January 13th Market Overview

Happy Tuesday

Inflation came in cooler than expected and the market still sold off. Kinda hard to price in good data when the Fed chair is under criminal investigation over a building renovation. Trump threw 25% tariffs at any country doing business with Iran. Chaos is driving today, not fundamentals.

Let’s dig in...

Today's Big Picture

Inflation Cools But Nobody Cares 
Core CPI hit 2.6% versus 2.8% expected. That's the kind of print that normally green-lights rate cuts. But the DOJ probe into Powell over building renovations is drowning out everything else. Eleven central bank chiefs issued a joint statement defending Fed independence. That never happens.

Iran Tensions Put Oil Back in Play 

Trump slapped a 25% tariff on any country doing business with Iran after violent crackdowns on protesters left hundreds dead. This forces China, India, and other major trading partners to pick sides. Iran's economy is already cracking under sanctions with food prices up 70% and its currency in freefall. Trump said Iran reached out to negotiate but the U.S. "may have to act before a meeting."

His national security team has been briefed on military options. Crude jumped. This isn't just tariff posturing.

Bank Earnings Overshadowed by Rate Cap Threat 
JPMorgan beat on earnings but the stock dropped anyway. Trump's 10% credit card rate cap proposal is spooking the entire sector. CFO Barnum warned it would force banks to cut off credit to the people who need it most. Visa, Mastercard, and Synchrony all sold off hard.

Market Overview

Index Performance

Stock Spotlight

Intel $INTC ( ▲ 3.02% ) 
is nearly sold out of server chips for the year and mulling a 10-15% price hike. Analysts say Apple is now a foundry customer on Intel's 18A process for future MacBook chips.

L3Harris $LHX ( ▲ 0.47% ) 
is spinning off its missile business with a $1 billion investment from the Pentagon. IPO targeted for late 2026.

Alphabet $GOOGL ( ▼ 0.04% ) 
crossed $4 trillion market cap after its Gemini deal with Apple to power Siri. Walmart also signed on to use the AI models.

AMD $AMD ( ▲ 1.19% ) 
got upgraded at KeyBanc with a $270 target. The firm sees AI GPU revenues hitting $14-15 billion this year.

Big Name Updates

JPMorgan $JPM ( ▼ 0.98% ) 
beat on earnings but investment banking fees missed. CFO warned a blanket rate cap would cut off credit to borrowers who need it most.

Meta $META ( ▼ 2.47% ) 
is cutting about 10% of Reality Labs. Zuckerberg is redirecting billions from metaverse toward AI infrastructure.

Delta $DAL ( ▼ 1.21% ) 
missed on revenue despite record corporate demand. Ordered 30 Boeing 787s with options for 30 more.

Microsoft $MSFT ( ▼ 2.4% ) 
committed to paying electricity rates that cover its full data center costs. This came after local backlash over utility price concerns.

Other Notable Company News

Super Micro $SMCI ( ▼ 1.15% ) 
got a sell rating from Goldman on margin concerns.

Albemarle $ALB ( ▲ 0.38% ) 
upgraded at Deutsche Bank as lithium prices show signs of bottoming.

AbbVie $ABBV ( ▲ 0.52% ) 
agreed to lower Medicaid drug prices in exchange for tariff exemptions.

XPeng $XPEV ( ▼ 2.23% ) 
rose after the EU discussed replacing tariffs with a minimum price floor on Chinese EVs.

Sector Watch

Bond Market

Treasury yields drifted lower on the soft inflation print. The 10-year settled at 4.178%. Bond traders seem more focused on economic data than the political noise. Tomorrow brings a $22 billion 30-year auction.

Policy Watch

Fed Independence 
The DOJ is investigating Powell over testimony he gave about a headquarters renovation project. The probe looks political. Treasury Secretary Bessent reportedly warned Trump it could rattle markets.

Meanwhile, a Supreme Court case next week will determine whether Trump can fire Fed governors before their terms end. If he wins that case, he gains the power to reshape the entire board. The probe is noise. The court case is the real threat.

Trade

• Trump called the United States–Mexico–Canada Agreement "irrelevant" at a Ford plant in Michigan

• New 25% tariff on any country trading with Iran took effect immediately

• China vowed to take "all necessary measures" to protect its interests

Price Controls 
The White House push for a 10% credit card rate cap is facing stiff opposition. Banks argue it will force them to stop issuing cards to lower-credit borrowers entirely.

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What to Watch

Bank Earnings Continue Bank of America 
$BAC and Citigroup $C report tomorrow. Watch for more commentary on consumer credit and the rate cap threat.

The AI Barometer TSMC 
$TSM reports later this week. Single most important data point for whether AI chip demand is still real or a bit hyped.

Japan Intervention Risk 
The yen hit 158.94 against the dollar, nearing levels that triggered intervention in 2024. If it breaks 160, Barclays says intervention risk rises materially.

Thanks for reading - you are now the more informed 🙂

- John

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