TSMC Prints Money, Wall Street Banks Hit Records, Russell 2000 Extends Historic Streak – Market Breakdown #160
The AI giga-cycle is apparently real, Goldman and Morgan Stanley posted the best numbers since the pandemic, and small caps just outperformed the S&P 500 for a tenth straight session because the mark
📊 THE MARKET BREAKDOWN
Weekly market intelligence for traders who think in systems, not headlines.
Issue #160 – January 15, 2026
🔥 Headlines & Hysteria (powered by Forked Feed)
TSMC Q4 Profit Surges 35% to Record, Guides $52-56B in Capex for 2026
Forked Feed says: TSMC just announced it’s spending more on factories this year than the GDP of Paraguay, and the market responded by buying chips like they’re going out of style. Profit up 35%, revenue smashing estimates, and CEO C.C. Wei casually mentioned that demand is “insatiable.” That’s not a typo. The man who makes all the AI chips literally cannot make them fast enough. Meanwhile, every analyst who spent 2025 warning about the “AI bubble” is quietly updating their LinkedIn bios to “always believed in the giga-cycle.”
Goldman Sachs, Morgan Stanley Post Record Results as Dealmaking Explodes
Forked Feed says: Goldman dropped $14.01 EPS against expectations of $11.70, and David Solomon announced the bank’s highest deal backlog in four years. Morgan Stanley posted record revenue. The investment bankers are back, baby. Turns out when you combine a deregulatory administration with corporations desperate to do M&A before the rules change again, you get a fee bonanza. Solomon said the 2021 boom volume levels “will be exceeded” and “might be exceeded in 2026.” That’s investment banker for “we’re going to charge so many fees this year we’ll need to hire more people to count the fees.”
Russell 2000 Beats S&P 500 for 10th Straight Day
Forked Feed says: The longest small-cap outperformance streak since 1990. Thirty-four years. The last time this happened, the Soviet Union still existed and people communicated by fax machine. For three years we’ve been told the Magnificent Seven are the only stocks that matter, and suddenly the market has discovered that there are actually 2,000 other companies in the Russell index. IWM is up 7% year-to-date while the Magnificent Seven ETF is flat. Somewhere, a value investor who’s been crying into his spreadsheets since 2020 just opened a bottle of champagne.
Trump Says Iran Killings “Stopped,” Oil and Precious Metals Plunge
Forked Feed says: Trump announced he received assurances from “very important sources on the other side” that executions won’t happen and killing has stopped. “I hope it’s true. Who knows, right?” is apparently enough for markets to remove 3% from oil prices and 6% from silver in a single session. The White House says 800 scheduled executions were halted yesterday. Iran’s foreign minister says there was “no plan for hanging at all.” Both cannot be true, but that’s not stopping the risk-on trade. De-escalation by vibes is the new normal.
European Troops Arrive in Greenland as Trump Doubles Down on “Conquering” Territory
Forked Feed says: NATO allies are now positioning forces in Greenland to defend against... NATO’s largest member. France, Germany, Sweden, Norway, Finland, Netherlands, and the UK all sent troops to participate in “Operation Arctic Endurance.” Meanwhile, the White House press secretary said this won’t “impact the president’s decision-making process” because apparently the sight of allied troops preparing to defend against you is just ambient noise at this point. Denmark still insists Greenland isn’t for sale. Trump still insists anything less than ownership is “unacceptable.” The working group will meet in the coming weeks to explore whether there’s a middle ground between “definitely for sale” and “definitely not for sale.” Spoiler: there isn’t.
🔎 Today’s Focus — “The AI Validation Trade”
If there was any remaining doubt about the AI investment thesis, TSMC just buried it under $56 billion in planned capital expenditure.
Taiwan Semiconductor’s Q4 results weren’t just good. They were a full-throated endorsement of every bullish AI narrative the market has embraced since ChatGPT launched in 2022. Profit jumped 35% to a record $16 billion. Revenue hit NT$1.046 trillion. And the company is guiding for nearly 30% revenue growth in 2026 while hiking capex by at least a quarter from last year.
The market reaction was immediate and decisive. Nvidia popped 2%. ASML hit an all-time high and crossed $500 billion market cap. The VanEck Semiconductor ETF climbed to records. AMD rallied 6%. The entire chip complex moved in unison because when TSMC says demand is “insatiable,” they’re not guessing. They’re the ones filling the orders.
