Zero Hedge

Mamdani Declares War On Civil Discourse

Mamdani Declares War On Civil Discourse

Authored by Charles Mitchell via RealClearPolitics,

Zohran Mamdani’s inauguration speech on Jan. 1 became instantly famous for his promise to prove the “warmth of collectivism.” Yet Americans should pay just as much attention to another deeply concerning comment from the socialist mayor of New York City’s first act in office. He declared that those who are “fluent in the good grammar of civility have deployed decorum to mask agendas of cruelty,” implying that his administration won’t tolerate public debate about his agenda.

These words mark the moment when higher education’s radical monoculture jumped into the real world of political power and cultural impact. Our experiment in self-government is now at unprecedented risk.

Mamdani’s words are familiar to anyone who has followed the decline of the university in recent decades. It reflects the idea that respectful discourse – a central Enlightenment and American ideal – is really a tool of oppression used by elites to prop themselves up while keeping everyone else down. This belief is widespread on campus: A December poll from the free-speech group FIRE found that 90% of undergraduates think that “words can be violence.” Even worse, a third of students are willing to use actual violence to prevent the saying of those words. This is a generation prepared to stifle debate it dislikes, casting even the most well-meaning ideological opponents as enemies of society.

But Mamdani’s inauguration is the first time this generation has seized the levers of power outside of the classroom. It makes sense: His candidacy was driven by zealot-like support from young college graduates and students – the groups most likely to be radicalized. Now Mamdani, in some of his first words, is spreading the message that discourse is dangerous. This isn’t simply another college professor preaching to the undergrad choir. It’s the mayor of America’s most powerful city proselytizing the broader public about the supposed moral importance of stifling debate.

Mamdani’s rhetoric is especially dangerous due to his track record of enabling and encouraging antisemitism. Since Oct. 7, 2023, the biggest security bills my organization has paid have been for events in which Jewish students could discuss the Hamas attacks openly and experience their heritage – and that’s in a small town in rural Pennsylvania. Two of the speakers we hosted in November and protected were attacked, bloodied, and hospitalized the next day. But it’s just not Jewish people who are threatened when civil discourse is discarded. Everyone is at risk from the resulting breakdown of basic human decency.

Given the ideological capture of academia, the day was always going to come when the inmates started running the asylum. What’s shocking is that so many serious people failed to see it. A generation of well-meaning centrists let such extremism run riot in higher education, assuming that what happened on campus would surely stay there. It didn’t, and the resulting damage will not easily or quickly be undone.

But it must be confronted as soon as possible, which requires immediate action from sane Americans of all political stripes. While some may pin their hopes on the Trump administration, the real reform of higher education must happen elsewhere. As we enter America’s 250th year, Arizona, Florida, North Carolina, Ohio, Tennessee, and Texas policymakers have created new civics programs within their state universities. This is a template for further progress. At the very least, students should learn about the Enlightenment values that undergirded the American experiment before deciding whether they will join Mamdani in denouncing them.

The most important action, however, depends on philanthropists. Many of the country’s most successful people are profoundly disappointed by their alma maters, yet continue to make large, unrestricted gifts to them. This is profoundly self-defeating, insofar as it supports the training of a generation that rejects the foundations of American success. Instead, philanthropists should stop funding irreformable schools, establish new centers at the schools where there’s still a shred of hope, and even create new schools altogether, similar to the University of Austin. Whether on the sane left or the sane right, the donor’s goal should be to make civil discourse and respectful debate the defining part of a university’s work. That’s currently the case for only a handful of schools.

Zohran Mamdani is proof that the destructive ideology that defines the modern university is poised to damage America itself. He is the first of a wave of extremists who want to reshape society for the worse. Our best hope, as a country, is to begin building an even bigger wave of college graduates who practice civil discourse and promote social cohesion. This monumental challenge will take years. Untold harm will be done in the meantime. But the survival of our experiment in self-government ultimately depends on raising the next generation to choose a better, truer, and freer path than the one chosen by Zohran Mamdani and the radicalized army that elected him.

Charles Mitchell is co-founder and CEO of the Open Discourse Coalition.

Tyler Durden Tue, 01/13/2026 - 10:25

As Trump Threatens Iran, Most Of The US Navy Strike Group Remains In Caribbean

As Trump Threatens Iran, Most Of The US Navy Strike Group Remains In Caribbean

Update(1420ET): President Trump just said something very revealing while in Michigan. He admitted he really doesn't know the death toll in Iran after a couple weeks of raging protests and violence. In classic Trump fashion, he started the morning by issuing direct threats of military intervention, but now seems to obfuscate, keeping Iranian leaders and the world guessing...

But there's reason to believe that even if Trump wanted to order some kind of 'kinetic strikes' on the Islamic Republic, it may not be imminent. Regional analyst Levent Kemal has observed:

I don't think help is on the way. And no matter how much Trump threatens, most of the US Navy strike group is still in the Caribbean. The matter of F15 or F22 aircraft accompanying the plan to strike Khamenei with B52s remains unclear. Maybe Israeli F35 can escort and support them. Even if he did something limited, there doesn't seem to be any capacity ready to defend against the response that would follow. He needs, I think, at least 5 days.

Kemal concludes by pointing out that anything within this window would have to involve Israel doing a lot of heavy lifting. Meanwhile, the following won't happen anytime soon (driving oil down) if Trump keeps threatening Iran with military intervention:

  • TRUMP: WE'LL GET OIL PRICES DOWN EVEN FURTHER
  • TRUMP'S ENVOY SECRETLY MET IRAN'S EXILED CROWN PRINCE -AXIOS
  • WITKOFF MET IRAN'S EXILED CROWN PRINCE OVER THE WEEKEND: AXIOS
AFP/Getty Images

There's reason to believe that the White House is not close to ordering fresh attacks on Iran.

"What you’re hearing publicly from the Iranian regime is quite different from the messages the administration is receiving privately, and I think the president has an interest in exploring those messages," White House press secretary Karoline Leavitt told reporters Monday. "However, with that said, the president has shown he’s unafraid to use military options if and when he deems necessary, and nobody knows that better than Iran." But that seemed to reveal the administration's real thinking on the issue.

On this question of casualty numbers in Iran...

* * *

Update(0953ET): President Trump on Tuesday morning has called on Iranians to keep protesting in the streets, where clashes with security services have spiraled and turned violent - but in some locations have waned. He's told Iranians to "take over your institutions" - which is essentially a call for coup or armed insurrection.

Trump further said he has canceled all meetings with Iranian officials, after yesterday's reports that the two sides were looking to jump-start diplomacy of official contacts if Tehran leaders cooperate, and don't kill any protesters. But now Trump is doing his typical thing of quickly ratcheting pressure to the max. He's reiterated that HELP IS ON THE WAY - suggesting military intervention could be imminent, in the following Truth Social statement.

This resulted in an immediate spike in oil prices, already amid war rumors, as the Commander-in-Chief has been briefed on military "options" - despite the Islamic Republic not having attacked the United States or any of its regional bases.

We detailed below that Iran's government has begun to face a potential deadly insurgency, and even anti-Tehran NGOs have admitted that dozens of police and security personnel have been killed - and even knifed and shot.

* * *

Facing global condemnation and threats of US intervention over casualties associated with anti-government protests, the Iranian government summoned French, German, Italian and British ambassadors in Tehran and screened a collection of videos purportedly showing "armed violence carried out by protesters." Saying the images belie the notion that protests have been uniformly peaceful, Iran demanded that the envoys share the videos with their respective governments and stop voicing support of the "rioters."  

In a screenshot of the video presented to a roomful of European diplomats, a masked individual fires a pump-action shotgun

The ambassadors' Monday matinee coincided with massive pro-government demonstrations in Iran. The presentation included imagery of individuals firing pump-action shotguns and pistols. Other clips showed makeshift barricades on city streets, and groups of people vandalizing cars and flipping them over. There were also multiple apparent examples of arson, including burnt-out buildings, cars and buses. There's also testimony given by a bloodied man, identified as a law enforcement officer, on a hospital gurney. Asked what he was hit by, he replies: 

"I don't know. Knives and things. I was holding my helmet to guard my head...then they pulled off my pants, dragged me," reads the on-screen transcription. "I was told to get up and go. I couldn't. Told them to help me. Then they dragged me toward the square so I got run over by cars." 

Attempting to portray the US government as hypocritical, the video presentation included a clip of anti-ICE activist Renee Good being shot in the head by ICE agents in Minneapolis last week, along with President Trump's reaction. "The woman screaming was, obviously, a professional agitator, and the woman driving the car was very disorderly, obstructing and resisting," Trump said, adding that the ICE officer "seems to have shot her in self-defense." The presentation closed with another quote from Trump, when he warned that, "If Iran shots [sic] and violently kills peaceful protesters, the United States of America will come to their rescue." 

Iran's foreign ministry directed the assembled diplomats to "hand over these videos to their governments and stop supporting the protesters," saying that foreign governments giving "any form of political or information support for rioters" represents wrongful interference with Iran's internal affairs.

According to Iranian state news outlet Press TV, President Masoud Pezeshkian accused US and Israeli intelligence agencies of training armed units, with that training happening both inside and outside the country. If outside governments are directly aiding the agitators, it wouldn't be the first time that technique was used in an attempt to impose regime change on Iran. In 1953, US and British intelligence engineered a coup d'etat that ousted Iran's democratically-elected prime minister, Mohammad Mosaddegh. "Operation Ajax" involved the use of CIA-funded Iranian agents and "rented" crowds of anti-government demonstrators.

Soon after the presentation in Tehran, the European Parliament announced a "ban [of] all diplomatic staff and any other representatives of the Islamic Republic of Iran from all European Parliament premises," to avoid support the "brave people of Iran" and to avoid "aid[ing] in legitimising this regime that has sustained itself through torture, repression and murder." 

Fueling diplomatic disputes, the American son of the deposed Shah of Iran urged members of the Iranian diaspora to replace the "disgraceful" flag of the Islamic Republic of Iran at the country's diplomatic facilities. That exhortation came after a video went viral over the weekend, showing a protester scaling a balcony of Iran's London embassy and replacing the flag with the version used during the Shah's rule. Iran separately summoned the UK ambassador and formally protested "the desecration of the Iranian flag." The former shah's son, Reza Pahlavi, is aggressively pushing for US intervention and promoting himself as the best "transitional figure" after regime change.   

On Sunday, Vice President Mohammad‑Reza Aref portrayed the discord as a new phase of Israel's confrontation with Iran, after June's 12-day war. "The enemies made a mistake by starting the riots through their key agents who were arrested by Iran’s security forces," following which "they had no option but to accelerate their plots, which led to violent incidents in the last few nights," Aref said. He added that Iran's enemies have sought to thwart each of the country's attempts to overcome foreign sanctions.

The Iranian protests began on Dec 29, with merchants railing against the plunging value of Iran's currency -- the rial now trades at 1.4 million to the dollar. More than two weeks later, the death toll is widely reported to be several hundred. Many US outlets are relying on numbers from the US-based Human Rights Activists News Agency (HRANA). The group, which is a subsidiary of Human Rights Activists in Iran (HRA), says 646 people have been killed through Monday, including 505 protesters, 133 security personnel, a prosecutor and seven civilian bystanders.    

Tyler Durden Tue, 01/13/2026 - 09:53

As Trump Threatens Iran, Most Of The US Navy Strike Group Remains In Caribbean

As Trump Threatens Iran, Most Of The US Navy Strike Group Remains In Caribbean

Update(1420ET): President Trump just said something very revealing while in Michigan. He admitted he really doesn't know the death toll in Iran after a couple weeks of raging protests and violence. In classic Trump fashion, he started the morning by issuing direct threats of military intervention, but now seems to obfuscate, keeping Iranian leaders and the world guessing...

But there's reason to believe that even if Trump wanted to order some kind of 'kinetic strikes' on the Islamic Republic, it may not be imminent. Regional analyst Levent Kemal has observed:

I don't think help is on the way. And no matter how much Trump threatens, most of the US Navy strike group is still in the Caribbean. The matter of F15 or F22 aircraft accompanying the plan to strike Khamenei with B52s remains unclear. Maybe Israeli F35 can escort and support them. Even if he did something limited, there doesn't seem to be any capacity ready to defend against the response that would follow. He needs, I think, at least 5 days.

Kemal concludes by pointing out that anything within this window would have to involve Israel doing a lot of heavy lifting. Meanwhile, the following won't happen anytime soon (driving oil down) if Trump keeps threatening Iran with military intervention:

  • TRUMP: WE'LL GET OIL PRICES DOWN EVEN FURTHER
  • TRUMP'S ENVOY SECRETLY MET IRAN'S EXILED CROWN PRINCE -AXIOS
  • WITKOFF MET IRAN'S EXILED CROWN PRINCE OVER THE WEEKEND: AXIOS
AFP/Getty Images

There's reason to believe that the White House is not close to ordering fresh attacks on Iran.

"What you’re hearing publicly from the Iranian regime is quite different from the messages the administration is receiving privately, and I think the president has an interest in exploring those messages," White House press secretary Karoline Leavitt told reporters Monday. "However, with that said, the president has shown he’s unafraid to use military options if and when he deems necessary, and nobody knows that better than Iran." But that seemed to reveal the administration's real thinking on the issue.

On this question of casualty numbers in Iran...

* * *

Update(0953ET): President Trump on Tuesday morning has called on Iranians to keep protesting in the streets, where clashes with security services have spiraled and turned violent - but in some locations have waned. He's told Iranians to "take over your institutions" - which is essentially a call for coup or armed insurrection.

Trump further said he has canceled all meetings with Iranian officials, after yesterday's reports that the two sides were looking to jump-start diplomacy of official contacts if Tehran leaders cooperate, and don't kill any protesters. But now Trump is doing his typical thing of quickly ratcheting pressure to the max. He's reiterated that HELP IS ON THE WAY - suggesting military intervention could be imminent, in the following Truth Social statement.

This resulted in an immediate spike in oil prices, already amid war rumors, as the Commander-in-Chief has been briefed on military "options" - despite the Islamic Republic not having attacked the United States or any of its regional bases.

We detailed below that Iran's government has begun to face a potential deadly insurgency, and even anti-Tehran NGOs have admitted that dozens of police and security personnel have been killed - and even knifed and shot.

* * *

Facing global condemnation and threats of US intervention over casualties associated with anti-government protests, the Iranian government summoned French, German, Italian and British ambassadors in Tehran and screened a collection of videos purportedly showing "armed violence carried out by protesters." Saying the images belie the notion that protests have been uniformly peaceful, Iran demanded that the envoys share the videos with their respective governments and stop voicing support of the "rioters."  

In a screenshot of the video presented to a roomful of European diplomats, a masked individual fires a pump-action shotgun

The ambassadors' Monday matinee coincided with massive pro-government demonstrations in Iran. The presentation included imagery of individuals firing pump-action shotguns and pistols. Other clips showed makeshift barricades on city streets, and groups of people vandalizing cars and flipping them over. There were also multiple apparent examples of arson, including burnt-out buildings, cars and buses. There's also testimony given by a bloodied man, identified as a law enforcement officer, on a hospital gurney. Asked what he was hit by, he replies: 

"I don't know. Knives and things. I was holding my helmet to guard my head...then they pulled off my pants, dragged me," reads the on-screen transcription. "I was told to get up and go. I couldn't. Told them to help me. Then they dragged me toward the square so I got run over by cars." 

Attempting to portray the US government as hypocritical, the video presentation included a clip of anti-ICE activist Renee Good being shot in the head by ICE agents in Minneapolis last week, along with President Trump's reaction. "The woman screaming was, obviously, a professional agitator, and the woman driving the car was very disorderly, obstructing and resisting," Trump said, adding that the ICE officer "seems to have shot her in self-defense." The presentation closed with another quote from Trump, when he warned that, "If Iran shots [sic] and violently kills peaceful protesters, the United States of America will come to their rescue." 

Iran's foreign ministry directed the assembled diplomats to "hand over these videos to their governments and stop supporting the protesters," saying that foreign governments giving "any form of political or information support for rioters" represents wrongful interference with Iran's internal affairs.

According to Iranian state news outlet Press TV, President Masoud Pezeshkian accused US and Israeli intelligence agencies of training armed units, with that training happening both inside and outside the country. If outside governments are directly aiding the agitators, it wouldn't be the first time that technique was used in an attempt to impose regime change on Iran. In 1953, US and British intelligence engineered a coup d'etat that ousted Iran's democratically-elected prime minister, Mohammad Mosaddegh. "Operation Ajax" involved the use of CIA-funded Iranian agents and "rented" crowds of anti-government demonstrators.

Soon after the presentation in Tehran, the European Parliament announced a "ban [of] all diplomatic staff and any other representatives of the Islamic Republic of Iran from all European Parliament premises," to avoid support the "brave people of Iran" and to avoid "aid[ing] in legitimising this regime that has sustained itself through torture, repression and murder." 

Fueling diplomatic disputes, the American son of the deposed Shah of Iran urged members of the Iranian diaspora to replace the "disgraceful" flag of the Islamic Republic of Iran at the country's diplomatic facilities. That exhortation came after a video went viral over the weekend, showing a protester scaling a balcony of Iran's London embassy and replacing the flag with the version used during the Shah's rule. Iran separately summoned the UK ambassador and formally protested "the desecration of the Iranian flag." The former shah's son, Reza Pahlavi, is aggressively pushing for US intervention and promoting himself as the best "transitional figure" after regime change.   

On Sunday, Vice President Mohammad‑Reza Aref portrayed the discord as a new phase of Israel's confrontation with Iran, after June's 12-day war. "The enemies made a mistake by starting the riots through their key agents who were arrested by Iran’s security forces," following which "they had no option but to accelerate their plots, which led to violent incidents in the last few nights," Aref said. He added that Iran's enemies have sought to thwart each of the country's attempts to overcome foreign sanctions.

The Iranian protests began on Dec 29, with merchants railing against the plunging value of Iran's currency -- the rial now trades at 1.4 million to the dollar. More than two weeks later, the death toll is widely reported to be several hundred. Many US outlets are relying on numbers from the US-based Human Rights Activists News Agency (HRANA). The group, which is a subsidiary of Human Rights Activists in Iran (HRA), says 646 people have been killed through Monday, including 505 protesters, 133 security personnel, a prosecutor and seven civilian bystanders.    

Tyler Durden Tue, 01/13/2026 - 09:53

As Trump Threatens Iran, Most Of The US Navy Strike Group Remains In Caribbean

As Trump Threatens Iran, Most Of The US Navy Strike Group Remains In Caribbean

Update(1420ET): President Trump just said something very revealing while in Michigan. He admitted he really doesn't know the death toll in Iran after a couple weeks of raging protests and violence. In classic Trump fashion, he started the morning by issuing direct threats of military intervention, but now seems to obfuscate, keeping Iranian leaders and the world guessing...

But there's reason to believe that even if Trump wanted to order some kind of 'kinetic strikes' on the Islamic Republic, it may not be imminent. Regional analyst Levent Kemal has observed:

I don't think help is on the way. And no matter how much Trump threatens, most of the US Navy strike group is still in the Caribbean. The matter of F15 or F22 aircraft accompanying the plan to strike Khamenei with B52s remains unclear. Maybe Israeli F35 can escort and support them. Even if he did something limited, there doesn't seem to be any capacity ready to defend against the response that would follow. He needs, I think, at least 5 days.

Kemal concludes by pointing out that anything within this window would have to involve Israel doing a lot of heavy lifting. Meanwhile, the following won't happen anytime soon (driving oil down) if Trump keeps threatening Iran with military intervention:

  • TRUMP: WE'LL GET OIL PRICES DOWN EVEN FURTHER
  • TRUMP'S ENVOY SECRETLY MET IRAN'S EXILED CROWN PRINCE -AXIOS
  • WITKOFF MET IRAN'S EXILED CROWN PRINCE OVER THE WEEKEND: AXIOS
AFP/Getty Images

There's reason to believe that the White House is not close to ordering fresh attacks on Iran.

"What you’re hearing publicly from the Iranian regime is quite different from the messages the administration is receiving privately, and I think the president has an interest in exploring those messages," White House press secretary Karoline Leavitt told reporters Monday. "However, with that said, the president has shown he’s unafraid to use military options if and when he deems necessary, and nobody knows that better than Iran." But that seemed to reveal the administration's real thinking on the issue.

On this question of casualty numbers in Iran...

* * *

Update(0953ET): President Trump on Tuesday morning has called on Iranians to keep protesting in the streets, where clashes with security services have spiraled and turned violent - but in some locations have waned. He's told Iranians to "take over your institutions" - which is essentially a call for coup or armed insurrection.

Trump further said he has canceled all meetings with Iranian officials, after yesterday's reports that the two sides were looking to jump-start diplomacy of official contacts if Tehran leaders cooperate, and don't kill any protesters. But now Trump is doing his typical thing of quickly ratcheting pressure to the max. He's reiterated that HELP IS ON THE WAY - suggesting military intervention could be imminent, in the following Truth Social statement.

This resulted in an immediate spike in oil prices, already amid war rumors, as the Commander-in-Chief has been briefed on military "options" - despite the Islamic Republic not having attacked the United States or any of its regional bases.

We detailed below that Iran's government has begun to face a potential deadly insurgency, and even anti-Tehran NGOs have admitted that dozens of police and security personnel have been killed - and even knifed and shot.

* * *

Facing global condemnation and threats of US intervention over casualties associated with anti-government protests, the Iranian government summoned French, German, Italian and British ambassadors in Tehran and screened a collection of videos purportedly showing "armed violence carried out by protesters." Saying the images belie the notion that protests have been uniformly peaceful, Iran demanded that the envoys share the videos with their respective governments and stop voicing support of the "rioters."  

In a screenshot of the video presented to a roomful of European diplomats, a masked individual fires a pump-action shotgun

The ambassadors' Monday matinee coincided with massive pro-government demonstrations in Iran. The presentation included imagery of individuals firing pump-action shotguns and pistols. Other clips showed makeshift barricades on city streets, and groups of people vandalizing cars and flipping them over. There were also multiple apparent examples of arson, including burnt-out buildings, cars and buses. There's also testimony given by a bloodied man, identified as a law enforcement officer, on a hospital gurney. Asked what he was hit by, he replies: 

"I don't know. Knives and things. I was holding my helmet to guard my head...then they pulled off my pants, dragged me," reads the on-screen transcription. "I was told to get up and go. I couldn't. Told them to help me. Then they dragged me toward the square so I got run over by cars." 

Attempting to portray the US government as hypocritical, the video presentation included a clip of anti-ICE activist Renee Good being shot in the head by ICE agents in Minneapolis last week, along with President Trump's reaction. "The woman screaming was, obviously, a professional agitator, and the woman driving the car was very disorderly, obstructing and resisting," Trump said, adding that the ICE officer "seems to have shot her in self-defense." The presentation closed with another quote from Trump, when he warned that, "If Iran shots [sic] and violently kills peaceful protesters, the United States of America will come to their rescue." 

Iran's foreign ministry directed the assembled diplomats to "hand over these videos to their governments and stop supporting the protesters," saying that foreign governments giving "any form of political or information support for rioters" represents wrongful interference with Iran's internal affairs.

