General Market News

California Democratic Rep. Ro Khanna reintroduced legislation to block institutional investors from purchasing single-family homes, following President Trump's January 7 proposal for a similar moratorium. The bipartisan interest comes as Trump seeks to address economic concerns, with only 36% of Americans approving his handling of the economy ahead of 2026 midterms.

• Khanna's Stop Wall Street Landlords Act would eliminate tax breaks for large institutional investors (those with assets exceeding $100 million) and impose a 100% real estate transfer tax on home sales occurring more than 18 months after enactment
• The bill would prohibit Fannie Mae and Freddie Mac from allowing large institutional investors to purchase mortgages on single-family homes
• Trump's 57% disapproval rating on economic handling creates potential for bipartisan cooperation, with Khanna expressing willingness to work with the president on legislation to help the working class

Treasury Secretary Scott Bessent stated Sunday that the Supreme Court is unlikely to overturn President Trump's tariffs imposed under the International Emergency Economic Powers Act, calling them the president's 'signature economic policy.' The Supreme Court is expected to rule on the legality of Trump's use of IEEPA for tariffs as early as this week. Trump recently announced new tariffs on European goods tied to his demands for Greenland acquisition.

• Bessent compared the situation to the Supreme Court's decision not to overturn Obamacare, arguing the court would not want to 'create chaos' by overruling a major presidential economic policy
• Trump invoked emergency powers under IEEPA to impose tariffs on dozens of nations and recently announced additional tariffs on Europe until a 'Complete and Total purchase of Greenland' is reached
• The administration justifies the emergency tariff powers as necessary for national security to counter Russian and Chinese expansion in the Arctic region, despite widespread rejection from Greenland, Denmark, and European leaders

WisdomTree analysts expect the Treasury yield curve to continue steepening in 2026 as the Federal Reserve nears the end of its rate-cutting cycle. A horizon analysis suggests ultra-short to intermediate-term bonds may deliver positive returns, while longer-dated bonds (10-year to 30-year) face potential underperformance as back-end yields rise. The analysis reinforces a cautious stance on long-duration bonds and favors ultra-short strategies like Treasury Floating Rates.

• The Fed is assumed to be near the end of its easing cycle, with ultra-short and short-term rates expected to remain flat to moderately lower while intermediate to longer-term rates face upward pressure
• Horizon analysis shows 3-month through 5-year maturities producing positive annualized returns, while 10-year to 30-year bonds generate negative returns under a steepening curve scenario
• Treasury Floating Rates, which reference the 3-month T-bill, are positioned as potentially the best-performing ultra-short strategy in this environment

President Donald Trump denied a Wall Street Journal report claiming he offered JPMorgan CEO Jamie Dimon the position of Federal Reserve chair. Trump announced plans to sue JPMorgan within two weeks, alleging the bank 'debanked' him following the January 6, 2021 Capitol attack.

• Trump contradicted the WSJ report via Truth Social post, explicitly stating he never offered Dimon the Fed chair nomination
• Trump plans to file a lawsuit against JPMorgan in the next two weeks over alleged 'debanking' related to January 6 events
• The dispute involves one of America's largest banks and its CEO, a prominent figure in the financial industry

U.S. Treasury Secretary Scott Bessent commented on the criminal probe into Federal Reserve Chairman Jerome Powell, suggesting it stems from 'construction incompetence' related to misleading testimony about Fed headquarters renovations. The Department of Justice has threatened criminal indictment over Powell's Senate testimony, while the final round of interviews for Powell's successor has concluded with an announcement expected before or after President Trump's Davos trip.

• DOJ launched a criminal investigation into whether Powell lied to Congress about the scope of renovations at the Fed's Washington headquarters
• Bessent stated the Fed needs 'a thorough overhaul' and called for more transparency and accountability at the institution
• Trump is expected to announce Powell's replacement in January, either before or after the Davos trip, with Kevin Hassett effectively removed from consideration as Trump wants him to remain as NEC director

Zacks Investment Research predicts 2026 will deliver strong market gains, potentially exceeding 2025's performance, marking a fourth consecutive year of double-digit returns. The S&P 500 has posted gains of 24.2% (2023), 23.3% (2024), and 16.4% (2025), with early 2026 showing the Russell 2000 up 7.89% and the S&P 400 up 6.07% year-to-date. The outlook is driven by sustained AI demand, moderating inflation, falling interest rates, and strong earnings growth projections.

• AI demand characterized as 'insatiable' by AMD CEO Lisa Su, who projects her company could grow 35% annually for 3-5 years, with the AI data center market potentially reaching $1 trillion by 2030
• Core inflation (CPI) declined to 2.6% year-over-year from 3.3% earlier in 2025, supporting the Fed's three rate cuts last year and expectations for another cut in 2026
• Earnings growth forecasts remain strong with Q4 2025 projected at 7.9%, Q1 2026 at 11.8%, and Q2 2026 at 14.0%, demonstrating resilience despite tariff concerns
• Small-cap stocks are outperforming in early 2026 after lagging in the first half of 2025, benefiting from lower interest rates and tax provisions including 100% immediate expensing of capital expenditures

U.S. stocks ended nearly flat on Friday ahead of the Martin Luther King Jr. holiday weekend, with all three major indexes posting weekly losses as Q4 earnings season began. The S&P 500 fell 0.38% for the week despite strong bank earnings, while investors rotated from large-cap tech stocks into smaller-cap equities.

• The Dow fell 0.17%, S&P 500 dropped 0.06%, and Nasdaq declined 0.06% on Friday, with weekly losses of 0.29%, 0.38%, and 0.66% respectively
• Small-cap Russell 2000 reached a record closing high and gained 2.04% for the week as investors shifted money from heavyweight tech names to undervalued areas
• Financials posted their biggest weekly decline since October despite mostly solid bank earnings, while chip stocks rose 1.2% on Friday extending Thursday's gains

White House economic advisor Kevin Hassett proposed that U.S. banks voluntarily offer 'Trump cards' to underserved Americans with adequate income, potentially scaling back President Trump's demand for a 10% credit card interest rate cap. The proposal has received no formal discussions with major banks, who have already rejected the broader rate cap idea. This shift suggests the administration may be backing away from industry-wide changes that would require legislation.

• Trump's original demand for a 10% interest rate cap by Jan. 20 has been roundly rejected by bank executives and industry lobbyists throughout the week
• Hassett's 'Trump card' concept would narrowly target consumers who lack credit access but have sufficient income and stability to justify credit lines, potentially avoiding the need for legislation
• Major credit card issuers and bank lobbyists told CNBC they have had no discussions with the administration about the 'Trump card' concept despite claims of CEO engagement