General Market News

Michael Burry, known for predicting the 2008 financial crisis, is warning of an impending recession based on the prolonged 2-10 Treasury yield curve inversion from 2022-2024, a pattern that has historically only preceded recessions. Unlike previous decades, today's inflationary environment limits traditional easy-money policy responses that previously helped counter economic downturns. The article suggests Burry's timing may be more accurate this time, as structural economic conditions differ significantly from the 2010s.

• The 2-10 Treasury spread remained inverted from 2022-2024, followed by rapid steepening—a pattern that has only preceded recessions historically
• Current inflationary pressures prevent central banks from using easy-money policies and rate cuts that successfully countered recessions in the 2010s
• Elevated long-duration bond yields and rising annual interest payments for the U.S. government could force market intervention that triggers rather than prevents the next recession

US Treasury Secretary Scott Bessent urged markets and European leaders to remain calm ahead of President Trump's World Economic Forum address at Davos, following market turmoil sparked by Trump's tariff threats against eight European countries opposing his Greenland acquisition push. Markets responded negatively despite reassurances, with the S&P 500 falling 2.1%, the dollar sliding to a two-week low, and Treasury yields climbing toward critical thresholds.

• Major US indices suffered their biggest single-day declines in three months on Tuesday, with the S&P 500 down 2.1%, Dow down 1.8%, and Nasdaq falling 2.4%
• Trump announced 10% tariffs on eight European nations, prompting the EU to signal potential retaliatory tariffs on $109 billion of US goods
• Treasury officials fear European institutions may divest from US assets, with a Danish pension fund already announcing plans to exit US government bonds, potentially destabilizing American borrowing costs

Swiss National Bank Chairman Martin Schlegel emphasized the critical importance of Federal Reserve independence amid a criminal probe of Fed Chair Jerome Powell by the Trump administration. The SNB joined other central banks in supporting Powell, who faces pressure from President Trump to cut interest rates. Schlegel warned that central bank independence is essential for controlling inflation and maintaining price stability.

• The Swiss franc appreciated 14.5% against the dollar in 2024, its strongest annual gain since 2002, driven by global trade tensions and Trump's tariff policies
• Dollar holdings represent about 36% of the SNB's 765 billion francs ($966 billion) in foreign currency reserves, with recent franc strength reducing the value of these dollar-denominated assets
• The SNB has no plans to change its 1,040 metric tons of gold holdings, which generated a 36.3-billion-franc profit last year, and remains unconcerned about potential negative inflation readings in coming months

Last week's earnings revealed a sharp divide in investor priorities: major banks beat earnings estimates but saw stocks fall 3-5% due to regulatory concerns, rising costs, and anticipated Fed rate cuts. In contrast, Taiwan Semiconductor's announcement of $52-56 billion in 2026 capex (up from $41 billion) and 35% profit growth reignited confidence in AI demand, lifting chip stocks 3-8%. The market is rewarding credible growth narratives over stable but uninspiring results.

• Banks like JPMorgan, Wells Fargo, and Citigroup beat earnings but declined as investors focused on future margin compression from expected rate cuts and JPMorgan's expense jump to $105 billion (from $96 billion)
• TSMC's capex increase and CEO's direct validation that 'AI is real' triggered immediate rallies: TSMC +6%, ASML +7-8%, and Nvidia +3.2%, signaling sustained AI infrastructure demand
• Investment banks outperformed traditional banks, with Morgan Stanley's investment banking fees up 47% and Goldman Sachs posting record trading revenue, highlighting that exposure to growth-driven capital markets activity commands a premium

Major Wall Street banks are pushing back on President Trump's affordability proposals, including credit card interest rate caps and 401(k) borrowing for home down payments, while suggesting alternatives like encouraging retirement savings transfers. The discussions are taking place ahead of mid-term elections where high living costs remain a key voter concern. However, sources indicate none of the proposed ideas are likely to substantially impact affordability before the November elections.

