To The Moon

Last week’s batch of data / reports, points to a US economy heading into 27–28 January FOMC with solid growth, a still-tight labour market, and inflation stuck just above target rather than re-accelerating.

Below are the details.

Jobless Claims.

Weekly Claims:

• For week ending 17 Jan 2026, weekly claims rose by 1,000 to 200,000 versus consensus estimated a rise to 209,000.

• The 4-week moving average dropped to 201,500, its lowest level since early 2024, indicating that layoffs are not yet a primary driver of economic concern. (see below)

Continuing Claims:

• For the week ending 10 Jan 2026, continuing claims fell by -26,000 to 1.849 million, remaining below the average seen in H2 2025. (see above)

• The decrease suggests that while hiring has been slow, those currently unemployed are finding it slightly easier to cycle back into the workforce than they did during the "hiring freeze" of late 2025.

The 2 claims reports is consistent with a labour market that has cooled from the 2021–2022 extremes but is still tight, with layoffs low and no sign (yet) of a sharp rise in unemployment.

Q3 2025 GDP (First Revision)

• Real GDP growth for Q3 2025 was revised up slightly to an annualised 4.4% from 4.3%, marking an acceleration from 3.8% in Q2 and the fastest pace in nearly two years. (see above)

• YoY, real GDP was up about 2.3%, while corporate profits from current production rose roughly 4.5% QoQ (not annualised), an upward revision of nearly $10 billion dollars relative to the prior estimate.

• Growth was driven by (a) solid personal consumption, (b) stronger non‑residential investment and exports, with the price index for gross domestic purchases up 3.4% annualised, unchanged from earlier estimates.

PCE Inflation - November 2025.

• Headline PCE inflation ran at 2.8% YoY, with core PCE (exclude food & energy) also at 2.8%, matching expectations and up slightly from 2.7% in October. (see above)

• On a month‑on‑month basis, both headline and core PCE rose 0.2% in November 2025, repeating October’s 0.2% and consistent with roughly a 2.4–2.5% annualised pace if sustained. (see above)

Analysis:

• Both figures remain stubbornly above the Fed's 2% target.

• The lack of downward momentum in Core PCE is a "hawkish" signal, suggesting that the FOMC may have to keep interest rates "higher for longer" to fully suppress price pressures in the service sector.

S&P Flash US PMIs (Jan 2026)

Services PMI (Preliminary):

• Remained at 52.5, an 8th-month low.

• While still expanding, the rate of new business growth is the slowest it has been in nearly 2 years. (see above)

Manufacturing PMI (Preliminary):

• Inched up to 51.9 from 51.8, a 2-month high.

• Manufacturers noted that while demand is steady, "input” cost inflation, driven largely by tariff expectations, is beginning to hit a 5-month high. (see above)

Overall, manufacturing growth accelerated to outpace that of services, but the January survey brought further signs that underlying order book growth has softened in both sectors recently, led by falling exports.

Consumer Sentiment (Final)

• The final US consumer sentiment index for January 2026, was revised sharply higher to 56.4 from the preliminary 54.0 and December’s 52.9.

• It is the highest level since August 2025.

• Despite the rise, sentiment is roughly -20% lower YoY.

• Improvement was broad‑based across income, education, age and political groups, indicating that households are slowly adjusting to the new price level and drawing support from lower inflation and decent nominal wage growth.

• At 56.4, sentiment remains well below pre‑pandemic norms (typically 80–100).

• This signals that households still feel squeezed, but “direction of travel” into the FOMC is clearly more positive than in mid‑2025.

• Notably, nearly 40% of respondents cited concerns over potential new tariffs as a primary reason for their cautious outlook on future spending.

Govt Shutdown on 30 Jan 2025?

A partial government shutdown is threatened for 30 Jan 2026, 23:59 hrs.

Root causes are structural rather than purely cyclical:

1. Persistent primary deficits and rising interest expense as a share of GDP, which intensify disputes over appropriations each fiscal year.​

2. Polarised politics in Congress, where small factions can block continuing resolutions or omnibus bills, increasing the bargaining power of shutdown threats.​

3. Use of budget deadlines as leverage to extract policy concessions unrelated to the budget line items themselves (immigration, regulations, etc.), leading to repeated brinkmanship.

Many agree that #2 and #3 are the key causes to impending partial government shutdown.

So far, 6 of 12 annual funding bills were signed late last year, the remaining six are currently stalled in the Senate and they are for : (see below)

• Defense

• Homeland Security

• Labor, Health and Human Services, Education, and Related Agencies

• Transportation, Housing and Urban Development, and Related Agencies

• Financial Services and General Government

• State, Foreign Operations, and Related Programs (often referred to as National Security/State)

Budgetary Friction:

Republicans, led by the administration’s "Big Beautiful Bill" stimulus priorities, are resistant to the Dept of Homeland Security (DHS) reforms demanded by Democrats.

This deadlock over the remaining 4% of US budget threatens a wider partial shutdown

The Minneapolis Shooting:

A significant catalyst to US’s budgetary friction is due to recent fatal shooting of a citizen (Alex Pretti) by federal agents in Minneapolis.

This has led Senate Democrats to pledge a block on the $64.4 billion funding package for DHS unless strict "guardrails" and accountability measures are placed on agencies like ICE.  ​

Even if a shutdown is avoided or brief, repeated episodes (including disrupted data collection earlier, as referenced in the PCE release) undermine confidence in the fiscal process and can temporarily delay key macro data, complicating the Fed’s information set.

Is AI-investment the Best Bet?