According to Iranian state news outlet Press TV, President Masoud Pezeshkian accused US and Israeli intelligence agencies of training armed units, with that training happening both inside and outside the country. If outside governments are directly aiding the agitators, it wouldn't be the first time that technique was used in an attempt to impose regime change on Iran. In 1953, US and British intelligence engineered a coup d'etat that ousted Iran's democratically-elected prime minister, Mohammad Mosaddegh. "Operation Ajax" involved the use of CIA-funded Iranian agents and "rented" crowds of anti-government demonstrators.

Soon after the presentation in Tehran, the European Parliament announced a "ban [of] all diplomatic staff and any other representatives of the Islamic Republic of Iran from all European Parliament premises," to avoid support the "brave people of Iran" and to avoid "aid[ing] in legitimising this regime that has sustained itself through torture, repression and murder." 

Fueling diplomatic disputes, the American son of the deposed Shah of Iran urged members of the Iranian diaspora to replace the "disgraceful" flag of the Islamic Republic of Iran at the country's diplomatic facilities. That exhortation came after a video went viral over the weekend, showing a protester scaling a balcony of Iran's London embassy and replacing the flag with the version used during the Shah's rule. Iran separately summoned the UK ambassador and formally protested "the desecration of the Iranian flag." The former shah's son, Reza Pahlavi, is aggressively pushing for US intervention and promoting himself as the best "transitional figure" after regime change.   

On Sunday, Vice President Mohammad‑Reza Aref portrayed the discord as a new phase of Israel's confrontation with Iran, after June's 12-day war. "The enemies made a mistake by starting the riots through their key agents who were arrested by Iran’s security forces," following which "they had no option but to accelerate their plots, which led to violent incidents in the last few nights," Aref said. He added that Iran's enemies have sought to thwart each of the country's attempts to overcome foreign sanctions.

The Iranian protests began on Dec 29, with merchants railing against the plunging value of Iran's currency -- the rial now trades at 1.4 million to the dollar. More than two weeks later, the death toll is widely reported to be several hundred. Many US outlets are relying on numbers from the US-based Human Rights Activists News Agency (HRANA). The group, which is a subsidiary of Human Rights Activists in Iran (HRA), says 646 people have been killed through Monday, including 505 protesters, 133 security personnel, a prosecutor and seven civilian bystanders.    

Tyler Durden Tue, 01/13/2026 - 09:53

"Entered New Era": SK Hynix To Build $13 Billion Memory Plant As Nvidia CEO Says AI Demand Soaring

"Entered New Era": SK Hynix To Build $13 Billion Memory Plant As Nvidia CEO Says AI Demand Soaring

One week after Nvidia CEO Jensen Huang told the auidence at CES Las Vegas that AI data centers are creating a "market that never existed" for memory, the global leader in high-bandwidth memory, SK Hynix, announced that construction of a new $13 billion advanced memory manufacturing plant will begin this spring, with first production targeted for the second half of 2027, as it races furiously to keep up with surging AI-driven demand.

As Nvidia's main HBM supplier, SK Hynix sits at the center of the memory supply chain and has become a headwind for AI data center growth. With HBM prices soaring, we have been documenting the key developments across the space:

SK Hynix's HBM is the stacked DRAM Nvidia uses on H100, H200, Blackwell, and every AI accelerator shipping through 2030. It's easily half or more of the world's HBM supplies, ahead of both Samsung and Micron.

Last week, Huang told the audience at CES, "For storage, that is a completely unserved market today. This is a market that never existed, and this market will likely be the largest storage market in the world, basically holding the working memory of the world's AIs."

The SK Hynix forecast shows the HBM market is expected to grow at an average annual rate of 33% from 2025 to 2030.

"The importance of proactively responding to rising HBM demand is becoming increasingly critical," SK Hynix wrote in a statement.

Chey Tae-won, chairman of SK Hynix parent SK Group, warned of tight supplies late last year. "We have entered an era in which supply is facing a bottleneck. We are receiving memory chip supply requests from many companies, and we are thinking hard about how to address all demands."

Ty Tue, 01/13/2026 - 09:30

"Entered New Era": SK Hynix To Build $13 Billion Memory Plant As Nvidia CEO Says AI Demand Soaring

"Entered New Era": SK Hynix To Build $13 Billion Memory Plant As Nvidia CEO Says AI Demand Soaring

One week after Nvidia CEO Jensen Huang told the auidence at CES Las Vegas that AI data centers are creating a "market that never existed" for memory, the global leader in high-bandwidth memory, SK Hynix, announced that construction of a new $13 billion advanced memory manufacturing plant will begin this spring, with first production targeted for the second half of 2027, as it races furiously to keep up with surging AI-driven demand.

As Nvidia's main HBM supplier, SK Hynix sits at the center of the memory supply chain and has become a headwind for AI data center growth. With HBM prices soaring, we have been documenting the key developments across the space:

SK Hynix's HBM is the stacked DRAM Nvidia uses on H100, H200, Blackwell, and every AI accelerator shipping through 2030. It's easily half or more of the world's HBM supplies, ahead of both Samsung and Micron.

Last week, Huang told the audience at CES, "For storage, that is a completely unserved market today. This is a market that never existed, and this market will likely be the largest storage market in the world, basically holding the working memory of the world's AIs."

The SK Hynix forecast shows the HBM market is expected to grow at an average annual rate of 33% from 2025 to 2030.

"The importance of proactively responding to rising HBM demand is becoming increasingly critical," SK Hynix wrote in a statement.

Chey Tae-won, chairman of SK Hynix parent SK Group, warned of tight supplies late last year. "We have entered an era in which supply is facing a bottleneck. We are receiving memory chip supply requests from many companies, and we are thinking hard about how to address all demands."

Ty Tue, 01/13/2026 - 09:30

Here's Proof That UK's X Ban Threat Has Nothing To Do With Protecting Children

Here's Proof That UK's X Ban Threat Has Nothing To Do With Protecting Children

Authored by Steve Watson via Modernity.news,

As UK authorities ramp up their assault on free speech, a viral post shared by Elon Musk exposes the glaring hypocrisy in the government’s “protect the children” narrative. Data from the The National Society for the Prevention of Cruelty to Children (NSPCC) and police forces reveals Snapchat as the epicenter of online child sexual grooming, dwarfing X’s minimal involvement.

This comes amid Keir Starmer’s escalating war on X, where community notes routinely dismantle government spin, and unfiltered truth is delivered to the masses. If safeguarding kids was the real goal, it would be the likes of Snapchat in the crosshairs, given that thousands of real world child sexual offences have originated from its use.

Instead they’re going after X because, they claim, it provides the ability to make fake images of anyone in a bikini using the inbuilt Grok Ai image generator.

Based on 2025 NSPCC and UK police data, Snapchat is linked to 40-48% of identified child grooming cases, Instagram around 9-11%, Facebook 7-9%, WhatsApp 9%, and X under 2%.

These numbers align with NSPCC’s alarming report on the surge in online grooming. The charity recorded over 7,000 Sexual Communication with a Child offences in 2023/24—an 89% spike since 2017/18.

Where platforms were identified, Snapchat dominated at 48%, followed by WhatsApp at 12%, Facebook and Messenger at 10%, Instagram at 6%, and Kik at 5%.

NSPCC Chief Executive Sir Peter Wanless stated “One year since the Online Safety Act became law and we are still waiting for tech companies to make their platforms safe for children. We need ambitious regulation by Ofcom who must significantly strengthen their current approach to make companies address how their products are being exploited by offenders. It is clear that much of this abuse is taking place in private messaging which is why we also need the Government strengthen the Online Safety Act to give Ofcom more legal certainty to tackle child sexual abuse on the likes of Snapchat and WhatsApp.”

Victim testimonies underscore the horror. Thomas, groomed at 14, recalled: “Our first conversation was quite simple. I was just chatting. The only way I can describe it is like having the most supportive person that you could ever meet. After about a month, the pressure started to build of him trying to prove that I was gay. That’s when he started sending explicit pictures and pressuring me to send images to him. I did send him pictures, but I didn’t like it and I didn’t want to do it anymore. He said he had saved the images and would send them to everyone if I stopped sending more pictures. There was a constant fear in the back of my mind. It wasn’t easy but I managed to block him on all sites and carry on with my life.”

Liidia, a 13-year-old from Glasgow, highlighted Snapchat’s risks: “Snapchat has disappearing messages, and that makes it easier for people to hide things they shouldn’t be doing. Another problem is that Snapchat has this feature where you can show your location to everyone. If you’re not careful, you might end up showing where you are to people you don’t know, which is super risky. And honestly, not all the rules in Snapchat are strict, so some people take advantage of that to do bad things. Apps should have better ways for us to report bad things, and they should always get updated to protect us better with the latest security tech.”

NSPCC’s policy manager Rani Govender added: “The scale and significance of these crimes cannot be underestimated. No justification for tech company inaction.”

Becky Riggs, National Police Chief’s Council lead for child protection, urged: “It is imperative that the responsibility of safeguarding children online is placed with the companies who create spaces for them, and the regulator strengthens rules that social media platforms must follow.”

A Snapchat spokesperson claimed: “If we identify such activity, or it is reported to us, we remove the content, disable the account, take steps to prevent the offender from creating additional accounts, and report them to the authorities.”

The NSPCC on grooming tactics noted: “Perpetrators typically used mainstream and open web platforms as the first point of contact with children. This can include social media chat apps, video games and messaging apps on consoles, dating sites, and chatrooms. Perpetrators then encourage children to continue communication on private and encrypted messaging platforms where abuse can proceed undetected.”

Sextortion adds another layer of terror, with the Guardian reporting a “shocking” rise alarming the FBI and NSPCC. The National Center for Missing and Exploited Children (NCMEC) logged 546,000 global reports in 2024—a 192% jump from 2023—with 9,600 from the UK in the first half alone.

Snapchat reported 20,000 cases of adults grooming children last year, more than all other platforms combined.

The NCA warned: “Sextortion is a heartless crime, which can have devastating consequences for victims. Sadly, teenagers in the UK and around the world have taken their own lives because of it.”

Labour’s child protection claims ring completely hollow against the backdrop of stalled progress on Britain’s grooming gangs scandal. Despite scandals in Rotherham, Rochdale, and beyond exposing organized abuse—often dismissed to avoid racism accusations—little has advanced.

A government audit last month admitted the “concept of ‘grooming gangs’… is not captured clearly in any official data set.” Parliamentary debates urge stepping up the grooming gangs taskforce, but as UnHerd notes, these “rape gangs started in the 1990’s and accelerated as the Blair government shoved woke down our throats and made everyone afraid of being called racist.”

Raising the issue now risks “hate speech” labels, silencing victims and enabling perpetrators. Vague accusations of bigotry are increasingly garnering more attention than the actual crimes. This cultural relativism has fueled hate, per experts, while survivors’ stories get rewritten to downplay institutional failures.

Starmer’s regime isn’t prioritising kids—it’s weaponising safety pretexts in an effort to crush X’s influence. The platform’s free speech ethos and community notes expose leftist deceptions daily, threatening their narrative control.

As we highlighted earlier, US Under-Secretary Sarah B Rogers has warned “With respect to a potential ban of X, Keir Starmer has said that nothing is off the table. I would say from America’s perspective, nothing is off the table when it comes to free speech.”

She added: “America has a full range of tools that we can use” to bypass bans, like in Iran via Starlink. Rogers mocked Labour’s hypocrisy: if the government “cared about women’s safety, it would have acted differently on grooming gangs.”

As Starmer’s approval rating craters, threatening to fall into SINGLE digits, his desperation grows. But X endures as a beacon for truth, proving authoritarians can’t snuff out freedom without a fight.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Tue, 01/13/2026 - 09:10

Here's Proof That UK's X Ban Threat Has Nothing To Do With Protecting Children

Here's Proof That UK's X Ban Threat Has Nothing To Do With Protecting Children

Authored by Steve Watson via Modernity.news,

As UK authorities ramp up their assault on free speech, a viral post shared by Elon Musk exposes the glaring hypocrisy in the government’s “protect the children” narrative. Data from the The National Society for the Prevention of Cruelty to Children (NSPCC) and police forces reveals Snapchat as the epicenter of online child sexual grooming, dwarfing X’s minimal involvement.

This comes amid Keir Starmer’s escalating war on X, where community notes routinely dismantle government spin, and unfiltered truth is delivered to the masses. If safeguarding kids was the real goal, it would be the likes of Snapchat in the crosshairs, given that thousands of real world child sexual offences have originated from its use.

Instead they’re going after X because, they claim, it provides the ability to make fake images of anyone in a bikini using the inbuilt Grok Ai image generator.

Based on 2025 NSPCC and UK police data, Snapchat is linked to 40-48% of identified child grooming cases, Instagram around 9-11%, Facebook 7-9%, WhatsApp 9%, and X under 2%.

These numbers align with NSPCC’s alarming report on the surge in online grooming. The charity recorded over 7,000 Sexual Communication with a Child offences in 2023/24—an 89% spike since 2017/18.

Where platforms were identified, Snapchat dominated at 48%, followed by WhatsApp at 12%, Facebook and Messenger at 10%, Instagram at 6%, and Kik at 5%.

NSPCC Chief Executive Sir Peter Wanless stated “One year since the Online Safety Act became law and we are still waiting for tech companies to make their platforms safe for children. We need ambitious regulation by Ofcom who must significantly strengthen their current approach to make companies address how their products are being exploited by offenders. It is clear that much of this abuse is taking place in private messaging which is why we also need the Government strengthen the Online Safety Act to give Ofcom more legal certainty to tackle child sexual abuse on the likes of Snapchat and WhatsApp.”

Victim testimonies underscore the horror. Thomas, groomed at 14, recalled: “Our first conversation was quite simple. I was just chatting. The only way I can describe it is like having the most supportive person that you could ever meet. After about a month, the pressure started to build of him trying to prove that I was gay. That’s when he started sending explicit pictures and pressuring me to send images to him. I did send him pictures, but I didn’t like it and I didn’t want to do it anymore. He said he had saved the images and would send them to everyone if I stopped sending more pictures. There was a constant fear in the back of my mind. It wasn’t easy but I managed to block him on all sites and carry on with my life.”

Liidia, a 13-year-old from Glasgow, highlighted Snapchat’s risks: “Snapchat has disappearing messages, and that makes it easier for people to hide things they shouldn’t be doing. Another problem is that Snapchat has this feature where you can show your location to everyone. If you’re not careful, you might end up showing where you are to people you don’t know, which is super risky. And honestly, not all the rules in Snapchat are strict, so some people take advantage of that to do bad things. Apps should have better ways for us to report bad things, and they should always get updated to protect us better with the latest security tech.”

NSPCC’s policy manager Rani Govender added: “The scale and significance of these crimes cannot be underestimated. No justification for tech company inaction.”

Becky Riggs, National Police Chief’s Council lead for child protection, urged: “It is imperative that the responsibility of safeguarding children online is placed with the companies who create spaces for them, and the regulator strengthens rules that social media platforms must follow.”

A Snapchat spokesperson claimed: “If we identify such activity, or it is reported to us, we remove the content, disable the account, take steps to prevent the offender from creating additional accounts, and report them to the authorities.”

The NSPCC on grooming tactics noted: “Perpetrators typically used mainstream and open web platforms as the first point of contact with children. This can include social media chat apps, video games and messaging apps on consoles, dating sites, and chatrooms. Perpetrators then encourage children to continue communication on private and encrypted messaging platforms where abuse can proceed undetected.”

Sextortion adds another layer of terror, with the Guardian reporting a “shocking” rise alarming the FBI and NSPCC. The National Center for Missing and Exploited Children (NCMEC) logged 546,000 global reports in 2024—a 192% jump from 2023—with 9,600 from the UK in the first half alone.

Snapchat reported 20,000 cases of adults grooming children last year, more than all other platforms combined.

The NCA warned: “Sextortion is a heartless crime, which can have devastating consequences for victims. Sadly, teenagers in the UK and around the world have taken their own lives because of it.”

Labour’s child protection claims ring completely hollow against the backdrop of stalled progress on Britain’s grooming gangs scandal. Despite scandals in Rotherham, Rochdale, and beyond exposing organized abuse—often dismissed to avoid racism accusations—little has advanced.

A government audit last month admitted the “concept of ‘grooming gangs’… is not captured clearly in any official data set.” Parliamentary debates urge stepping up the grooming gangs taskforce, but as UnHerd notes, these “rape gangs started in the 1990’s and accelerated as the Blair government shoved woke down our throats and made everyone afraid of being called racist.”

Raising the issue now risks “hate speech” labels, silencing victims and enabling perpetrators. Vague accusations of bigotry are increasingly garnering more attention than the actual crimes. This cultural relativism has fueled hate, per experts, while survivors’ stories get rewritten to downplay institutional failures.

Starmer’s regime isn’t prioritising kids—it’s weaponising safety pretexts in an effort to crush X’s influence. The platform’s free speech ethos and community notes expose leftist deceptions daily, threatening their narrative control.

As we highlighted earlier, US Under-Secretary Sarah B Rogers has warned “With respect to a potential ban of X, Keir Starmer has said that nothing is off the table. I would say from America’s perspective, nothing is off the table when it comes to free speech.”

She added: “America has a full range of tools that we can use” to bypass bans, like in Iran via Starlink. Rogers mocked Labour’s hypocrisy: if the government “cared about women’s safety, it would have acted differently on grooming gangs.”

As Starmer’s approval rating craters, threatening to fall into SINGLE digits, his desperation grows. But X endures as a beacon for truth, proving authoritarians can’t snuff out freedom without a fight.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Tue, 01/13/2026 - 09:10

US Equity Futures Jump To Record High After Core CPI Comes In Cool

US Equity Futures Jump To Record High After Core CPI Comes In Cool

US equity futures were initially weaker as the market weighs geopolitics, inflation data, and the start to earnings season, where JPM reported results that were mixed at best (unexpected weakness in bank underwriting kept the stock flat in premarket trading). However, just after core CPI printed below estimates, futures spiked as high as 7030, rising to a new record high, up 0.2%, with Nasdaq futures also rising 0.2%, with Mag7 names mixed premarket with AMD/INTC leading Semis. Fins/Energy are leading Cyclicals which are roughly flat vs. Defensives, where Utils are the standout group.Sentiment was impaired after Trump said that any country doing business with Iran will receive a 25% tariff; the potential for conflict is pushing oil prices higher with WTI back above $60 for first time since Nov. Japanese stocks jumped while the yen slumped on speculation that PM Sanae Takaichi may call a snap election, reigniting the so-called Takaichi trade.Bond yields are +1-2bp across the curve and USD is rallying driven by a surge in the USDJPY which jumped as high as 159, the highest since July 2024. CPI print this afternoon with the scenario analysis is below. The ADP weekly print, NFIB Small Biz Survey, and New Home Sales the other macro data today. 

In premarket trading, Mag 7 stocks were mixed (Alphabet +0.7%, Nvidia +0.02%, Tesla +0.1%, Meta little changed, Amazon -0.2%, Microsoft -0.4%, Apple -0.4%)

  • Delta Air Lines (DAL) falls 5% after the carrier gave an underwhelming profit forecast for the full year.
  • L3Harris Technologies Inc. (LHX) gains 13% as the US Department of Defense is set to invest in the company’s Missile Solutions business via a $1 billion convertible preferred security, tightening the direct links between the US government and a major defense contractor.
  • Ormat Technologies (ORA) rises 5% after the renewable energy company signed a 20-year power purchase agreement with data center operator Switch for energy from its Salt Wells geothermal power plant in Nevada.
  • Synopsys (SNPS) falls 2% as Piper Sandler downgrades the chip design software firm to neutral from overweight, saying the company could see prolonged headwinds to growth.
  • Travere Therapeutics (TVTX) slumps 28% after the biotech firm said it received a request from the FDA to clarify the clinical benefit of its therapy that treats a rare kidney disease, a move that analysts said could delay the approval by the agency.

In corporate news, Amgen said its experimental drug MariTide helped patients maintain weight loss for two years. Diageo is said to be considering options for its Chinese assets, including possible divestments. Wall Street firms continue to reduce headcount, with Citi set to cut about 1,000 jobs this week and BlackRock said to be trimming about 1% of staff.

After initially trading lower, spooked by Trump’s threat to tariff countries doing business with Iran which has the potential to disrupt US trading relationships across the globe, futures jumped after core CPI came in below estimates. 

Speaking of CPI, JPMorgan’s trading desk predicted a rally of up to 1.75% for the S&P 500 if CPI is in line with, or cooler, than estimated - which is now the case; let's see if stocks surge as much as JPM predicted.

Fed’s Williams said interest rates are “well positioned” to stabilize the labor market and bring inflation back to the 2% goal. 

With earnings season kicking off, Bloomberg notes how small caps have been in favor recently, with the Russell 2000 outperforming the S&P 500 for the past seven sessions. The last time it had a longer winning streak was 2019. Yet tech remains the dominant contributor to 4Q profit growth among S&P 500 members, estimated to show year-over-year EPS growth of 20%, while non-tech earnings expansion is slated to decelerate from 9% to just 1%, according to data from Bank of America.

Meanwhile, the Fed drama continues, with global central bankers pledging “full solidarity” with Powell and saying that the independence of central banks is a cornerstone of financial and economic stability. Today’s Big Take looks at the Washington backlash that could derail Trump’s campaign to tighten White House control over the Fed.

In other assets, the dollar has clawed back some ground after Monday’s drop, but downside risks remain. Oil is higher while gold slipped from its record. CME said it will change the way it sets margins for gold, silver, platinum and palladium futures after a surge in prices and volatile trading.

European stocks dip, reversing an earlier rise which pushed them near record highs as investors look ahead to US inflation data. Energy stocks outperform while the construction and materials sector lags. Stoxx 600 is little changed at 610.90 with 336 members down, 250 up, and 14 unchanged. Here are some of the biggest movers on Tuesday: 

  • Symrise shares rally as much as 7.3% after the company announced a €400 million ($467 million) share buyback and said it’s in advanced talks to sell its terpene business, a kind of chemical used in fragrances and flavors.
  • Orsted shares surge as much as 6.6% after a US judge ruled work can resume on a wind farm off the coast of Rhode Island while it challenges the government’s latest attempt to stop offshore projects from being built.
  • Whitbread shares jump as much as 6.9%, the most since May, after the Premier Inn owner reported solid trading and increased cost efficiencies in its third-quarter update.
  • Synektik shares gain as much as 4.6% after the Polish distributor of medical devices including surgery robots reported new orders rising 30% last quarter as well as new contract with Czech hospital.
  • THG shares jump as much as 9.7%, the most since October, as analysts highlighted strong momentum in the company’s beauty and nutrition businesses.
  • Gamma Communications shares jump as much as 9.3%, the most since September, after reporting FY25 trading is in line with consensus expectations.
  • Persimmon shares rise as much as 2.8% to the highest level since November 2024 as the homebuilder reassures that full-year 2025 results are likely to be at the upper end of market expectations and it is on track to meet this year’s forecasts.
  • Raspberry PI shares slump as much as 10% to a record low after the computing company’s strong results were overshadowed by its warning over the rapid increase in the cost of DRAM memory chips, as more supplies are funneled into AI data centers.
  • Games Workshop shares drop as much as 3.7%, the most since November, after the Warhammer owner reported first-half results that showed sales growth declining toward the end of the period in some stores.
  • Vinci shares fall as much as 3.7% as French infrastructure stocks drop on ratings downgrades by Bank of America, concerned by the risk of rising French taxes.
  • Thales shares fall as much as 2.4% as Deutsche Bank downgrades several defense names, citing uncertainties surrounding the French defense budget and lagging cyber sales.

