General Market News

Fox Business host Larry Kudlow argues against pursuing criminal charges against Federal Reserve Chairman Jay Powell despite criticizing his performance, warning that the indictment will prevent Senate confirmation of Trump's preferred Fed nominee. While Kudlow calls Powell a 'terrible Fed chairman' who was politically motivated and missed inflation targets, he believes the criminal probe over building renovation cost overruns is counterproductive and markets appear unconcerned.

• Republican senators like Thom Tillis refuse to confirm a new Fed chairman until criminal subpoenas against Powell are withdrawn, creating a confirmation impasse
• The Fed building renovation is estimated to run at least $700 billion over budget, which became subject to grand jury subpoenas and investigation
• Markets showed resilience despite the controversy, with the S&P and Dow hitting all-time highs and the 10-year Treasury auction performing well at 4.17 percent

Federal Reserve Bank of New York President John Williams said Monday that monetary policy is well positioned to support the economy, signaling no near-term rate cuts despite pressure from President Trump. Williams expects GDP growth of 2.5-2.75% in 2026 and inflation to return to the Fed's 2% target by 2027. His comments come amid an assault on Fed independence, including grand jury subpoenas served to the central bank related to renovation cost overruns.

• The Fed cut rates by 0.75 percentage points in 2025 to a range of 3.5-3.75%, with officials projecting only one more cut in 2026 as they balance labor market concerns against above-target inflation
• Williams forecasts inflation will peak at 2.75-3% in early 2026 before declining to 2.5% for the full year, with unemployment stabilizing and then retreating in following years
• Fed Chair Powell stated that grand jury subpoenas targeting the central bank are 'pretexts' aimed at directing monetary policy through political pressure rather than evidence-based decision making

President Donald Trump announced a 25% tariff on all U.S. business conducted with any country that trades with Iran, effective immediately. The move aims to economically isolate Iran amid ongoing protests in the country where dozens have been killed. Further details about implementation remain unclear as the White House declined to provide additional information.

• The tariff applies to 'any and all business' done with the U.S. by countries that conduct trade with Iran, with Trump calling the order 'final and conclusive'
• The announcement comes as Iran faces massive internal protests with dozens reportedly killed in recent weeks, prompting Trump to threaten military action if killings continue
• The legal basis for these tariffs is unclear, with the Supreme Court set to rule on whether Trump's previous expansive tariffs invoked under the International Emergency Economic Powers Act (IEEPA) are legal

The Trump administration has opened a criminal investigation into Federal Reserve Chairman Jerome Powell related to testimony about headquarters renovation costs, triggering a rare GOP revolt on Capitol Hill. Multiple Republican senators, including Thom Tillis and Lisa Murkowski, are threatening to block future Fed nominees until the matter is resolved, citing concerns about central bank independence. The Fed building renovation is expected to cost $2.5 billion and be completed in 2027.

• Sen. Thom Tillis (R-NC) and Sen. Lisa Murkowski (R-AK) pledged to block confirmation of any Federal Reserve nominee, including the next Fed chair whose term expires soon, until the investigation is resolved
• House Financial Services Committee Chair French Hill (R-AR) defended Powell's integrity and warned the probe 'creates an unnecessary distraction' when the economy requires focus
• The investigation centers on alleged testimony issues regarding Fed headquarters renovation cost overruns, though the $2.5 billion project is funded by the Fed itself rather than taxpayers

Bipartisan opposition is mounting on Capitol Hill against the Justice Department's criminal investigation into Federal Reserve Chair Jerome Powell over renovation cost overruns and related congressional testimony. Powell claims the probe is an attempt to intimidate him as he resists President Trump's pressure to lower interest rates more quickly. Republican Senator Thom Tillis is threatening to block any Fed nominees until the investigation is resolved, potentially derailing Trump's plans to replace Powell when his term expires in May.

