The Daly Asset Management Fund is Officially Live

Daly Asset Management is officially live.

You can now invest directly in our systematic, data-driven strategies at dalyassetmanagement.com. This isn't your advisor's 60/40 portfolio. This isn't another closet index fund charging active fees. This is quantitative investing built for sophisticated, self-directed allocators who understand that alpha comes from being systematically contrarian, not chasing whatever CNBC is pumping today.

The market is rotating. Concentration is cracking. And the strategies we've deployed are built for exactly this environment.

Corporate Overview

The first full trading week of 2026 delivered the kind of headline risk that makes January feel unpredictable. While markets kicked off the year with fresh all-time highs for the S&P 500 on the first trading days, the real story emerged mid-week when Trump announced a military operation capturing Venezuelan President Nicolás Maduro and unveiled plans for a massive $1.5 trillion defense budget for 2027—a 50% increase. Meanwhile, defense stocks surged, oil prices whipsawed on Venezuela uncertainty, and small-cap stocks quietly ripped higher as materials, industrials, and healthcare led sector rotation.

At Daly Asset Management, we build systematic strategies for investors who understand that alpha comes from positioning ahead of regime shifts—not reacting to cable news. No hidden fees. No fluff. Just research-driven conviction for self-directed investors navigating geopolitical volatility and structural market changes.

💡 Stock of the Week: Lockheed Martin (LMT)

Sector: Aerospace & Defense | Market Cap: $125B | Dividend Yield: 2.3%

This week saw defense contractors experience violent intraday swings after Trump's Wednesday announcement simultaneously threatening restrictions on buybacks and executive pay while proposing to balloon defense spending to $1.5 trillion. Lockheed Martin initially dropped 4.8%, then surged back as markets digested the implications of a 50% budget increase that dwarfs current spending.

Why now:

• Historic budget expansion: Trump's proposal would bring 2027 defense spending from the current $901 billion to $1.5 trillion—unprecedented peacetime growth targeting 5% of GDP

• Geopolitical momentum: Between the Venezuela military operation, Greenland rhetoric, and escalating global tensions, defense modernization is becoming bipartisan priority

• Program positioning: Lockheed's F-35, missile defense systems, and naval platforms directly benefit from Trump's "Dream Military" buildout including new battleship classes

• Valuation reset: Trading at reasonable multiples relative to earnings growth in a budget environment that could add $5 trillion in defense spending through 2035 (per CRFB estimates)

Risks to watch:

• Executive compensation caps and buyback restrictions could pressure near-term stock performance

• Congress must approve the budget—no guarantee of full $1.5T

• Production capacity constraints and supply chain bottlenecks remain industry-wide issues

Verdict: We're long defense not because of jingoism, but because the macro regime shifted. When a president proposes 50% budget increases and backs it with military operations, you position for multi-year capex cycles—not quarterly earnings beats.

Market Snapshot (Week of Jan 2–9, 2026)

The S&P 500's march to new highs early in the week gave way to sector rotation as defense, materials, and small caps surged while Big Tech sold off. Oil prices fluctuated wildly as Trump's Venezuela operation and subsequent control of oil sales created uncertainty about supply dynamics.

Market Commentary

🇻🇪 Venezuela: The Geopolitical Wildcard Nobody Priced In

The week's biggest shock came Saturday when Trump announced a military strike that captured Venezuelan President Nicolás Maduro, followed by declarations that the U.S. would "run" Venezuela and control its vast oil reserves.

What happened:

• U.S. forces captured Maduro and his wife in Caracas in what Trump called an anti-drug operation

• Trump announced the U.S. would control Venezuela's oil sales "indefinitely" and invite American oil companies to invest billions

• Venezuela holds 303 billion barrels of proven reserves—the largest in the world

• Trump said Venezuela would "turn over" 30-50 million barrels to the U.S.

Market implications:

• Oil prices initially spiked, then fell as markets realized increased Venezuelan supply could add bearish pressure long-term

• WTI crude traded around $57-58/barrel by week's end—volatile but ultimately rangebound

• Oil services stocks surged: Schlumberger +10%, Halliburton +9% on expectations of infrastructure rebuild contracts

• Exxon and ConocoPhillips could recover seized assets from 2007 nationalization

This isn't immediately bullish for oil prices. Venezuela's production has been constrained for years—adding supply (even gradually) in an already oversupplied market is bearish. But it's bullish for U.S. energy services, geopolitical positioning, and Trump's narrative of resource dominance in the Western Hemisphere.

🛡️ Trump's $1.5 Trillion Defense Budget: Not a Negotiating Tactic

On Wednesday, Trump announced on Truth Social he wants the 2027 defense budget at $1.5 trillion—50% higher than the current $901 billion.