Of the 7 stocks in Magnificent 7, the trio of $NVIDIA(NVDA)$, $Alphabet(GOOG)$ and $Microsoft(MSFT)$ have consistently emerged as the dominant contenders in the AI-race, due to their vertical integration, infrastructure, and direct monetization of the technology.

Although they have been the primary engines of the S&P 500's growth, they are increasingly vulnerable to "geopolitical noise" and high interest rates.

Gold - "Shining" Alternative?

As of 28 Jan 2026, gold has recently surged past the $5,100 /oz to $5,262 /oz mark, reaching record highs as investors flee "paper" volatility for hard assets.  

Historically, during periods of "Double risks" (shutdowns + tariffs), gold acts as the ultimate hedge.

Unlike tech stocks, gold is not susceptible to government funding lapses or trade-war-induced margin compression.

Personally, gold as investment now is as good as “the train has left the station” - a missed opportunity. I will consider getting my feet wet, when there is a correction, just not now.

NVDA, GOOG, MSFT - “Top 3” trio hedge?

AI‑levered mega caps have been among the strongest performers of the 2023–2025 cycle, but 2025 performance already showed dispersion:

Nvidia (NVDA).

• In 2025, NVDA’s stock was up by +34.84%.

• However, it “lost” momentum into Q4 2025 amid concerns about AI “bubble” dynamics, accounting scrutiny over circular investing, and hyperscalers’ capex discipline.

Alphabet (GOOG):

It experienced a renewed strength in late 2025 on :

• Gemini 3 model traction (due to vast improvement).

• Advances in quantum computing

• High‑profile investors (ie. $Berkshire Hathaway(BRK.B)$) adding exposure.

All the above let GOOG as one of the better AI‑adjacent performers in the Magnificent 7 cohort.

Microsoft (MSFT):

• Tech giant remained a core AI platform play through Azure and its model partnerships, contributing significantly to the AI‑driven gains in the “Mag 7” indices.

• Nevertheless, MSFT also “involved”, in the late‑2025 volatility as investors reassessed cloud capex trajectories.

As a defense against a broad US equity sell‑off driven by macro/policy noise, the trio have mixed characteristics:

Pros:

• Strong balance sheets.

• Recurring revenue.

• Dominant competitive positions in secular growth areas (cloud, AI, search, productivity), that typically allows them to recover quickly after drawdowns.

Cons:

• Valuations are high. They are expensive compared to the rest of the market.

• Follow growth trends. Their performance is closely tied to fast-growing companies and market momentum.

• Drop sharply in crashes. During sudden market sell-offs, these stocks tend to fall as much as, or more than, the general index.

• Recover quickly. Despite deep drops, these stocks typically lead the market recovery when the rebound begins.

My viewpoints: (mine only)

The way I look at the trio of NVDA, GOOG and MSFT — they are excellent medium‑term AI compounders but not pure “hedges” against a falling market.

And they are more likely to be leaders in the next cycle than shelters during the drawdown itself.

However, due to limited budget If I have to choose, it would be Alphabet (GOOG).

Why GOOG and not NVDA or MSFT ?

(1) Valuation Edge.

As of January 2026, GOOG remains the most reasonably priced of the top AI contenders.

Its forward Price-to-Earnings (P/E) ratio for 2026 estimates sits at approximately 27x–28x, while MSFT trades at a premium of 30x or higher.

While NVDA's P/E has moderated, GOOG is viewed as having less "bubble risk" because its valuation is still supported by its massive, high-margin advertising cash cow.

(2) Inference Efficiency Breakthough (TPU v6/v7 vs. GPUs)

While NVDA dominates the training of models, GOOG is winning the battle of inference (daily running of AI for users).  

• GOOG's latest TPU (Ironwood), highlighted in January 2026 reports, offers a 4x cost-performance advantage over NVDA’s Blackwell chips for pure inference tasks.  

• Since late December 2025, there were reports that major companies (including $Meta Platforms, Inc.(META)$ ) are purchasing GOOG's TPUs to bypass NVDA’s high "tax" and supply constraints.

• This is turning GOOG into a credible hardware competitor for the first time.

(3) Model Superiority (Gemini 3 vs. GPT-4/5)

Data from mid-January 2026 shows that Gemini 3 Pro has overtaken its rivals in several critical benchmarks:

Massive Context:

• Gemini 3 supports a 1-million-plus token context window, far exceeding the 128k limit typical of Microsoft-backed GPT models.

• This allows it to "read" entire libraries of data at once.  

GOOG's Gemini processing bench marking against other AI tools

Coding and Reasoning:

On the LiveCodeBench Pro (a top coding benchmark), Gemini 3 achieved an Elo rating of 2,439, nearly 200 points higher than the latest GPT-5.1 iterations available via Microsoft. (see above)

(4) YTD Performances.

As of 27 Jan 2026

In January 2026, GOOG has emerged as the strongest performer among the three, outpacing NVDA and MSFT, due to its (a) unique vertical integration and (b) rapid monetization of AI.

Unlike MSFT, that relies heavily on external partners like OpenAI & NVDA, GOOG owns its entire AI stack—from custom TPU chips and the Gemini 3 model to its global distribution platforms like Search and YouTube.

Released in late 2025, Gemini 3 has seen explosive growth, with monthly active users projected to hit 700 million by early 2026.

The rapid scale-up has largely alleviated investors’ previous concerns about GOOG losing ground to competitors.

By training and running models on its proprietary TPUs, GOOG has lowered its AI compute costs by nearly 80% relative to industry benchmarks.

This allows for higher profit margins compared to peers.

With better clarity on GOOG’s AI achievements, now you know why I decided to pick it over NVDA and MSFT.

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

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