But here’s what made today’s session interesting: the AI validation didn’t just lift semis. It lifted everything.
The Dow gained 293 points. The S&P rose 0.26%. But more importantly, 300+ stocks in the S&P 500 advanced. The Russell 2000 extended its historic streak. Breadth expanded even as the mega-caps participated. This wasn’t a narrow tech rally. It was a broad-based risk-on session fueled by the confidence that the AI buildout isn’t slowing down.
The Goldman and Morgan Stanley earnings added fuel. Record investment banking fees. Record equity trading revenue. Highest deal backlog in four years. The dealmaking renaissance that everyone predicted would come with deregulation is actually arriving.
Put it together and you have a market that’s getting simultaneous validation from both the growth thesis (TSMC) and the cyclical thesis (bank fees). That doesn’t happen often.
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⚡ The Setup
SPY ~ 692.24 | BTC ~ 95,495 | US10Y ~ 4.164% | DXY ~ 99.31
The S&P 500 rose 0.26% to close at 6,944.47, rebounding from two consecutive down sessions. The Dow Jones Industrial Average added 292.81 points, or 0.60%, to 49,442.44, boosted by gains in Goldman Sachs and Nvidia. The Nasdaq Composite advanced 0.25% to 23,530.02.
The major averages ended well off their session highs as early momentum faded. Earlier in the day, the Dow had been up 431 points, the S&P had gained 0.76%, and the Nasdaq was up over 1%. The afternoon fade reflected some profit-taking after the morning’s chip-fueled rally.
Small caps continued their historic run, with the Russell 2000 beating the S&P 500 for a tenth straight session. This matches the longest outperformance streak since 1990.
Precious metals retreated sharply as geopolitical risk premiums faded. Gold fell from record highs near $4,650 to around $4,595. Silver tumbled 6% from its all-time high above $92 to below $90, the sharpest single-day pullback in months. The selloff came after Trump indicated de-escalation with Iran.
Oil prices plunged over 3% on the same Iran headlines, with WTI crude dropping below $60.
The VIX collapsed to 15.84, down over 5% as the “crisis premium” evaporated.
🧩 Market Archetype — “The Validation Session”
Every few months, the market gets a session that answers a question everyone was secretly asking. Today answered: “Is the AI capex cycle real?”
TSMC’s results weren’t just strong. They were existential validation for the entire semiconductor thesis. When the world’s dominant chipmaker guides for $52-56 billion in capital spending and says demand is “insatiable,” you either believe it or you fight the tape.
The market believed it.
This is what validation sessions look like: the skeptics get quiet, the underweight get squeezed, and the narrative firms up. ASML didn’t hit records because it reported earnings. It hit records because TSMC confirmed it would be buying a lot more equipment. Nvidia didn’t rally because it had news. It rallied because TSMC confirmed its customers are still insatiable.
The banking side added a parallel validation. If TSMC confirmed the growth thesis, Goldman and Morgan Stanley confirmed the cyclical thesis. Record fees. Record backlog. Solomon saying 2021 volumes might be exceeded this year.
Validation sessions can be dangerous because they tend to embolden positioning. But they also tend to matter because they move the base case.
The AI giga-cycle is the base case now.
🧭 Flow Pulse
Semiconductor inflows dominated the session. SMH saw heavy buying after TSMC earnings, with the ETF climbing to record highs. Nvidia, AMD, ASML, and TSMC ADRs all experienced significant volume.
Bank stocks recovered sharply after yesterday’s weakness. Goldman Sachs rose 4.6%, Morgan Stanley gained 5.8%. The XLF financial ETF bounced as the sector absorbed the strong earnings reports.
Small-cap flows continued. IWM saw sustained inflows as the rotation from mega-cap to small-cap extended for a tenth consecutive day. Russell 2000 constituents experienced broad-based buying.
Precious metals saw aggressive selling. GLD and SLV both experienced heavy outflows as traders booked profits following the Trump de-escalation comments on Iran. The speed of the unwind reflected how much geopolitical premium had been built in.
Energy outflows accelerated. XLE saw selling pressure as oil prices dropped 3% on Iran headlines. The risk-off in commodities was pronounced.
Tech was mixed. Despite the TSMC rally, QQQ flows were balanced as investors weighed chip strength against the broader rotation away from mega-caps.
Forked Feed says: The flow story today was a masterclass in narrative arbitrage. In the morning, “AI is confirmed, buy everything with a semiconductor.” By afternoon, “Iran is de-escalating, sell everything with a geopolitical premium.” Silver gave back six percent of its 150% one-year rally in a single session because Trump said he heard from “very important sources” that things were fine. Gold dropped $50 from its all-time high. Oil cratered. Meanwhile, Goldman Sachs and Morgan Stanley proved that investment banking fees are the one asset class that actually benefits from chaos, policy uncertainty, and the constant need for corporations to restructure their businesses before the rules change again. The real flow story isn’t in equities. It’s in the velocity of narrative shifts. We went from “imminent Iran strike” to “de-escalation vibes” in 48 hours, and the commodity complex repriced accordingly. If you’re trying to position for geopolitics, you’re basically playing a game where the rules change based on whatever Trump says he heard from anonymous sources.
🔮 Forked Forecast
Base Case (55%):Rotation Continues, AI Thesis Firmed
The TSMC validation gives semiconductors a floor. Goldman and Morgan Stanley give financials a floor. The Russell 2000 streak probably doesn’t extend forever, but the rotation into small caps has fundamental support from rate cuts and valuation gaps. Markets consolidate near highs with breadth remaining healthy. S&P holds 6,900-7,000 range. Tech outperforms on semis but underperforms on mega-cap rotation. Banks hold gains as policy fears fade slightly.
Bull Case (25%): Full Risk-On, Records Everywhere
Iran de-escalation holds. TSMC earnings spark broader AI buying that lifts the whole complex. Small-cap rally broadens into a full market rotation that takes Russell to new highs while S&P pushes toward 7,100. VIX falls toward 14. Oil stabilization removes one source of uncertainty. Fed path becomes clearer as inflation data continues soft. Goldman’s “2021 volumes exceeded” call proves prescient.
Bear Case (20%): Narrative Reversal, Risk Premiums Return
Iran de-escalation proves temporary. Trump’s “sources” turn out to be wishful thinking. Executions resume and US strike back on the table. Oil spikes, gold reverses higher, safe-haven bid returns. Small-cap rally stalls as risk-off takes hold. Semis give back gains as tariff concerns resurface. Banks sell off on renewed policy uncertainty. VIX climbs back toward 20.
Triggers to Watch:
Iran follow-through: Do executions actually stay halted? Any signs of crackdown resuming reverses today’s de-escalation trade
Greenland “working group” developments: Any escalation from Denmark or US changes the NATO calculus
Supreme Court tariff ruling: Still pending, could reshape budget math
Additional bank earnings: Regional banks report Friday
China response to any semiconductor restrictions: TSMC flagged tariffs as a risk factor
Russell 2000 streak: Does 11 happen? Historic streaks tend to end with sharp reversals
💬 Final Thought
Ten days. That’s how long small caps have been beating the S&P 500. The last time this happened, the Berlin Wall had been down for less than a year.
These streaks don’t happen in normal markets. They happen when something fundamental is shifting. For three years, the story was concentration: buy the Magnificent Seven, ignore everything else, collect your gains. For ten days, the story has been the opposite: the Magnificent Seven are flat year-to-date, the Russell 2000 is up 7%, and the market is remembering that there are actually thousands of other companies in America.
Maybe it’s just January effect. Maybe it’s just rate cuts working through the floating-rate debt that small caps carry. Maybe it’s just valuation mean reversion after years of small-cap underperformance.
Or maybe it’s the beginning of something else.
TSMC’s results today weren’t just validation for the AI trade. They were validation for the idea that this cycle has legs. When the world’s most important chipmaker says demand is “insatiable” and guides for $56 billion in capex, they’re telling you something. When Goldman Sachs says their deal backlog is at a four-year high and 2021 volumes might be exceeded, they’re telling you something else.
What they’re telling you is that the economy isn’t slowing down. The AI buildout isn’t slowing down. The dealmaking isn’t slowing down. And if that’s true, then maybe the rotation makes sense. Maybe small caps should outperform in an environment where growth is broad-based rather than concentrated.
Or maybe Iran reverses course tomorrow and we’re back to pricing in strikes by Friday.
That’s the 2026 market: validation and uncertainty, records and risks, ten-day streaks and the knowledge that streaks always end.
Trade accordingly.
That’s all for issue #160. TSMC validated the AI thesis. Goldman validated the deal thesis. Small caps validated the rotation thesis. Iran validated the de-escalation thesis. Five theses confirmed in one session, which means at least two of them will probably be wrong by next week.
— Forked Feed
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