• Sen. Tillis's blocking threat poses a major obstacle for Trump on the Senate Banking Committee, where Republicans hold only a 13-11 majority, meaning one GOP defection can deadlock nominee confirmations
• Multiple Republicans including Sen. Murkowski and House Financial Services Chair French Hill criticized the investigation as 'coercion' and an 'unnecessary distraction' that could undermine Fed independence and market stability
• Powell's term as Fed chair ends in May 2026, but he could remain as a Fed governor until 2028, complicating Trump's long-stated goal of replacing him with an ally

A group of former Federal Reserve chairs and Treasury secretaries issued a joint statement defending Fed Chair Jerome Powell after he disclosed that the Trump administration's Justice Department is threatening criminal indictment over his testimony regarding Fed renovations. The group, including Ben Bernanke, Alan Greenspan, Janet Yellen, Timothy Geithner, and Henry Paulson, called the probe an unprecedented attack on Fed independence.

• The former officials warn that prosecutorial attacks on the Fed chair undermine the central bank's independence, which is critical for achieving stable prices, maximum employment, and moderate long-term interest rates
• The statement characterizes the criminal inquiry as resembling monetary policy practices in emerging markets with weak institutions, stating it 'has no place in the United States'
• The bipartisan group includes former officials who served under both Republican and Democratic administrations, along with several former chairs of the Council of Economic Advisers

President Trump's Department of Justice has launched a criminal investigation into Federal Reserve Chairman Jerome Powell over Fed building renovation testimony, which Powell calls a 'pretext' for gaining control of monetary policy. Trump's efforts to reshape the Fed have been largely thwarted by courts, including a judge's decision to keep Fed Governor Lisa Cook in her position, preventing Trump from appointing a new slate of regional Fed presidents who might support his dovish monetary policy preferences.

• The 10-year Treasury yield rose to 4.21% Monday morning as investors reacted to uncertainty over Fed independence and inflation implications, though Trump claimed no knowledge of the DOJ investigation
• Trump's attempt to fire Fed Governor Lisa Cook was blocked by courts, denying him the opportunity to gain majority control of the FOMC through appointments of regional Fed presidents
• Markets currently price in only 5% odds of a rate cut this month, with the next expected cut not until June 17 (69% probability), as all five voting regional Fed presidents indicate no rush to cut rates further

U.S. Commerce Secretary Howard Lutnick predicts 5-6% GDP growth in 2026, which would be unprecedented for an economy of America's size. The forecast is driven by multiple factors including an expected shift to more dovish Federal Reserve leadership, massive government spending increases, and continued AI infrastructure investment. The Atlanta Fed's GDPNow model currently projects 5.4% Q4 growth, supporting expectations for sustained momentum.

• Jerome Powell's term as Fed Chair ends in May 2026, with Trump's four dovish candidates expected to pursue more aggressive rate cuts and expansionary monetary policy after the Fed's balance sheet ticked up for the first time in two years
• Trump Administration plans to increase defense spending by ~40% to $1.5 trillion while implementing aggressive deregulation, distributing a 'tariff dividend' from billions in tariff revenue, and delivering what's expected to be the largest tax refund in U.S. history
• The 43-day government shutdown reduced Q4 GDP by an estimated 1.5%, meaning the economy is already stronger than official numbers suggest, while Nvidia CEO confirmed strong revenue visibility through 2026 supporting continued AI infrastructure buildout

More than a dozen former Federal Reserve chairs, Treasury secretaries, and prominent economists issued a joint statement supporting Fed Chair Jerome Powell amid a Justice Department criminal inquiry into potential perjury related to his June congressional testimony about cost overruns at the Fed's headquarters renovation. The group condemned the probe as an 'unprecedented attempt to use prosecutorial attacks' to undermine Fed independence.

• Signatories include former Fed Chairs Bernanke, Yellen, and Greenspan, plus former Treasury Secretaries Paulson, Geithner, Rubin, and Lew, along with several prominent economists
• Powell confirmed he was notified by the U.S. Attorney's Office in Washington, D.C. about the investigation into statements he made during June testimony on Capitol Hill
• The statement warns that using prosecutorial attacks on central bank leadership resembles 'how monetary policy is made in emerging markets with weak institutions' and threatens the rule of law that underpins U.S. economic success

Morocco aims to add $10 billion to its GDP through artificial intelligence by 2030, representing a significant boost to its current $170 billion economy. The country plans to invest in AI training programs, sovereign data centers, and cloud infrastructure while creating 50,000 AI jobs and training 200,000 graduates. The initiative includes partnerships with companies like France's Mistral AI and an $1.2 billion digital transformation budget for 2024-2026.

