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| Inflation Protection Model Portfolio |
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| Monthly Portfolio Review: January 2026Publication date: February 2, 2026 |
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| | | Current portfolio holdings |
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| | FOR SUBSCRIBER USE ONLY. DO NOT FORWARD OR SHARE. |
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| | | Stocks were up marginally in January, but commodities stole the show amid geopolitical turmoil and a market shift toward real assets. Despite a sharp pullback on the last day of the month, precious metals surged in January with gold advancing 9% and silver rising more than 40%. Oil prices also rose, making Energy the top performing sector. The Inflation Protection portfolio performed quite well this month, advancing 8.5%, versus a 1.5% total return for the S&P 500. Six stocks in the portfolio generated double-digit returns, with Freeport-McMoRan (FCX) leading the way, up 19%, after posting a reassuring fourth quarter earnings report. Visa (V) was the only notable detractor, sliding 8%. Although market reaction to Kevin Warsh’s nomination was negative for gold and other commodities, we expect him to support growth-oriented monetary policy as Fed Chair.
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| | | The Inflation Protection portfolio returned 8.5% in January, substantially outpacing the S&P 500 Index return of 1.5%. On a one-year basis through the end of the month, the portfolio generated a total return of 20.9%, versus a 16.4% return for the S&P 500.
The portfolio’s top performing stocks this month were Freeport-McMoRan (FCX), which returned 19%; Royal Gold (RGLD), which returned 19%; WESCO International (WCC), which returned 18%; and Permian Resources (PR), which returned 15%.
Two positions delivered a negative return. Visa (V) declined 8%, and Mid-America Apartments (MAA) declined 2%. |
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Geopolitical surprises
Geopolitics had a meaningful impact this month, first with the capture of Nicolas Maduro in Venezuela and then with Trump’s maneuvering to take effective control of Greenland.
Market reaction to the elimination of Maduro was positive as we discussed in the 76report (Why Markets Celebrated the Fall of Maduro). The Maduro regime has been a source of risk and instability for the United States. His removal improves the outlook for Latin America.
Trump’s actions with respect to Greenland were not as well-received by markets, at least initially, mainly because of potential fallout from the approach he took. Trump’s strategy was to pressure European nations into selling Greenland to the U.S. through the threat of tariffs, stoking concerns over another potential trade war.
This led to some volatility mid-month, but it was short-lived. In a matter of days, Trump announced that a framework arrangement had been reached with European counterparts that would address U.S. strategic objectives in Greenland.
Commodities soar
All of this geopolitical commotion, which also included widespread and violent protest activity in Iran, helped to spur investment demand for various commodities in January.
Precious metals in particular had an extraordinary month, even though the rally was clipped on the last trading day with Trump’s announcement that Kevin Warsh will be nominated as Fed Chair.
Gold and silver ended the month up 9% and 43% respectively, even after precipitous drops on January 30. At their peak, the two metals had risen more than 20% and 60% over the course of the month. |
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Gold and Silver(Total Return - January 2026) |
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| The sharp rally in precious metals, which clearly took on some speculative momentum, had many drivers. Geopolitical uncertainty contributed by underscoring the value of gold as a neutral reserve asset that cannot be confiscated.
As we discussed in the 76report (Gold Hits $5,000: This Is Scarcity, Not Risk Aversion), we also see more structural drivers behind the move in gold and other commodities, with rising productivity spurring demand for scarce assets.
Warsh gets the nod
The party in precious metals was called off early when Trump announced his pick for Fed Chair on January 30.
Kevin Warsh is perceived by many as an inflation hawk, mainly because of the positions he took as Fed Governor during the global financial crisis. He has been a sharp critic of Quantitative Easing (QE) and the massive growth of the Fed’s balance sheet, first with the financial crisis and again with the pandemic.
Despite his hawkish reputation, we believe Warsh is very much aligned with Trump’s pro-growth agenda, including his desire to bring interest rates down for the benefit of Main Street consumers and businesses.
As we discussed last week (Why Trump Picked Kevin Warsh to Lead the Fed in the Era of AI and Crypto), Warsh is also very much focused on AI and the modernization of the financial system.
In recent interviews, Warsh has drawn an analogy between the current economic environment and the early 1990s when productivity gains from the Internet were just starting to kick in. He has praised former Fed Chair Alan Greenspan for keeping interest rates low in this time frame, suggesting a template for his own tenure as Fed Chair.
