This year, silver has surged. It was $72 an ounce at the end of 2025 and closed January at around $115, an increase of around 60% in just one month. What's going on? There is more going on in silver than just mere speculation. Over 150 companies reported this week. Procter's organic sales growth was zero and volume fell 1%. This is the lower part of the K in our K-shaped economy. The Trump administration dropped a bombshell on the entire health insurance sector. All health insurance stocks declined after hours Monday night. Simply put, this was a terrible earnings season for UnitedHealthcare. This story is far from over.
Hi, this is Steve Eisman and welcome to another edition of the weekly wrap. This is for the week ending January 30, 2026. The first month of the year has ended and we've already had tons of news. Last week was Greenland and Davos and this week was a huge week for earnings. I'll start with some thoughts on the market and the recent massive move in silver.
As a continuation from last year, the equity markets still seem fairly resilient. The market closed January up over 1.5%. Long-term treasury yields have been in a fairly narrow range for over 3 years, and the VIX index, a measure of how investors feel about risk, is at a relatively low 17. When investors get nervous, the VIX can climb to well over 30. All of these indicators would normally mean that all investors are fairly complacent about risk. If investors were nervous about, let's say, inflation, the market would be down, interest rates would be up, and the VIX would be soaring. However, these days the equity investors who are complacent and bullish exist side by side with an entirely different group of investors who are speculating about the demise of the dollar as a result of excess deficit spending. That's why gold keeps reaching new all-time highs, breaching the $5,000 barrier. Also, this year, silver has surged. It was $72 an ounce at the end of 2025 and closed January at around $115, an increase of around 60% in just one month. It's hard to reconcile a strong stock market with a continued rally in gold and silver, but it just seems to be happening.
There is more going on in silver than just mere speculation. The trading of most commodities relies on a bedrock assumption that most traders will not demand delivery of the physical commodity that they own contractually. This is certainly true in the case of silver. And as long as that assumption held, silver was just a metal people sometimes used to speculate about government currency risk in addition to gold. Now, there are far more silver contracts than physical silver, with some estimates that for every ounce of physical silver, there are over 200 times that amount of contracts. On January 1 of this year, the Chinese government imposed new export controls on silver. China reclassified silver as a strategic material, thereby putting it in the same category as rare earths. So now to export silver from China, companies now need special licenses. This matters because China controls at least 60% of global refined silver. This regulatory change in China has the potential to create a supply shock. As a result, traders are panicking and now demanding physical delivery of the silver they own on paper. As I said, there is a lot more paper silver than actual physical silver. And that's a major reason why silver is soaring.
Silver is now in what's called backwardation. That means that current silver spot prices are above future prices, which is highly unusual. When backwardation occurs, it tells you that buyers want physical silver now, not promises that silver will be delivered contractually in the future. Stay tuned. This story is far from over.
Last Tuesday on the Greenland news, the market suffered a correction. And on that day, the sellers of stocks were institutional investors. The flows into ETFs and index funds on that very same day indicate massive buying by retail investors. This continues a trend of the last several years, which is that on every dip, it is not the so-called smart money buying the dips. Rather, it's retail buyers every time. The retail investor is strongly acculturated to buying every dip, which is one reason why the market has been so resilient for the last few years. I am convinced that the only thing that will break this pattern and the psychology of retail buyers is an actual recession. Not fears of a recession, but an actual one.
On Wednesday, the Fed showed some backbone in the face of pressure from President Trump and decided to not cut interest rates. The Fed commented that the economy seemed stronger, so now was not the time to cut rates. Now, before we discuss this week's earnings, I want to touch on two companies that reported late last week. Procter and Gamble and McCormick, both consumer staples companies. They reported last Thursday and they did not do well. Procter beat on earnings per share but missed on revenue. McCormick, the spice maker, missed on earnings per share but met on revenue, but both are struggling. This is the lower part of the K in our K-shaped economy. Procter's organic sales growth was zero and volume fell 1%. This shows that inflation-weary consumers are searching for deals and McCormick's businesses were weak across the board. McCormick's stock was down significantly on the news last week, but Procter was up a little bit. And this brings me to the point I want to get at.
