🗞 2026 Has Been Hacked, Here's What's Going On

WHILE YOU POUR THE JOE… ☕️

Happy New Year,

Over the past 12 months, stocks in the basic materials sector have outperformed all others.

Yes, including AI names like NVIDIA.

Seems odd, doesn’t it?

Not really, as there were very clear indicators coming from the main economic drivers like:

• PMI indexes

• Retail Sales

• Capacity Utilization

However, buying an ETF like $XLB wouldn’t have been enough, even though you could have outperformed the S&P 500 by over 3x during the year. 🔥 

The reason: You could’ve been exposed to a name like Cleveland-Cliffs (CLF) ⬇️ 

Even better, there is a massive rotation about to happen for 2026 (again).

This newsletter is the foundation, and today we’re going to cover the rest of the entire idea.

More importantly, how you can make life-changing profits from it.

But,

If you’re actually serious about making 2026 better than 2025, I have a little gift for you below ⬇️ 

• 7 Day Free Trial to my Deal Room

Everything I’m personally buying, with valuation models & deep dives included in this trial.

Most members 10X their membership fee before it’s even due.

Make 2026 count, join the Deal Room.

Speaking of life-changing returns, let’s get on with today’s email 📧…

FOLLOW THE MONEY
Rotations Are Coming

As you know from our last newsletter,

The bottoming in the $JPM / $GS ratio means a defensive rotation is about to come to the market.

Especially as it also means a rebound in the Services PMI index, driven mainly by other defensive industries like:

• Healthcare services

• Finance & Insurance

• Real Estate Renting & Leasing

As important as that ratio is, it’s only half the picture, because there is another widely followed ratio Wall Street traders love to track in their decision-making.

The relationship between value stocks (IVE) and growth stocks (IVW) is an important dynamic in the market.

Because it signals the current and future potential sentiment in the United States economy.

As you can see, the ratio is bottoming past significant deviations after a period of trading toward upper deviations.

Meaning:

• 2022-2024: A period of caution and uncertainty in the economy, leaving plenty of room for upside potential.

• 2025-2026: Bottoming to signal no more room for economic growth implications, leaving room for downside potential

Notice that these two scenarios also align with the swings in the JPM / GS ratio, giving us a pretty reliable signal, which is why Wall Street loves it so much.

If you don’t think that these views are accurate, then maybe this other indicator can convince you ⬇️ 

There’s a significant deviation happening between the S&P 500 (SPY) and the equal-weight S&P 500 (RSP). 👀 

As the chart suggests, we now have the widest performance gap in history (roughly 24% apart).

Meaning the real economy, the RSP, is falling way behind the overweight nature of the S&P 500. This outperformance, as everyone knows, is due to the heavy tech and AI positioning.

Which has been a thing of beauty, until it eventually blows up in everyone’s faces.

So, right now we have the following ratios deviating past what is normal:

• $JPM / $GS ratio

• $IVE / $IVW ratio

• $SPY / $RSP ratio

Normalizing these three massive drivers means one thing is about to happen.

Markets are going to rotate into a much more defensive positioning.

But,

What exactly is defensive?

Defensive used to mean buying the cheapest and highest-quality businesses in the market.

Not anymore.

With Warren Buffett retiring and not a lot of other “Value Investors” applying this methodology to their managed funds, it’s becoming clear that only the retail crowd is excited about buying value stocks.

Right now, value stocks have taken on a whole new meaning.

It’s exactly what I saw during my last few months at Goldman Sachs & Citigroup.

More managers and hedge funds are choosing to buy high-growth mid-cap companies, even if they have to overpay for them. 📈 

If you’ve been part of the Deal Room, then you know this is exactly where our outperformance is born.

Like Intuitive Surgical (ISRG) in October⬇️ 

This company traded at a massive forward P/E premium compared to other peers in the healthcare space.

While everyone avoided it in preference for “value stocks” like PepsiCo (PEP), we were all over it for the right reasons.

The premium came from its underlying expansion into Japanese markets and some FDA approvals that hadn’t been announced yet.

In the end, these value investors underperformed while we bathed in profits. 💰️ 

Just like this company, there have been several others pitched inside the Deal Room, with plenty more coming your way.

Get 7 Days Free right now, and see exactly what I’m talking about.

Otherwise, I’ll see you in my next issue with some industry and stock picks that can outperform based on this defensive market rotation.

To your success,

G 🫰