• Banks oppose credit card rate caps, warning they would reduce credit availability and force lenders to cut credit lines to limit losses
• Alternative proposals include letting parents use 401(k) funds for children's home purchases and allowing tax-free home sales for older Americans, though housing supply remains the core issue
• Citigroup CEO Jane Fraser publicly stated that while Trump is 'right in focusing on affordability,' capping credit card rates 'would not be good for the U.S. economy'

Global markets paused on Wednesday after a sharp selloff in stocks, bonds, and the dollar as investors awaited President Trump's speech at the World Economic Forum in Davos. Trump's escalating tariff threats against Europe over Greenland have prompted European leaders to pledge retaliation if February 1 tariffs take effect, raising concerns about a transatlantic trade war. The standoff could pressure U.S. Treasury yields higher, creating political risks for the Trump administration in a mid-term election year.

• Europe has suspended trade talks and retabled over $100 billion in counter-tariffs on U.S. goods, with French President Macron calling Washington's 'endless accumulation' of tariffs 'fundamentally unacceptable'
• Rising Treasury yields could prove toxic for the Trump administration politically, potentially forcing reconsideration of tariff policies as mid-term elections approach
• Markets may need to price in escalation scenarios including tit-for-tat retaliation and possible investment curbs affecting Europe's massive holdings of U.S. stocks and bonds

The US Supreme Court is hearing arguments on President Trump's unprecedented attempt to fire Federal Reserve Governor Lisa Cook, which he initiated in August 2025 by citing unproven mortgage fraud allegations. Lower courts have blocked the removal, finding it likely violated Cook's due process rights and that the allegations were not legally sufficient cause under the Federal Reserve Act. The case represents a landmark test of central bank independence, as no president has previously attempted to remove a Fed official.

• Trump seeks to overturn rulings by a district judge and appeals court that blocked Cook's firing, with the judge finding the unproven allegations likely were a pretext to remove her over monetary policy disagreements
• Cook, appointed in 2022 as the first Black woman Fed governor with a term through 2038, helps set US monetary policy as Trump pressures the Fed to cut interest rates more aggressively
• The case threatens Fed independence established since 1913, as the Federal Reserve Act requires governors be removed only 'for cause' without defining the term, while Trump has also opened an ethics probe into Fed Chair Jerome Powell

The Supreme Court is hearing oral arguments on whether President Trump can fire Federal Reserve Governor Lisa Cook over unproven mortgage fraud allegations predating her Fed appointment. The case threatens the Fed's independence in setting interest rates, as removing Cook and Chair Jerome Powell (currently under separate criminal investigation) would allow Trump to appoint a majority of the Fed's board. Cook and Powell both supported maintaining high interest rates in 2024 against Trump's wishes.

• Cook can only be removed 'for cause' under the 1913 Federal Reserve Act; lower courts ruled alleged mortgage fraud before her appointment doesn't meet this standard for in-office misconduct
• All three living former Fed chairs (Greenspan, Bernanke, Yellen) filed a brief opposing Cook's removal, warning it would 'expose the Federal Reserve to political influences' and undermine monetary policy credibility
• The case comes amid Fed Chair Powell's criminal investigation over building renovation oversight, which Powell claims is retaliation for keeping rates steady against Trump's preferences

U.S. Treasury yields declined slightly on Wednesday after a Tuesday sell-off driven by escalating trade tensions. President Trump announced tariffs on eight European allies starting at 10% on Feb. 1 and rising to 25% by June 1, linked to demands over Greenland, sparking fears of a 'sell America' trade as investors reassess U.S. asset risk.

• The benchmark 10-year Treasury yield dropped over 2 basis points to 4.27% after topping 4.3% on Tuesday, while the 30-year yield fell to 4.896%
• Danish pension fund AkademikerPension announced it is divesting $100 million in U.S. Treasurys due to concerns about poor U.S. government finances
• European leaders condemned Trump's tariff threats as 'outrageous' and are considering countermeasures, raising concerns that the U.S. may no longer be seen as a reliable trading partner

President Trump's threat to impose tariffs on six specific EU countries (Denmark, Finland, France, Germany, Netherlands, and Sweden) rather than the entire EU could create significant enforcement challenges for U.S. customs authorities. The complex cross-border supply chains and free movement of goods within the EU make it difficult to determine the true origin of products, potentially allowing companies to obscure production locations.

