Daily Market Brief - Jan 23, 2026

Editor's Notes:

• The U.S. tape still feels “up,” but it’s a very specific kind of up. The rally on de-escalating trade headlines is real, but the market’s tolerance for surprises looks low. A slightly-hot PCE print and all the talk about “AI bubble” risk makes this feel like a market that wants good news, and punishes anything that complicates the Fed or the multiple.
• My main tell right now is the “sell the news” behavior. When earnings beats get treated like a reason to sell, it usually means expectations (and positioning) are doing more work than fundamentals. It’s not that investors are bearish, it’s that guidance and durability matter more than the quarter. That’s a different regime than last year’s “beat and raise, we don’t care.”
• Japan looks risk-on, but the bond story hasn’t gone away. The Nikkei can rally while JGB yields are the quiet lever in the background. If yields really do pull domestic capital back home, that’s not just a Japan story, it’s a global flow story. Meanwhile Hong Kong looks more fragile, with weakness in banks, energy, staples, and semis offset by pockets of resilient tech and very speculative small-cap bursts.

This daily market report provides key insights into global market sentiment, notable stock movements, and crucial market developments. It highlights the cautious bullishness in the US market, driven by de-escalation of trade tensions but tempered by inflation and AI valuation concerns. Japan shows a risk-on sentiment despite macro headwinds, while Hong Kong experiences mixed performance with sectoral weaknesses. The report also details significant stock movers and interesting investment ideas across various sectors.

Overall Themes, Market Sentiment & Debates

US Market: Bullish Overlays Cautious Undercurrents

Sentiment in the US market remains broadly bullish, largely buoyed by President Trump's de-escalation of trade tensions (the "TACO" trade), which spurred broad market rallies and favored 0DTE options. However, a deeper look reveals persistent concerns:

• Inflation & Fed Policy: November PCE inflation (2.8% vs 2.7% expected) is edging further from its target, hinting at potential Federal Reserve policy influence. Despite robust Q3 GDP growth (4.4%) and strong Q4 projections (Atlanta Fed GDPNow 5.4%), small businesses are grappling with rising costs from import duties and labor supply issues.
• AI Hype & Valuation: The AI narrative is dominant, but concerns about an "AI bubble" and the need for hedging are growing. Debate centers on the long-term moats of AI-driven companies and the sustainability of current valuations.
• "Selling the News": A troubling trend continues where positive earnings beats are met with negative price action, trailing the S&P 500 by an average of 1.1% post-beat. This marks the worst reaction since 2017, often attributed to disappointing forward guidance from companies like 3M and Netflix.
• Geopolitics & Chips: The US House seeks more control over AI chip exports to China, proposing a bipartisan bill to ban Nvidia's Blackwell chips for two years and regulate H200 sales, challenging the Trump administration's recent easing of controls.

Japan Market: Risk-On Despite Macro Headwinds

Japanese market sentiment is bullish, with the Nikkei up +1.7% overnight, largely shrugging off "prepare to be disappointed" headlines and bearish signals from bonds and the yen. The narrative around rising JGB yields appears to have lost momentum.

• Bond Market Shift: The "Japanese bond situation" is a major global macro concern. JGB yields crossing 4% could potentially draw $1.2 trillion from US Treasuries back to Japan, signaling a significant capital flow reversal.
• Retail Expansion & Resources: International expansion by Japanese retail brands (e.g., Ootaya, Saizeria, Muji, Uniqlo) indicates growth opportunities. Government-backed rare earth development at South Bird Island is boosting interest in related resource stocks.
• Activist Focus: Activist investors are engaging, as seen with London-based groups targeting Tsutsumi Jewelry Co. and Pasona Group Inc. for "extremely depressed" share prices, highlighting opportunities for value unlocking.

Hong Kong Market: Mixed with Sectoral Weakness

The Hang Seng Index closed up +0.17%, but performance was mixed, reflecting underlying caution ahead of China economic data.

• Sectoral Weakness: Banking (Merchants Bank -2.98%), energy (PetroChina -2.49%), consumer staples (Nongfu Spring -1.62%), and semiconductors (SMIC -1.38%) all faced pressure. This was due to China growth concerns, tariff disputes, economic slowdown jitters, and a shift from AI optimism to China slowdown fears.
• Resilient Tech & Speculative Gains: Meituan bucked the trend, gaining +2.41% as a resilient tech play. Meanwhile, significant gains in smaller caps like Wan Kei (+50.21%) and Allegro Culture (+49.19%) point to speculative interest. In contrast, Da Sen Holdings (-18.00%) and CIFI faced sharp declines amid risk-off sentiment and property market woes.

