• This week’s economic data was light, but what we did see continues to show an economy that is growing and proving more resilient than many expected. GDP was revised higher, and Americans are still spending more than forecasts anticipated.
• Inflation data came in right where it was expected, reinforcing the idea that while prices are still something we watch closely, the broader trend remains stable for now.
• Much of the global focus this week was on the World Economic Forum in Davos, where political and business leaders discussed geopolitical risks, global growth, and the future of innovation.
• Concerns around rising geopolitical tensions eased after clear messaging reduced uncertainty, and markets responded positively to that clarity.
• One of the more important conversations came from global banking leaders, who emphasized just how difficult and risky it would be for the world to move away from U.S. markets. The U.S. continues to lead in growth, jobs, and innovation.
• We also saw an unusual and rapid move in Japanese bond markets, serving as a reminder that debt and fiscal discipline matter, and that bond markets can send powerful warning signals when they are ignored.
• Events like these reinforce why we don’t invest based on headlines or emotion. Our Invest and Protect Strategy is designed to help us cut through the noise and act based on data, not fear.
• Our focus remains the same: managing risk thoughtfully so you can stay invested with confidence, even when markets become unpredictable.
• At RPOA, our goal is to make your money last as long as you do, so you can enjoy your Second Childhood Without Parental Supervision.

Transcript:

Jordan Roach
Hello everybody. Welcome to our Weekly Market Alert video for Friday, January 23 this week, we’re a little light on the economic side of events, but we have a few important points, and we’ll talk about what that means for the forward direction potentially of the market. We have important takeaways from the World Economic Forum that’s Meeting in Davos, Switzerland. And then finally, we had a large sell off in Japanese bonds, and we’ll talk about whether that matters at all. So a lot to get into. Let’s jump on in. So for this week, again, pretty light in the news side, not a ton of economic data points to look through, to digest, but there were a few things of note. The first was GDP. Figures for last quarter were revised upwards by a 10th of a percent. So it’s revised from 4.3% to 4.4% and that’s a strong revision. So despite all this noise, despite all the concerns maybe bad sentiments, GDP is growing and being revised upward, and that’s a good signal for broader economic growth. The next thing we had was personal spending numbers coming out, right? So it’s everyday Americans, it’s you and I spending dollars. We got that report out from November, and it was higher than estimated. So again, yes, we’ve seen some inflation. Yes, we’ve all talked about egg prices and gas prices and housing prices, but largely Americans are still spending more than what the market thought we would be spending. That’s a good thing. And then finally, we had some core PCE data. It’s a specific type of inflation data that was come out, came right in line with expectations so light, but everything we got pretty much signaled a strong market, right, trending growth, right? Not the best we’ve ever seen, but certainly an economy that is growing and trending upward. So we’re seeing resiliency, and that is, generally speaking, a good thing for us, stocks, for jobs as well. So we’ll see if that continues. Now, moving on, the big event this week happens over basically all week is the World Economic Forum. So that’s global leaders, a lot of political leaders, some business leaders that are meeting out in Davos, Switzerland. Okay, so across the pond, we have pretty much most of our administration out there. We have some important banking leaders out there as well, and they go in to talk about the state of affairs, to work out geopolitical issues, and we’ll talk about those, to talk about what AI means, all these things, right? And so we’ve a few things that have been very interesting to watch. And the first, of course, is going to be about tension surrounding Greenland, right? And that geopolitical risk, and is there going to be an invasion, and there’s going to be tariffs? Are there? We’re going to have a response from the from NATO, from the European Union, what does that look like? So that was really led a lot of the talks that I saw now, once President Trump came out, he basically just came out right point and said, We’re not going to invade. That’s not the point. That’s not what we don’t plan on doing that. We’re not going to do that. Talked about what they were looking to see, why Greenland is an important strategic asset. And largely right after the talk, markets rallied almost immediately, up 1% almost point in time. You could watch markets, you could watch the end of his speech, and you can see them correlate. So the markets some of that geopolitical tension around what could happen with Greenland, that kind of dissipated, right? It’s not gone, but it’s dissipating, and that is a good thing the markets like that, because, again, that’s just another geopolitical event that we’ve seen that’s been a problem this year, right? Because we have gone on with it. We talked about Iran, talking about Venezuela, of course, Russia, Ukraine, Greenland’s the next thing. So again, anytime we can see, maybe resolutions markets going to like that, okay? And we saw that certainly initially. Now the big other question is going to be, if there were going to be tariffs that come in, right? That can be a negotiating asset that, of course, President Trump has alluded to, we’re going to impose these tariffs on these European nations, on the native countries, to effectively give us leverage to get Greenland in some manner or some form. What we were expecting, potentially, was see if NATO countries, if European Union was going to respond in some way now, not with force, right? It’d mostly be economically and we had a lot of talk around, are we going to see pension funds and governments start trying to unwind right their holdings in US stocks or US bonds? And that was really a major discussion, but it was really interesting. I watched a an interview with the CEO of UBS right, one of the biggest banks in the world, one of the most closely watched banks in the world. Watched their CEO, and basically what he said was trying to de tether, de risk, hedge away, diversify away from us, assets, whether it’s stocks, bonds or currencies, is almost impossible to do, and he said, more importantly, it’s very risky to do so, because he still sees largely that US is still leading in growth, still leading in jobs, still leading largely in innovation. And so de tethering from that for European nations, for NATO countries, is almost impossible, and it’s very risky to do so. So. That was interesting news, because, again, we’ve heard a lot of meanderings. We’ve heard, we’ve heard a lot of narratives about, well, could the world do this? And it looks like a huge CEO of one of the biggest banks the world saying, almost impossible to do so, and do it at your own peril. So I would take that largely, if you’re a US investor, as good news, right? You want to see narratives on both sides and how they can find a landing spot. Now finally, that I think the biggest interesting point to see this year, this week, is the development around Japanese bonds, something we certainly do not talk about a lot, right? We’re not going to talk about overseas bond markets too much. Talk about our debt markets, of course, but not overseas. And what we saw this week, in one day was Japanese bonds, 40 year bonds. So we don’t even have those in the US, our longest dated Treasuries are 30 years but in Japan, they have 40 year bonds. We saw yields for Japanese bonds go over 4% for the first time in history. In fact, we saw bond yields go up 80 basis points, which means point 8% in the last four months, which is a huge move on yields, and that’s not good for prices. And there are domino effects of that. And I think largely the sell off we saw in US markets and global markets mid week was not really due to what was going on in Greenland. It was doing to had to do with what was going on in the Japanese markets and overseas markets. And it was really interesting to see an interview with Ken Griffin. And Ken and I, our owner, Ken Ken Moray and I have talked about this before. Ken Griffin is closely followed in his dialog. What he does because he owns, runs one of the largest hedge funds in the world and one of the biggest market makers in the world, and that Citadel is the firm. And what he said this year is basically the sell off in Japanese bonds. The rise in those yields is a forewarning for developed nations to start getting their fiscal houses in order. Because largely what we think drove the sell off is because the current leadership in Japan, that came into power, largely in October, was basically trying to loosen fiscal policy, fiscal policy trying to do away with certain taxes, and in doing so with a country that’s already strapped and saddled with debt, bond market, bond vigilantes gave them a little warning, sold off, and so Ken Griffin basically saying is what happened to Japan, is just a warning sign, potentially to all countries To get their debt situation, their debt situations in order or bond markets could start controlling policy. They could start taking over with what they do, and that could reverberate, cascade, domino into stocks as well. So it was a very interesting warning, and something to see if it plays out again, because it was a very quick move, right, a move that you’d say is almost a black swan event into the speed at which yields moved upwards. And that’s something that certainly could happen across other markets, including the US. So the one thing that I find you know that we hopefully have peace of mind about is our investment and protect strategy, right? We can take all this noise and this news and kind of see through it, right? So if that kind of event does happen right in the US Treasury markets, which would almost undoubtedly cause US stocks to be repriced downward. We have a strategy to help us understand quantitatively when we want to take proactive measures, and hopefully that will give you guys peace of mind as well. It certainly gives us that So more to come. I’m sure, again, with everything going on, we’ll have plenty to talk to week over week. We’ll get back with you with anything we find important, anything interesting. Please like and subscribe so you don’t miss any of this content. I look forward to talking to you again soon. Thanks, everybody.

Please note: transcript has been modified after the time of recording. 

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