For many months, Trump has been bashing current Fed Chair Jerome Powell for keeping monetary policy too restrictive. Rate cuts are clearly Trump’s top priority.
Trump and Treasury Secretary Scott Bessent conducted an extensive search process to replace Powell with an individual who shares their macroeconomic vision. Clearly, they believe they have found one in Warsh, notwithstanding his structural concerns over QE.
Gold and silver had risen so sharply, however, that it is not surprising that they retreated with the announcement of Warsh’s nomination, especially given his historic criticism of the endless growth of the Fed’s balance sheet.
Energy stocks lead
While metal prices surged in January, contributing to a 9% total return for the Materials sector, stocks in the Energy sector did even better, delivering a 14% return. Oil prices moved up noticeably in January, following several months of trading at relatively depressed levels.
The Maduro capture initially led to some pressure on oil prices (based on the potential for more Venezuelan supply) but oil then drifted higher on a combination of geopolitical uncertainty, strong economic growth, and potentially strong demand from the mining sector (with the rise in metals prices). |
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Crude Oil - Last 12 Months |
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Energy stocks were also helped by a sharp spike in spot natural gas prices in response to the cold snap that swept much of the United States.
Technology stocks generally lagged the rest of the market, as money moved into sectors that had underperformed in 2025.
January was notable in that the S&P 500 Equal Weight Index substantially outperformed the market-cap weighted index, returning 3.3% versus 1.5%. Similarly, Value outperformed Growth, returning 2.4% versus 0.5%.
But these moves only partly reversed the 2025 outperformance of the market-cap weighted index (versus equal weight) and the growth index (versus value).
In 2025, the S&P 500 returned 16.4%, versus 9.3% for the equal weight index. Meanwhile, the S&P 500 Growth Index returned 21.4%, versus 11.0% for the S&P 500 Value Index. |
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S&P 500 vs. Equal Weight, Value, Growth(Total Return - January 2026) |
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The Technology sector as a whole was only slightly positive in January. There were some bright spots, such as the recovery in Meta Platforms (META), which gained 9%. This was offset by weakness in mega-cap tech stocks like Microsoft (MSFT), down 11%, and Apple (AAPL), down 5%. |
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A constructive outlook
January was an eventful and, at times, chaotic month. Headlines were noisy and often unsettling. But stepping back from the day-to-day distractions, the underlying macroeconomic picture looks increasingly favorable.
The economy appears to be moving into a period of strong, non-inflationary growth, supported by rising productivity rather than excess demand. Inflation continues to cool, and importantly, shelter costs—one of the most persistent and lagging components of inflation—are now declining, reinforcing the disinflation trend.
As price pressures ease, interest rates are likely to follow, particularly as policymakers look to stimulate growth through lower rates rather than further balance sheet expansion (assuming Warsh is confirmed, which we expect, and starts to push the Fed in this direction later this year).
The stock market continues to wrestle with AI as it attempts to differentiate winners and losers. Meanwhile, AI adoption continues to accelerate across the economy, providing a tailwind for corporate profits.
META’s success this month actually represents a useful case study.
META came under pressure in late 2025 as the company ramped up AI spending, raising concerns about near-term profitability. Those concerns are now fading as AI investments are yielding meaningful gains in revenue growth and operating efficiency within META’s core advertising business.
META may be early, but it will not be unique. AI has the potential to improve nearly every business by speeding up decision-making, reducing friction, and lowering costs. One unavoidable implication, however, is that many business processes now require fewer people.
On META’s most recent earnings call, CEO Mark Zuckerberg noted that “2026 is going to be the year that AI starts to dramatically change the way that we work.” He added that they are “starting to see projects that used to require big teams now be accomplished by a single very talented person.”
That dynamic helps explain the recent wave of corporate restructuring. Amazon (AMZN) recently announced that it would reduce roughly 16,000 corporate roles. These are not warehouse jobs tied to weakening demand, but office roles being eliminated as productivity improves.
It is important to distinguish between layoffs driven by economic distress and those driven by technological efficiency. While painful for affected workers, AI-driven job reductions are positive for corporate margins and at the macro level give the Fed more room to ease policy.