• EU goods are typically marked only as 'EU origin,' and extensive cross-border supply chains make it hard to trace products to individual member states without customs controls between them
• Larger companies like Volkswagen and Volvo manufacture across multiple EU countries, though shifting production typically takes at least a year to implement in response to tariffs
• French products with 'geographical indications' like champagne and Camembert would be easier to target, as France has the most GI-protected products among the six countries in the tariff threat

U.S. Treasury Secretary Scott Bessent dismissed concerns about a Treasury sell-off after Denmark-based AkademikerPension sold $100 million in U.S. bonds amid escalating tensions over President Trump's push to acquire Greenland and threatened tariffs on European countries. Bessent called Denmark's Treasury holdings and the country itself 'irrelevant' while speaking at the World Economic Forum in Davos.

• Trump announced 20% tariffs on eight European countries effective Feb. 1, later rising to 25%, as part of his campaign to take over Greenland, which the U.S. considers a national security concern due to emerging Arctic trade routes
• Danish pension operator AkademikerPension sold $100 million in U.S. Treasurys citing 'poor U.S. government finances,' though Bessent stated the U.S. has had 'record foreign investment' in Treasurys
• Bessent claimed the sell-off narrative originated from a single Deutsche Bank analyst report that the bank's CEO later disavowed, calling media coverage 'fake news'

Spain's Foreign Minister José Manuel Albares announced that an India-EU free trade agreement is expected to be concluded within days, following meetings in New Delhi. European Commission President Ursula von der Leyen is scheduled to arrive in India next week to finalize the historic deal, which would create a market of 2 billion consumers and become the world's largest free trade zone.

• The India-EU trade deal would surpass the EU-Mercosur agreement to become the world's largest free trade zone, covering approximately 2 billion consumers
• Spain's foreign minister stated there are no expected obstacles to completing the agreement, emphasizing the EU's commitment to free trade and economic security
• EU Commission President von der Leyen is expected in India early next week to finalize negotiations for the historic trade agreement

U.S. markets experienced their worst session since October on Tuesday as investors reacted to escalating tensions over President Trump's aggressive push to annex Greenland. The S&P 500 and Dow turned negative for 2026, while safe-haven assets surged and Denmark's PFA pension fund announced plans to reduce U.S. Treasury holdings. The turmoil reflects growing concerns about geopolitical risks spilling into capital markets.

• Major U.S. indexes plunged with the S&P 500 down 2.56%, Dow down 1.76%, and Nasdaq down 2.39%, while the VIX 'fear gauge' spiked to 20.99
• Denmark's PFA pension fund announced it will reduce U.S. Treasury investments, citing concerns over poor government finances, marking an early signal of foreign capital flight
• Gold prices hit new records as investors fled to safe-haven assets, while the dollar weakened nearly 1% against major currencies and bond yields jumped

President Trump signed an executive order Tuesday aimed at blocking Wall Street-backed institutional investors from purchasing single-family homes, arguing these purchases have priced out American families and turned neighborhoods into corporate assets. The order directs federal agencies to limit support for such purchases and instructs the DOJ and FTC to increase antitrust scrutiny of large institutional investors in housing.

• Federal agencies have 60 days to issue guidance preventing government support for institutional purchases of single-family homes that could be bought by families
• The order includes an exception for build-to-rent communities that are 'planned, permitted, financed, and constructed as rental communities' from the start
• HUD must require landlords in federal housing assistance programs to disclose ownership information to identify large institutional investor involvement, while White House staff will prepare legislation to codify the policy

Consumer spending showed resilience in December 2025 with a median 4.9% year-over-year increase, according to the Federal Reserve Bank of New York's Survey of Consumer Expectations. However, the data reveals a divided landscape where income increasingly determines spending behavior, with lower-income households focusing on necessities while remaining vulnerable to financial shocks. Only 48% of consumers are confident they could cover a $2,000 emergency within 30 days.

• Spending growth is concentrated in necessities: food expectations reached a series high at 5.4%, medical care at 5.3%, and housing at 4.1%, while discretionary spending on transportation and recreation declined
• Income inequality drives behavior: 77% of households earning $100,000+ reported large purchases versus sharply lower rates for those earning under $50,000, with confidence in covering emergencies jumping to 80% for non-paycheck-to-paycheck households but falling to just 15% for struggling households
• Expected future spending growth moderated to 3.4% over the next 12 months, and despite 52% of consumers expecting to save more in 2026, only 24% actually increased savings in the prior six months

President Donald Trump signed an executive order on Tuesday aimed at restricting large institutional investors from purchasing single-family homes to preserve housing supply for American families and address voter affordability concerns. The order directs federal agencies to develop guidance within 60 days and review antitrust enforcement against coordinated pricing strategies by Wall Street landlords.