Notable Big Stock Moves, Earnings & Developments

Interesting Comments, Facts & Ideas

AI & Tech Landscape

• MSFT's Moat Debate: Microsoft draws "Buffett-style" comparisons for its wide, durable moat across brand, switching costs, network effects, and scale, bolstered by strong management and capital allocation for cloud/AI growth. However, a counter-bearish view suggests Azure is its sole success, with OpenAI facing challenges and Copilot deemed a "disaster," arguing Azure alone cannot sustain S&P outperformance. One view posits Microsoft's success is in "servicing corporate inefficiency," monetizing "legacy debt."
• AI Infrastructure Investment: NVIDIA CEO Jensen Huang indicated at the World Economic Forum (WEF) that "trillions of dollars" will be required for AI infrastructure, underscoring the scale of investment expected.
• Next-Gen Electrification: Wolfspeed (WOLF) is highlighted as a "pure-play electrification infrastructure bet" in Silicon Carbide (SiC). The company recently emerged from bankruptcy (wiping $4B debt), secured $750M via the CHIPS Act, and is strategically important to the US Department of Energy (DOE), trading below cash with long-term supply agreements (GM, Toyota, Mercedes).
• AI-Driven Demand: NextEra Energy (NEE) is positioned for a "structural electricity demand up-cycle" fueled by AI data centers and electrification, boasting 72 GW capacity and a 25 GW backlog.
• Lemonade (LMND): Bullish on its new "Autonomous Car Insurance" for Tesla FSD users, which offers 50% rate reductions for software-driven miles based on telemetry data—an industry-first tied directly to autonomous driving performance.
• Walmart's Crypto Move: Walmart is exploring stablecoin issuance for closed-loop payments, indicating a strategic, albeit nascent, interest in blockchain technology for internal efficiency.
• NuScale (SMR): Former President Trump's advocacy for nuclear power and Small Modular Reactors (SMRs) at WEF, coupled with an executive order streamlining reactor licensing, positively impacts NuScale Power.
• Voyager Technologies (VOYG): Bullish on this space tech and defense company working with Palantir and NASA. It is notably involved in a joint venture with Airbus to build Starlab, a commercial Low Earth Orbit (LEO) space station.

Valuation & Catalysts

• Anterix (ATEX): Strong conviction due to its exclusive nationwide 900 MHz band license for smart grid modernization, valued at $3B+ compared to its $473M market cap. The company shows aggressive share repurchase (48% of market cap), a debt-free balance sheet, and a pivot to profitability, with conservative price targets of $50-55 and a bull case of $200-250.
• Atlassian (TEAM): Bullish at "around 2019" valuation levels. It is seen as a sticky workflow platform (Jira/Confluence) with high switching costs, strong network effects, ~83% gross margins, and ~$1.4B+ in Free Cash Flow. Skepticism around Share-Based Compensation (SBC)/dilution is argued to be priced in.
• B Riley (RILY): Bullish on "hidden assets" including Targus ($150M), Great American ($175M+), owned brands ($80M+), and wealth management ($60M+). This suggests the company is not facing bankruptcy and has sufficient assets to deleverage, with operational earnings covering interest payments.
• Cavvy Energy (CVVY.TO): Bullish, anticipating a new contract to increase sulphur revenue sevenfold ($14M to ~$100M annually), boosting Net Operating Income by ~60%. It is viewed as undervalued given debt reduction efforts.
• Duolingo (DUOL): Bullish despite decelerating growth, still growing "way faster than the industry" at nearly 40% revenue growth (vs. 10% median). It trades at a discount (P/S 6.88 vs. software average 11, EV/EBITDA 19.87 vs. 24.48), suggesting an overly negative market narrative given strong Daily Active User (DAU) growth.
• Fiverr (FVRR): Long-term bullish on growing revenue (gig economy, AI), positive Return on Equity (RoE) and EBITDA, nearing positive operating margins, and growing Free Cash Flow, trading at a P/E of 26.
• Fluor (FLR): Value play with limited downside, supported by a de-risked business model (80-85% reimbursable contracts) and share buybacks. Activist Starboard Value is pushing for NuScale Power holdings monetization by end-Q2 2026, alongside strategic shifts towards mining, life sciences, and data centers. Target price range of $50-67.
• Inditex (Zara) (ITX.MC): Bullish on "hidden pricing power" and successful pivot to a "premium" brand identity, enabling price increases amid higher demand. Noted for efficient manufacturing (3-week collection development), stores acting as warehouses, and optimized space. Strong financials (30% Return on Invested Capital (ROIC), 35% RoE, 20% Free Cash Flow (FCF) yield, 58% Gross Margin), trading at 22-25x adjusted earnings.
• Lululemon (LULU): Bullish as the stock experiences a "brutal drawdown" to its "lowest valuation in the past ten years" (14x forward P/E vs. 35-40x historically) despite maintaining 20% operating margins. Possesses a fortress balance sheet ($1B cash, no debt) and an "exploding" China market with over 60% YoY growth.
• Marathon Digital Holdings (MARA): Bullish pitch arguing it is "priced below the Bitcoin it holds," unlike peers (BITF, HUT) trading at a premium to their Bitcoin holdings.
• Sirius XM (SIRI): Bullish as a "value play with lots of upside," citing attractive ratios and a good dividend. A key catalyst is potential FCC approval to lease GHz radio waves to cellular companies for 5G, estimated to provide a $4B-7B boost to its $6.78B market cap. Berkshire Hathaway recently upped its ownership to ~37%.
• Toast (TOST): Bullish at current prices (~$30/share), providing Point-of-Sale (POS) services for restaurants and growing 20% in locations annually, commanding ~$10k/year/location in gross profit. Valuation suggests investors "will get this 'potential' for free" if buying today, as it expects to expand to 500k locations eventually.
• Ubisoft (UBI): Strong bearish sentiment after a "cataclysmic drop" (over 36% in a day) due to a "deluge of cancellations and delays and layoffs."

Notable Investor Actions & Incongruities

• Kraft Heinz (KHC): Bearish news that Berkshire Hathaway, under Greg Abel's leadership, is looking to exit its entire ~27% stake. This is seen as an unraveling of "Warren's biggest 'mistake'" and implies significant downside risk, potentially pushing the stock below $20.
• GameStop Corp. (GME): Its significant price increase was largely influenced by insider share purchases from the CEO and a Director, signaling strong conviction.
• Varonis Systems (VRNS): An incongruity was noted as the stock price increased despite the explanation detailing negative events like lawsuits, investigations, and lowered analyst price targets.
• Mobileye Global (MBLY): Dropped due to a Q4 revenue decrease, lower EyeQ SoC volumes, and flat 2026 guidance.
• Inspire Medical Systems (INSP): Plummeted due to analyst downgrades and reimbursement uncertainty stemming from a CMS coding error.

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.