Asian stocks briefly jumped to a fresh record, driven by gains in Japanese shares as traders returned from holiday amid growing speculation that Prime Minister Sanae Takaichi may soon call a snap election.  The MSCI Asia Pacific Index rose as much as 1.4%, the most in a week, with Alibaba, TSMC and Toyota Motor among the biggest boosts to the gauge. Most subsectors were in the green, with financials being a major contributor. Benchmarks in Hong Kong, South Korea and Australia also rose.  Concerns around Federal Reserve’s independence after the Trump administration escalated its attack on the central bank again prompted flows away from US market into regions like Asia. Traders are also brushing off the latest tariff threats from President Donald Trump, who said to impose a 25% tariff on goods from countries “doing business” with Iran. 

“The market does not care about Trump’s capricious tariff threats,” said Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore. “Trump’s previous backdown from China has shown that bigger levers such as the supply of rare earths matter more in tariff negotiations. It is unlikely that he can afford to upset the trade truce with China just to pressure Iran.”

In FX, the yen sinks, following a jolt in Japanese bond and stock markets, on speculation that an early election is on the cards. Dollar-yen briefly hits 159, highest since July 2024. The Bloomberg Dollar Spot Index edges marginally higher.

In rates, treasuries, European and UK bond yields rise by two or three basis points, with US CPI data ahead.

In commodities, oil prices rally on geopolitical risk and Trump’s threat of tariffs on Iranian crude buyers, with Brent hitting the highest since November and briefly moving above $65/barrel before paring. Gold edging lower from another record high, down about $12 to $4,585/oz.

Today's US economic calendar includes ADP weekly employment change (8:15am), December CPI (8:30am), October new home sales (10am) and December Federal budget balance (2pm). Scheduled Fed speakers include Musalem (10am) and Barkin (4pm)

Market Snapshot

  • S&P 500 mini +0.2%
  • Nasdaq 100 mini +0.3%
  • Russell 2000 mini +0.3%
  • Stoxx Europe 600 -0.2%
  • DAX -0.2%
  • CAC 40 -0.5%
  • 10-year Treasury yield +2 basis points at 4.19%
  • VIX +0.3 points at 15.43
  • Bloomberg Dollar Index little changed at 1210.29
  • euro little changed at $1.1669
  • WTI crude +1.8% at $60.57/barrel

Top Overnight News

  • Donald Trump vowed to impose a 25% tariff on goods from any country “doing business with” Iran, a move that risks derailing his trade truce with China, the world’s top buyer of Iranian oil. Germany’s Friedrich Merz said the world is seeing the “final days” of Iran’s regime. BBG
  • The criminal probe into Jay Powel by US prosecutors has galvanized the Federal Reserve’s top leaders to resist Trump’s attacks and could push he chair to remain a governor until 2028. Trump’s   DoJ probe was seen by people close to the US central bank as a sign that the president would go to extraordinary lengths to force policymakers to bow to his demands. FT
  • California Gov. Gavin Newsom said he was working behind the scenes to block a proposed tax on billionaires’ wealth and was committed to defeating the measure if it reached the ballot. NYT
  • President Trump reportedly unhappy about AG Pam Bondi's performance and has repeatedly complained to aides: WSJ 
  • Microsoft has warned that US AI groups are being outpaced by Chinese rivals in the battle for users outside the west, as China combines low-cost “open” models with hefty state subsidies to gain an edge. FT
  • Iranian protests appeared to persist in localized pockets overnight as activist group Iran Human Rights warned of imminent executions by the state and said the civilian death toll may be in the thousands. BBG
  • The BOJ may raise rates as early as April as heightened market concerns over PM Takaichi’s approach to fiscal policy keep the yen weak, former board member Makoto Sakurai said. “The BOJ must raise rates at least by June or July,” he added. BBG
  • Japanese investors dumped UK government bonds at the fastest pace in 14 years in November, citing worries over Britain’s fiscal outlook and more attractive yields at home. BBG
  • Japanese stocks surged to an all time high and the yen tumbled to a 19 month low as markets bet that a possible snap election net month would reignite the “Takaichi trade.” FT

Trade/Tariffs

  • China's Commerce Ministry outlines the final ruling on the imports of solar polysilicon from the US and South Korea, effective 14th January with tariffs of up to 113.8%. To continue to collect anti-dumping tariffs for another five years.
  • China said it opposes unilateral sanctions and "long-arm jurisdiction", following the 25% tariff on US trade for countries doing business with Iran.
  • Taiwan officials said 'some' consensus has been reached with the US on a trade deal.
  • Japanese Finance Minister Katayama said there were some detailed proposals on rare earth supply chains during the meeting with the US. A potential price floor on rare earths were discussed.
  • US President Trump said any countries doing business with Iran are to pay a 25% tariff on any or all business being done with the US.

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks followed on from Monday’s gains, with equities mostly in the green. ASX 200 started the session on the front foot, +0.4%, before extending gains and currently trading just shy of session highs at 8835. With spot XAU trading near ATHs, this has aided sectors such as metals and mining (2.0%) to continue Monday’s gains. Nikkei 225 returned from its long weekend with a gap higher, resulting in the index opening with gains as much as 3.7% and forming new ATHs. This comes amid a weaker JPY and growing speculation of PM Takaichi dissolving parliament. Japanese media noted that the LDP was looking to capitalise on Takaichi's high approval ratings. KOSPI opened Tuesday’s trade at ATHs and oscillated at highs before peaking at 4681 and slightly paring back, but remains comfortably in the green. Hang Seng and Shanghai Comp. opened in line with the broader sentiment, with the former surging higher, aided by gains in Gigadevice (3986 HK). The latter is the laggard across Asia-Pacific equities, trading with slight gains of 0.2%.

Top Asian News

  • China examines foreign ETF trades after Jane Street India probe, Bloomberg reported.
  • Japanese Finance Minister Katayama said she shared concerns with US Treasury Secretary Bessent over weak JPY.

European equities (STOXX 600 -0.2%) have traded tentatively throughout the morning, as markets await CPI. T he AEX (+0.4%) is the key outperformer in the region amid gains in ASML (+1.2%) after Jefferies raised the Co.'s price target, thereby lifting the index. European sectors are trading mixed, with Energy (+0.9%), Technology (+0.6%) and Banks (+0.6%) leading. The former has gained amid stronger crude prices given the heightened geopolitical tension between US and Iran, whilst ASML helps boost Tech. On the downside, Autos (-0.7%), Utilities (-0.7%) and Construction & Materials (-2.6%) lag. The latter faced steep losses due to Sika (-7.0%) after the Co.'s FY25 sales fell by 4.8%, with the Chinese market a continued weakness for them.

Top European News

  • French Budget Balance (Nov) -155.4B vs. Exp. -165.0B (Prev. -136.2B, Rev. -136.2B).
  • UK BRC Retail Sales YY (Dec) 1.0% (Prev. 1.2%).

Central Banks

  • Fed's Williams (Voter, Neutral) said monetary policy well positioned amid a favourable outlook and that policy is now closer to neutral, well-positioned ahead of January rate decision; expect that we’ll see [the labor market] stabilize this year". MONETARY POLICY. “In considering the extent and timing of additional adjustments… the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”. “Monetary policy is now well positioned to support the stabilization of the labor market and the return of inflation to the FOMC’s longer-run goal of 2 percent.”. “The actions taken by the FOMC… have moved the modestly restrictive stance of monetary policy closer to neutral.”. INFLATION. “Underlying inflation trends have been pretty favorable.”. “Tariffs have been overwhelmingly borne by domestic businesses and consumers.”. “I expect inflation will be just under 2-1/2 percent for this year as a whole, before reaching… 2 percent in 2027.”. “I anticipate inflation will peak at around 2-3/4 to 3 percent sometime during the first half of this year.”. “Inflation appears likely to peak sometime in the first half of this year as the full effects of tariffs are felt.”. “Medium- and longer-term expectations remain well within their pre-Covid ranges.”. “Inflation expectations remain well anchored.”. GROWTH. “The economic outlook is favorable.”. “I expect the economy to grow above trend this year, with real GDP growth between 2-1/2 and 2-3/4 percent.”. “GDP growth looks to have been somewhat above 2 percent last year, and it will likely pick up some this year.”. LABOR MARKET. “This has been a gradual process, without signs of a sharp rise in layoffs.”. “Downside risks to employment have increased as the labor market cooled.”. “The unemployment rate moved up… and ended the year at 4.4 percent.”. “I expect that we’ll see [the labor market] stabilize this year and then strengthen somewhat thereafter.”
  • Fed's Williams (Voter, Neutral) said the Fed is not under strong influence to change rates. Expects the next Fed chair to understand the gravity of the role. Strong productivity growth echoes past booms. Adds that the best way to instill confidence in the Fed is to do the job well. He expects improved labour market demand. Confident the Fed will return inflation to 2%. Jobs market is unusual with low hiring, low firing.
  • Japan's government is reportedly likely to delay the nomination of a BoJ board member if PM Takaichi called an election, via Reuters citing sources.
  • Global central banks are reportedly drafting a statement in support for Fed Chair Powell.

FX

  • DXY is flat and trades within a narrow 98.89 to 99.03 range; the high for the day is a couple of pips short of its 50 DMA, while a bout of pressure in the index could see a test of its 200 DMA at 98.80. Focus for the index today will be on US CPI; in brief, the consensus looks for headline CPI to rise by 0.3% M/M in December (prev. 0.3%), and the annual rate to remain unchanged at 2.7% Y/Y. GS expect the figures to exceed consensus, citing firmer food and energy prices.
  • Away from the US, G10s are mixed with mild strength in the GBP whilst the JPY is the clear underperformer – other peers are near-enough flat vs the USD. Nothing really driving the strength in the GBP this morning, whilst the JPY has a lot to digest.
  • A full JPY analysis piece can be found on the Newsquawk headline feed at 08:55 GMT, but in brief, USD/JPY eclipsed 159.00 for the first time since 11 July 2024. As a reminder, Japan intervened twice on July 11 and 12 to bring the USD/JPY below the 160.00 mark. The latest depreciation in the JPY has been spurred by continued reports of PM Takaichi's plans to call an election, where her aim is to secure a single-party government. This would, in theory, allow her to enact more expansionary fiscal policy.

Fixed Income

  • JGBs led the downside overnight as the "Takaichi trade" resumed. For more details, see the 08:55GMT Market Update.
  • Amidst this, USTs and Bunds also found themselves lower. USTs by just a handful of ticks and holding above the 112-00 mark and by extension yesterday's trough, which was half a tick below that. Focus turns to US CPI later, where consensus looks for the headline M/M, and Y/Y prints to remain at 0.3% and 2.7% while both core figures are seen higher by a tenth at 0.3% and 2.7% respectively. Goldman Sachs looks for a hotter print driven by technical factors.
  • Bunds in-fitting with the above, at a 127.84 low with downside of 28 ticks at most. Bunds made fresh lows following a soft Bobl outing, which had a weak b/c and lower than exp. amount sold. More generally, action for today will likely be dictated by US CPI. If the bearish bias extends, we look to support at 127.89, 127.82 and 127.70 from the last three sessions.
  • Gilts gapped lower by 14 ticks at the open, acknowledging the bearish bias from APAC trade, before dipping further to a 92.30 base. Since, the benchmark has recovered to opening levels. No reaction to the passing of I/L supply while the interview with BoE's Bailey took place this morning, but the text won't be published until January 16th.
  • Greece begins the sale of a new 10yr bond; guidance seen at +60-65bps to mid swaps.
  • Italy sells EUR 4bln vs exp. EUR 3.5-4bln 2.40% 2029 BTP: avg. yield 2.48%, b/c 1.45x
  • Germany sells EUR 4.597bln vs exp. EUR 6bln 2.50% 2031 Bobl: Avg yield: 2.47%, b/c 1.41x, retention 23.38%

Commodities

  • Crude firmer with geopolitics in focus. Overnight action was somewhat rangebound, as there was no significant escalation or development. However, we did get reports via CBS that President Trump was briefed on military and covert operations against Iran, but no decision has been made.
  • Since, as participants digest this risk and reports via BBG that two tankers were attacked in proximity to the Black Sea loading terminal for the CPC, crude has climbed and posts upside in excess of USD 1.00/bbl. At highs of USD 60.82/bbl and USD 65.20/bbl for WTI and Brent, respectively.
  • Spot gold is a little lower this morning, taking a breather following the strength seen in the prior session, where the yellow metal made fresh ATHs beyond the USD 4.6k/oz mark. Slight pressure today without a clear driver; potentially profit-taking ahead of US CPI. Price action in Europe has been sideways, and within a USD 4,573.87-4,608.13/oz range.
  • A bit of divergence between gold and silver this morning, with the latter posting modest gains and currently holding at the upper end of the day's range, last at USD 85.76/oz.
  • Base metals are mixed after choppy trade overnight. 3M LME Copper currently trades within a USD 13,034-13,232/t range. Desks have highlighted that there have been growing fears amongst traders that copper may sharply pull back if demand for the metal slows in 2026, particularly if China curbs spending.
  • Citi said its 3-month price target for gold and silver is now USD 5000/oz and USD 100/oz respectively.
  • Two oil tankers were attacked in proximity to the Black Sea loading terminal for the CPC, Bloomberg reports citing sources.-Two additional oil tankers have been hit near the Black Sea CPC terminal by drones, according to sources; taking the total on Tuesday to four tankers.

Geopolitics: Ukraine

  • A push by French President Macron and Italian PM Meloni to begin discussions with the Russian Kremlin is gaining traction in EU capitals and in Brussels itself, Politico reported citing sources. Primary goal to ensure EU red lines are not crossed. and to signal to the US that the EU has leverage. Elsewhere, creation of the role of EU special envoy to Ukraine hs support of the Council and leaders. Mario Draghi and Alexander Stubb have been touted. However, EU diplomat Kallas opposes the role.
  • Kyiv Mayor said the Russians are attacking the capital with ballistic missiles and that explosions are being heard.

Geopolitics Middle East 

  • US President Trump is leaning towards striking Iran to punish the regime for killing protesters, but hasn't made a final decision and is exploring Iranian proposals for negotiations, a White House official with direct knowledge told Axios.
  • Iran's Foreign Minister said Tehran is ready for any action by the US, including military action.
  • China said it opposes unilateral sanctions and "long-arm jurisdiction", following the 25% tariff on US trade for countries doing business with Iran.
  • US President Trump has been briefed on a range of military and covert options against Iran, according to CBS News; however no final decision has been made and diplomatic channels remain open.
  • "EU intends to impose new sanctions on Iran", Sky News Arabia reported.
  • "Washington called on Dual U.S.-Iranian Citizens to Leave Iran", Al Arabiya reported.
  • US President Trump said any countries doing business with Iran are to pay a 25% tariff on any or all business being done with the US.
  • US President Trump is leaning towards striking Iran to punish the regime for killing protesters, but hasn't made a final decision and is exploring Iranian proposals for negotiations, a White House official with direct knowledge told Axios.
  • Iranian authorities claim that the situation is 'under control'.
  • "EU intends to impose new sanctions on Iran", Sky News Arabia reported.
  • US President Trump has been briefed on a range of military and covert options against Iran, according to CBS News; however no final decision has been made and diplomatic channels remain open.
  • "Washington called on Dual U.S.-Iranian Citizens to Leave Iran", Al Arabiya reported.
  • At least two unsanctioned supertankers are departing Venezuelan waters carrying crude oil, according to reported citing TankerTrackers.
  • US Treasury Secretary Bessent posted that he was pleased to hear a strong, shared desire to quickly address key vulnerabilities in critical minerals supply chains; "I am optimistic that nations will pursue prudent derisking over decoupling".

US Event Calendar

  • 8:30 am: Dec CPI MoM, est. 0.3%
  • 8:30 am: Dec Core CPI MoM, est. 0.3%
  • 8:30 am: Dec CPI YoY, est. 2.7%, prior 2.7%
  • 8:30 am: Dec Core CPI YoY, est. 2.71%, prior 2.6%
  • 8:30 am: Dec CPI Index NSA, est. 324.17, prior 324.12
  • 8:30 am: Dec Core CPI Index SA, est. 332.06, prior 331.07
  • 10:00 am: Oct New Home Sales, est. 715k
  • 10:00 am: Oct New Home Sales MoM, est. -10.63%
  • 2:00 pm: Dec Federal Budget Balance, est. -152.5b, prior -173.3b

DB's Jim Reid concludes the overnight wrap

Morning from Helsinki where it's a reasonably mild -8 degrees. I've spent 2026 so far chasing the cold with -15 in Alps at the start of the year, a rare -7 degrees in Surrey last week and now 4 Nordic cities in 2 days. Most of the time I've been trying not to fall over to break the screws in my back or to further damage knees that will soon need replacing. If I were a racehorse, I suspect a few emotional goodbyes would be coming soon.   

There have been lots of icy patches to avoid in markets over the last 24 hours as 2026 continues to be the year of the headline even if most markets have enjoyed the ride so far. The main story this week, and there is competition, are the continued developments and market reaction around the Federal Reserve, after US prosecutors launched a criminal investigation that’s revived fears around central bank independence. That helped push gold (+1.95%) and silver (+6.57%) to new records yesterday, and the move out of US assets also meant the dollar and US Treasuries lost ground as well. Ironically, if the ultimate aim is to reduce yields, it could have the opposite impact as the Fed may be keen not to be seen as reacting to political pressure at the front end, and the long-end may show some concern about the motives. In addition, if Powell was looking for a reason to stay on as a Governor after his term as Chair ends in May, this could be one. It's very unusual to stay on but Eccles did so in 1948 for 3.5 years to help protect and secure Fed independence after the Treasury were trying to fund large post war time debts. So there might be some parallels in 2026. Ironically one of the buildings being renovated, that is causing the DoJ investigation, is the Marrine S. Eccles Building. You can also see our US economists quick take on the developments here.

Meanwhile, investors have also faced an array of geopolitical headlines from Venezuela to Iran, which has pushed Brent crude (+0.84%) to a 7-week high of $63.87/bbl. Remember Rubio is meeting Danish and Greenland officials some time this week as well. We could also hear on IEEPA tariffs tomorrow at the next "opinions day". And there’s no immediate sign of any letup on the calendar either, as today will bring the US CPI print as well as the start of US Q4 earnings season. Yet despite all the noise, risk assets have been remarkably unfazed by everything, with the S&P 500 (+0.16%) and Europe’s STOXX 600 (+0.21%) both at new records.   

The prospect of Fed independence being eroded immediately induced a negative reaction for US assets, reminiscent of previous episodes where it looked like Powell might be removed. But even as the reaction followed a clear pattern, it was still fairly subdued relative to previous episodes last year, and the initial losses were pared back significantly. So while the Treasury yield curve saw a bear steepening with 10yr yields trading +4bps higher just before the US open, by the close the 2yr yield (+0.2bps) was virtually unchanged at 3.53%, while 10yr (+1.1bps to 4.18%) and the 30yr (+1.5bps to 4.83%) saw modest increases. Despite higher yields, the US Dollar lost ground, weakening -0.27% against the Euro. The reversal of the initial move was particularly clear for equities, as S&P 500 futures were initially down -0.79% shortly after the European open, before the index rose +0.16% to a new record.  

A few arguments were put forward as to why there wasn’t a bigger reaction, but an important one was the resistance from a couple of Senate Republicans to Trump’s move, raising questions as to how successful any attempts to erode the Fed’s independence would be. In particular, Republican Senator Thom Tillis, who sits on the Senate Banking Committee, said that he would oppose confirming any nominee for the Fed until this was resolved. That’s significant, because the Senate Banking Committee is split 13-11 to the Republicans, so Tillis’ opposition would lead to a split if the others voted along party lines. And there were other Republican Senators who voiced concern, with Lisa Murkowski saying that “the administration’s investigation is nothing more than an attempt at coercion.” On top of that, another argument for the limited reaction was that Powell’s term as Chair was already ending in May, so a change in leadership was expected anyway in the next few months. Moreover, previous episodes last year have also led to the sense that the administration don’t want a negative bond market reaction, given long-end yields flow through to mortgage rates, which they’d prefer to keep contained. Clearly it’s a moving situation though, and these are a huge couple of weeks for the Fed, as the Supreme Court are hearing arguments in the Lisa Cook case on Jan 21, ahead of the FOMC meeting on Jan 27-28.

One asset class that did hold on to almost all of its move were precious metals, which surged to fresh records with gold (+1.97%) up to $4,598/oz, and silver (+6.57%) up to $85.10/oz. In addition to investors becoming more concerned about potential currency debasement and future inflation, these were supported by the ongoing geopolitical uncertainty. This related in particular to possible US steps towards Iran and late in the day Trump posted that “effective immediately” any country “doing business” with Iran will pay a tariff 25% on trade with the US. In theory, this would most impact countries across Asia, with China being Iran’s biggest trading partner.

However, we’ve not yet heard any further details or an executive order implementing this tariff threat, and markets have taken Trump’s post in their stride overnight. The Shanghai Comp is flat and the Hang Seng up +0.94%. Elsewhere Japanese stocks are flying, but in line with where futures were this time yesterday during their holiday, with the Nikkei (+3.21%) responding to the media speculation since Friday that Takaichi is considering a snap lower house election as early as February. Elsewhere the KOSPI (+1.13%) and the S&P/ASX 200 (+0.59%) are also performing well. S&P 500 (-0.14%) and NASDAQ 100 (-0.31%) futures are trading slightly lower though.  

Coming back to Japan, the election fever has seen the yen (-0.39%) fall to its lowest level since July 2024, trading at 158.76 against the dollar, and 10-year (+5.7bps), 20-year (+5.8bps), and 30-year (+6.1bps) JGBs trading at 2.15%, 3.13%, and 3.46%, respectively this morning.  

Looking forward, the next big test will be the US CPI print, which is out at 13:30 London time today. As a reminder, the last print came on the softer side, but there were various methodological issues from the shutdown which meant it was treated with caution. For instance, the shelter numbers saw a huge drop-off that’s more usually consistent with recessions, hence we saw some scepticism around the numbers. For this time round, our US economists expect the print to come in on the stronger side, unwinding some of the distortions from the government shutdown. So they expect headline CPI to come in at a monthly +0.36%, with core pretty similar at +0.35%.

Ahead of all that, equities put in a steady performance on both sides of the Atlantic yesterday, with the S&P 500 (+0.16%) inching up to a new record. However, financials were an underperformer, and the KBW Bank Index (-0.95%) lost ground after Trump’s post that he was calling for a one-year cap on credit card interest rates of 10%. How realistic that is to implement is a moot point and it may actually reduce credit to the poorer population. So an interesting set up for JP Morgan (-1.43%) to kick off earnings season before the bell today.