Key details:

• Would bring defense spending to ~5% of GDP, up from current 3.5%

• Trump claims tariff revenues will fund it while reducing debt

• Budget watchdogs estimate $5.8 trillion added to debt through 2035 after interest

• Congress must approve—but bipartisan support is growing

Defense stocks whipsawed:

• Wednesday morning: Trump threatened to block buybacks and cap executive salaries at $5M—stocks tanked

• Wednesday afternoon: Trump announced $1.5T budget—stocks reversed and surged

• Lockheed +4%, Northrop +8%, RTX +5% by Thursday's close

Defense hasn't had a true multi-year capex supercycle since the post-9/11 era. If even half this budget materializes, we're looking at structural tailwinds for primes, suppliers, and the entire industrial complex through the end of the decade.

📈 The Rotation Is Real: Small Caps and Cyclicals Lead

While headlines focused on Venezuela and defense, the quiet story was sector rotation:

• Small caps outperformed: Russell 2000 up over 1% while megacap tech lagged

• Top performers for the week: SanDisk +32%, Moderna +19%, LAM Research +16%, Micron +13%, L3Harris +11%

• Materials, industrials, and healthcare led—classic cyclical/defensive mix

• Big Tech struggled: Apple down 7 straight days, Microsoft -2%, Tesla missed delivery estimates

What's driving this:

• First five trading days of the year up ~1%—historically bullish signal (83% win rate since 1950)

• Money rotating out of crowded mega-cap tech into neglected value

• Defense/industrial capex narratives gaining traction

• Small caps benefit from domestic focus and potential M&A activity

🎯 CES 2026: AI Hype Meets Reality Check

The Consumer Electronics Show dominated headlines with Nvidia CEO Jensen Huang's keynote, but markets were less enthusiastic:

• Nvidia rallied early week, then sold off as investors questioned AI monetization timelines

• Semiconductors volatile—ASML +9%, Intel +7% Friday, but sector breadth weak overall

• Analysts split on whether Nvidia's at a bubble peak or beginning second leg higher

AI capex is real, but 2026 is the year enterprise ROI gets scrutinized. Winners will be infrastructure providers (power, cooling, chips), not necessarily the hyperscalers themselves.

💼 Labor Market Still Resilient—But Confidence Cracking

While full jobs data drops Friday, early indicators showed mixed signals:

• Job-finding confidence fell to 43.1% from 47.3% in November

• Layoffs hit 17-month lows in December per Challenger data

• Mixed signals suggest "low hire, low fire" economy—not collapsing, but not accelerating

Markets are watching closely for Friday's official report to gauge Fed rate cut expectations for 2026.

🧭 Tactical Map: Where to Lean In

• Defense & Aerospace: $1.5T budget proposal creates multi-year tailwinds—favor primes with diversified revenue streams and strong balance sheets

• Energy Services: Venezuelan infrastructure rebuild is a decade-long opportunity—look at Schlumberger, Halliburton, Baker Hughes

• Small Cap Value: Rotation is real after years of underperformance—domestic-focused industrials and materials are catching bids

• Gold & Hard Assets: Geopolitical volatility + Venezuela operation = continued safe-haven demand

• Fade: Over-owned Big Tech without earnings growth, anything reliant on imminent Fed cuts, commercial real estate still facing refinancing walls

🔍 Theme to Watch: The Return of Resource Nationalism

Venezuela isn't an isolated event—it's a signal. Trump's willingness to use military force to secure resource access, combined with threats around Greenland and hardline stances on commodities, suggests we're entering an era where:

• Energy security = national security

• Supply chains get weaponized

• Allied vs. adversary sourcing matters

This benefits U.S.-based producers, domestic manufacturing, and companies with pricing power in critical materials. It's inflationary, geopolitically risky, and structurally bullish for real assets.

📅 Forward View: Week of Jan 13–17

Key Economic Releases:

• Jan 7: JOLTS Job Openings – watch for stabilization in labor demand

• Jan 10: Nonfarm Payrolls (Dec) – expecting continued moderate growth

• Jan 14: CPI (Dec) – consensus is for continued deceleration

• Jan 29: FOMC Meeting – no action expected, but forward guidance matters

Earnings Season Kickoff:

• Financials report Jan 14-15 (JPM, BAC, C) – expect strong trading revenues

• Tech heavy-hitters late January (TSLA, NFLX, MSFT) – AI monetization in focus

Technical Levels:

• S&P 500: Support at 6,800, next resistance at 6,950 (prior all-time high)

• 10-Year Yield: Watching 4.25% breakout level; stability here is constructive

💬 Final Words

The first full week of 2026 reminded us that macro still matters—and that geopolitics can dominate markets faster than algorithms can price. Trump's Venezuela operation and defense budget proposal aren't just headlines; they're regime shifts that favor domestic exposure, hard assets, and companies positioned for a world where resource access and military strength define competitive advantage.

At Daly Asset Management, we don't chase narratives or pray for Fed pivots. We position ahead of structural changes with systematic, research-driven strategies for self-directed investors. No hidden fees. No fluff.

Disclosures: This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own due diligence or consult with a financial advisor before making investment decisions.