• Institutional investors own approximately 450,000 single-family homes, representing about 3% of all single-family rental homes nationally as of June 2022, according to a 2024 Government Accountability Office study
• The order directs the Treasury Department to review rules on institutional investors holding single-family homes and instructs the Justice Department and FTC to prioritize antitrust enforcement against coordinated vacancy and pricing strategies
• Major Wall Street firms including Blackstone, American Homes 4 Rent, and Progress Residential have acquired thousands of single-family homes since the 2008 financial crisis, a trend Democrats have long criticized for driving up housing costs

Wall Street strategist Chris Verrone predicts the S&P 500 will pull back no more than 4-5% despite Tuesday's 2.1% drop triggered by President Trump's tariff threats over Greenland acquisition demands. Markets experienced their worst day in months as Trump threatened tariffs on European countries to pressure Denmark into ceding Greenland, a semiautonomous NATO member territory.

• Verrone of Strategas sees a buying opportunity with S&P 500 potentially bottoming around 6,500 (from current ~6,800), citing pro-cyclical recovery signals across bonds, commodities, and banking sectors
• Wedbush analyst Dan Ives invokes the 'TACO' theory ('Trump Always Chickens Out'), noting investors who held through similar 2024 volatility saw S&P 500 gains of nearly 40% through year-end
• U.S. economic fundamentals remain strong with Q3 GDP growth at 4.3% annualized and S&P 500 expected to report 14% earnings growth in Q4, supporting bullish outlooks despite trade war concerns

Wall Street experienced its largest single-day decline in three months on January 20, with the S&P 500 falling 2.06%, the Nasdaq dropping 2.39%, and the Dow losing 1.76%. The selloff was triggered by President Trump's threat to impose escalating tariffs on European nations unless Denmark agrees to sell Greenland, raising concerns about renewed market volatility similar to last April's 'Liberation Day' tariff announcements.

• Both the S&P 500 and Nasdaq fell below their 50-day moving averages, while the CBOE Volatility Index spiked to 20.09, its highest close since November 24
• Trump threatened 10% tariffs on eight European nations starting February 1, escalating to 25% by June 1 unless the U.S. can purchase Greenland, which Denmark insists is not for sale
• Market stress was compounded by turmoil in Japanese government bonds, which plunged to record-low prices following Prime Minister Takaichi's snap election call, creating spillover effects in European and U.S. debt markets

SkyBridge Capital is increasing its focus on macro strategies due to market volatility driven by policy uncertainty under the Trump administration, according to founder Anthony Scaramucci speaking at the World Economic Forum in Davos. The firm shifted its portfolio weighting from 65% cryptocurrency in March 2025 to 69% macro strategies by September 2025, though Scaramucci remains cautiously optimistic on bitcoin's long-term prospects despite its sharp decline from record highs.

• Bitcoin has fallen approximately 28% from its October 2025 all-time high of over $126,000 to below $90,000, with the crash triggering over $19 billion in leveraged position liquidations—the largest in crypto history
• SkyBridge's Opportunity Fund shifted allocation from 65% crypto/digital assets in March 2025 to 69% macro strategies by September 2025 as volatility increased under Trump administration policy uncertainty
• Scaramucci acknowledged the bitcoin community's excessive optimism regarding regulatory relief, noting that anticipated stablecoin and crypto market structure legislation (the Genius Act and Clarity Act) has stalled in Congress

U.S. Treasury yields surged to multi-month highs on Tuesday, driven by renewed trade tensions including Trump's demands on Greenland and threats of tariffs on French goods. The 10-year Treasury yield climbed to around 4.29%, its highest since August, raising concerns about increased borrowing costs for mortgages, loans, and business financing across the economy.

• Rising yields reflect investor concerns about inflation, budget deficits, and policy uncertainty, with analysts forecasting the 10-year yield could reach 4.5% in 2026
• Global bond market turbulence includes a 'sell America' dynamic, with Denmark's AkademikerPension dumping U.S. Treasurys citing debt concerns and political pressure over Greenland
• European investors hold approximately $8 trillion in U.S. bonds and equities, making them 'America's largest lender' with potential leverage in trade disputes