Elsewhere there were stronger performances, with consumer staples (+1.42%) the top-performing sector in the S&P 500 as Walmart rose +3.00% after NASDAQ’s announcement that they’d join the NASDAQ 100 on Jan 20. The Mag-7 (-0.03%) had a mixed session, but Alphabet (+1.00%) became the latest tech giant to cross the $4trn valuation mark as Google confirmed a “multi-year deal” to power the AI technology for Apple’s iPhones. While Microsoft and Apple also crossed the $4trn level last year, Nvidia is currently the only company with a higher valuation than Alphabet, which has surged by over 100% from post-Liberation Day lows last spring.

Over in Europe yesterday, markets had put in a stronger performance, as they weren’t affected as much by the Federal Reserve news. So sovereign bonds rallied across the continent, with yields on 10yr bunds (-1.2bps), OATs (-1.0bps) and BTPs (-1.4bps) all coming down. In addition, equities also outperformed, with the STOXX 600 (+0.21%) at a new record, whilst the DAX (+0.57%) advanced for a 10th consecutive session for the first time since summer 2024. In fact, if we get an 11th advance today, it would be the longest run of gains for the DAX since 2014.

Looking at the day ahead, and data releases include the US CPI print for December, along with the NFIB’s small business optimism index for December. Central bank speakers include BoE Governor Bailey, the ECB’s Kocher, and the Fed’s Musalem and Barkin. Earnings releases include JPMorgan Chase and BNY Mellon.

Tyler Durden Tue, 01/13/2026 - 08:40

US Equity Futures Jump To Record High After Core CPI Comes In Cool

US Equity Futures Jump To Record High After Core CPI Comes In Cool

US equity futures were initially weaker as the market weighs geopolitics, inflation data, and the start to earnings season, where JPM reported results that were mixed at best (unexpected weakness in bank underwriting kept the stock flat in premarket trading). However, just after core CPI printed below estimates, futures spiked as high as 7030, rising to a new record high, up 0.2%, with Nasdaq futures also rising 0.2%, with Mag7 names mixed premarket with AMD/INTC leading Semis. Fins/Energy are leading Cyclicals which are roughly flat vs. Defensives, where Utils are the standout group.Sentiment was impaired after Trump said that any country doing business with Iran will receive a 25% tariff; the potential for conflict is pushing oil prices higher with WTI back above $60 for first time since Nov. Japanese stocks jumped while the yen slumped on speculation that PM Sanae Takaichi may call a snap election, reigniting the so-called Takaichi trade.Bond yields are +1-2bp across the curve and USD is rallying driven by a surge in the USDJPY which jumped as high as 159, the highest since July 2024. CPI print this afternoon with the scenario analysis is below. The ADP weekly print, NFIB Small Biz Survey, and New Home Sales the other macro data today. 

In premarket trading, Mag 7 stocks were mixed (Alphabet +0.7%, Nvidia +0.02%, Tesla +0.1%, Meta little changed, Amazon -0.2%, Microsoft -0.4%, Apple -0.4%)

  • Delta Air Lines (DAL) falls 5% after the carrier gave an underwhelming profit forecast for the full year.
  • L3Harris Technologies Inc. (LHX) gains 13% as the US Department of Defense is set to invest in the company’s Missile Solutions business via a $1 billion convertible preferred security, tightening the direct links between the US government and a major defense contractor.
  • Ormat Technologies (ORA) rises 5% after the renewable energy company signed a 20-year power purchase agreement with data center operator Switch for energy from its Salt Wells geothermal power plant in Nevada.
  • Synopsys (SNPS) falls 2% as Piper Sandler downgrades the chip design software firm to neutral from overweight, saying the company could see prolonged headwinds to growth.
  • Travere Therapeutics (TVTX) slumps 28% after the biotech firm said it received a request from the FDA to clarify the clinical benefit of its therapy that treats a rare kidney disease, a move that analysts said could delay the approval by the agency.

In corporate news, Amgen said its experimental drug MariTide helped patients maintain weight loss for two years. Diageo is said to be considering options for its Chinese assets, including possible divestments. Wall Street firms continue to reduce headcount, with Citi set to cut about 1,000 jobs this week and BlackRock said to be trimming about 1% of staff.

After initially trading lower, spooked by Trump’s threat to tariff countries doing business with Iran which has the potential to disrupt US trading relationships across the globe, futures jumped after core CPI came in below estimates. 

Speaking of CPI, JPMorgan’s trading desk predicted a rally of up to 1.75% for the S&P 500 if CPI is in line with, or cooler, than estimated - which is now the case; let's see if stocks surge as much as JPM predicted.

Fed’s Williams said interest rates are “well positioned” to stabilize the labor market and bring inflation back to the 2% goal. 

With earnings season kicking off, Bloomberg notes how small caps have been in favor recently, with the Russell 2000 outperforming the S&P 500 for the past seven sessions. The last time it had a longer winning streak was 2019. Yet tech remains the dominant contributor to 4Q profit growth among S&P 500 members, estimated to show year-over-year EPS growth of 20%, while non-tech earnings expansion is slated to decelerate from 9% to just 1%, according to data from Bank of America.

Meanwhile, the Fed drama continues, with global central bankers pledging “full solidarity” with Powell and saying that the independence of central banks is a cornerstone of financial and economic stability. Today’s Big Take looks at the Washington backlash that could derail Trump’s campaign to tighten White House control over the Fed.

In other assets, the dollar has clawed back some ground after Monday’s drop, but downside risks remain. Oil is higher while gold slipped from its record. CME said it will change the way it sets margins for gold, silver, platinum and palladium futures after a surge in prices and volatile trading.

European stocks dip, reversing an earlier rise which pushed them near record highs as investors look ahead to US inflation data. Energy stocks outperform while the construction and materials sector lags. Stoxx 600 is little changed at 610.90 with 336 members down, 250 up, and 14 unchanged. Here are some of the biggest movers on Tuesday: 

  • Symrise shares rally as much as 7.3% after the company announced a €400 million ($467 million) share buyback and said it’s in advanced talks to sell its terpene business, a kind of chemical used in fragrances and flavors.
  • Orsted shares surge as much as 6.6% after a US judge ruled work can resume on a wind farm off the coast of Rhode Island while it challenges the government’s latest attempt to stop offshore projects from being built.
  • Whitbread shares jump as much as 6.9%, the most since May, after the Premier Inn owner reported solid trading and increased cost efficiencies in its third-quarter update.
  • Synektik shares gain as much as 4.6% after the Polish distributor of medical devices including surgery robots reported new orders rising 30% last quarter as well as new contract with Czech hospital.
  • THG shares jump as much as 9.7%, the most since October, as analysts highlighted strong momentum in the company’s beauty and nutrition businesses.
  • Gamma Communications shares jump as much as 9.3%, the most since September, after reporting FY25 trading is in line with consensus expectations.
  • Persimmon shares rise as much as 2.8% to the highest level since November 2024 as the homebuilder reassures that full-year 2025 results are likely to be at the upper end of market expectations and it is on track to meet this year’s forecasts.
  • Raspberry PI shares slump as much as 10% to a record low after the computing company’s strong results were overshadowed by its warning over the rapid increase in the cost of DRAM memory chips, as more supplies are funneled into AI data centers.
  • Games Workshop shares drop as much as 3.7%, the most since November, after the Warhammer owner reported first-half results that showed sales growth declining toward the end of the period in some stores.
  • Vinci shares fall as much as 3.7% as French infrastructure stocks drop on ratings downgrades by Bank of America, concerned by the risk of rising French taxes.
  • Thales shares fall as much as 2.4% as Deutsche Bank downgrades several defense names, citing uncertainties surrounding the French defense budget and lagging cyber sales.

Asian stocks briefly jumped to a fresh record, driven by gains in Japanese shares as traders returned from holiday amid growing speculation that Prime Minister Sanae Takaichi may soon call a snap election.  The MSCI Asia Pacific Index rose as much as 1.4%, the most in a week, with Alibaba, TSMC and Toyota Motor among the biggest boosts to the gauge. Most subsectors were in the green, with financials being a major contributor. Benchmarks in Hong Kong, South Korea and Australia also rose.  Concerns around Federal Reserve’s independence after the Trump administration escalated its attack on the central bank again prompted flows away from US market into regions like Asia. Traders are also brushing off the latest tariff threats from President Donald Trump, who said to impose a 25% tariff on goods from countries “doing business” with Iran. 

“The market does not care about Trump’s capricious tariff threats,” said Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore. “Trump’s previous backdown from China has shown that bigger levers such as the supply of rare earths matter more in tariff negotiations. It is unlikely that he can afford to upset the trade truce with China just to pressure Iran.”

In FX, the yen sinks, following a jolt in Japanese bond and stock markets, on speculation that an early election is on the cards. Dollar-yen briefly hits 159, highest since July 2024. The Bloomberg Dollar Spot Index edges marginally higher.

In rates, treasuries, European and UK bond yields rise by two or three basis points, with US CPI data ahead.

In commodities, oil prices rally on geopolitical risk and Trump’s threat of tariffs on Iranian crude buyers, with Brent hitting the highest since November and briefly moving above $65/barrel before paring. Gold edging lower from another record high, down about $12 to $4,585/oz.

Today's US economic calendar includes ADP weekly employment change (8:15am), December CPI (8:30am), October new home sales (10am) and December Federal budget balance (2pm). Scheduled Fed speakers include Musalem (10am) and Barkin (4pm)

Market Snapshot

  • S&P 500 mini +0.2%
  • Nasdaq 100 mini +0.3%
  • Russell 2000 mini +0.3%
  • Stoxx Europe 600 -0.2%
  • DAX -0.2%
  • CAC 40 -0.5%
  • 10-year Treasury yield +2 basis points at 4.19%
  • VIX +0.3 points at 15.43
  • Bloomberg Dollar Index little changed at 1210.29
  • euro little changed at $1.1669
  • WTI crude +1.8% at $60.57/barrel

Top Overnight News

  • Donald Trump vowed to impose a 25% tariff on goods from any country “doing business with” Iran, a move that risks derailing his trade truce with China, the world’s top buyer of Iranian oil. Germany’s Friedrich Merz said the world is seeing the “final days” of Iran’s regime. BBG
  • The criminal probe into Jay Powel by US prosecutors has galvanized the Federal Reserve’s top leaders to resist Trump’s attacks and could push he chair to remain a governor until 2028. Trump’s   DoJ probe was seen by people close to the US central bank as a sign that the president would go to extraordinary lengths to force policymakers to bow to his demands. FT
  • California Gov. Gavin Newsom said he was working behind the scenes to block a proposed tax on billionaires’ wealth and was committed to defeating the measure if it reached the ballot. NYT
  • President Trump reportedly unhappy about AG Pam Bondi's performance and has repeatedly complained to aides: WSJ 
  • Microsoft has warned that US AI groups are being outpaced by Chinese rivals in the battle for users outside the west, as China combines low-cost “open” models with hefty state subsidies to gain an edge. FT
  • Iranian protests appeared to persist in localized pockets overnight as activist group Iran Human Rights warned of imminent executions by the state and said the civilian death toll may be in the thousands. BBG
  • The BOJ may raise rates as early as April as heightened market concerns over PM Takaichi’s approach to fiscal policy keep the yen weak, former board member Makoto Sakurai said. “The BOJ must raise rates at least by June or July,” he added. BBG
  • Japanese investors dumped UK government bonds at the fastest pace in 14 years in November, citing worries over Britain’s fiscal outlook and more attractive yields at home. BBG
  • Japanese stocks surged to an all time high and the yen tumbled to a 19 month low as markets bet that a possible snap election net month would reignite the “Takaichi trade.” FT

Trade/Tariffs

  • China's Commerce Ministry outlines the final ruling on the imports of solar polysilicon from the US and South Korea, effective 14th January with tariffs of up to 113.8%. To continue to collect anti-dumping tariffs for another five years.
  • China said it opposes unilateral sanctions and "long-arm jurisdiction", following the 25% tariff on US trade for countries doing business with Iran.
  • Taiwan officials said 'some' consensus has been reached with the US on a trade deal.
  • Japanese Finance Minister Katayama said there were some detailed proposals on rare earth supply chains during the meeting with the US. A potential price floor on rare earths were discussed.
  • US President Trump said any countries doing business with Iran are to pay a 25% tariff on any or all business being done with the US.

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks followed on from Monday’s gains, with equities mostly in the green. ASX 200 started the session on the front foot, +0.4%, before extending gains and currently trading just shy of session highs at 8835. With spot XAU trading near ATHs, this has aided sectors such as metals and mining (2.0%) to continue Monday’s gains. Nikkei 225 returned from its long weekend with a gap higher, resulting in the index opening with gains as much as 3.7% and forming new ATHs. This comes amid a weaker JPY and growing speculation of PM Takaichi dissolving parliament. Japanese media noted that the LDP was looking to capitalise on Takaichi's high approval ratings. KOSPI opened Tuesday’s trade at ATHs and oscillated at highs before peaking at 4681 and slightly paring back, but remains comfortably in the green. Hang Seng and Shanghai Comp. opened in line with the broader sentiment, with the former surging higher, aided by gains in Gigadevice (3986 HK). The latter is the laggard across Asia-Pacific equities, trading with slight gains of 0.2%.

Top Asian News

  • China examines foreign ETF trades after Jane Street India probe, Bloomberg reported.
  • Japanese Finance Minister Katayama said she shared concerns with US Treasury Secretary Bessent over weak JPY.

European equities (STOXX 600 -0.2%) have traded tentatively throughout the morning, as markets await CPI. T he AEX (+0.4%) is the key outperformer in the region amid gains in ASML (+1.2%) after Jefferies raised the Co.'s price target, thereby lifting the index. European sectors are trading mixed, with Energy (+0.9%), Technology (+0.6%) and Banks (+0.6%) leading. The former has gained amid stronger crude prices given the heightened geopolitical tension between US and Iran, whilst ASML helps boost Tech. On the downside, Autos (-0.7%), Utilities (-0.7%) and Construction & Materials (-2.6%) lag. The latter faced steep losses due to Sika (-7.0%) after the Co.'s FY25 sales fell by 4.8%, with the Chinese market a continued weakness for them.

Top European News

  • French Budget Balance (Nov) -155.4B vs. Exp. -165.0B (Prev. -136.2B, Rev. -136.2B).
  • UK BRC Retail Sales YY (Dec) 1.0% (Prev. 1.2%).

Central Banks

  • Fed's Williams (Voter, Neutral) said monetary policy well positioned amid a favourable outlook and that policy is now closer to neutral, well-positioned ahead of January rate decision; expect that we’ll see [the labor market] stabilize this year". MONETARY POLICY. “In considering the extent and timing of additional adjustments… the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”. “Monetary policy is now well positioned to support the stabilization of the labor market and the return of inflation to the FOMC’s longer-run goal of 2 percent.”. “The actions taken by the FOMC… have moved the modestly restrictive stance of monetary policy closer to neutral.”. INFLATION. “Underlying inflation trends have been pretty favorable.”. “Tariffs have been overwhelmingly borne by domestic businesses and consumers.”. “I expect inflation will be just under 2-1/2 percent for this year as a whole, before reaching… 2 percent in 2027.”. “I anticipate inflation will peak at around 2-3/4 to 3 percent sometime during the first half of this year.”. “Inflation appears likely to peak sometime in the first half of this year as the full effects of tariffs are felt.”. “Medium- and longer-term expectations remain well within their pre-Covid ranges.”. “Inflation expectations remain well anchored.”. GROWTH. “The economic outlook is favorable.”. “I expect the economy to grow above trend this year, with real GDP growth between 2-1/2 and 2-3/4 percent.”. “GDP growth looks to have been somewhat above 2 percent last year, and it will likely pick up some this year.”. LABOR MARKET. “This has been a gradual process, without signs of a sharp rise in layoffs.”. “Downside risks to employment have increased as the labor market cooled.”. “The unemployment rate moved up… and ended the year at 4.4 percent.”. “I expect that we’ll see [the labor market] stabilize this year and then strengthen somewhat thereafter.”
  • Fed's Williams (Voter, Neutral) said the Fed is not under strong influence to change rates. Expects the next Fed chair to understand the gravity of the role. Strong productivity growth echoes past booms. Adds that the best way to instill confidence in the Fed is to do the job well. He expects improved labour market demand. Confident the Fed will return inflation to 2%. Jobs market is unusual with low hiring, low firing.
  • Japan's government is reportedly likely to delay the nomination of a BoJ board member if PM Takaichi called an election, via Reuters citing sources.
  • Global central banks are reportedly drafting a statement in support for Fed Chair Powell.

FX

  • DXY is flat and trades within a narrow 98.89 to 99.03 range; the high for the day is a couple of pips short of its 50 DMA, while a bout of pressure in the index could see a test of its 200 DMA at 98.80. Focus for the index today will be on US CPI; in brief, the consensus looks for headline CPI to rise by 0.3% M/M in December (prev. 0.3%), and the annual rate to remain unchanged at 2.7% Y/Y. GS expect the figures to exceed consensus, citing firmer food and energy prices.
  • Away from the US, G10s are mixed with mild strength in the GBP whilst the JPY is the clear underperformer – other peers are near-enough flat vs the USD. Nothing really driving the strength in the GBP this morning, whilst the JPY has a lot to digest.
  • A full JPY analysis piece can be found on the Newsquawk headline feed at 08:55 GMT, but in brief, USD/JPY eclipsed 159.00 for the first time since 11 July 2024. As a reminder, Japan intervened twice on July 11 and 12 to bring the USD/JPY below the 160.00 mark. The latest depreciation in the JPY has been spurred by continued reports of PM Takaichi's plans to call an election, where her aim is to secure a single-party government. This would, in theory, allow her to enact more expansionary fiscal policy.

Fixed Income

  • JGBs led the downside overnight as the "Takaichi trade" resumed. For more details, see the 08:55GMT Market Update.
  • Amidst this, USTs and Bunds also found themselves lower. USTs by just a handful of ticks and holding above the 112-00 mark and by extension yesterday's trough, which was half a tick below that. Focus turns to US CPI later, where consensus looks for the headline M/M, and Y/Y prints to remain at 0.3% and 2.7% while both core figures are seen higher by a tenth at 0.3% and 2.7% respectively. Goldman Sachs looks for a hotter print driven by technical factors.
  • Bunds in-fitting with the above, at a 127.84 low with downside of 28 ticks at most. Bunds made fresh lows following a soft Bobl outing, which had a weak b/c and lower than exp. amount sold. More generally, action for today will likely be dictated by US CPI. If the bearish bias extends, we look to support at 127.89, 127.82 and 127.70 from the last three sessions.
  • Gilts gapped lower by 14 ticks at the open, acknowledging the bearish bias from APAC trade, before dipping further to a 92.30 base. Since, the benchmark has recovered to opening levels. No reaction to the passing of I/L supply while the interview with BoE's Bailey took place this morning, but the text won't be published until January 16th.
  • Greece begins the sale of a new 10yr bond; guidance seen at +60-65bps to mid swaps.
  • Italy sells EUR 4bln vs exp. EUR 3.5-4bln 2.40% 2029 BTP: avg. yield 2.48%, b/c 1.45x
  • Germany sells EUR 4.597bln vs exp. EUR 6bln 2.50% 2031 Bobl: Avg yield: 2.47%, b/c 1.41x, retention 23.38%

Commodities

  • Crude firmer with geopolitics in focus. Overnight action was somewhat rangebound, as there was no significant escalation or development. However, we did get reports via CBS that President Trump was briefed on military and covert operations against Iran, but no decision has been made.
  • Since, as participants digest this risk and reports via BBG that two tankers were attacked in proximity to the Black Sea loading terminal for the CPC, crude has climbed and posts upside in excess of USD 1.00/bbl. At highs of USD 60.82/bbl and USD 65.20/bbl for WTI and Brent, respectively.
  • Spot gold is a little lower this morning, taking a breather following the strength seen in the prior session, where the yellow metal made fresh ATHs beyond the USD 4.6k/oz mark. Slight pressure today without a clear driver; potentially profit-taking ahead of US CPI. Price action in Europe has been sideways, and within a USD 4,573.87-4,608.13/oz range.
  • A bit of divergence between gold and silver this morning, with the latter posting modest gains and currently holding at the upper end of the day's range, last at USD 85.76/oz.
  • Base metals are mixed after choppy trade overnight. 3M LME Copper currently trades within a USD 13,034-13,232/t range. Desks have highlighted that there have been growing fears amongst traders that copper may sharply pull back if demand for the metal slows in 2026, particularly if China curbs spending.
  • Citi said its 3-month price target for gold and silver is now USD 5000/oz and USD 100/oz respectively.
  • Two oil tankers were attacked in proximity to the Black Sea loading terminal for the CPC, Bloomberg reports citing sources.-Two additional oil tankers have been hit near the Black Sea CPC terminal by drones, according to sources; taking the total on Tuesday to four tankers.

Geopolitics: Ukraine

  • A push by French President Macron and Italian PM Meloni to begin discussions with the Russian Kremlin is gaining traction in EU capitals and in Brussels itself, Politico reported citing sources. Primary goal to ensure EU red lines are not crossed. and to signal to the US that the EU has leverage. Elsewhere, creation of the role of EU special envoy to Ukraine hs support of the Council and leaders. Mario Draghi and Alexander Stubb have been touted. However, EU diplomat Kallas opposes the role.
  • Kyiv Mayor said the Russians are attacking the capital with ballistic missiles and that explosions are being heard.

Geopolitics Middle East 

  • US President Trump is leaning towards striking Iran to punish the regime for killing protesters, but hasn't made a final decision and is exploring Iranian proposals for negotiations, a White House official with direct knowledge told Axios.
  • Iran's Foreign Minister said Tehran is ready for any action by the US, including military action.
  • China said it opposes unilateral sanctions and "long-arm jurisdiction", following the 25% tariff on US trade for countries doing business with Iran.
  • US President Trump has been briefed on a range of military and covert options against Iran, according to CBS News; however no final decision has been made and diplomatic channels remain open.
  • "EU intends to impose new sanctions on Iran", Sky News Arabia reported.
  • "Washington called on Dual U.S.-Iranian Citizens to Leave Iran", Al Arabiya reported.
  • US President Trump said any countries doing business with Iran are to pay a 25% tariff on any or all business being done with the US.
  • US President Trump is leaning towards striking Iran to punish the regime for killing protesters, but hasn't made a final decision and is exploring Iranian proposals for negotiations, a White House official with direct knowledge told Axios.
  • Iranian authorities claim that the situation is 'under control'.
  • "EU intends to impose new sanctions on Iran", Sky News Arabia reported.
  • US President Trump has been briefed on a range of military and covert options against Iran, according to CBS News; however no final decision has been made and diplomatic channels remain open.
  • "Washington called on Dual U.S.-Iranian Citizens to Leave Iran", Al Arabiya reported.
  • At least two unsanctioned supertankers are departing Venezuelan waters carrying crude oil, according to reported citing TankerTrackers.
  • US Treasury Secretary Bessent posted that he was pleased to hear a strong, shared desire to quickly address key vulnerabilities in critical minerals supply chains; "I am optimistic that nations will pursue prudent derisking over decoupling".

