Good morning, investors. When it comes to markets, clarity can be as important as any radical catalyst. A trade update out of Washington offered exactly that for what could end up being the biggest trade of the decade.

The AI trade just became more predictable and investors reacted immediately.

The US and Taiwan struck a deal that commits Taiwanese technology companies to at least $250 billion of US investment in advanced semiconductor and AI capacity, backed by $250 billion in government credit guarantees.

The agreement also caps US reciprocal tariffs on Taiwanese goods at 15%.

Semiconductors sit at the center of the AI boom, and the deal removes a policy overhang that has weighed on markets for much of the past year.

Given that demand for chips has been astronomical, much of the uncertainty behind the AI trade has been political — where chips are made, how tariffs might change, risks to supply chains.

Investors now have more clarity on those questions.

Shares of Taiwan Semiconductor had already climbed about 5% prior to the news Thursday, following a strong earnings beat that morning.

Nvidia, AMD, Applied Materials and other stocks tied to chips and AI also rallied. 

The VanEck Semiconductor ETF closed 2.1% higher on the day, bringing its year-to-date gains to 6.2%.

TSMC, for its part, reinforced the notion that demand for advanced chips is still strong. The trade deal, meanwhile, addressed the geopolitical risk. 

Taken together, it’s easy to see why bulls may feel more confident now compared to a day ago.

To be sure, before the deal, few Wall Street firms expected the AI trade to lose steam this year. But valuations have had to absorb a steady stream of policy noise, tariff threats, and trade uncertainty.

The US-Taiwan agreement doesn’t eliminate those risks, though it does put more defined guardrails in place.  

The structure is straightforward if not unsurprising.

Chipmakers that build in the US get tariff caps and defined exemptions. Those that do not will face steeper penalties.

During construction, companies can import significant volumes without new duties, minimizing the odds for near-term supply disruptions. 

These details make earnings less exposed to policy shifts, which in turn makes the trajectory of the AI trade easier to forecast.

As longtime market-watchers know, fewer unknowns can be just as bullish as accelerating growth.  

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📈Goldman Sachs stock jumped after beating earnings. Fourth-quarter profits smashed estimates with a 12% jump compared to a year ago, fueled by strong results in equities trading and asset management. (CNBC)

🏘 Mortgage rates fell to a 3-year low. The average 30-year mortgage fell to 6.06%, one week after President Trump announced Fannie Mae and Freddie Mac would buy $200 billion in mortgage bonds. (Yahoo Finance)

📉 US jobless claims dropped unexpectedly. The number of Americans filing for unemployment benefits dipped 9,000 to 198,000, lower than the forecasted 215,000. (Reuters)

I sat down with BlackRock’s chief investment and portfolio strategist, Gargi Chaudhuri, to unpack the firm’s investment playbook for 2026, what BlackRock clients are most worried about, the biggest risk to the bull market, and the success of bitcoin ETFs.

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🗓 January 16, 2009: In the fallout of the financial crisis, Circuit City announced the closure of all its US stores and the elimination of 34,000 jobs.

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