It was a very intriguing session. The inflation narrative weighed on markets enough for most significant indices to finish lower yesterday.

Ironically, the iShares Russell 2000 ETF (IWM) was the only winner despite needing lower rates the most.  It gives credence to the notion that rotation is underway in a very measured manner.

Good News Was Good News Beneath the Surface

Economic data this week has made the Atlanta Fed Gross Domestic Product (GDP) estimate higher for the quarter.

Most of the stock market rallied on good news except growth.

Changing of the Guard

Internals were strong across various indices.

But advancers were mostly minor underachievers, mixed with a strong performance in semiconductors, fueled by news from Taiwan Semiconductor Manufacturing Co. Ltd (TSM).

Meanwhile, the decliners included heavyweights Apple (AAPL), which tumbled to the third-largest market share in China, and Tesla (TSLA), which is seeing strong electric vehicle (EV) competition from Honda (HMC) and others.

The Fed Wants to Cut

All of this makes it even more curious that small-caps were the “winners” in yesterday’s session. The answer to that riddle comes from an interview with Fed Chris Waller on CNBC. Waller and other supposed “hawks” on the Federal Open Market Committee (FOMC) have let it be known they are still leaning toward rate cuts and are confident the rate of inflation is still drifting, albeit slower, toward their 2.0% target.

This is the Jay Powell Fed that desperately wants to be accommodating.

Next Treasury Secretary

Yesterday, Scott Bessent, Treasury Secretary nominee, dominated Senators trying to take him on with notes, hubris, and typical outrage over stuff they genuinely don’t understand.

Tactics like accusing him and President-elect Trump of wanting to ditch programs like Head Start reveal they are still wedded to scare tactics more than seeking solutions. Still, they will cling to any excuse to keep pumping up the size of government instead of the efficiency of government.

I want to thank those who tuned into my Town Hall. It was a labor of love, and it will re-air on Fox Business on Saturday and Sunday.

Today’s Session

Housing starts and permits came in better than expected and once again good news is looking like good news. The market seems to be refocused on Monday.

Comments

Excellent Town Hall. Great guests. Thanks for all you do. You are amazing. Ronnie Metsker on 1/17/2025 9:30:27 AM

Thank you, Ronnie, that means a lot. CP Charles Payne on 1/17/2025 9:42:31 AM

Charles great Town Hall! Really enjoyed it! Most of the time I listen to you on Sirius. I sometimes have to replay it to hear who you guests were and wish I could see your diagrams. If only a way to live stream your show or download and watch! Cynthia Knapp on 1/17/2025 10:16:07 AM

Loved the town hall, Charles. The best message was to get involved NOW! Claim a part of this great creator of wealth called the free market! I figure I've added 1-2% to my performance by watching your show. You are very generous sharing your knowledge with the viewers and adding to that knowledge with a selection of clear speaking guests. Keep up the good work. Ric Walter on 1/17/2025 10:40:28 AM

Loved being part of the studio audience and seeing Charles live. The market heard Charles' message yesterday. Look at the gilded market 😍 Mike Mayone on 1/17/2025 11:13:53 AM

You have an investing seminar every single day. You are the best! Tom Hall, Phoenx, AZ on 1/17/2025 11:16:13 AM

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