US Event Calendar

  • 8:30 am: Dec CPI MoM, est. 0.3%
  • 8:30 am: Dec Core CPI MoM, est. 0.3%
  • 8:30 am: Dec CPI YoY, est. 2.7%, prior 2.7%
  • 8:30 am: Dec Core CPI YoY, est. 2.71%, prior 2.6%
  • 8:30 am: Dec CPI Index NSA, est. 324.17, prior 324.12
  • 8:30 am: Dec Core CPI Index SA, est. 332.06, prior 331.07
  • 10:00 am: Oct New Home Sales, est. 715k
  • 10:00 am: Oct New Home Sales MoM, est. -10.63%
  • 2:00 pm: Dec Federal Budget Balance, est. -152.5b, prior -173.3b

DB's Jim Reid concludes the overnight wrap

Morning from Helsinki where it's a reasonably mild -8 degrees. I've spent 2026 so far chasing the cold with -15 in Alps at the start of the year, a rare -7 degrees in Surrey last week and now 4 Nordic cities in 2 days. Most of the time I've been trying not to fall over to break the screws in my back or to further damage knees that will soon need replacing. If I were a racehorse, I suspect a few emotional goodbyes would be coming soon.   

There have been lots of icy patches to avoid in markets over the last 24 hours as 2026 continues to be the year of the headline even if most markets have enjoyed the ride so far. The main story this week, and there is competition, are the continued developments and market reaction around the Federal Reserve, after US prosecutors launched a criminal investigation that’s revived fears around central bank independence. That helped push gold (+1.95%) and silver (+6.57%) to new records yesterday, and the move out of US assets also meant the dollar and US Treasuries lost ground as well. Ironically, if the ultimate aim is to reduce yields, it could have the opposite impact as the Fed may be keen not to be seen as reacting to political pressure at the front end, and the long-end may show some concern about the motives. In addition, if Powell was looking for a reason to stay on as a Governor after his term as Chair ends in May, this could be one. It's very unusual to stay on but Eccles did so in 1948 for 3.5 years to help protect and secure Fed independence after the Treasury were trying to fund large post war time debts. So there might be some parallels in 2026. Ironically one of the buildings being renovated, that is causing the DoJ investigation, is the Marrine S. Eccles Building. You can also see our US economists quick take on the developments here.

Meanwhile, investors have also faced an array of geopolitical headlines from Venezuela to Iran, which has pushed Brent crude (+0.84%) to a 7-week high of $63.87/bbl. Remember Rubio is meeting Danish and Greenland officials some time this week as well. We could also hear on IEEPA tariffs tomorrow at the next "opinions day". And there’s no immediate sign of any letup on the calendar either, as today will bring the US CPI print as well as the start of US Q4 earnings season. Yet despite all the noise, risk assets have been remarkably unfazed by everything, with the S&P 500 (+0.16%) and Europe’s STOXX 600 (+0.21%) both at new records.   

The prospect of Fed independence being eroded immediately induced a negative reaction for US assets, reminiscent of previous episodes where it looked like Powell might be removed. But even as the reaction followed a clear pattern, it was still fairly subdued relative to previous episodes last year, and the initial losses were pared back significantly. So while the Treasury yield curve saw a bear steepening with 10yr yields trading +4bps higher just before the US open, by the close the 2yr yield (+0.2bps) was virtually unchanged at 3.53%, while 10yr (+1.1bps to 4.18%) and the 30yr (+1.5bps to 4.83%) saw modest increases. Despite higher yields, the US Dollar lost ground, weakening -0.27% against the Euro. The reversal of the initial move was particularly clear for equities, as S&P 500 futures were initially down -0.79% shortly after the European open, before the index rose +0.16% to a new record.  

A few arguments were put forward as to why there wasn’t a bigger reaction, but an important one was the resistance from a couple of Senate Republicans to Trump’s move, raising questions as to how successful any attempts to erode the Fed’s independence would be. In particular, Republican Senator Thom Tillis, who sits on the Senate Banking Committee, said that he would oppose confirming any nominee for the Fed until this was resolved. That’s significant, because the Senate Banking Committee is split 13-11 to the Republicans, so Tillis’ opposition would lead to a split if the others voted along party lines. And there were other Republican Senators who voiced concern, with Lisa Murkowski saying that “the administration’s investigation is nothing more than an attempt at coercion.” On top of that, another argument for the limited reaction was that Powell’s term as Chair was already ending in May, so a change in leadership was expected anyway in the next few months. Moreover, previous episodes last year have also led to the sense that the administration don’t want a negative bond market reaction, given long-end yields flow through to mortgage rates, which they’d prefer to keep contained. Clearly it’s a moving situation though, and these are a huge couple of weeks for the Fed, as the Supreme Court are hearing arguments in the Lisa Cook case on Jan 21, ahead of the FOMC meeting on Jan 27-28.

One asset class that did hold on to almost all of its move were precious metals, which surged to fresh records with gold (+1.97%) up to $4,598/oz, and silver (+6.57%) up to $85.10/oz. In addition to investors becoming more concerned about potential currency debasement and future inflation, these were supported by the ongoing geopolitical uncertainty. This related in particular to possible US steps towards Iran and late in the day Trump posted that “effective immediately” any country “doing business” with Iran will pay a tariff 25% on trade with the US. In theory, this would most impact countries across Asia, with China being Iran’s biggest trading partner.

However, we’ve not yet heard any further details or an executive order implementing this tariff threat, and markets have taken Trump’s post in their stride overnight. The Shanghai Comp is flat and the Hang Seng up +0.94%. Elsewhere Japanese stocks are flying, but in line with where futures were this time yesterday during their holiday, with the Nikkei (+3.21%) responding to the media speculation since Friday that Takaichi is considering a snap lower house election as early as February. Elsewhere the KOSPI (+1.13%) and the S&P/ASX 200 (+0.59%) are also performing well. S&P 500 (-0.14%) and NASDAQ 100 (-0.31%) futures are trading slightly lower though.  

Coming back to Japan, the election fever has seen the yen (-0.39%) fall to its lowest level since July 2024, trading at 158.76 against the dollar, and 10-year (+5.7bps), 20-year (+5.8bps), and 30-year (+6.1bps) JGBs trading at 2.15%, 3.13%, and 3.46%, respectively this morning.  

Looking forward, the next big test will be the US CPI print, which is out at 13:30 London time today. As a reminder, the last print came on the softer side, but there were various methodological issues from the shutdown which meant it was treated with caution. For instance, the shelter numbers saw a huge drop-off that’s more usually consistent with recessions, hence we saw some scepticism around the numbers. For this time round, our US economists expect the print to come in on the stronger side, unwinding some of the distortions from the government shutdown. So they expect headline CPI to come in at a monthly +0.36%, with core pretty similar at +0.35%.

Ahead of all that, equities put in a steady performance on both sides of the Atlantic yesterday, with the S&P 500 (+0.16%) inching up to a new record. However, financials were an underperformer, and the KBW Bank Index (-0.95%) lost ground after Trump’s post that he was calling for a one-year cap on credit card interest rates of 10%. How realistic that is to implement is a moot point and it may actually reduce credit to the poorer population. So an interesting set up for JP Morgan (-1.43%) to kick off earnings season before the bell today.

Elsewhere there were stronger performances, with consumer staples (+1.42%) the top-performing sector in the S&P 500 as Walmart rose +3.00% after NASDAQ’s announcement that they’d join the NASDAQ 100 on Jan 20. The Mag-7 (-0.03%) had a mixed session, but Alphabet (+1.00%) became the latest tech giant to cross the $4trn valuation mark as Google confirmed a “multi-year deal” to power the AI technology for Apple’s iPhones. While Microsoft and Apple also crossed the $4trn level last year, Nvidia is currently the only company with a higher valuation than Alphabet, which has surged by over 100% from post-Liberation Day lows last spring.

Over in Europe yesterday, markets had put in a stronger performance, as they weren’t affected as much by the Federal Reserve news. So sovereign bonds rallied across the continent, with yields on 10yr bunds (-1.2bps), OATs (-1.0bps) and BTPs (-1.4bps) all coming down. In addition, equities also outperformed, with the STOXX 600 (+0.21%) at a new record, whilst the DAX (+0.57%) advanced for a 10th consecutive session for the first time since summer 2024. In fact, if we get an 11th advance today, it would be the longest run of gains for the DAX since 2014.

Looking at the day ahead, and data releases include the US CPI print for December, along with the NFIB’s small business optimism index for December. Central bank speakers include BoE Governor Bailey, the ECB’s Kocher, and the Fed’s Musalem and Barkin. Earnings releases include JPMorgan Chase and BNY Mellon.

Tyler Durden Tue, 01/13/2026 - 08:40

US Equity Futures Jump To Record High After Core CPI Comes In Cool

US Equity Futures Jump To Record High After Core CPI Comes In Cool

US equity futures were initially weaker as the market weighs geopolitics, inflation data, and the start to earnings season, where JPM reported results that were mixed at best (unexpected weakness in bank underwriting kept the stock flat in premarket trading). However, just after core CPI printed below estimates, futures spiked as high as 7030, rising to a new record high, up 0.2%, with Nasdaq futures also rising 0.2%, with Mag7 names mixed premarket with AMD/INTC leading Semis. Fins/Energy are leading Cyclicals which are roughly flat vs. Defensives, where Utils are the standout group.Sentiment was impaired after Trump said that any country doing business with Iran will receive a 25% tariff; the potential for conflict is pushing oil prices higher with WTI back above $60 for first time since Nov. Japanese stocks jumped while the yen slumped on speculation that PM Sanae Takaichi may call a snap election, reigniting the so-called Takaichi trade.Bond yields are +1-2bp across the curve and USD is rallying driven by a surge in the USDJPY which jumped as high as 159, the highest since July 2024. CPI print this afternoon with the scenario analysis is below. The ADP weekly print, NFIB Small Biz Survey, and New Home Sales the other macro data today. 

In premarket trading, Mag 7 stocks were mixed (Alphabet +0.7%, Nvidia +0.02%, Tesla +0.1%, Meta little changed, Amazon -0.2%, Microsoft -0.4%, Apple -0.4%)

  • Delta Air Lines (DAL) falls 5% after the carrier gave an underwhelming profit forecast for the full year.
  • L3Harris Technologies Inc. (LHX) gains 13% as the US Department of Defense is set to invest in the company’s Missile Solutions business via a $1 billion convertible preferred security, tightening the direct links between the US government and a major defense contractor.
  • Ormat Technologies (ORA) rises 5% after the renewable energy company signed a 20-year power purchase agreement with data center operator Switch for energy from its Salt Wells geothermal power plant in Nevada.
  • Synopsys (SNPS) falls 2% as Piper Sandler downgrades the chip design software firm to neutral from overweight, saying the company could see prolonged headwinds to growth.
  • Travere Therapeutics (TVTX) slumps 28% after the biotech firm said it received a request from the FDA to clarify the clinical benefit of its therapy that treats a rare kidney disease, a move that analysts said could delay the approval by the agency.

In corporate news, Amgen said its experimental drug MariTide helped patients maintain weight loss for two years. Diageo is said to be considering options for its Chinese assets, including possible divestments. Wall Street firms continue to reduce headcount, with Citi set to cut about 1,000 jobs this week and BlackRock said to be trimming about 1% of staff.

After initially trading lower, spooked by Trump’s threat to tariff countries doing business with Iran which has the potential to disrupt US trading relationships across the globe, futures jumped after core CPI came in below estimates. 

Speaking of CPI, JPMorgan’s trading desk predicted a rally of up to 1.75% for the S&P 500 if CPI is in line with, or cooler, than estimated - which is now the case; let's see if stocks surge as much as JPM predicted.

Fed’s Williams said interest rates are “well positioned” to stabilize the labor market and bring inflation back to the 2% goal. 

With earnings season kicking off, Bloomberg notes how small caps have been in favor recently, with the Russell 2000 outperforming the S&P 500 for the past seven sessions. The last time it had a longer winning streak was 2019. Yet tech remains the dominant contributor to 4Q profit growth among S&P 500 members, estimated to show year-over-year EPS growth of 20%, while non-tech earnings expansion is slated to decelerate from 9% to just 1%, according to data from Bank of America.

Meanwhile, the Fed drama continues, with global central bankers pledging “full solidarity” with Powell and saying that the independence of central banks is a cornerstone of financial and economic stability. Today’s Big Take looks at the Washington backlash that could derail Trump’s campaign to tighten White House control over the Fed.

In other assets, the dollar has clawed back some ground after Monday’s drop, but downside risks remain. Oil is higher while gold slipped from its record. CME said it will change the way it sets margins for gold, silver, platinum and palladium futures after a surge in prices and volatile trading.

European stocks dip, reversing an earlier rise which pushed them near record highs as investors look ahead to US inflation data. Energy stocks outperform while the construction and materials sector lags. Stoxx 600 is little changed at 610.90 with 336 members down, 250 up, and 14 unchanged. Here are some of the biggest movers on Tuesday: 

  • Symrise shares rally as much as 7.3% after the company announced a €400 million ($467 million) share buyback and said it’s in advanced talks to sell its terpene business, a kind of chemical used in fragrances and flavors.
  • Orsted shares surge as much as 6.6% after a US judge ruled work can resume on a wind farm off the coast of Rhode Island while it challenges the government’s latest attempt to stop offshore projects from being built.
  • Whitbread shares jump as much as 6.9%, the most since May, after the Premier Inn owner reported solid trading and increased cost efficiencies in its third-quarter update.
  • Synektik shares gain as much as 4.6% after the Polish distributor of medical devices including surgery robots reported new orders rising 30% last quarter as well as new contract with Czech hospital.
  • THG shares jump as much as 9.7%, the most since October, as analysts highlighted strong momentum in the company’s beauty and nutrition businesses.
  • Gamma Communications shares jump as much as 9.3%, the most since September, after reporting FY25 trading is in line with consensus expectations.
  • Persimmon shares rise as much as 2.8% to the highest level since November 2024 as the homebuilder reassures that full-year 2025 results are likely to be at the upper end of market expectations and it is on track to meet this year’s forecasts.
  • Raspberry PI shares slump as much as 10% to a record low after the computing company’s strong results were overshadowed by its warning over the rapid increase in the cost of DRAM memory chips, as more supplies are funneled into AI data centers.
  • Games Workshop shares drop as much as 3.7%, the most since November, after the Warhammer owner reported first-half results that showed sales growth declining toward the end of the period in some stores.
  • Vinci shares fall as much as 3.7% as French infrastructure stocks drop on ratings downgrades by Bank of America, concerned by the risk of rising French taxes.
  • Thales shares fall as much as 2.4% as Deutsche Bank downgrades several defense names, citing uncertainties surrounding the French defense budget and lagging cyber sales.

Asian stocks briefly jumped to a fresh record, driven by gains in Japanese shares as traders returned from holiday amid growing speculation that Prime Minister Sanae Takaichi may soon call a snap election.  The MSCI Asia Pacific Index rose as much as 1.4%, the most in a week, with Alibaba, TSMC and Toyota Motor among the biggest boosts to the gauge. Most subsectors were in the green, with financials being a major contributor. Benchmarks in Hong Kong, South Korea and Australia also rose.  Concerns around Federal Reserve’s independence after the Trump administration escalated its attack on the central bank again prompted flows away from US market into regions like Asia. Traders are also brushing off the latest tariff threats from President Donald Trump, who said to impose a 25% tariff on goods from countries “doing business” with Iran. 

“The market does not care about Trump’s capricious tariff threats,” said Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore. “Trump’s previous backdown from China has shown that bigger levers such as the supply of rare earths matter more in tariff negotiations. It is unlikely that he can afford to upset the trade truce with China just to pressure Iran.”

In FX, the yen sinks, following a jolt in Japanese bond and stock markets, on speculation that an early election is on the cards. Dollar-yen briefly hits 159, highest since July 2024. The Bloomberg Dollar Spot Index edges marginally higher.

In rates, treasuries, European and UK bond yields rise by two or three basis points, with US CPI data ahead.

In commodities, oil prices rally on geopolitical risk and Trump’s threat of tariffs on Iranian crude buyers, with Brent hitting the highest since November and briefly moving above $65/barrel before paring. Gold edging lower from another record high, down about $12 to $4,585/oz.

Today's US economic calendar includes ADP weekly employment change (8:15am), December CPI (8:30am), October new home sales (10am) and December Federal budget balance (2pm). Scheduled Fed speakers include Musalem (10am) and Barkin (4pm)

Market Snapshot

  • S&P 500 mini +0.2%
  • Nasdaq 100 mini +0.3%
  • Russell 2000 mini +0.3%
  • Stoxx Europe 600 -0.2%
  • DAX -0.2%
  • CAC 40 -0.5%
  • 10-year Treasury yield +2 basis points at 4.19%
  • VIX +0.3 points at 15.43
  • Bloomberg Dollar Index little changed at 1210.29
  • euro little changed at $1.1669
  • WTI crude +1.8% at $60.57/barrel

Top Overnight News

  • Donald Trump vowed to impose a 25% tariff on goods from any country “doing business with” Iran, a move that risks derailing his trade truce with China, the world’s top buyer of Iranian oil. Germany’s Friedrich Merz said the world is seeing the “final days” of Iran’s regime. BBG
  • The criminal probe into Jay Powel by US prosecutors has galvanized the Federal Reserve’s top leaders to resist Trump’s attacks and could push he chair to remain a governor until 2028. Trump’s   DoJ probe was seen by people close to the US central bank as a sign that the president would go to extraordinary lengths to force policymakers to bow to his demands. FT
  • California Gov. Gavin Newsom said he was working behind the scenes to block a proposed tax on billionaires’ wealth and was committed to defeating the measure if it reached the ballot. NYT
  • President Trump reportedly unhappy about AG Pam Bondi's performance and has repeatedly complained to aides: WSJ 
  • Microsoft has warned that US AI groups are being outpaced by Chinese rivals in the battle for users outside the west, as China combines low-cost “open” models with hefty state subsidies to gain an edge. FT
  • Iranian protests appeared to persist in localized pockets overnight as activist group Iran Human Rights warned of imminent executions by the state and said the civilian death toll may be in the thousands. BBG
  • The BOJ may raise rates as early as April as heightened market concerns over PM Takaichi’s approach to fiscal policy keep the yen weak, former board member Makoto Sakurai said. “The BOJ must raise rates at least by June or July,” he added. BBG
  • Japanese investors dumped UK government bonds at the fastest pace in 14 years in November, citing worries over Britain’s fiscal outlook and more attractive yields at home. BBG
  • Japanese stocks surged to an all time high and the yen tumbled to a 19 month low as markets bet that a possible snap election net month would reignite the “Takaichi trade.” FT

Trade/Tariffs

  • China's Commerce Ministry outlines the final ruling on the imports of solar polysilicon from the US and South Korea, effective 14th January with tariffs of up to 113.8%. To continue to collect anti-dumping tariffs for another five years.
  • China said it opposes unilateral sanctions and "long-arm jurisdiction", following the 25% tariff on US trade for countries doing business with Iran.
  • Taiwan officials said 'some' consensus has been reached with the US on a trade deal.
  • Japanese Finance Minister Katayama said there were some detailed proposals on rare earth supply chains during the meeting with the US. A potential price floor on rare earths were discussed.
  • US President Trump said any countries doing business with Iran are to pay a 25% tariff on any or all business being done with the US.

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks followed on from Monday’s gains, with equities mostly in the green. ASX 200 started the session on the front foot, +0.4%, before extending gains and currently trading just shy of session highs at 8835. With spot XAU trading near ATHs, this has aided sectors such as metals and mining (2.0%) to continue Monday’s gains. Nikkei 225 returned from its long weekend with a gap higher, resulting in the index opening with gains as much as 3.7% and forming new ATHs. This comes amid a weaker JPY and growing speculation of PM Takaichi dissolving parliament. Japanese media noted that the LDP was looking to capitalise on Takaichi's high approval ratings. KOSPI opened Tuesday’s trade at ATHs and oscillated at highs before peaking at 4681 and slightly paring back, but remains comfortably in the green. Hang Seng and Shanghai Comp. opened in line with the broader sentiment, with the former surging higher, aided by gains in Gigadevice (3986 HK). The latter is the laggard across Asia-Pacific equities, trading with slight gains of 0.2%.

Top Asian News

  • China examines foreign ETF trades after Jane Street India probe, Bloomberg reported.
  • Japanese Finance Minister Katayama said she shared concerns with US Treasury Secretary Bessent over weak JPY.

European equities (STOXX 600 -0.2%) have traded tentatively throughout the morning, as markets await CPI. T he AEX (+0.4%) is the key outperformer in the region amid gains in ASML (+1.2%) after Jefferies raised the Co.'s price target, thereby lifting the index. European sectors are trading mixed, with Energy (+0.9%), Technology (+0.6%) and Banks (+0.6%) leading. The former has gained amid stronger crude prices given the heightened geopolitical tension between US and Iran, whilst ASML helps boost Tech. On the downside, Autos (-0.7%), Utilities (-0.7%) and Construction & Materials (-2.6%) lag. The latter faced steep losses due to Sika (-7.0%) after the Co.'s FY25 sales fell by 4.8%, with the Chinese market a continued weakness for them.

Top European News

  • French Budget Balance (Nov) -155.4B vs. Exp. -165.0B (Prev. -136.2B, Rev. -136.2B).
  • UK BRC Retail Sales YY (Dec) 1.0% (Prev. 1.2%).

Central Banks

  • Fed's Williams (Voter, Neutral) said monetary policy well positioned amid a favourable outlook and that policy is now closer to neutral, well-positioned ahead of January rate decision; expect that we’ll see [the labor market] stabilize this year". MONETARY POLICY. “In considering the extent and timing of additional adjustments… the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”. “Monetary policy is now well positioned to support the stabilization of the labor market and the return of inflation to the FOMC’s longer-run goal of 2 percent.”. “The actions taken by the FOMC… have moved the modestly restrictive stance of monetary policy closer to neutral.”. INFLATION. “Underlying inflation trends have been pretty favorable.”. “Tariffs have been overwhelmingly borne by domestic businesses and consumers.”. “I expect inflation will be just under 2-1/2 percent for this year as a whole, before reaching… 2 percent in 2027.”. “I anticipate inflation will peak at around 2-3/4 to 3 percent sometime during the first half of this year.”. “Inflation appears likely to peak sometime in the first half of this year as the full effects of tariffs are felt.”. “Medium- and longer-term expectations remain well within their pre-Covid ranges.”. “Inflation expectations remain well anchored.”. GROWTH. “The economic outlook is favorable.”. “I expect the economy to grow above trend this year, with real GDP growth between 2-1/2 and 2-3/4 percent.”. “GDP growth looks to have been somewhat above 2 percent last year, and it will likely pick up some this year.”. LABOR MARKET. “This has been a gradual process, without signs of a sharp rise in layoffs.”. “Downside risks to employment have increased as the labor market cooled.”. “The unemployment rate moved up… and ended the year at 4.4 percent.”. “I expect that we’ll see [the labor market] stabilize this year and then strengthen somewhat thereafter.”
  • Fed's Williams (Voter, Neutral) said the Fed is not under strong influence to change rates. Expects the next Fed chair to understand the gravity of the role. Strong productivity growth echoes past booms. Adds that the best way to instill confidence in the Fed is to do the job well. He expects improved labour market demand. Confident the Fed will return inflation to 2%. Jobs market is unusual with low hiring, low firing.
  • Japan's government is reportedly likely to delay the nomination of a BoJ board member if PM Takaichi called an election, via Reuters citing sources.
  • Global central banks are reportedly drafting a statement in support for Fed Chair Powell.