As AI adoption deepens, we may see more unsettling labor headlines and even modest increases in unemployment. Counterintuitive as it may sound, that combination—higher productivity, softer labor pressure, and easier monetary policy—creates a favorable backdrop for stocks and supports the case for a durable expansion. |
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| | | The top performing stocks in the Inflation Protection portfolio this month were Freeport-McMoRan (FCX), which returned 19%; Royal Gold (RGLD), which returned 19%; WESCO International (WCC), which returned 18%; and Permian Resources (PR), which returned 15%.
Two stocks in the portfolio generated negative returns in January. Visa (V) declined 8%, and Mid-America Apartments (MAA) declined 2%. |
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| FCX continued to advance in January, after leading the portfolio in December, on the back of rising copper prices.
Over the past three months, FCX has returned approximately 45%, versus a 40% return for the Global X Copper Miners ETF (COPX), and a 16% return in copper itself.
FCX also benefited from a solid fourth quarter earnings report, with good news coming out of its key mining operation in Indonesia, which had suffered a production setback last September due to an accident.
Investors took comfort in confirmation that the underground mine restart remains on track, with phased production expected to resume in the first half of the year and ramp materially into 2027.
While copper and gold output from Indonesia remained depressed in the most recent quarter, operating metrics exceeded expectations, and there were no changes to the established recovery timeline.
Although shares of FCX have advanced sharply over the past two months, much of this upside reflects improved confidence in the Indonesian operation. Valuation remains attractive, and we continue to see long-term upside in the copper price. |
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FCX vs. Copper, Copper ETF(Last 3 Months) |
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| RGLD led the way this month among the portfolio’s gold streaming plays as they continued to match or outperform gold, consistent with our expectations. |
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Gold vs. RGLD, FNV, WPM(Total Return - January 2026) |
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| The price of gold suffered a sharp reversal at the end of January and in the beginning of February. This was unsurprising given the pace at which gold advanced at the start of the year.
Gold, of course, can be volatile and is susceptible to speculative involvement in either direction. We continue to favor a long-term allocation to gold for all the many reasons we have enumerated.
WCC performed well in January as investors grew more confident in its near-term earnings stability and longer-term growth backdrop. The market responded positively to evidence of improving order trends across utility, broadband, and data center end markets, where customer spending remains resilient.
WCC will report full year earnings on February 10.
PR performed well in January, supported by resilience in oil markets and continued operational momentum in the Permian Basin. Shares benefited from confidence that oil volumes are set to grow steadily into 2026, driven by improving capital efficiency and disciplined development spending.
Management’s focus on high-return oil wells, combined with tighter cost control, reinforce expectations for expanding margins and rising free cash flow. Balance sheet strength has also improved following meaningful debt reduction, enhancing financial flexibility and optionality around capital returns.
Against a backdrop of firm crude oil pricing, PR stood out in January as an oil-levered name with improving execution, visible growth, superb asset quality, a credible path to higher shareholder distributions, and a moderate valuation relative to larger peers.
Shares of V were negatively affected by Trump’s proposed plan to cap credit card interest, which could have a marginally negative impact on transaction volumes if implemented.
V also reported earnings at the end of the month. Consumer spending has proven resilient, cross-border volumes continue to grow, and higher value services such as value-added services and commercial payments are expanding rapidly.
Management reaffirmed its full year outlook. With strong volume growth, powerful network effects, and multiple secular growth drivers layered on top of a high-margin base business, V’s long-term earnings power and cash flow profile remain very attractive, even after a choppy start to the year.
MAA shares were down slightly for the month. We look forward to an update from management when fourth quarter results are reported later this week. |
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| | Mid-America Apartment (MAA) |
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| | Diamondback Energy (FANG) |
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| | Floor & Decor Holdings (FND) |
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| | WESCO International (WCC) |
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| | Wheaton Precious Metals (WPM) |
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| | The 76research Inflation Protection Model Portfolio emphasizes business models that benefit from inflationary pressure. Holdings are typically selected from industries based on supply constrained real assets, including commodity and energy businesses, or companies that otherwise demonstrate superior pricing power. Drawing from an investable universe of expected inflation beneficiaries, specific holdings are chosen based on valuation and general business quality, growth and risk considerations. |
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| | FOR SUBSCRIBER USE ONLY. DO NOT FORWARD OR SHARE. |
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