January 23, 2026

In the Loop – January 23, 2026

“In The Loop” is designed to give you a short update reflecting major developments, earnings, and investment trends across some core Equity Income and Growth holdings. All clients should be aware that individual buy/sell recommendations will be conveyed directly to you on an individual basis. Have a great weekend.

There’s a constant barrage of headlines and political theater right now, and it’s translating into choppier markets. Unfortunately, I do not see this changing anytime soon. Therefore, to be better investors, we must embrace it. Today, let’s look beyond Greenland, Venezuela, Chairman Powell’s construction over-runs, Davos, the Supreme Court verdict on tariffs being legal and focus back on the market internals. Why does the market keep shrugging off scary headlines and racing back to all-time highs? Maybe it’s the fact that the Atlanta Fed GDP estimate for Q4 2025 = 5.4%, which is double the CPI (Consumer Price Index) at 2.7%. Hot Growth with Cooler Inflation, experts would call this the “Goldilocks” environment. In this environment, earnings tend to grow, recession odds diminish, and the Fed stays patient. I would imagine no interest rate reductions in the first quarter of 2026. Today, S&P 500 valuations may seem stretched. However, with strong growth, company earnings can grow into these valuations. For those reasons, there are too many good things happening not to stay invested and endure the noise. If the Fed tightens, then that would signal the run is in the last innings. However, if the Fed stays patient or even reduces interest rates further (which I believe will happen once the new Fed Chairperson is announced in 2026) quality stocks continue to work. For now, the market is broadening into areas other than Mag 7 (Small Cap, Value, Biotech, and International). This is very healthy!

US Consumer

US interest rates have cooled from their highs, mortgage rates are declining, and oil and gasoline prices are sliding — a combination that can help inflation continue to normalize and support consumer spending. Also, according to Treasury Secretary Bessent, tax refunds are expected to be higher this year than previous years. Americans in certain tax brackets may also see higher take-home pay in 2026, as recent tax breaks reduce required withholding for some households. This will occur in the first quarter also supporting the consumer.

Power Resilience Forum 2026

In our opinion, this was the Most Interesting Conference of the week. Learning about new energy sources that American companies are creating to meet the future electricity demands is fascinating. I thought I would highlight a few within our current holdings.

Have a great weekend.

Individual Company Updates

META (Meta Platforms)

At the Power Resilience Forum 2026, Meta stood out for how directly it’s thinking about “firm power” for AI—especially behind-the-meter natural gas. The concept is simple: instead of relying solely on an increasingly congested grid (and waiting years for transmission upgrades), Meta can pair large data center campuses with on-site or adjacent gas-fired generation to secure reliable baseload electricity that doesn’t get bottlenecked by interconnection queues. This approach can also reduce curtailment risk and improve predictability versus purely intermittent supply. Williams (WMB) becomes a key enabler here: behind-the-meter gas generation only works if you can deliver large, steady gas volumes with high reliability—meaning pipeline capacity, lateral connections to sites, compression, and operational expertise. In other words, WMB isn’t “powering” the data center, but it’s helping make the fuel logistics and infrastructure real—turning natural gas into a dependable, financeable input for on-site generation.

NEE (NextEra Energy)

NextEra’s relevance to resilience is its ability to marry scale renewables with long-duration contracting—and the conference buzz around recommissioning the Duane Arnold nuclear plant (Iowa) underscores how the market is re-rating nuclear as a “clean firm” solution for 24/7 power needs. The big headline is the 25-year power purchase agreement (PPA) with Google, which is a strong signal that hyperscalers are willing to commit long-term capital to lock in dependable supply and de-risk their growth plans. For the grid, nuclear recommissioning is a rare win: it adds high-capacity-factor generation without needing to build an entirely new greenfield plant, and it supports the broader ecosystem of electrification. For investors, the takeaway is that NEE sits at the intersection of (1) customer demand for clean energy, (2) financing sophistication to structure long PPAs, and (3) the operational discipline to bring “real molecules and electrons” online—not just proposals.

VST (Vistra)

Vistra’s story at the forum is about being a near-term power provider to hyperscalers in a world where “time to power” is becoming the new competitive moat. While many renewable projects and transmission builds are measured in years, Vistra has a portfolio positioned to deliver dispatchable, scalable electricity with the operational experience to support industrial-grade loads—exactly what large AI data centers require. That matters because hyperscalers don’t just need cheap power; they need firm, schedulable power with high uptime and grid services capability (ramping, reserves, reliability). VST’s role is essentially to bridge the gap between explosive load growth and the slower pace of grid expansion—helping customers secure capacity now, and providing a platform that can be complemented over time with additional clean supply and grid upgrades.

GEV (GE Vernova) and CAT (Caterpillar)

GE Vernova and Caterpillar showed up as the “picks-and-shovels” of the resilience buildout—because when the grid is constrained, turbines and distributed generation become the fastest way to add dependable megawatts. GEV’s gas turbine and power equipment footprint is central to large-scale generation and grid modernization: turbines, grid hardware, and services that keep plants running efficiently as demand spikes. CAT complements that from the distributed side—its engines and turbine solutions are widely used for on-site generation, microgrids, and backup power, which is increasingly moving from “emergency only” toward “strategic capacity” for data centers and industrial users. The common thread: whether it’s utility-scale plants or behind-the-meter builds, the “resilience era” is driving tangible demand for reliable generation hardware—and both GEV and CAT are positioned to benefit as customers prioritize speed, uptime, and controllable power over perfect-world planning assumptions.

We remain focused on navigating market trends and positioning portfolios for long-term growth and resilience.
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