FX

  • DXY is flat and trades within a narrow 98.89 to 99.03 range; the high for the day is a couple of pips short of its 50 DMA, while a bout of pressure in the index could see a test of its 200 DMA at 98.80. Focus for the index today will be on US CPI; in brief, the consensus looks for headline CPI to rise by 0.3% M/M in December (prev. 0.3%), and the annual rate to remain unchanged at 2.7% Y/Y. GS expect the figures to exceed consensus, citing firmer food and energy prices.
  • Away from the US, G10s are mixed with mild strength in the GBP whilst the JPY is the clear underperformer – other peers are near-enough flat vs the USD. Nothing really driving the strength in the GBP this morning, whilst the JPY has a lot to digest.
  • A full JPY analysis piece can be found on the Newsquawk headline feed at 08:55 GMT, but in brief, USD/JPY eclipsed 159.00 for the first time since 11 July 2024. As a reminder, Japan intervened twice on July 11 and 12 to bring the USD/JPY below the 160.00 mark. The latest depreciation in the JPY has been spurred by continued reports of PM Takaichi's plans to call an election, where her aim is to secure a single-party government. This would, in theory, allow her to enact more expansionary fiscal policy.

Fixed Income

  • JGBs led the downside overnight as the "Takaichi trade" resumed. For more details, see the 08:55GMT Market Update.
  • Amidst this, USTs and Bunds also found themselves lower. USTs by just a handful of ticks and holding above the 112-00 mark and by extension yesterday's trough, which was half a tick below that. Focus turns to US CPI later, where consensus looks for the headline M/M, and Y/Y prints to remain at 0.3% and 2.7% while both core figures are seen higher by a tenth at 0.3% and 2.7% respectively. Goldman Sachs looks for a hotter print driven by technical factors.
  • Bunds in-fitting with the above, at a 127.84 low with downside of 28 ticks at most. Bunds made fresh lows following a soft Bobl outing, which had a weak b/c and lower than exp. amount sold. More generally, action for today will likely be dictated by US CPI. If the bearish bias extends, we look to support at 127.89, 127.82 and 127.70 from the last three sessions.
  • Gilts gapped lower by 14 ticks at the open, acknowledging the bearish bias from APAC trade, before dipping further to a 92.30 base. Since, the benchmark has recovered to opening levels. No reaction to the passing of I/L supply while the interview with BoE's Bailey took place this morning, but the text won't be published until January 16th.
  • Greece begins the sale of a new 10yr bond; guidance seen at +60-65bps to mid swaps.
  • Italy sells EUR 4bln vs exp. EUR 3.5-4bln 2.40% 2029 BTP: avg. yield 2.48%, b/c 1.45x
  • Germany sells EUR 4.597bln vs exp. EUR 6bln 2.50% 2031 Bobl: Avg yield: 2.47%, b/c 1.41x, retention 23.38%

Commodities

  • Crude firmer with geopolitics in focus. Overnight action was somewhat rangebound, as there was no significant escalation or development. However, we did get reports via CBS that President Trump was briefed on military and covert operations against Iran, but no decision has been made.
  • Since, as participants digest this risk and reports via BBG that two tankers were attacked in proximity to the Black Sea loading terminal for the CPC, crude has climbed and posts upside in excess of USD 1.00/bbl. At highs of USD 60.82/bbl and USD 65.20/bbl for WTI and Brent, respectively.
  • Spot gold is a little lower this morning, taking a breather following the strength seen in the prior session, where the yellow metal made fresh ATHs beyond the USD 4.6k/oz mark. Slight pressure today without a clear driver; potentially profit-taking ahead of US CPI. Price action in Europe has been sideways, and within a USD 4,573.87-4,608.13/oz range.
  • A bit of divergence between gold and silver this morning, with the latter posting modest gains and currently holding at the upper end of the day's range, last at USD 85.76/oz.
  • Base metals are mixed after choppy trade overnight. 3M LME Copper currently trades within a USD 13,034-13,232/t range. Desks have highlighted that there have been growing fears amongst traders that copper may sharply pull back if demand for the metal slows in 2026, particularly if China curbs spending.
  • Citi said its 3-month price target for gold and silver is now USD 5000/oz and USD 100/oz respectively.
  • Two oil tankers were attacked in proximity to the Black Sea loading terminal for the CPC, Bloomberg reports citing sources.-Two additional oil tankers have been hit near the Black Sea CPC terminal by drones, according to sources; taking the total on Tuesday to four tankers.

Geopolitics: Ukraine

  • A push by French President Macron and Italian PM Meloni to begin discussions with the Russian Kremlin is gaining traction in EU capitals and in Brussels itself, Politico reported citing sources. Primary goal to ensure EU red lines are not crossed. and to signal to the US that the EU has leverage. Elsewhere, creation of the role of EU special envoy to Ukraine hs support of the Council and leaders. Mario Draghi and Alexander Stubb have been touted. However, EU diplomat Kallas opposes the role.
  • Kyiv Mayor said the Russians are attacking the capital with ballistic missiles and that explosions are being heard.

Geopolitics Middle East 

  • US President Trump is leaning towards striking Iran to punish the regime for killing protesters, but hasn't made a final decision and is exploring Iranian proposals for negotiations, a White House official with direct knowledge told Axios.
  • Iran's Foreign Minister said Tehran is ready for any action by the US, including military action.
  • China said it opposes unilateral sanctions and "long-arm jurisdiction", following the 25% tariff on US trade for countries doing business with Iran.
  • US President Trump has been briefed on a range of military and covert options against Iran, according to CBS News; however no final decision has been made and diplomatic channels remain open.
  • "EU intends to impose new sanctions on Iran", Sky News Arabia reported.
  • "Washington called on Dual U.S.-Iranian Citizens to Leave Iran", Al Arabiya reported.
  • US President Trump said any countries doing business with Iran are to pay a 25% tariff on any or all business being done with the US.
  • US President Trump is leaning towards striking Iran to punish the regime for killing protesters, but hasn't made a final decision and is exploring Iranian proposals for negotiations, a White House official with direct knowledge told Axios.
  • Iranian authorities claim that the situation is 'under control'.
  • "EU intends to impose new sanctions on Iran", Sky News Arabia reported.
  • US President Trump has been briefed on a range of military and covert options against Iran, according to CBS News; however no final decision has been made and diplomatic channels remain open.
  • "Washington called on Dual U.S.-Iranian Citizens to Leave Iran", Al Arabiya reported.
  • At least two unsanctioned supertankers are departing Venezuelan waters carrying crude oil, according to reported citing TankerTrackers.
  • US Treasury Secretary Bessent posted that he was pleased to hear a strong, shared desire to quickly address key vulnerabilities in critical minerals supply chains; "I am optimistic that nations will pursue prudent derisking over decoupling".

US Event Calendar

  • 8:30 am: Dec CPI MoM, est. 0.3%
  • 8:30 am: Dec Core CPI MoM, est. 0.3%
  • 8:30 am: Dec CPI YoY, est. 2.7%, prior 2.7%
  • 8:30 am: Dec Core CPI YoY, est. 2.71%, prior 2.6%
  • 8:30 am: Dec CPI Index NSA, est. 324.17, prior 324.12
  • 8:30 am: Dec Core CPI Index SA, est. 332.06, prior 331.07
  • 10:00 am: Oct New Home Sales, est. 715k
  • 10:00 am: Oct New Home Sales MoM, est. -10.63%
  • 2:00 pm: Dec Federal Budget Balance, est. -152.5b, prior -173.3b

DB's Jim Reid concludes the overnight wrap

Morning from Helsinki where it's a reasonably mild -8 degrees. I've spent 2026 so far chasing the cold with -15 in Alps at the start of the year, a rare -7 degrees in Surrey last week and now 4 Nordic cities in 2 days. Most of the time I've been trying not to fall over to break the screws in my back or to further damage knees that will soon need replacing. If I were a racehorse, I suspect a few emotional goodbyes would be coming soon.   

There have been lots of icy patches to avoid in markets over the last 24 hours as 2026 continues to be the year of the headline even if most markets have enjoyed the ride so far. The main story this week, and there is competition, are the continued developments and market reaction around the Federal Reserve, after US prosecutors launched a criminal investigation that’s revived fears around central bank independence. That helped push gold (+1.95%) and silver (+6.57%) to new records yesterday, and the move out of US assets also meant the dollar and US Treasuries lost ground as well. Ironically, if the ultimate aim is to reduce yields, it could have the opposite impact as the Fed may be keen not to be seen as reacting to political pressure at the front end, and the long-end may show some concern about the motives. In addition, if Powell was looking for a reason to stay on as a Governor after his term as Chair ends in May, this could be one. It's very unusual to stay on but Eccles did so in 1948 for 3.5 years to help protect and secure Fed independence after the Treasury were trying to fund large post war time debts. So there might be some parallels in 2026. Ironically one of the buildings being renovated, that is causing the DoJ investigation, is the Marrine S. Eccles Building. You can also see our US economists quick take on the developments here.

Meanwhile, investors have also faced an array of geopolitical headlines from Venezuela to Iran, which has pushed Brent crude (+0.84%) to a 7-week high of $63.87/bbl. Remember Rubio is meeting Danish and Greenland officials some time this week as well. We could also hear on IEEPA tariffs tomorrow at the next "opinions day". And there’s no immediate sign of any letup on the calendar either, as today will bring the US CPI print as well as the start of US Q4 earnings season. Yet despite all the noise, risk assets have been remarkably unfazed by everything, with the S&P 500 (+0.16%) and Europe’s STOXX 600 (+0.21%) both at new records.   

The prospect of Fed independence being eroded immediately induced a negative reaction for US assets, reminiscent of previous episodes where it looked like Powell might be removed. But even as the reaction followed a clear pattern, it was still fairly subdued relative to previous episodes last year, and the initial losses were pared back significantly. So while the Treasury yield curve saw a bear steepening with 10yr yields trading +4bps higher just before the US open, by the close the 2yr yield (+0.2bps) was virtually unchanged at 3.53%, while 10yr (+1.1bps to 4.18%) and the 30yr (+1.5bps to 4.83%) saw modest increases. Despite higher yields, the US Dollar lost ground, weakening -0.27% against the Euro. The reversal of the initial move was particularly clear for equities, as S&P 500 futures were initially down -0.79% shortly after the European open, before the index rose +0.16% to a new record.  

A few arguments were put forward as to why there wasn’t a bigger reaction, but an important one was the resistance from a couple of Senate Republicans to Trump’s move, raising questions as to how successful any attempts to erode the Fed’s independence would be. In particular, Republican Senator Thom Tillis, who sits on the Senate Banking Committee, said that he would oppose confirming any nominee for the Fed until this was resolved. That’s significant, because the Senate Banking Committee is split 13-11 to the Republicans, so Tillis’ opposition would lead to a split if the others voted along party lines. And there were other Republican Senators who voiced concern, with Lisa Murkowski saying that “the administration’s investigation is nothing more than an attempt at coercion.” On top of that, another argument for the limited reaction was that Powell’s term as Chair was already ending in May, so a change in leadership was expected anyway in the next few months. Moreover, previous episodes last year have also led to the sense that the administration don’t want a negative bond market reaction, given long-end yields flow through to mortgage rates, which they’d prefer to keep contained. Clearly it’s a moving situation though, and these are a huge couple of weeks for the Fed, as the Supreme Court are hearing arguments in the Lisa Cook case on Jan 21, ahead of the FOMC meeting on Jan 27-28.

One asset class that did hold on to almost all of its move were precious metals, which surged to fresh records with gold (+1.97%) up to $4,598/oz, and silver (+6.57%) up to $85.10/oz. In addition to investors becoming more concerned about potential currency debasement and future inflation, these were supported by the ongoing geopolitical uncertainty. This related in particular to possible US steps towards Iran and late in the day Trump posted that “effective immediately” any country “doing business” with Iran will pay a tariff 25% on trade with the US. In theory, this would most impact countries across Asia, with China being Iran’s biggest trading partner.

However, we’ve not yet heard any further details or an executive order implementing this tariff threat, and markets have taken Trump’s post in their stride overnight. The Shanghai Comp is flat and the Hang Seng up +0.94%. Elsewhere Japanese stocks are flying, but in line with where futures were this time yesterday during their holiday, with the Nikkei (+3.21%) responding to the media speculation since Friday that Takaichi is considering a snap lower house election as early as February. Elsewhere the KOSPI (+1.13%) and the S&P/ASX 200 (+0.59%) are also performing well. S&P 500 (-0.14%) and NASDAQ 100 (-0.31%) futures are trading slightly lower though.  

Coming back to Japan, the election fever has seen the yen (-0.39%) fall to its lowest level since July 2024, trading at 158.76 against the dollar, and 10-year (+5.7bps), 20-year (+5.8bps), and 30-year (+6.1bps) JGBs trading at 2.15%, 3.13%, and 3.46%, respectively this morning.  

Looking forward, the next big test will be the US CPI print, which is out at 13:30 London time today. As a reminder, the last print came on the softer side, but there were various methodological issues from the shutdown which meant it was treated with caution. For instance, the shelter numbers saw a huge drop-off that’s more usually consistent with recessions, hence we saw some scepticism around the numbers. For this time round, our US economists expect the print to come in on the stronger side, unwinding some of the distortions from the government shutdown. So they expect headline CPI to come in at a monthly +0.36%, with core pretty similar at +0.35%.

Ahead of all that, equities put in a steady performance on both sides of the Atlantic yesterday, with the S&P 500 (+0.16%) inching up to a new record. However, financials were an underperformer, and the KBW Bank Index (-0.95%) lost ground after Trump’s post that he was calling for a one-year cap on credit card interest rates of 10%. How realistic that is to implement is a moot point and it may actually reduce credit to the poorer population. So an interesting set up for JP Morgan (-1.43%) to kick off earnings season before the bell today.

Elsewhere there were stronger performances, with consumer staples (+1.42%) the top-performing sector in the S&P 500 as Walmart rose +3.00% after NASDAQ’s announcement that they’d join the NASDAQ 100 on Jan 20. The Mag-7 (-0.03%) had a mixed session, but Alphabet (+1.00%) became the latest tech giant to cross the $4trn valuation mark as Google confirmed a “multi-year deal” to power the AI technology for Apple’s iPhones. While Microsoft and Apple also crossed the $4trn level last year, Nvidia is currently the only company with a higher valuation than Alphabet, which has surged by over 100% from post-Liberation Day lows last spring.

Over in Europe yesterday, markets had put in a stronger performance, as they weren’t affected as much by the Federal Reserve news. So sovereign bonds rallied across the continent, with yields on 10yr bunds (-1.2bps), OATs (-1.0bps) and BTPs (-1.4bps) all coming down. In addition, equities also outperformed, with the STOXX 600 (+0.21%) at a new record, whilst the DAX (+0.57%) advanced for a 10th consecutive session for the first time since summer 2024. In fact, if we get an 11th advance today, it would be the longest run of gains for the DAX since 2014.

Looking at the day ahead, and data releases include the US CPI print for December, along with the NFIB’s small business optimism index for December. Central bank speakers include BoE Governor Bailey, the ECB’s Kocher, and the Fed’s Musalem and Barkin. Earnings releases include JPMorgan Chase and BNY Mellon.

Tyler Durden Tue, 01/13/2026 - 08:40

Core CPI Prints Cooler Than Expected In December, Near 5 Year Lows

Core CPI Prints Cooler Than Expected In December, Near 5 Year Lows

On the heels of 'solid' labor market data from BLS (lower unemployment), ADP (weekly employment change remaining positive), and a rebound in Small Business Optimism; this morning we get a glimpse of the other side of The Fed's mandate as the last CPI print for 2025 prints. From what we can tell, President Trump did not drop any hints this time ahead of the release which was expected to be flat from November's prints.

The headline CPI print rose 0.3% MoM (vs +0.3% MoM exp) driving prices up 2.7% on a YoY basis (vs +2.7% YoY exp)...

Source: Bloomberg

Many expected a December pickup due to the unwinding of distortions from data-collection disruptions during the government shutdown, which amplified seasonal discounting in November.

Under the hood, Goods inflation was unch while Services and Food led the price increases...

Source: Bloomberg

Overall shelter inflation continues to slide on a YoY basis:

  • December Shelter inflation up 0.4% MoM, translating into 3.2% YoY, down from 3.3% YoY in Nov

  • December Rent inflation up 0.3% MoM, translating into 2.9% YoY, down from 3.3% YoY in Nov

The more stable (and most watched) Core CPI was expected to rise from +2.6% YoY to +2.7% YoY but was surprisingly cooler up just 0.2% MoM and steady at +2.6% YoY - the lowest since March 2021...

Source: Bloomberg

Core Goods saw deflation on a MoM basis while Services prices accelerated a little...

Source: Bloomberg

The Fed's 'old favorite' inflation signal - SupreCore (Services Ex-Shelter) - slowed once again on a YoY basis, now at its slowest since Sept 2021...

Source: Bloomberg

Recreation Services saw a significant jump on a MoM basis while Education Services saw notable deflation MoM...

Source: Bloomberg

And if you want someone to blame for higher prices - it's your Recreational time...

Source: Bloomberg

...with a record increase in Movie & Sports Admission costs... World Cup & UFC?

Source: Bloomberg

This is clearly a more convincing sign that inflation is on a downward path after November's shutdown-distorted data.

According to JPM's Market Intel team, this is the market reaction matrix, and probability:

  • Core MoM prints above 0.45%. SPX loses 1.25% - 2.5%: Probability 5.0%

  • Core MoM prints between 0.40% - 0.45%. SPX gains 0.25% to loses 75bps: Probability 32.5%

  • Core MoM prints between 0.35% - 0.40%. SPX gains 0.25% to 0.75%: Probability 40.0%

  • Core MoM prints between 0.30% - 0.35%. SPX gains 1% - 1.5%: Probability 20.0%

  • Core MoM prints below 0.30%. SPX gains 1.25% - 1.75%: Probability 2.5%

Finally, for now, we seem to be avoiding a 1970s redux in Fed policy error helping to re-ignite an inflationary rebound...

Source: Bloomberg

...but time will tell.

Tyler Durden Tue, 01/13/2026 - 08:39

Core CPI Prints Cooler Than Expected In December, Near 5 Year Lows

Core CPI Prints Cooler Than Expected In December, Near 5 Year Lows

On the heels of 'solid' labor market data from BLS (lower unemployment), ADP (weekly employment change remaining positive), and a rebound in Small Business Optimism; this morning we get a glimpse of the other side of The Fed's mandate as the last CPI print for 2025 prints. From what we can tell, President Trump did not drop any hints this time ahead of the release which was expected to be flat from November's prints.

The headline CPI print rose 0.3% MoM (vs +0.3% MoM exp) driving prices up 2.7% on a YoY basis (vs +2.7% YoY exp)...

Source: Bloomberg

Many expected a December pickup due to the unwinding of distortions from data-collection disruptions during the government shutdown, which amplified seasonal discounting in November.

Under the hood, Goods inflation was unch while Services and Food led the price increases...

Source: Bloomberg

Overall shelter inflation continues to slide on a YoY basis:

  • December Shelter inflation up 0.4% MoM, translating into 3.2% YoY, down from 3.3% YoY in Nov

  • December Rent inflation up 0.3% MoM, translating into 2.9% YoY, down from 3.3% YoY in Nov

The more stable (and most watched) Core CPI was expected to rise from +2.6% YoY to +2.7% YoY but was surprisingly cooler up just 0.2% MoM and steady at +2.6% YoY - the lowest since March 2021...

Source: Bloomberg

Core Goods saw deflation on a MoM basis while Services prices accelerated a little...

Source: Bloomberg

The Fed's 'old favorite' inflation signal - SupreCore (Services Ex-Shelter) - slowed once again on a YoY basis, now at its slowest since Sept 2021...

Source: Bloomberg

Recreation Services saw a significant jump on a MoM basis while Education Services saw notable deflation MoM...

Source: Bloomberg

And if you want someone to blame for higher prices - it's your Recreational time...

Source: Bloomberg

...with a record increase in Movie & Sports Admission costs... World Cup & UFC?

Source: Bloomberg

This is clearly a more convincing sign that inflation is on a downward path after November's shutdown-distorted data.

According to JPM's Market Intel team, this is the market reaction matrix, and probability:

  • Core MoM prints above 0.45%. SPX loses 1.25% - 2.5%: Probability 5.0%

  • Core MoM prints between 0.40% - 0.45%. SPX gains 0.25% to loses 75bps: Probability 32.5%

  • Core MoM prints between 0.35% - 0.40%. SPX gains 0.25% to 0.75%: Probability 40.0%

  • Core MoM prints between 0.30% - 0.35%. SPX gains 1% - 1.5%: Probability 20.0%

  • Core MoM prints below 0.30%. SPX gains 1.25% - 1.75%: Probability 2.5%

Finally, for now, we seem to be avoiding a 1970s redux in Fed policy error helping to re-ignite an inflationary rebound...

Source: Bloomberg

...but time will tell.

Tyler Durden Tue, 01/13/2026 - 08:39

JPM Kicks Off Q4 Earnings Season With Rare Miss Driven By Weakness In Debt Underwriting

JPM Kicks Off Q4 Earnings Season With Rare Miss Driven By Weakness In Debt Underwriting

Ahead of the official start of earnings season this morning when JPM reported Q4 results, Goldman's head of Delta One Rich Privorotsky wrote that "attention now turns to JPM to set tone for earnings seasons. Prices/multiples are elevated across the sector so hard to argue expectations are low.  Focus on NII/NIM durability as deposit costs and loan pricing adjust… trading and IB momentum… expense discipline against the now well-telegraphed ~$105bn 2026 expense guide (~10% increase) … and any change in credit quality (likely still benign near-term)."  

With that in mind, moments ago JPM reported Q1 earnings that while beating on sales and trading, unexpectedly missed on revenue and earnings, with traders pointing to a rare miss in investment-banking fees which fell in Q4, missing the firm’s own guidance from just last month. The biggest US bank generated $2.35 billion from the business in the last three months of 2025, down 5% from a year earlier, according to a statement Tuesday. The firm said in December that it expected a percentage gain in the “low single digits.”

The investment-banking results were largely driven by a surprise 2% decline in debt-underwriting fees while analysts expected a 19% gain. 

This was partially offset by stronger than expected Q4 trading revenue, which came in at $8.24 billion, ahead of even the highest estimate of analysts in the survey, with both equity and fixed-income traders beating expectations.

As we previewed yesterday, JPMorgan kicks off the banking industry’s Q2 results Tuesday, with megabank rivals Bank of America, Wells Fargo, Citigroup, Goldman Sachs Group Inc. and Morgan Stanley slated for Wednesday and Thursday. The group’s is expected to post its second-highest annual profit ever, boosted by President Donald Trump’s policy changes.