So far this year, the market is acting mostly opposite to last year. Despite weak results, consumer staple stocks have rallied off their bottoms. The four best performing sectors so far this year are energy up 14%, materials up 11%, and industrials and consumer staples, both up over 6%. The three worst performing sectors are info tech and healthcare, both down less than 1% and financials down 2%. What's going on now? It could just be a dead cat bounce of overlooked sectors, but perhaps it's more than that. The fiscal stimulus from the passage of President Trump's big beautiful bill is going to hit in the first half of this year. Maybe, just maybe, the market is sniffing out that the economy will broaden this year from the AI narrowness of last year.
And now for this week's earnings. Over 150 companies reported this week. I'll review the ones I think are the most important. First up is UnitedHealthcare. Now, I'm going to go in depth here because a lot happened. Simply put, this was a terrible earnings season for UnitedHealthcare, and the news was bad even before the company reported on Tuesday morning. On Monday night, the Trump administration dropped a bombshell on the entire health insurance sector. As part of its affordability program, something we've been talking about quite a lot, the Trump administration is only going to increase Medicare Advantage pricing by, get this, 0.09% for 2027. Essentially zero. That is way less than the expected 5% increase that investors were hoping for. Recall that health insurance stocks did terribly last year for a whole host of reasons, including rising health care costs and issues with Medicare Advantage pricing. Prior to this week, value investors were starting to invest in health insurance stocks, assuming the worst was over. It's not. All health insurance stocks declined after hours Monday night. And if that wasn't bad enough, Tuesday morning, UnitedHealthcare reported and the results were just plain poor. Earnings per share beat by a penny. Okay. And revenue slightly missed, but that is the least of it. For 2025, earnings per share were down 41%. The company projected total revenue in 2026 of $439 billion, which is a 2% decline versus 2025 and well below expectations of $455 billion.
Now, those are just numbers and barely capture the degree of difficulty this company faces. The problems at UNH run very deep. It has many divisions, but the two most important divisions are UnitedHealthcare, its traditional health insurance business, and Optum Health, which provides care directly to Medicare Advantage patients through thousands of clinics. Both health insurance and Optum Health are having problems. The key here is that the health insurance business suffers from rising medical costs. However, traditional health insurance is what's called a short-tailed business, meaning customers can be repriced fairly quickly. This means that the health insurance business is somewhat fixable. However, traditional health insurance has not been United's growth vehicle for a long time. Optum Health was the growth vehicle, and here the problems are far more serious. A few years ago, the government changed the way Medicare providers are compensated and this has obliterated Optum's margins to such a degree that this division barely made any money in fourth quarter. The change in Medicare compensation creates a 6% pricing headwind in 2026 and that is why the company is projecting only a 2.4% operating margin for Optum Health in 2026. The important point is that 2027 pricing for all Medicare Advantage is now flat versus expectations of 5% higher. Given that United has a reputation as an aggressive coder and the new federal government pricing system penalizes aggressive coders, 2027 Medicare Advantage pricing for United should be down again, not flat. And that means that 2027 expectations need to be reset.
The current expectations for 2026 earnings per share is $17.70, up 8% versus 2025. I suppose that's possible, although I don't have a lot of faith in the 2026 estimate given the state of flux the company is in. But the 2027 earnings per share estimate is for $20.70, up 17% versus 2026. Now that looks silly. Now, given the flat pricing scheme for Medicare Advantage in 2027, EPS estimates for 2027 will be coming down. I'm guessing that at best 2027 will only be slightly up versus 2026, so sub-$19 in earnings per share. And that is why the combination of Monday night's Medicare Advantage pricing announcement coupled with United's Tuesday earnings results caused the stock to decline by an incredible 20% on Tuesday.