• Morocco targets creating 50,000 AI-related jobs and training 200,000 graduates in AI skills by 2030
• The government has allocated 11 billion dirhams ($1.2 billion) for digital transformation from 2024-2026, covering AI initiatives and fiber-optic expansion
• A 500-megawatt renewable energy-powered data center is planned in Dakhla to enhance data sovereignty and security

Former Fed Chair and Treasury Secretary Janet Yellen criticized an investigation into current Fed Chair Jerome Powell as 'extremely chilling' for central bank independence. The U.S. Attorney's Office in Washington, D.C., led by Trump confidante Jeanine Pirro, is reportedly investigating whether Powell lied to Congress about a Fed headquarters renovation project. Yellen expressed surprise that financial markets are not more concerned about the probe.

• Yellen stated the odds Powell lied are 'zero' and believes the investigation is aimed at removing him from his position at the Fed
• The investigation involves potential perjury charges related to Powell's June testimony to Congress about an expensive Fed headquarters renovation
• Yellen condemned Trump's calls for rate cuts to reduce federal debt payments (currently $38.4 trillion), calling it 'the road to banana republic'

US stocks opened lower on Monday after the Department of Justice launched a criminal investigation into Federal Reserve Chair Jerome Powell, intensifying President Trump's pressure on the central bank. The Dow Jones fell 388 points (0.8%) and the S&P 500 dropped 0.3% as investors reassessed political risks. Powell confirmed the probe relates to his Senate testimony on Fed office renovations and stated he would not yield to political pressure threatening the Fed's independence.

• Financial stocks led losses amid concerns over Fed independence and Trump's proposal to cap credit card interest rates at 10% for one year, which critics say could restrict lending and hurt bank profitability
• Powell's term as Fed chair expires in May, and the central bank is expected to pause further rate cuts at its upcoming meeting while markets currently price in two 25-basis-point cuts this year versus the Fed's projection of one
• Key earnings reports from JPMorgan, Bank of America, Wells Fargo, Goldman Sachs, and others are due this week alongside critical inflation data (CPI Tuesday, PPI Wednesday) that will help assess if corporate fundamentals support current valuations

German Finance Minister Lars Klingbeil reaffirmed the importance of central bank independence amid the Trump administration's pressure campaign against Federal Reserve Chair Jerome Powell, including threats of indictment. Speaking in Washington for a G7 finance ministers meeting, Klingbeil emphasized that central bank independence is a 'clear line' for Germany, while acknowledging growing difficulties in transatlantic dialogue.

• Trump administration has threatened to indict Fed Chair Powell over congressional testimony comments, which Powell called a 'pretext' to influence interest rate policy
• Klingbeil stated Germany 'attaches great importance to the independence of central banks' and described himself as 'very transatlantic' despite increasing U.S.-Europe differences
• The German minister is in Washington for a G7 finance ministers meeting that includes participation from Australia, Mexico, South Korea, and India

A financial analyst argues that oversold consumer discretionary stocks present value opportunities in 2026 after underperforming during the AI-driven rally of 2025. The article highlights three specific companies—Lululemon, Deckers Outdoor, and Costco—that have strong fundamentals but weak recent price action, suggesting they are positioned for potential rebounds as market leadership rotates away from technology stocks.

• Lululemon Athletica ($24B market cap) recently replaced its CEO and shows 'rock-solid fundamentals' despite being technically penalized with declining price action in late 2025
• Deckers Outdoor ($15B market cap), which owns HOKA and UGG brands, displays strong fundamentals but poor recent price performance, creating a divergence that may present a buying opportunity
• Costco ($382B market cap) has outperformed the S&P 500 over five years (148% vs 95% gains) but has been recently ignored by investors despite its historically strong business performance

The S&P 500 Index broke above recent range-bound trading to hit new closing highs above 6,966 following December jobs data, with analysts predicting additional short-covering rallies could sustain the breakout. A list of 60 short-covering candidates has seen 83% rally in early 2026 with average returns near 7%, suggesting continued rotation into last year's underperforming stocks outside mega-cap technology.

