans to control Venezuelan oil exports and revenues “indefinitely,” reviving fears of more supply and lower crude prices, bad news for oil-dependent budgets. Bloomberg data showed the 20 worst-performing EM sovereign dollar bonds on the day were all African, led by Nigeria: its 2051 notes fell as much as 2.5 cents on the dollar, with Angola, Egypt, and Kenya also sliding.

Why It Matters: This is the ugly side of “oil is geopolitical”: if the market believes Venezuelan barrels will be managed and rerouted in a way that increases effective supply, it hits the countries that rely on crude exports to fund dollar debt service, especially after a strong 2025 in African eurobonds that may have pulled future returns forward. In short: lower oil + stronger dollar dynamics is the combo emerging market debt hates.

What to Watch: Whether Washington clarifies the mechanics, how sanctions are adjusted, how quickly Venezuelan exports scale, and whether “indefinite control” becomes policy reality or rhetorical leverage.
Source: bloomberg.com

3. Europe’s Defense Rally Hits Fresh Highs as Geopolitics Stays “Sticky”

The News: European defense stocks pushed to new records on Jan. 8 as investors leaned harder into the “rearmament + instability” trade. Reuters reported Europe’s aerospace-and-defense index rose as much as 2.1% to an all-time high, with BAE Systems up ~6% and peers like Leonardo, Saab, Rheinmetall, and Renk also higher. The bid wasn’t just Europe: U.S. defense names bounced after President Trump said he wants a $1.5 trillion U.S. military budget for 2027 (vs. $901 billion approved for this year), even as the market digested his parallel push to pressure contractors to speed weapons production.

Why It Matters: Defense is becoming a macro factor again: when investors believe geopolitical risk is persistent, not episodic, order books, pricing power, and long-dated budgets start to look more durable. Reuters noted the European sector surged ~57% in 2025, and it’s started 2026 strong as flashpoints from Venezuela to Greenland keep defense spending politically easier to justify. The twist is policy risk: Trump’s talk of limiting dividends/buybacks unless production accelerates could change capital-return assumptions for U.S. primes, which (ironically) may make European contractors look even more attractive in relative terms.

What to Watch: Whether the U.S. budget number turns into an actionable request Congress can pass, and whether capital-return restrictions become formal policy or negotiating leverage. In Europe, the next tell is guidance: if companies start explicitly raising outlooks on “multi-year demand visibility,” the rally graduates from headline-driven to earnings-driven. Because “geopolitics is back” is a trade—“signed contracts” is an investment.
Source: reuters.com

Q: Why was the broom late?

A: It swept in.

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