There is a lesson here. Investors love to play turnaround stories after a stock gets beaten up. Turnaround stories come in two flavors, and I'll analogize it to fixing a house. Sometimes the guts of a fixer-upper house are good, but there are minor problems like a leaky roof. Fix the roof which does not take long and you have a house returned to its greatness. However, sometimes a house has massive problems and the house needs to be stripped down to its foundation. That takes a lot of work and a great deal of time. I think the value investors who bought into the United story thought this was a quick fixer-upper, but now realize the story is a lot more complicated. Another lesson here is know what you own when you invest in an index fund. On Tuesday, the S&P was up 41 basis points. NASDAQ was up 91 basis points. So, it was a good day. But the Dow was down 83 basis points. And the Dow is down solely because UnitedHealthcare is in the Dow and it was down 20%.
Speaking of turnarounds, Starbucks reported. This turnaround is taking a lot longer than investors had hoped for, but there are at least some signs that the company is moving in the right direction. Results were mixed. The company missed on earnings per share, but beat slightly on revenue. However, it's important to point out that every sector and subsector focuses on particular metrics that are specific to that sector. So, a metric that consumer staples analysts care about could be irrelevant for another sector. In consumer stocks, the most important metric is generally same-store sales growth. And in 4Q, Starbucks' same-store sales growth was 4% positive, and has been negative for years. Given the earnings miss, normally Starbucks should have been down. Yet, because of the positive same-store sales growth metric, the stock was flattish.
Next up, GE Vernova, one of the three spin-offs of GE. It reported. This is one of the more important AI-related stories. As I've discussed several times, the binding constraint on AI data centers is power. The traditional way to build power is for a utility to build a new power plant, which is usually powered by a large gas turbine. There are only three companies in the world that make large gas turbines: GE Vernova, Siemens, and Mitsubishi. GEV's results were very strong, but the key metric here is orders, which reached $22.2 billion and were up 65% year-over-year. I'd just point out that when GEV got spun out at the beginning of 2024 out of GE, it had just gone through a period of terrible results with poor orders and massive negative cash flow. The story then changed radically and the stock has climbed from around 130 back then to its current $700.
Next up, Amphenol. Another AI-related play. It's a tech company that makes connectors of all kinds. It used to be considered a steady slow-growth tech company. Kind of a safety play within tech. But because of the lift to all tech capex from AI, its earnings have been turbocharged. 2025 earnings per share growth was an incredible 77%. Fourth quarter numbers were great and the company issued first quarter revenue guidance of 44%. Sounds great, but it was disappointing to some investors and the stock was down over 12% on the print.
Meta. It's amazing how a narrative about a company can change in just 3 months. When Meta and Oracle reported last quarter, the market grew concerned about the level of their AI-related capex and reduction in cash flow from that capex. Meta declined from around $750 a share to around $605 in mid-January of this year. On a percentage basis, Oracle declined even more. However, this quarter, Meta beat on earnings per share and revenue. The bigger news, however, was that it expects first quarter revenue to be in the range of $53.5 to $56.5 billion, far higher than the $51.41 billion that analysts expect. This big jump in first quarter revenue trumped the huge increase in capex. Meta now expects AI capex to be $115 to $135 billion for all of 2026, ahead of analyst expectations of $111 billion and versus $75 billion in 2025. Now, last quarter, capex numbers like this caused the stock to go down, but this time the stock was up 9% after hours. Like I said, narratives can change quickly.
Now, let's look at ServiceNow. Meta might have shown how quickly a narrative can change, but ServiceNow shows how some narratives can be very, very stubborn. ServiceNow is an iconic enterprise software company, but the narrative on software is deeply negative. Investors fear that AI is reducing the cost of software production to such a degree that the moats around all software companies like ServiceNow are going to be under attack. ServiceNow though reported great numbers. Earnings per share and revenue beat. Revenue grew over 20%. I can find no holes in these numbers yet. Despite these strong numbers, the stock tumbled 10% on Thursday from these same AI fears. ServiceNow is down 24% just this year, and that's after being down over 30% in 2025. Like I said, this negative narrative surrounding software is very stubborn and hard to shake. Needless to say, the decline in ServiceNow infected the entire software group on Thursday.
