The Market Shook — But Nothing Broke, LFG Daily - February 9th, 2026

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Luke Lloyd, CEO Lloyd Financial Group

With last week’s market volatility grabbing headlines and testing nerves, I’m passing the torch to our investment team for today’s commentary. They’ll break down what’s driving the moves, what actually matters for long-term investors, and how we’re thinking about positioning portfolios amid the noise.

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Colin Symons, CIO Lloyd Financial Group

I’m going to try to avoid diving into the weeds too much but there’s a finance concept called carry. The original carry trade was in FX, where you borrow money in a low-interest rate currency and use it to buy a higher yielding currency, earning the spread. Imagine you borrow yen at 0.1% and invest in the US at 4%, making the 3.9% spread. Easy, right?

Maybe not so much, particularly in the modern era. Everyone is aware of this and currencies move around, probably losing at least some amount of gains through relative debasement. However, it’s an attractive idea and has been extended to the idea of using it in anything that tends to go up over time.

The problem with carry is leverage gets used and that can lead to more issues, as we’ve seen lately. Effectively, a market where carry is used ends up being a system where we get steady gains punctuated by occasional crashes, as well described in The Rise of Carry. Basically, cheap borrowing encourages investment, which leads to more investment as people buy into uptrends. Eventually, something happens and we crash, causing selling and losses.

We saw this in several places, recently, but the most spectacular one was in the silver market. It more than tripled in a year and got cut in half in a matter of days. That’s exciting enough, but also wasn’t the only place where we saw that kind of behavior.

When these crashes get bad enough, they can spread. Let’s say you owned a portfolio that owned silver and tech stocks. As time goes on, your portfolio is going up, but silver is going up faster. As people often do, maybe you add to silver on dips. Eventually, your 50/50 mix of silver/tech is 80/20.Then silver goes down, and down some more.

What action will you take? Surely, you’d sell some silver. But as it continues down 20%, 30%, 40%, you start selling other assets, like your tech stocks. I saw one crypto investor who put his plane up for sale. With leverage, things can go very wrong, and unfortunately, some people lost it all.

However, forced selling can create dislocations, as people sell for nonfundamental reasons. This creates great opportunity, as we arguably saw on Friday. Are we done with the carry crash and can go back to buying?

Nobody really knows, but Friday looked really good. According to Goldman Sachs, we saw a great deal of shorting last week, then some painful short covering on Friday. In theory, we should probably see more of that this week, but that’s not a guarantee. We still see spots of weakness, like software, and the FX market hasn’t created a clear positive trend, yet.

For our part, we got more aggressive, last week, admittedly, a little early. Honestly, I’m not at all against getting even more aggressive, but only with a high-percentage bet. I need to see everything heal more convincingly before I position more aggressively. To be clear, I’d bet last week was probably a bottom, at least for most risk assets, and that’s how we’re positioned. If that’s true, the selling should have created a lot of opportunity, which is why I’d buy more of what got hit if Friday’s trend continues. We’ll likely find out, this week.

Japanese PM Takaichi won a supermajority in parliament for her LDP party, as expected, sending the Nikkei soaring. That was the expected outcome, though, and we have been seeing some position unwinds, seeing the Nikkei and other risk assets off highs. That’s a classic “Sell the News” reaction, though I wouldn’t panic over that, just yet.

Chinese regulators advised financial institutions reduce their US Treasury holdings due to concentration risk and volatility. Of note, this guidance was issued before recent, constructive Trump/Xi calls.

GS expects US stocks to face more selling pressure from trend-following funds.

Anthropic, the OpenAI rival, is planning on raising $20B in funding, more than expected, due to high investor interest.

Lots of software earnings this week, which could be a focal point as that’s been the center of damage in the market.

What does it all mean? Seeing some selling after the big Friday news, but that’s not enough to really worry. Watch breadth and see what moves.

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