Hello, YieldAlley readers! In this issue:

  • Small Cap Opportunity: The Rotation Trade

  • Markets Decline After Tariff-Driven Volatility as GDP Revised to 4.4%

  • Amazon Pet Supplies Bonus: $30 Credit on $100 Purchase (30-Day Credit Delay)

  • The Richest Americans in History

  • And more!

NEWS

Standout Stories

🤖 There are now more than 1 million “.ai” websites, contributing an estimated $70 million to Anguilla’s government revenue last year (Sherwood)

📈 Earnings vs. the Stock Market (A Wealth of Common Sense)

🛻 Tesla Cybertruck sales plunged 48% in 2025 (CBS)

📚 Warren Buffett, Charlie Munger and the Reading Unlock (SatPost)

💳 Here's what it takes to achieve an 800 credit score, according to financial experts (CBS)

MARKET THOUGHTS

Markets Decline After Tariff-Driven Volatility as GDP Revised to 4.4%

  • ECONOMY

    • Real GDP increased at a 4.4% annual rate in the third quarter according to the Bureau of Economic Analysis's updated estimate, revised higher from the previous 4.3% estimate and ahead of the second quarter's 3.8% pace. The upward revision was driven by stronger exports and investment. Core PCE price index, the Federal Reserve's preferred inflation gauge, rose 0.2% month-over-month in November, matching October's reading. Year-over-year core PCE increased 2.8%, remaining well above the Fed's 2% long-term target. New unemployment claims for the week ended January 17 totaled 200,000, a slight increase from the prior week's revised 199,000 but below the 207,000 estimate. The four-week moving average fell to 201,500, the lowest level in two years. Continuing claims declined to 1.849 million in the week ended January 10 from the prior week's downwardly revised 1.875 million. University of Michigan's Index of Consumer Sentiment rose to 56.4 in January from 52.9 in December, though the reading remained over 20% lower year-over-year as consumers reported pressures from high prices and weakening labor market prospects. S&P Global's Flash U.S. Composite PMI showed business activity growth inched higher in January, with manufacturing acceleration outpacing services sector growth. Business confidence remained positive but dipped slightly amid worries over the political environment and higher prices.

  • STOCKS

    • Major indexes finished a volatile, holiday-shortened week lower after sharp Tuesday declines following President Trump's announcement of new tariffs on European nations opposed to U.S. control of Greenland. The S&P 500 posted its largest daily decline since October before reversing course Wednesday after Trump softened his stance, announcing he had formed a framework for a Greenland deal with NATO and would no longer impose tariffs scheduled for February 1st. Markets were closed Monday for Martin Luther King Jr. Day. The S&P MidCap 400 performed worst for the week, falling 0.55%, followed by the Dow Jones Industrial Average down 0.53% and S&P 500 down 0.35%. The Russell 2000 shed 0.32%, while the Nasdaq Composite closed modestly lower. Year-to-date performance through Friday showed small-caps leading with the Russell 2000 up 7.54% and S&P MidCap 400 up 5.49%, outpacing the Dow's 2.15% gain, Nasdaq's 1.12% advance, and S&P 500's 1.02% increase.

  • FIXED INCOME

    • U.S. Treasuries posted modest losses heading into Friday despite rallying alongside equities Wednesday, with short-term yields edging higher and longer-term yields declining slightly. Municipal bonds lost ground amid broader rate volatility, though T. Rowe Price traders noted new issuance in the muni market was relatively well absorbed. Corporate bonds posted gains and outperformed Treasuries amid improving macroeconomic sentiment and resilient investor demand.

INCOME BUILDING TIP

Small Cap Opportunity: The Rotation Trade Takes Hold

Small caps are having their best run in years. The Russell 2000 is up 53% from its April 2025 lows, outpacing both the S&P 500 and NASDAQ 100. The index has beaten the S&P 500 for 11 straight sessions as investors rotate away from mega-cap tech into industrials, energy, and small caps. Since the November 2021 peak, the Russell has gained just 16% while the S&P has surged 57%, leaving small caps at relative discounts. The last time the Russell outperformed was in 2020.

The rally is happening despite rising long-term interest rates, which contradicts the conventional wisdom that small caps need falling rates to outperform. Small caps borrow on shorter timeframes, so 30-year Treasury movements matter less than people think. Interestingly, companies with negative earnings are leading the charge; about 60% of the Russell 2000 consists of unprofitable companies, and they're beating the profitable ones. That suggests this is a momentum-driven move rather than a quality rotation. Whether it has staying power depends on whether earnings growth and GDP remain strong enough to support the rally.

INCOME BUILDING

Cash Rates

Government Money Market Funds (7-Day Yields)

  • SNVXX (Schwab Government Money Fund - Investor Shares): 3.41%

  • SPAXX (Fidelity Government Money Market Fund): 3.33%

  • TTTXX (BlackRock Liquidity Funds: Treasury Trust - Institutional Class): 3.55%

  • VMFXX (Federal Money Market Fund): 3.63%

Brokered CD Rates (6-Month Rate)

  • Charles Schwab: 3.79%

  • E*Trade:

  • Fidelity: 3.75%

  • Merrill Edge and Merrill Lynch:

  • Vanguard: 3.75%

ETFs (30-Day Yields)

  • SGOV (iShares 0-3 Month Treasury Bond ETF): 3.60%

  • BIL (SPDR Bloomberg 1-3 Month T-Bill ETF): 3.51%

  • USFR (WisdomTree Floating Rate Treasury Fund): 3.56%

  • TFLO (iShares Treasury Floating Rate Bond ETF): 3.57%

DEALS AND BONUSES

Amazon Pet Supplies Bonus: $30 Credit on $100 Purchase (30-Day Credit Delay)

Offer Details

  • Main promotion: Spend $100 on eligible pet products and receive a $30 promotional credit

  • Offer window: Credit expires May 26, 2026 (check Amazon for current availability)

  • Eligibility: Limited to one per customer and account

  • Credit timing: Automatically added to account 30 days after shipment, with email notification

  • Key restrictions:

    • Products must be sold by Amazon.com or Amazon.com Services LLC only (not third-party sellers, even if Prime eligible)

    • Items must be purchased in a single order

    • Must ship at same speed to a single address

    • Maximum benefit: $30

    • Cannot be combined with other offers

    • Promotional credit expires 11:59 PM PT on May 26, 2026

    • Does not apply to digital content

    • Promotional codes cannot be redeemed for Amazon Gift Cards

    • Amazon reserves right to modify or cancel offer

Our Thoughts

The 30-day delay to receive the credit is standard for Amazon promotions and shouldn't be an issue for most users. Consider whether you can realistically use $100 worth of pet supplies now and deploy the $30 credit within the approximately 5-month expiration window. The single-order requirement means you'll need to batch all purchases together rather than spreading across multiple orders, so plan accordingly. For those already spending on pet supplies regularly, this is essentially free money with minimal opportunity cost.

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