1q26 Risks – Inflation Rising: Stock Market Update, Friday January 30, 2026

We spent the first few weeks of 2026 discussing market volatility in our video, both realized actually seen volatility in the markets (low) and implied volatile at that expected by the options markets (high looking out starting mid-February). We talked about our thoughts on what might be a very sloppy, choppy 1q with a pullback possibly between Feb and mid-April.

For the 2^nd half of 2025, in our videos and at our OHFG educational events, our team messaged that we saw inflation dropping faster than others expected it to.  Our rationale back then focused on a few things.  First was housing costs, or shelter costs as economists refer to them, which our data said were slowing faster than the government data reflected in their numbers. Here’s Goldman Sachs chart and their forecast on shelter inflation.

Given the weakening job market and its forward effect on people moving after changing jobs and given the tighter immigration policies of the last 2 years, Goldman Sachs expects shelter inflation to continue lower toward 2.25% thought 2026 below the 3% shelter costs that prior PCE measures came in at.  That’s of course a good thing on the good bad side.

The other two large parts of the inflation equation are goods and services each which rose substantially after the reopening of the economy, post Covid 2020 fiscal and monetary stimulus program.  We all remember 2022 and the 7-9% inflation prints during that year, don’t we?  Here’s Goldman chart on core Goods and Services inflation and it’s easy to see the Matterhorn like inflation ramp in 2021/22 and its slowdown since.

On the service side, wage inflation continues to slow as a combination of a weakening job market, layoffs of white-collar workers due to AI, and the productivity gains of AI are helping keep service costs down. That’s a good on the good bad scale.

Which leaves the goods side of inflation which according to GS is slated to actually accelerate some here in the 1h26 on the back of tariff pass throughs on new inventory purchases and higher commodity input costs.

So Chris, if inflation was coming down in 2025 like your group expected last year, why are you dedicating a entire episode to it now when most seem to have moved on to other topics like geopolitics, Fed rate cuts and things like AI? Because our team gets paid to worry about things and risks others aren’t, to try to anticipate what fears linger around the corner before others. And right now, the real time market data in the bond market is flashing a severe yellow warning sign to me for an excuse for a selloff in 1q.  A selloff that if it should happen, one that our team thinks would be one of the few buying opportunities of the year but none the less down is down.

Here is the imputed 1-yr breakeven inflation rate as seen by the treasury bond market. Yes, one year is likely to short of a period from investing standpoint but we are looking for market-based signs that might actually lead shorter term investment down turns and upturns to help make tactical move and optimism ones portfolio if one choses.

As we’ve discussed in the past, inflation is seasonal in the USA.  This seasonality happens a lot as we are a service economy and wages and befits change in the new year, social security COLA payment increases hit in the new year, and medical cost bumps in the new year.  Has everyone looked at their medical insurance renewal cost increases in 2026?  If not, sticker shock is coming. You can see the seasonal turns up in Jan-early April on the previous chart.

The reshoring of manufacturing goods here in the USA while needed from the standpoint of independence is inflationary.  The exportation and deportation of low cost, lower end labor sources while a policy many agree with is inflationary.  A weaker dollar as investment capital moves offshore to their homelands, which the administration seems ok with is? Bad for higher inflation.

So, if you ask me what keeps me up at night over the next 3 months, I have a simple answer. The stock market sniffs out, late as is does most the time, the seasonal impulse higher of inflation causing a Feb-call it Tax Day selloff.  Should this happen, does are team see it as the end of the bull market? Doubtful given how earnings are likely to progress and the likely dovish new Fed chair in May.

Investors, 2026 has started off “fast and furious” in a negative way for volatility.  This was a risk our investment team had entering 2026 and why the first video of 2026 was titled “Patience” after the Guns and Roses rock ballad.  The first half of 2026 is one of those years, the options markets is hinting at a real BTD moment coming later in the 1q.

The good news is that our investment team has experience in these types of markets. Remember investors that elevated volatility also means elevated opportunity, for longer term investors.  Historically, investors’ biggest incremental returns come from investing when volatility is high, not low, and markets are down and others are either acting emotionally or worse yet being forced to sell, when they really should be pushing their chips into the center of the table and adding to investments.

What does all this mean to you?

Our advice to you is to keep following our investment content on our Oak Harvest Website and our YouTube Channels . We addressed our 2026 Market Outlook last night on Youtube with Troy, Charles, and myself.  .

Investors, whether you desire growth or income, or a combination of both in your portfolio, the entire OHFG team is here for our clients doing what we can to plan for you and your family’s future regardless of what stage you are at in your career or retirement.

Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect