Daily Market Brief - Jan 13, 2026

Editor's Notes:

• As investors start to reassess US risks and AI-related debates continuing, I expect to see more volatility for US stocks this year.
• China stocks are back on my watchlist, as there is an increasing chance of consumption stabilization and a clear sign of sentiment recovery - the big techs (BABA, Tencent, etc.) have seen their rerating unfolding over 2025, and are now moving closer to the global AI mainstream narratives.

Key market themes reveal institutional stability concerns in the US, driving a flight to safe havens amidst an unprecedented criminal probe into Fed Chair Jerome Powell. Concurrently, AI investment is pivoting from pure-play LLMs to critical infrastructure like nuclear energy and thermal management. Japan is undergoing structural transformation despite technical bearishness, while China shows divergence with a tech rebound contrasting EV sector capitulation.

Overall Themes, Market Sentiment & Debates

US: A Constitutional Crisis at the Fed Meets an Infrastructure Pivot

The dominant narrative has shifted from economic data to institutional stability following the unprecedented criminal probe into Fed Chair Jerome Powell. This is not merely a political headline; it represents a fundamental threat to Federal Reserve independence. The "weaponization" of the Fed is driving a flight to safe havens - gold near record highs ($4,600) and a weakening USD. For hedge fund managers, the debate isn't about the next 25bps cut, but whether the US is entering "Banana Republic" territory, increasing the risk of a "lost decade" for US equities.

Simultaneously, we are seeing the "Second Wave" of AI investment. Conviction remains high, but the capital is rotating from pure-play LLMs to the physical infrastructure required to sustain them. This explains the massive outperformance in nuclear energy (Vistra, Curtiss-Wright) and data center thermal management (Vertiv).

Japan: Structural Transformation Overshadowed by Technical Bearishness

The Nikkei 225 faces short-term technical pressure (double zigzag pattern signaling a "b wave" decline), but the structural story is accelerating. The Saudi PIF’s subsidiary, Ayar First Investment, is aggressively building 5%–10.7% stakes across the gaming sector (Bandai Namco, Capcom, Square Enix, etc.). This is one catalyst for the "re-rating" of Japanese corporate assets. There still remain deep-value opportunities, with one example mentioned being Digital Garage (4809.T), which holds cash and stakes nearly equal to its market cap, signaling that the "corporate governance" trade still has significant legs despite the bearish macro index view.

Hong Kong/China: Tech Rebound vs. EV Capitulation

The Hang Seng Tech Index (+3.1% on Jan 12) is finally showing signs of a sustainable rebound led by cloud and AI integration (Kingsoft Cloud +15%, Meituan +7%). The sentiment is shifting from "China is uninvestable" to "AI adoption is the catalyst for growth." However, this optimism does not extend to the EV sector. Manufacturers (Geely, Li Auto, XPeng) are seeing sharp sell-offs as profit-taking meets concerns over price wars and operational margins. The divergence between Chinese SaaS/AI and Chinese Hardware/EV is the key pair-trade opportunity.

Notable Stock Moves & Development (January 11–12, 2026)

Community Ideas & Tactical Observations

• The Tesla Bear Case (Operating De-leveraging): While the market obsesses over Elon Musk's political proximity, the fundamentals are entering a "Valley of Death." Q4 deliveries dropped 16% YoY, and operating margins have collapsed to 5.8%. The $1.5T valuation is priced for infinite growth, but the reality is soaring cost-per-car at fixed-cost gigafactories as volume drops. Fair value is likely sub-$100/share once the AI/Robotaxi "hopium" is discounted for current FCF burn.
• The Nuclear Monopoly (Ampco-Pittsburgh - AP): Some are identifying AP as a "hidden monopoly." Their Aerofin division holds a 94% monopoly on US nuclear cooling coils. Trading at 0.2x P/S vs. peers at 3.4x, possibly a mispricing for a critical infrastructure play.
• Micron (MU) and the Strategic Pivot: Ignore the historical cyclicality. MU's oligopoly in HBM (High Bandwidth Memory) is a national security asset. As supply constraints remain tight, the projected EPS growth makes the current price a value play, with a fair value target of $450 by FY26.
• Japanese Liquidity Play (Digital Garage - 4809.T): This is a textbook governance play. 109B yen in cash against a 127B yen market cap. Resona’s previous high-valuation entry for a stake in a key asset suggests a significant re-rating is overdue.
• Retail "Deep Value" or Falling Knife? (Abercrombie - ANF): The 17.7% drop on a slight guidance miss seems emotional. If operations stabilize, the sell-off is an overreaction to tariff fears that are already largely priced into the sector. Watch for a bounce.
• Insider Signals: Dorian LPG ($LPG) CEO buying $400k of shares is a signal to monitor. Historically, insider buys of this size in the shipping/LPG space precede significant upward moves in spot rates.

Happy Alpha Hunt! - Distilla

Disclaimer: This content is generated using AI, synthesizing public data (filings, reports, news) and social media (Reddit, X). It may contain errors, inaccuracies, or hallucinations. Nothing herein constitutes financial advice. This newsletter is for informational purposes only; please consult a qualified professional and conduct your own due diligence before making any investment decisions.