Software stocks are in a terrible bear market. Microsoft earnings per share and revenue beat, but the stock was down 10% Thursday. Why? Two reasons. First, cloud revenue growth of 39% was a touch light. My guess is that it also has to do with the backlog. Microsoft stated that the company's commercial remaining performance obligations, a measure of backlog, stood at $625 billion, up 110% versus last year. Nothing wrong with that. However, they also disclosed that 45% of those obligations or $250 billion is from OpenAI. And the fact that 45% of the backlog is from OpenAI raises the risk of whether OpenAI can achieve their lofty financial goals to pay Microsoft, Oracle, and others.
Tesla. The company reported better-than-expected earnings per share and revenue, but fourth quarter revenue was down 3% versus last year, and the auto segment fell 11%. These results are just not great, but also largely irrelevant. The 2026 PE for Tesla is 200 times. Tesla has managed to change its narrative from being an electric vehicle auto company to a company that will eventually be a robo-taxi and robotics company. Musk has promised a lot here and has yet to come through. On the conference call, Tesla promised that its robo-taxis will be in dozens of cities by the end of 2026. And on that news, the stock was up 3% after hours. It seems to me that the entire stock is dependent on Tesla fulfilling its robo-taxi promises. Count me a skeptic, but we shall see.
Finally, Apple reported Thursday night. Numbers were very strong. The company beat on revenue and earnings per share. Revenue growth was an incredibly strong 16%. Overall iPhone revenue surged 23%, which the company attributed to strong sales of the iPhone 17. Sales in China surged 38%. All very strong numbers.
And now for the mailbag. Just one mailbag this week and it's from Mike who asks, quote, 'According to the Wall Street Journal, Michelle Bowman, the central bank's vice chairman of supervision, is taking steps to undo the regulatory efforts put in place after the 2008 crash. Do you think this will undo the work of Daniel Tarullo that stabilized our banking sector?'
Great question. There are several issues here. After the great financial crisis, the Federal Reserve became the chief bank regulator of all major banks in the United States. The regulatory effort was led by Fed Governor Daniel Tarullo, who in my view did a great job. But that does not mean there can't be some tinkering around the edges. I think there can be tinkering in two areas. First, bank regulators have discouraged bank M&A since the great financial crisis, but now in my view, regionals really need such an M&A wave. The cost of technology and regulation has made it increasingly difficult for regional banks to compete with the likes of Chase. The Trump regulators, I believe, understand this and are encouraging bank M&A and I think that is a good thing. The other area to think about is leverage. There is no question that banks were far too leveraged going into the great financial crisis and that was a primary cause of the crisis. Back then, for example, Citi was leveraged 33 to 1. And if you add back all of the off-balance-sheet stuff, it was probably leveraged 40 to 1. As of 4Q25, Citi was leveraged 14 to 1. Citi is a far safer company at 14 to 1. And I think the Trump regulators will allow that leverage to climb higher, maybe to 16 or 17 to 1. That would be fine and still be far lower than where it was prior to the great financial crisis.
This last Monday, I posted an interview with Ken Suchoski, the payments analyst at Autonomous Research. We had a wide-ranging conversation from the continued dominance of Visa and Mastercard to the intense competition in the payment sector, as well as a discussion about stablecoins. So, check it out. This coming Monday, we will drop an interview with Jason Trennert, founder and CEO of Strategas Research. Our discussion ranged from a potentially improving economy to the impact of populism on the market to the current broadening of the market away from just tech. Hope you tune in. Be sure to check out our website realismanplaybook.com. There you can easily access all our episodes as well as financial literacy masterclasses. Check it out. And that's the wrap. See you real soon.
This podcast is for informational purposes only and does not constitute investment advice. The hosts and guests may hold positions in stocks discussed. Opinions expressed are their own and not recommendations. Please do your own due diligence and consult a licensed financial adviser before making any investment decisions.