Here is a snapshot of what JPM reported:

  • Net Income $13.0BN, down 7% YoY 
  • Full year 2025 Net Income was $57 billion, which short of beating its 2024 record, which was the highest annual profit in the history of American banking.
  • EPS $4.63, Missing estimates of $4.97
  • Adjusted revenue $46.77 billion, beating estimates $46.35 billion; This was driven by NII of $25.11B, up 7% YoY; and NIR of $21.7B, up 7% YoY
    • Markets revenue of $8.2B, up 17% YoY
    • FICC sales & trading revenue $5.38 billion, +7.5% y/y, estimate $5.27 billion
    • Equities sales & trading revenue $2.86 billion, +40% y/y, estimate $2.7 billion
    • Investment banking revenue $2.55 billion, -1.9% y/y, estimate $2.65 billion
    • Advisory revenue $1.03 billion, -2.5% y/y, estimate $953.9 million
    • Equity underwriting rev. $416 million, -16% y/y, estimate $499.5 million
    • Debt underwriting rev. $898 million, -2.5% y/y, estimate $1.1 billion

Some more highlights here:

  • NII ex. Markets of $23.9B, up 4% YoY, reflecting the impact of higher deposit balances, as well as higher revolving balances in Card Services, largely offset by the impact of lower rates
  • NIR ex. Markets of $14.7B, up 7% YoY, driven by higher asset management fees in AWM and CCB, higher auto operating lease income and higher Payments fees, partially offset by lower card income
  • Expense of $24.0B, up 5% YoY, driven by higher compensation, including higher revenue-related compensation and growth in front office employees, as well as higher auto lease depreciation, higher brokerage expense and distribution fees and higher occupancy expense, partially offset by an FDIC special assessment accrual release

Especially notable is that in Q4, JPM's reserve build soared to $2.1BN, highest since Covid, reflecting $2.2BN reserve established for forward purchase commitment of Apple credit card business, which must have been an epic disaster under Goldman. Combined with $2.51BN in charge offs (which was below estimates of $2.56BN), this meant that total credit costs were a whopping $4.7 billion, also highest since covid.

Some more details from the quarter: 

  • Loans $1.49 trillion, +11% y/y, beating estimate $1.45 trillion
  • Total deposits $2.56 trillion, missing estimate $2.58 trillion
  • Compensation expenses $13.12 billion, +5.2% y/y, beating estimate $13.74 billion
  • Non-interest expenses $23.98 billion, +5.4% y/y, higher than estimate $24.65 billion
  • Net yield on interest-earning assets 2.54% vs. 2.61% y/y, beating estimate 2.53%
  • Standardized CET1 ratio 14.5% vs. 15.7% y/y, estimate 14.8%
  • Managed overhead ratio 51%, missing estimate 53.1%
  • Return on equity 15%, missing estimate 15.7%
  • Return on tangible common equity 18%, missing estimate 18.9%
  • Tangible book value per share $107.56, beating estimate $106.66
  • Book value per share $126.99, estimate $126.47
  • Cash and due from banks $21.74 billion, estimate $22.24 billion

Some more:

Assets under management $4.79 trillion, beating estimate $4.73 trillion

Turning to the all important Commercial and Investment Bank division, it was a story of two opposing halves: solid Markets revenue and disappointing Banking performance. Starting with the former: 

  • Markets revenue of $8.2B, up 17% YoY
    • Fixed Income Markets revenue of $5.38B, beating est of $5.27B, up 7% YoY, driven by strong performance in Securitized Products, Rates and Currencies & Emerging Markets, largely offset by lower revenue in Credit
    • Equity Markets revenue of $2.86B, beating est of $2.7B, up 40% YoY, driven by higher revenue across products, particularly in Prime
  • Securities Services revenue of $1.5B, up 13% YoY, driven by higher deposit balances as well as fee growth on higher market levels and client activity

That's the good news. The not so good news was the surprising weakness in Investment Banking and especially Debt Underwriting:

  • IB revenue of $2.6B, down 2% YoY; IB fees down 5% YoY, driven by lower fees across all products
    • Equity underwriting rev. $416 million, -16% y/y, missing estimate $499.5 million
    • Debt underwriting rev. $898 million, -2.5% y/y, missing estimate $1.1 billion
  • The only silver lining: advisory revenue $1.03 billion, which also declined 2.5% y/y, but beat estimates of $953.9 million

“The U.S. economy has remained resilient,” said CEO Jamie Dimon adding that “while labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy.” Dimon said those conditions “could persist for some time, particularly with ongoing fiscal stimulus, the benefits of deregulation and the Fed’s recent monetary policy. However, as usual, we remain vigilant, and markets seem to underappreciate the potential hazards—including from complex geopolitical conditions, the risk of sticky inflation and elevated asset prices.”

 

In the first three quarters of last year, the biggest banks increased their loan books at the fastest pace since the financial crisis — boosting net interest income.

JPMorgan’s loans climbed 4% in the last three months of the year from the previous quarter. NII climbed 7% from a year earlier. The bank said in a presentation Tuesday that it expects to earn about $103 billion in NII in 2026.

 

The bank also reiterated that it expects to spend about $105 billion this year. Marianne Lake, who runs the bank’s consumer and community bank, previewed that outlook — which was higher than analysts had been expecting — at an industry conference last month, saying the biggest driver is “volume- and growth-related expenses.”

 

    +1% pre mkt... PPNR beat driven by better NII, fees and lower expenses (lower comp). In his commentary, Dimon noted a resilient economy with consumers continuing to spend though acknowledged that labor markets have softened and the market seems to underappreciate potential hazards... the key focus here will be

Finally, while the historical numbers were mixed, all eyes were on the bank's guidance. Here, JPM reiterated what we already knew - expenses would be $105bn for FY26...

... and NII ex markets was $95bn...

... but the bank gave a markets NII of ~$8bn, putting total NII modestly above consensus, and helping stabilize the stock.

Putting it all together, the market reaction was mixed, with the price first sliding in premarket trading on the IB miss, before rebounding on the strong markets revenue and the NII forecast which was modestly above consensus, before eventually stabilizing to unchanged as much of what was reported was already known.

Full Q4 investor presentation below (pdf link).

JPM Q4 Earnings by Zerohedge

Tyler Durden Tue, 01/13/2026 - 08:18

JPM Kicks Off Q4 Earnings Season With Rare Miss Driven By Weakness In Debt Underwriting

JPM Kicks Off Q4 Earnings Season With Rare Miss Driven By Weakness In Debt Underwriting

Ahead of the official start of earnings season this morning when JPM reported Q4 results, Goldman's head of Delta One Rich Privorotsky wrote that "attention now turns to JPM to set tone for earnings seasons. Prices/multiples are elevated across the sector so hard to argue expectations are low.  Focus on NII/NIM durability as deposit costs and loan pricing adjust… trading and IB momentum… expense discipline against the now well-telegraphed ~$105bn 2026 expense guide (~10% increase) … and any change in credit quality (likely still benign near-term)."  

With that in mind, moments ago JPM reported Q1 earnings that while beating on sales and trading, unexpectedly missed on revenue and earnings, with traders pointing to a rare miss in investment-banking fees which fell in Q4, missing the firm’s own guidance from just last month. The biggest US bank generated $2.35 billion from the business in the last three months of 2025, down 5% from a year earlier, according to a statement Tuesday. The firm said in December that it expected a percentage gain in the “low single digits.”

The investment-banking results were largely driven by a surprise 2% decline in debt-underwriting fees while analysts expected a 19% gain. 

This was partially offset by stronger than expected Q4 trading revenue, which came in at $8.24 billion, ahead of even the highest estimate of analysts in the survey, with both equity and fixed-income traders beating expectations.

As we previewed yesterday, JPMorgan kicks off the banking industry’s Q2 results Tuesday, with megabank rivals Bank of America, Wells Fargo, Citigroup, Goldman Sachs Group Inc. and Morgan Stanley slated for Wednesday and Thursday. The group’s is expected to post its second-highest annual profit ever, boosted by President Donald Trump’s policy changes.

Here is a snapshot of what JPM reported:

  • Net Income $13.0BN, down 7% YoY 
  • Full year 2025 Net Income was $57 billion, which short of beating its 2024 record, which was the highest annual profit in the history of American banking.
  • EPS $4.63, Missing estimates of $4.97
  • Adjusted revenue $46.77 billion, beating estimates $46.35 billion; This was driven by NII of $25.11B, up 7% YoY; and NIR of $21.7B, up 7% YoY
    • Markets revenue of $8.2B, up 17% YoY
    • FICC sales & trading revenue $5.38 billion, +7.5% y/y, estimate $5.27 billion
    • Equities sales & trading revenue $2.86 billion, +40% y/y, estimate $2.7 billion
    • Investment banking revenue $2.55 billion, -1.9% y/y, estimate $2.65 billion
    • Advisory revenue $1.03 billion, -2.5% y/y, estimate $953.9 million
    • Equity underwriting rev. $416 million, -16% y/y, estimate $499.5 million
    • Debt underwriting rev. $898 million, -2.5% y/y, estimate $1.1 billion

Some more highlights here:

  • NII ex. Markets of $23.9B, up 4% YoY, reflecting the impact of higher deposit balances, as well as higher revolving balances in Card Services, largely offset by the impact of lower rates
  • NIR ex. Markets of $14.7B, up 7% YoY, driven by higher asset management fees in AWM and CCB, higher auto operating lease income and higher Payments fees, partially offset by lower card income
  • Expense of $24.0B, up 5% YoY, driven by higher compensation, including higher revenue-related compensation and growth in front office employees, as well as higher auto lease depreciation, higher brokerage expense and distribution fees and higher occupancy expense, partially offset by an FDIC special assessment accrual release

Especially notable is that in Q4, JPM's reserve build soared to $2.1BN, highest since Covid, reflecting $2.2BN reserve established for forward purchase commitment of Apple credit card business, which must have been an epic disaster under Goldman. Combined with $2.51BN in charge offs (which was below estimates of $2.56BN), this meant that total credit costs were a whopping $4.7 billion, also highest since covid.

Some more details from the quarter: 

  • Loans $1.49 trillion, +11% y/y, beating estimate $1.45 trillion
  • Total deposits $2.56 trillion, missing estimate $2.58 trillion
  • Compensation expenses $13.12 billion, +5.2% y/y, beating estimate $13.74 billion
  • Non-interest expenses $23.98 billion, +5.4% y/y, higher than estimate $24.65 billion
  • Net yield on interest-earning assets 2.54% vs. 2.61% y/y, beating estimate 2.53%
  • Standardized CET1 ratio 14.5% vs. 15.7% y/y, estimate 14.8%
  • Managed overhead ratio 51%, missing estimate 53.1%
  • Return on equity 15%, missing estimate 15.7%
  • Return on tangible common equity 18%, missing estimate 18.9%
  • Tangible book value per share $107.56, beating estimate $106.66
  • Book value per share $126.99, estimate $126.47
  • Cash and due from banks $21.74 billion, estimate $22.24 billion

Some more:

Assets under management $4.79 trillion, beating estimate $4.73 trillion

Turning to the all important Commercial and Investment Bank division, it was a story of two opposing halves: solid Markets revenue and disappointing Banking performance. Starting with the former: 

  • Markets revenue of $8.2B, up 17% YoY
    • Fixed Income Markets revenue of $5.38B, beating est of $5.27B, up 7% YoY, driven by strong performance in Securitized Products, Rates and Currencies & Emerging Markets, largely offset by lower revenue in Credit
    • Equity Markets revenue of $2.86B, beating est of $2.7B, up 40% YoY, driven by higher revenue across products, particularly in Prime
  • Securities Services revenue of $1.5B, up 13% YoY, driven by higher deposit balances as well as fee growth on higher market levels and client activity

That's the good news. The not so good news was the surprising weakness in Investment Banking and especially Debt Underwriting:

  • IB revenue of $2.6B, down 2% YoY; IB fees down 5% YoY, driven by lower fees across all products
    • Equity underwriting rev. $416 million, -16% y/y, missing estimate $499.5 million
    • Debt underwriting rev. $898 million, -2.5% y/y, missing estimate $1.1 billion
  • The only silver lining: advisory revenue $1.03 billion, which also declined 2.5% y/y, but beat estimates of $953.9 million

“The U.S. economy has remained resilient,” said CEO Jamie Dimon adding that “while labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy.” Dimon said those conditions “could persist for some time, particularly with ongoing fiscal stimulus, the benefits of deregulation and the Fed’s recent monetary policy. However, as usual, we remain vigilant, and markets seem to underappreciate the potential hazards—including from complex geopolitical conditions, the risk of sticky inflation and elevated asset prices.”

 

In the first three quarters of last year, the biggest banks increased their loan books at the fastest pace since the financial crisis — boosting net interest income.

JPMorgan’s loans climbed 4% in the last three months of the year from the previous quarter. NII climbed 7% from a year earlier. The bank said in a presentation Tuesday that it expects to earn about $103 billion in NII in 2026.

 

The bank also reiterated that it expects to spend about $105 billion this year. Marianne Lake, who runs the bank’s consumer and community bank, previewed that outlook — which was higher than analysts had been expecting — at an industry conference last month, saying the biggest driver is “volume- and growth-related expenses.”

 

    +1% pre mkt... PPNR beat driven by better NII, fees and lower expenses (lower comp). In his commentary, Dimon noted a resilient economy with consumers continuing to spend though acknowledged that labor markets have softened and the market seems to underappreciate potential hazards... the key focus here will be

Finally, while the historical numbers were mixed, all eyes were on the bank's guidance. Here, JPM reiterated what we already knew - expenses would be $105bn for FY26...

... and NII ex markets was $95bn...

... but the bank gave a markets NII of ~$8bn, putting total NII modestly above consensus, and helping stabilize the stock.

Putting it all together, the market reaction was mixed, with the price first sliding in premarket trading on the IB miss, before rebounding on the strong markets revenue and the NII forecast which was modestly above consensus, before eventually stabilizing to unchanged as much of what was reported was already known.

Full Q4 investor presentation below (pdf link).

JPM Q4 Earnings by Zerohedge

Tyler Durden Tue, 01/13/2026 - 08:18

L3Harris Rockets Higher On "First-Of-It's Kind" Pentagon Investment Into Missile Unit

L3Harris Rockets Higher On "First-Of-It's Kind" Pentagon Investment Into Missile Unit

L3Harris Technologies (our top stock for the Hemispheric Defense Theme) announced on Tuesday a "first-of-its-kind" proposed partnership with the Department of War (DoW) to significantly boost solid rocket motor production.

The DoW will inject $1 billion into L3Harris' Missile Solutions unit through a convertible preferred investment, creating a direct link between the federal government and a major weapons manufacturer as the US races to increase missile production. The investment would automatically convert into common equity upon an initial public offering.

Under the plan, L3Harris' Missile Solutions unit will go public in the second half of 2026, creating a pure-play missile propulsion company built around the former Aerojet Rocketdyne business. L3Harris will retain control.

"Since its acquisition of Aerojet Rocketdyne, L3Harris has significantly invested to transform and grow its production operations, and recently created the Missile Solutions business, combining all aspects of its capabilities in support of offensive and defensive missile systems," L3Harris wrote in a press release, adding the investment will help expand capacity for the DoW's missile systems, such as PAC-3, THAAD, Tomahawk and Standard Missile.

L3Harris CEO Christopher Kubasik stated, "We're taking action to build today's 'Arsenal of Freedom' by launching a pure-play missile solutions provider. Recent Trump Administration actions have placed renewed emphasis on strengthening the defense industrial base and reinvigorating competition following a 30-year wave of consolidation. Building on several years of sustained investment and operational improvements by L3Harris, this new company will serve as a key partner to the DoW in supporting efforts to deter and defeat America's adversaries."

In premarket trading, L3Harris shares are up nearly 10%.

If those gains are held into the cash session, this would mark the largest intraday up move since October 2023.

L3Harris has been a top pick in our Western Hemisphere Defense theme since late May, mostly based on the fact that DoW's reposturing and fortifying the hemisphere would take new investments where L3Harris would stand to greatly benefit. L3Harris is up more than 50% since our report.

Read the report (May 2025):

Last week, Trump called for a 50% increase in U.S. military spending by 2027. The race to fortify the Western Hemisphere is well underway, and L3Harris stands out as a defense contractor poised to benefit from those trends.

Tyler Durden Tue, 01/13/2026 - 07:45

L3Harris Rockets Higher On "First-Of-It's Kind" Pentagon Investment Into Missile Unit

L3Harris Rockets Higher On "First-Of-It's Kind" Pentagon Investment Into Missile Unit

L3Harris Technologies (our top stock for the Hemispheric Defense Theme) announced on Tuesday a "first-of-its-kind" proposed partnership with the Department of War (DoW) to significantly boost solid rocket motor production.

The DoW will inject $1 billion into L3Harris' Missile Solutions unit through a convertible preferred investment, creating a direct link between the federal government and a major weapons manufacturer as the US races to increase missile production. The investment would automatically convert into common equity upon an initial public offering.

Under the plan, L3Harris' Missile Solutions unit will go public in the second half of 2026, creating a pure-play missile propulsion company built around the former Aerojet Rocketdyne business. L3Harris will retain control.

"Since its acquisition of Aerojet Rocketdyne, L3Harris has significantly invested to transform and grow its production operations, and recently created the Missile Solutions business, combining all aspects of its capabilities in support of offensive and defensive missile systems," L3Harris wrote in a press release, adding the investment will help expand capacity for the DoW's missile systems, such as PAC-3, THAAD, Tomahawk and Standard Missile.

L3Harris CEO Christopher Kubasik stated, "We're taking action to build today's 'Arsenal of Freedom' by launching a pure-play missile solutions provider. Recent Trump Administration actions have placed renewed emphasis on strengthening the defense industrial base and reinvigorating competition following a 30-year wave of consolidation. Building on several years of sustained investment and operational improvements by L3Harris, this new company will serve as a key partner to the DoW in supporting efforts to deter and defeat America's adversaries."

In premarket trading, L3Harris shares are up nearly 10%.

If those gains are held into the cash session, this would mark the largest intraday up move since October 2023.

L3Harris has been a top pick in our Western Hemisphere Defense theme since late May, mostly based on the fact that DoW's reposturing and fortifying the hemisphere would take new investments where L3Harris would stand to greatly benefit. L3Harris is up more than 50% since our report.

Read the report (May 2025):

Last week, Trump called for a 50% increase in U.S. military spending by 2027. The race to fortify the Western Hemisphere is well underway, and L3Harris stands out as a defense contractor poised to benefit from those trends.

Tyler Durden Tue, 01/13/2026 - 07:45

2026 Earnings Outlook: Another Year Of Optimism

2026 Earnings Outlook: Another Year Of Optimism

Authored by Lance Roberts via RealInvestmentAdvice.com,

The Wall Street consensus forecast for 2026 earnings growth is strong by historical standards. Analysts are giddy and projecting another year of double-digit growth in S&P 500 earnings per share (EPS). FactSet’s most recent data showed an expected 2026 earnings growth rate for the S&P 500 of about 15 percent. That is well above the long‑term average of roughly 8–9 percent. If FactSet is correct, such would mark a third consecutive year of double‑digit earnings gains.

Notably, the 2026 earnings assumptions are driven by the continued strength in the large technology and communications sectors. With those sectors dominated by the “Magnificent Seven,” it is hoped that they continue to contribute disproportionately to earnings growth. Those seven companies alone are forecast to grow earnings strongly once again. As shown, since 2018, there has been very little earnings growth from the bottom 493 companies.

Furthermore, despite the exuberance from Wall Street analysts regarding the overall index, expectations for 2026 earnings improved only for the top seven companies, while estimates for the bottom 493 have seen virtually no change since April.

Notably, these 2026 earnings forecasts are influenced by broader market return expectations. For example, many sell‑side strategists are assigning S&P 500 price targets that embed this earnings growth outlook. For example, as shown, current analysts’ forecasts imply that the index could rise between 8% and 17% in 2026. However, to justify that price increase (P), they assume an earnings (E) rate that keeps valuations (P/E) stable.

In other words, Wall Street hopes that earnings expansion rather than valuation multiples will drive market gains. However, over the last 5 years, multiple expansions led the charge as earnings growth failed to keep pace.

This optimism currently comes against a backdrop of a resilient U.S. economy. GDP growth forecasts center on continued expansion, albeit modest, with some estimates indicating annual growth of around 2 percent. That stability reinforces the case for continued corporate profitability. One support is fiscal policy from the recently passed OBBB, which provides tax relief and deregulation. Still, this type of projected growth is not guaranteed. As such, investors should recognize that earnings forecasts reflect analysts’ estimates at a given moment, which is always “bullish” to ensure that Wall Street can sell you products.

As we previously reported, the accuracy of analysts’ estimates is far down their list of concerns.

However, instead of focusing on Wall Street estimates, which will likely be revised lower in the future, investors should pay closer attention to what will drive 2026 earnings growth.

The Link Between Economic Growth, Profit Margins, and Earnings

Earnings growth does not occur in a vacuum. Corporate profits are inherently a function of economic growth, pricing power, input costs, and labor dynamics. If the economy grows at a moderate pace, as most anticipate, corporate revenues are expected to expand in line with broader demand. Many forecasts for GDP growth in 2026 hover around the 1.8% to 3% range. Those estimates are driven partly by fiscal support and ongoing investment in sectors such as technology and infrastructure. This modest expansion provides a supportive backdrop for 2026 earnings, as historical correlations suggest. (Outliers are historically a function of recovery or impact from a crisis or recession)

At the same time, corporate profit margins in the S&P 500 are currently very high relative to historical norms. According to FactSet, the estimated net profit margin for the index is near its highest level since tracking began in 2008, at around 13.9%, compared to a ten-year average of 11%. We also see this in corporate profits as a percentage of real economic growth, which is at its highest deviation from the long-term profit growth trend in history.

Elevated margins suggest companies have maintained pricing power and cost control, even amid inflationary pressures. But these high margins raise questions about sustainability. Given the supply-demand imbalances (more demand than supply), which allow for elevated margins, it is worth noting that as the economy returns to more normalized growth rates, profit margins tend to follow. Such is particularly the case as inflation pressures subside, employment weakens, and competitive forces erode pricing power. Margin compression has historically dampened earnings growth. Even if revenues are rising, if rising costs cannot be passed on to consumers, they eat into profits.

Valuations also matter. As noted above, the current price-to-earnings ratio for the S&P 500 remains above historical averages, at approximately 22x forward earnings. Those valuation levels are also well above the five- and ten-year averages. In other words, the market is pricing in continued earnings momentum. Therefore, if growth slows toward historical norms or margins compress, elevated valuations will mean even modest earnings disappointments could result in share price declines rather than gains.

The most considerable risk to investors is that the 2026 earnings estimates, which are the most deviated above its 125-year growth trend, disappoint, and the markets reprice lower. As shown, historically, when earnings become deviated from actual economic activity, the mean reversion process is not kind to investors.

In this context, understanding the mechanics behind earnings expectations becomes critical. Analysts’ expectations for robust earnings growth assume that these economic and profit margin conditions remain supportive; however, any divergence from this script increases the risk of downward earnings revisions, valuation compression, and market volatility.

Analyst Optimism, Valuation Risk, and Structural Challenges

One of the enduring themes in earnings forecasting is the bias toward optimism early in the forecast cycle. Analysts typically issue forward earnings estimates at the start of a year and revise them lower later as actual economic and corporate results become available.

As noted above, such optimism is partly behavioral and partly structural; analysts often have incentives tied to institutional clients who favor growth narratives. When growth assumptions falter due to weaker demand, rising costs, or unforeseen macroeconomic shocks, analysts will typically revise their estimates downward. This creates the familiar pattern of “estimates drifting lower” over the course of the reporting year.