• The SPX broke through resistance at 6,920 (late October high) after months of range-bound trading, with short-covering activity providing upward momentum as traders delayed profit-taking until 2026 for tax reasons
• Option sentiment indicators show optimism returning among short-term traders, with the put/call ratio declining from year-end levels, though not yet at extremes that typically precede sustained rallies
• Key level to watch is SPX 7,000 strike ahead of January expiration Friday due to gigantic put and call open interest that could create 'pinning' action, with support at 6,920 and 6,845-6,865 range

President Trump's tariffs are causing significant job losses in supply chain operations, with layoffs doubling from 16% to 32% between April and January, according to a survey by the Association for Supply Chain Management and CNBC. Rising costs and administrative burdens are forcing companies to cut staff and reduce capital investments, with 65% of respondents reporting at least a 10-15% increase in supply chain costs.

• Layoffs among supply chain managers doubled from 16% in April to 32% currently, as companies struggle to manage cost structures amid tariff pressures
• 65% of survey respondents reported supply chain cost increases of at least 10-15%, with 34% experiencing increases greater than 15%, creating major budget shocks
• Companies face 'dead money' tied up in customs bonds and administrative burdens that cannot be recovered even if tariffs are ruled illegal, with 56% of respondents concerned about a recession beginning in Q2

The U.S. Justice Department has opened an unprecedented investigation into Federal Reserve Chair Jerome Powell over statements he made to Congress about the Fed's headquarters renovation. Powell characterized the probe as politically motivated retaliation for the Fed's refusal to cut interest rates as aggressively as President Trump has demanded. Markets reacted with dollar weakness and gold gains as investors weighed threats to central bank independence.

• The investigation focuses on Powell's June testimony about the Fed building renovation, now estimated at $2.5 billion and roughly $700 million over budget, though Powell insists Congress was kept fully informed
• Trump has repeatedly pressured Powell to slash rates and criticized him since 2018, recently stating he would 'love to fire him' and suggesting the renovation costs could justify removal
• Powell's term as Fed chair expires in May 2026, but his board seat runs until January 2028; Trump indicated he has already decided on a replacement, with economic adviser Kevin Hassett seen as front-runner

The December Consumer Price Index (CPI) report, set for release Tuesday, is expected to show inflation at 2.6-2.7% year-over-year, above the Federal Reserve's 2% target. Economists warn the data will be 'extremely muddy' due to lingering effects from the 43-day government shutdown that ended in mid-November, which disrupted data collection and created a downward bias in inflation readings that will persist through April 2026.

• The Bureau of Labor Statistics used a 'carry-forward methodology' during the shutdown, assuming no price changes when surveys couldn't be conducted, imparting artificial downward bias especially in housing data (rent and owners' equivalent rent)
• November's CPI data collection coincided with holiday discounting periods, further distorting readings in categories like apparel and recreation goods
• Consensus forecasts expect headline CPI up 0.3% monthly and 2.6% annually, with core inflation also at 2.6%, though some economists see upside risk to 2.8% due to data collection uncertainties

US stock futures fell on Monday, with the Nasdaq 100 down nearly 0.8%, after the Department of Justice subpoenaed Federal Reserve chair Jerome Powell as part of a criminal investigation. Powell characterized the probe as politically motivated, part of President Trump's pressure campaign for rate cuts ahead of November elections, raising concerns about Fed independence and rattling investor confidence.

• The dollar fell to a three-week low while gold hit new record highs as investors sought safe-haven assets amid the Fed-White House tensions
• Markets are awaiting December's consumer price index data due Tuesday, with traders pricing in no rate cut at the Fed's January meeting following steady labor market cooling
• Geopolitical tensions escalated as Trump refused to rule out military action against Iran and revived threats regarding Greenland, adding to risk-off market sentiment