The current earnings growth consensus for 2026 is no exception. While forecasts indicate roughly 12.5–15% EPS growth, several structural vulnerabilities underpin these expectations. As discussed, profit margins are at elevated levels, which makes sustaining margin levels challenging in an environment where employment is declining.

Given that full-time employment is declining, which correlates with the reversal of economic growth rates, it is unsurprising that inflation and personal consumption are also trending lower. This is because employment, particularly full-time employment, supports economic supply and demand.

Second, sector concentration risk is significant. A significant portion of projected 2026 earnings growth stems from a small group of mega-cap technology companies. If these firms underperform or face regulatory, competitive, or macroeconomic headwinds, the impact on aggregate earnings could be disproportionately large. A concentrated earnings base magnifies downside risk because fewer companies are carrying the growth load. As we noted previously:

“While technology and AI-driven firms have recently become bright spots, their strength cannot offset broader corporate margin pressures. In Q2, S&P 500 earnings grew 6.4%, with 80 percent of companies beating estimates. But this masks a weakening breadth of growth, where earnings beats are concentrated in essentially just two sectors. There would have been no earnings growth without Megacap Technology and major Wall Street banks.”

Lastly, valuations remain historically high. Elevated price‑to‑earnings ratios reflect market confidence in future earnings growth. But high valuations also reduce the margin for error. If growth falls short of expectations, a multiple contraction is a likely outcome, resulting in stock price declines even if earnings do grow. Several market strategists caution that nearly all favorable assumptions must materialize for current valuations to be justified.

While analysts note that policy factors, such as deregulation and potential tax incentives, are a tailwind for earnings, their actual impact remains uncertain. Policy implementation timing, regulatory uncertainties, and shifting political landscapes can blunt or delay these effects. Investors should note that fiscal tailwinds often operate with lags and can be offset by rising costs elsewhere in the economy.

As such, investors should consider several key factors in 2026.

  • Expect Earnings Revisions: Analysts are historically optimistic in their early forecasts, and downward revisions are standard. Investors should monitor quarterly earnings guidance and track earnings revisions as one of the earliest indicators that actual performance may diverge from consensus. Early downward revisions often precede broader market corrections, so maintaining a disciplined watch on guidance can help you adjust risk exposure sooner.

  • Focus on Quality Over Momentum: Higher‑quality companies—those with strong balance sheets, consistent free cash flow, stable profit margins, and resilient business models—tend to outperform during periods of earnings disappointment. When consensus growth slows, lower‑quality or speculative names typically experience sharper drawdowns. Allocating capital toward quality can reduce downside risk.

  • Manage Valuation Risk: With forward price-to-earnings ratios above long-term averages, it is crucial to stay mindful of valuations. Avoid chasing valuations that imply perfect outcomes. If earnings growth disappoints, valuation compression is likely to occur. Use valuation metrics, such as the PEG ratio, to assess whether growth prospects justify current prices.

  • Monitor Economic Indicators: Keep a close eye on key macroeconomic data, including GDP growth, inflation trends, and labor market indicators. These indicators directly influence corporate revenues and margins. Early signs of a slowing economy or rising inflation pressures should prompt reevaluation of equity risk exposure.

  • Diversify Beyond the U.S. Market: The U.S. market valuations are high and heavily concentrated in a handful of mega‑cap tech names. Diversifying into international equities or sectors less dependent on narrow profit drivers can reduce concentration risk. Other markets may offer stronger valuations and more attractive earnings prospects if the U.S. slows.

  • Use Defensive Instruments Appropriately: In periods of earnings uncertainty, adding defensive instruments—such as high-quality bonds, low-volatility equities, or hedging strategies—can help mitigate downside risk. These positions typically underperform during strong rallies but provide ballast when earnings or economic data disappoint.

  • Prepare for Volatility: Volatility increases when analysts reduce earnings forecasts, and uncertainties mount. Investors should adopt a tactical approach that accounts for higher volatility, utilizing position sizing and stop-loss discipline to protect their capital. Volatility indicators such as the VIX can serve as early warning signals.

  • Revisit Fiscal and Policy Tailwinds: Assess how fiscal policy changes—such as tax incentives or deregulation—are actually impacting corporate profitability. If intended policy benefits fail to meet expectations, earnings momentum may weaken. Staying attuned to policy developments helps recalibrate expectations and positions.

Just remember, while all analysts are very bullish about 2026, there is no guarantee.

Tyler Durden Tue, 01/13/2026 - 07:20

2026 Earnings Outlook: Another Year Of Optimism

2026 Earnings Outlook: Another Year Of Optimism

Authored by Lance Roberts via RealInvestmentAdvice.com,

The Wall Street consensus forecast for 2026 earnings growth is strong by historical standards. Analysts are giddy and projecting another year of double-digit growth in S&P 500 earnings per share (EPS). FactSet’s most recent data showed an expected 2026 earnings growth rate for the S&P 500 of about 15 percent. That is well above the long‑term average of roughly 8–9 percent. If FactSet is correct, such would mark a third consecutive year of double‑digit earnings gains.

Notably, the 2026 earnings assumptions are driven by the continued strength in the large technology and communications sectors. With those sectors dominated by the “Magnificent Seven,” it is hoped that they continue to contribute disproportionately to earnings growth. Those seven companies alone are forecast to grow earnings strongly once again. As shown, since 2018, there has been very little earnings growth from the bottom 493 companies.

Furthermore, despite the exuberance from Wall Street analysts regarding the overall index, expectations for 2026 earnings improved only for the top seven companies, while estimates for the bottom 493 have seen virtually no change since April.

Notably, these 2026 earnings forecasts are influenced by broader market return expectations. For example, many sell‑side strategists are assigning S&P 500 price targets that embed this earnings growth outlook. For example, as shown, current analysts’ forecasts imply that the index could rise between 8% and 17% in 2026. However, to justify that price increase (P), they assume an earnings (E) rate that keeps valuations (P/E) stable.

In other words, Wall Street hopes that earnings expansion rather than valuation multiples will drive market gains. However, over the last 5 years, multiple expansions led the charge as earnings growth failed to keep pace.

This optimism currently comes against a backdrop of a resilient U.S. economy. GDP growth forecasts center on continued expansion, albeit modest, with some estimates indicating annual growth of around 2 percent. That stability reinforces the case for continued corporate profitability. One support is fiscal policy from the recently passed OBBB, which provides tax relief and deregulation. Still, this type of projected growth is not guaranteed. As such, investors should recognize that earnings forecasts reflect analysts’ estimates at a given moment, which is always “bullish” to ensure that Wall Street can sell you products.

As we previously reported, the accuracy of analysts’ estimates is far down their list of concerns.

However, instead of focusing on Wall Street estimates, which will likely be revised lower in the future, investors should pay closer attention to what will drive 2026 earnings growth.

The Link Between Economic Growth, Profit Margins, and Earnings

Earnings growth does not occur in a vacuum. Corporate profits are inherently a function of economic growth, pricing power, input costs, and labor dynamics. If the economy grows at a moderate pace, as most anticipate, corporate revenues are expected to expand in line with broader demand. Many forecasts for GDP growth in 2026 hover around the 1.8% to 3% range. Those estimates are driven partly by fiscal support and ongoing investment in sectors such as technology and infrastructure. This modest expansion provides a supportive backdrop for 2026 earnings, as historical correlations suggest. (Outliers are historically a function of recovery or impact from a crisis or recession)

At the same time, corporate profit margins in the S&P 500 are currently very high relative to historical norms. According to FactSet, the estimated net profit margin for the index is near its highest level since tracking began in 2008, at around 13.9%, compared to a ten-year average of 11%. We also see this in corporate profits as a percentage of real economic growth, which is at its highest deviation from the long-term profit growth trend in history.

Elevated margins suggest companies have maintained pricing power and cost control, even amid inflationary pressures. But these high margins raise questions about sustainability. Given the supply-demand imbalances (more demand than supply), which allow for elevated margins, it is worth noting that as the economy returns to more normalized growth rates, profit margins tend to follow. Such is particularly the case as inflation pressures subside, employment weakens, and competitive forces erode pricing power. Margin compression has historically dampened earnings growth. Even if revenues are rising, if rising costs cannot be passed on to consumers, they eat into profits.

Valuations also matter. As noted above, the current price-to-earnings ratio for the S&P 500 remains above historical averages, at approximately 22x forward earnings. Those valuation levels are also well above the five- and ten-year averages. In other words, the market is pricing in continued earnings momentum. Therefore, if growth slows toward historical norms or margins compress, elevated valuations will mean even modest earnings disappointments could result in share price declines rather than gains.

The most considerable risk to investors is that the 2026 earnings estimates, which are the most deviated above its 125-year growth trend, disappoint, and the markets reprice lower. As shown, historically, when earnings become deviated from actual economic activity, the mean reversion process is not kind to investors.

In this context, understanding the mechanics behind earnings expectations becomes critical. Analysts’ expectations for robust earnings growth assume that these economic and profit margin conditions remain supportive; however, any divergence from this script increases the risk of downward earnings revisions, valuation compression, and market volatility.

Analyst Optimism, Valuation Risk, and Structural Challenges

One of the enduring themes in earnings forecasting is the bias toward optimism early in the forecast cycle. Analysts typically issue forward earnings estimates at the start of a year and revise them lower later as actual economic and corporate results become available.

As noted above, such optimism is partly behavioral and partly structural; analysts often have incentives tied to institutional clients who favor growth narratives. When growth assumptions falter due to weaker demand, rising costs, or unforeseen macroeconomic shocks, analysts will typically revise their estimates downward. This creates the familiar pattern of “estimates drifting lower” over the course of the reporting year.

The current earnings growth consensus for 2026 is no exception. While forecasts indicate roughly 12.5–15% EPS growth, several structural vulnerabilities underpin these expectations. As discussed, profit margins are at elevated levels, which makes sustaining margin levels challenging in an environment where employment is declining.

Given that full-time employment is declining, which correlates with the reversal of economic growth rates, it is unsurprising that inflation and personal consumption are also trending lower. This is because employment, particularly full-time employment, supports economic supply and demand.

Second, sector concentration risk is significant. A significant portion of projected 2026 earnings growth stems from a small group of mega-cap technology companies. If these firms underperform or face regulatory, competitive, or macroeconomic headwinds, the impact on aggregate earnings could be disproportionately large. A concentrated earnings base magnifies downside risk because fewer companies are carrying the growth load. As we noted previously:

“While technology and AI-driven firms have recently become bright spots, their strength cannot offset broader corporate margin pressures. In Q2, S&P 500 earnings grew 6.4%, with 80 percent of companies beating estimates. But this masks a weakening breadth of growth, where earnings beats are concentrated in essentially just two sectors. There would have been no earnings growth without Megacap Technology and major Wall Street banks.”

Lastly, valuations remain historically high. Elevated price‑to‑earnings ratios reflect market confidence in future earnings growth. But high valuations also reduce the margin for error. If growth falls short of expectations, a multiple contraction is a likely outcome, resulting in stock price declines even if earnings do grow. Several market strategists caution that nearly all favorable assumptions must materialize for current valuations to be justified.

While analysts note that policy factors, such as deregulation and potential tax incentives, are a tailwind for earnings, their actual impact remains uncertain. Policy implementation timing, regulatory uncertainties, and shifting political landscapes can blunt or delay these effects. Investors should note that fiscal tailwinds often operate with lags and can be offset by rising costs elsewhere in the economy.

As such, investors should consider several key factors in 2026.

  • Expect Earnings Revisions: Analysts are historically optimistic in their early forecasts, and downward revisions are standard. Investors should monitor quarterly earnings guidance and track earnings revisions as one of the earliest indicators that actual performance may diverge from consensus. Early downward revisions often precede broader market corrections, so maintaining a disciplined watch on guidance can help you adjust risk exposure sooner.

  • Focus on Quality Over Momentum: Higher‑quality companies—those with strong balance sheets, consistent free cash flow, stable profit margins, and resilient business models—tend to outperform during periods of earnings disappointment. When consensus growth slows, lower‑quality or speculative names typically experience sharper drawdowns. Allocating capital toward quality can reduce downside risk.

  • Manage Valuation Risk: With forward price-to-earnings ratios above long-term averages, it is crucial to stay mindful of valuations. Avoid chasing valuations that imply perfect outcomes. If earnings growth disappoints, valuation compression is likely to occur. Use valuation metrics, such as the PEG ratio, to assess whether growth prospects justify current prices.

  • Monitor Economic Indicators: Keep a close eye on key macroeconomic data, including GDP growth, inflation trends, and labor market indicators. These indicators directly influence corporate revenues and margins. Early signs of a slowing economy or rising inflation pressures should prompt reevaluation of equity risk exposure.

  • Diversify Beyond the U.S. Market: The U.S. market valuations are high and heavily concentrated in a handful of mega‑cap tech names. Diversifying into international equities or sectors less dependent on narrow profit drivers can reduce concentration risk. Other markets may offer stronger valuations and more attractive earnings prospects if the U.S. slows.

  • Use Defensive Instruments Appropriately: In periods of earnings uncertainty, adding defensive instruments—such as high-quality bonds, low-volatility equities, or hedging strategies—can help mitigate downside risk. These positions typically underperform during strong rallies but provide ballast when earnings or economic data disappoint.

  • Prepare for Volatility: Volatility increases when analysts reduce earnings forecasts, and uncertainties mount. Investors should adopt a tactical approach that accounts for higher volatility, utilizing position sizing and stop-loss discipline to protect their capital. Volatility indicators such as the VIX can serve as early warning signals.

  • Revisit Fiscal and Policy Tailwinds: Assess how fiscal policy changes—such as tax incentives or deregulation—are actually impacting corporate profitability. If intended policy benefits fail to meet expectations, earnings momentum may weaken. Staying attuned to policy developments helps recalibrate expectations and positions.

Just remember, while all analysts are very bullish about 2026, there is no guarantee.

Tyler Durden Tue, 01/13/2026 - 07:20

2026 Earnings Outlook: Another Year Of Optimism

2026 Earnings Outlook: Another Year Of Optimism

Authored by Lance Roberts via RealInvestmentAdvice.com,

The Wall Street consensus forecast for 2026 earnings growth is strong by historical standards. Analysts are giddy and projecting another year of double-digit growth in S&P 500 earnings per share (EPS). FactSet’s most recent data showed an expected 2026 earnings growth rate for the S&P 500 of about 15 percent. That is well above the long‑term average of roughly 8–9 percent. If FactSet is correct, such would mark a third consecutive year of double‑digit earnings gains.

Notably, the 2026 earnings assumptions are driven by the continued strength in the large technology and communications sectors. With those sectors dominated by the “Magnificent Seven,” it is hoped that they continue to contribute disproportionately to earnings growth. Those seven companies alone are forecast to grow earnings strongly once again. As shown, since 2018, there has been very little earnings growth from the bottom 493 companies.

Furthermore, despite the exuberance from Wall Street analysts regarding the overall index, expectations for 2026 earnings improved only for the top seven companies, while estimates for the bottom 493 have seen virtually no change since April.

Notably, these 2026 earnings forecasts are influenced by broader market return expectations. For example, many sell‑side strategists are assigning S&P 500 price targets that embed this earnings growth outlook. For example, as shown, current analysts’ forecasts imply that the index could rise between 8% and 17% in 2026. However, to justify that price increase (P), they assume an earnings (E) rate that keeps valuations (P/E) stable.

In other words, Wall Street hopes that earnings expansion rather than valuation multiples will drive market gains. However, over the last 5 years, multiple expansions led the charge as earnings growth failed to keep pace.

This optimism currently comes against a backdrop of a resilient U.S. economy. GDP growth forecasts center on continued expansion, albeit modest, with some estimates indicating annual growth of around 2 percent. That stability reinforces the case for continued corporate profitability. One support is fiscal policy from the recently passed OBBB, which provides tax relief and deregulation. Still, this type of projected growth is not guaranteed. As such, investors should recognize that earnings forecasts reflect analysts’ estimates at a given moment, which is always “bullish” to ensure that Wall Street can sell you products.

As we previously reported, the accuracy of analysts’ estimates is far down their list of concerns.

However, instead of focusing on Wall Street estimates, which will likely be revised lower in the future, investors should pay closer attention to what will drive 2026 earnings growth.

The Link Between Economic Growth, Profit Margins, and Earnings

Earnings growth does not occur in a vacuum. Corporate profits are inherently a function of economic growth, pricing power, input costs, and labor dynamics. If the economy grows at a moderate pace, as most anticipate, corporate revenues are expected to expand in line with broader demand. Many forecasts for GDP growth in 2026 hover around the 1.8% to 3% range. Those estimates are driven partly by fiscal support and ongoing investment in sectors such as technology and infrastructure. This modest expansion provides a supportive backdrop for 2026 earnings, as historical correlations suggest. (Outliers are historically a function of recovery or impact from a crisis or recession)

At the same time, corporate profit margins in the S&P 500 are currently very high relative to historical norms. According to FactSet, the estimated net profit margin for the index is near its highest level since tracking began in 2008, at around 13.9%, compared to a ten-year average of 11%. We also see this in corporate profits as a percentage of real economic growth, which is at its highest deviation from the long-term profit growth trend in history.

Elevated margins suggest companies have maintained pricing power and cost control, even amid inflationary pressures. But these high margins raise questions about sustainability. Given the supply-demand imbalances (more demand than supply), which allow for elevated margins, it is worth noting that as the economy returns to more normalized growth rates, profit margins tend to follow. Such is particularly the case as inflation pressures subside, employment weakens, and competitive forces erode pricing power. Margin compression has historically dampened earnings growth. Even if revenues are rising, if rising costs cannot be passed on to consumers, they eat into profits.

Valuations also matter. As noted above, the current price-to-earnings ratio for the S&P 500 remains above historical averages, at approximately 22x forward earnings. Those valuation levels are also well above the five- and ten-year averages. In other words, the market is pricing in continued earnings momentum. Therefore, if growth slows toward historical norms or margins compress, elevated valuations will mean even modest earnings disappointments could result in share price declines rather than gains.

The most considerable risk to investors is that the 2026 earnings estimates, which are the most deviated above its 125-year growth trend, disappoint, and the markets reprice lower. As shown, historically, when earnings become deviated from actual economic activity, the mean reversion process is not kind to investors.

In this context, understanding the mechanics behind earnings expectations becomes critical. Analysts’ expectations for robust earnings growth assume that these economic and profit margin conditions remain supportive; however, any divergence from this script increases the risk of downward earnings revisions, valuation compression, and market volatility.

Analyst Optimism, Valuation Risk, and Structural Challenges

One of the enduring themes in earnings forecasting is the bias toward optimism early in the forecast cycle. Analysts typically issue forward earnings estimates at the start of a year and revise them lower later as actual economic and corporate results become available.

As noted above, such optimism is partly behavioral and partly structural; analysts often have incentives tied to institutional clients who favor growth narratives. When growth assumptions falter due to weaker demand, rising costs, or unforeseen macroeconomic shocks, analysts will typically revise their estimates downward. This creates the familiar pattern of “estimates drifting lower” over the course of the reporting year.

The current earnings growth consensus for 2026 is no exception. While forecasts indicate roughly 12.5–15% EPS growth, several structural vulnerabilities underpin these expectations. As discussed, profit margins are at elevated levels, which makes sustaining margin levels challenging in an environment where employment is declining.

Given that full-time employment is declining, which correlates with the reversal of economic growth rates, it is unsurprising that inflation and personal consumption are also trending lower. This is because employment, particularly full-time employment, supports economic supply and demand.

Second, sector concentration risk is significant. A significant portion of projected 2026 earnings growth stems from a small group of mega-cap technology companies. If these firms underperform or face regulatory, competitive, or macroeconomic headwinds, the impact on aggregate earnings could be disproportionately large. A concentrated earnings base magnifies downside risk because fewer companies are carrying the growth load. As we noted previously:

“While technology and AI-driven firms have recently become bright spots, their strength cannot offset broader corporate margin pressures. In Q2, S&P 500 earnings grew 6.4%, with 80 percent of companies beating estimates. But this masks a weakening breadth of growth, where earnings beats are concentrated in essentially just two sectors. There would have been no earnings growth without Megacap Technology and major Wall Street banks.”

Lastly, valuations remain historically high. Elevated price‑to‑earnings ratios reflect market confidence in future earnings growth. But high valuations also reduce the margin for error. If growth falls short of expectations, a multiple contraction is a likely outcome, resulting in stock price declines even if earnings do grow. Several market strategists caution that nearly all favorable assumptions must materialize for current valuations to be justified.

While analysts note that policy factors, such as deregulation and potential tax incentives, are a tailwind for earnings, their actual impact remains uncertain. Policy implementation timing, regulatory uncertainties, and shifting political landscapes can blunt or delay these effects. Investors should note that fiscal tailwinds often operate with lags and can be offset by rising costs elsewhere in the economy.

As such, investors should consider several key factors in 2026.

  • Expect Earnings Revisions: Analysts are historically optimistic in their early forecasts, and downward revisions are standard. Investors should monitor quarterly earnings guidance and track earnings revisions as one of the earliest indicators that actual performance may diverge from consensus. Early downward revisions often precede broader market corrections, so maintaining a disciplined watch on guidance can help you adjust risk exposure sooner.

  • Focus on Quality Over Momentum: Higher‑quality companies—those with strong balance sheets, consistent free cash flow, stable profit margins, and resilient business models—tend to outperform during periods of earnings disappointment. When consensus growth slows, lower‑quality or speculative names typically experience sharper drawdowns. Allocating capital toward quality can reduce downside risk.

  • Manage Valuation Risk: With forward price-to-earnings ratios above long-term averages, it is crucial to stay mindful of valuations. Avoid chasing valuations that imply perfect outcomes. If earnings growth disappoints, valuation compression is likely to occur. Use valuation metrics, such as the PEG ratio, to assess whether growth prospects justify current prices.

  • Monitor Economic Indicators: Keep a close eye on key macroeconomic data, including GDP growth, inflation trends, and labor market indicators. These indicators directly influence corporate revenues and margins. Early signs of a slowing economy or rising inflation pressures should prompt reevaluation of equity risk exposure.

  • Diversify Beyond the U.S. Market: The U.S. market valuations are high and heavily concentrated in a handful of mega‑cap tech names. Diversifying into international equities or sectors less dependent on narrow profit drivers can reduce concentration risk. Other markets may offer stronger valuations and more attractive earnings prospects if the U.S. slows.

  • Use Defensive Instruments Appropriately: In periods of earnings uncertainty, adding defensive instruments—such as high-quality bonds, low-volatility equities, or hedging strategies—can help mitigate downside risk. These positions typically underperform during strong rallies but provide ballast when earnings or economic data disappoint.

  • Prepare for Volatility: Volatility increases when analysts reduce earnings forecasts, and uncertainties mount. Investors should adopt a tactical approach that accounts for higher volatility, utilizing position sizing and stop-loss discipline to protect their capital. Volatility indicators such as the VIX can serve as early warning signals.

  • Revisit Fiscal and Policy Tailwinds: Assess how fiscal policy changes—such as tax incentives or deregulation—are actually impacting corporate profitability. If intended policy benefits fail to meet expectations, earnings momentum may weaken. Staying attuned to policy developments helps recalibrate expectations and positions.

Just remember, while all analysts are very bullish about 2026, there is no guarantee.

Tyler Durden Tue, 01/13/2026 - 07:20

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