Morning Brew January 12 2026

Good Morning

We are starting the week with a worried look to Iran, where more than 500 demonstrators have reportedly been killed in protests against the government and the US where the Trump administration is attacking the Fed`s independence: “The Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June," Powell stated.

Friday’s data did nothing to derail the rate‑cut narrative, allowing equities to finish the week on a positive note. The S&P gained 0.65%, the Dow 0.5%, and the Nasdaq 0.8%. For the week, the indices were up 1.6%, 2.3%, and 1.9%, respectively.

Key market movers included Broadcom, Intel, Tesla, and Oracle. Mortgage lenders rallied after President Trump announced he would direct his representatives to purchase USD 200 billion in mortgage‑backed securities to lower housing costs. LoanDepot surged 19.3%, Rocket Companies rose 9.6%, and Opendoor Technologies climbed 13.1%. In contrast, General Motors fell more than 2% after announcing a USD 6 billion charge related to unwinding certain electric‑vehicle investments.

The DAX closed at an all‑time high, showing notable strength.
US yields were little changed, with 10‑year Treasuries at 4.16%, and the USD Index ended the week at 99.12.

Precious metals once again took center stage: silver ended the week at USD 80, gold is trading near all‑time highs, and platinum finished at 2,250. Ole noted that the key question is at what levels these metals stabilize after the rebalancing. We saw a sharp selloff followed by a strong recovery, and the coming days will be important. This morning we4 are trading more than 5% higher in Silver, 1.6 in Gold and 3.7% in Platinum to 84.20, 4580, a new all time high and 2360.

The upcoming week brings US CPI, Retail Sales, and earnings from major banks as well as TSMC. Beyond scheduled events, the Trump administration continues to float a stream of ideas and proposals that markets must absorb:

• Purchasing USD 200 billion in mortgage‑backed securities to offset the Fed’s declining bond holdings
• Requesting Big Oil to invest USD 100 billion in Venezuela
• Limiting credit‑card interest rates to 10%
• Renewed ambitions to acquire Greenland from Denmark
• Potential intervention in Iran
• Threatening action against Cuba
• Threatening Jerome Powell wit a lawsuit over comments he made in Congress

Elon Musk suggested that saving for retirement may become unnecessary as AI is expected to lower costs dramatically in the coming years. Given his 84% forecast miss rate, I would not cancel my Autoinvest based on that prediction.

The Supreme Court did not issue its ruling on tariffs on Friday, leaving that particular uncertainty still in the room.

Japanese Prime Minister Sanae Takaichi may call an early general election, according to her coalition partner.
Meanwhile, U.S. President Donald Trump met with executives from major global oil companies at the White House on Friday to discuss Venezuela, stating he wants them to invest USD 100 billion in the country to significantly expand production.

The week ahead will be busy with key US data, the real start of the earning season and US Politics, including the battle for Fed independence, I have included key fed speakers in my schedule below.

Geopolitics, policy shifts, AI rotation: The case for “all-weather” investing

Key points:

• The risk mix has widened: Geopolitics, policy credibility, macro uncertainty, and AI leadership rotation can all drive markets in 2026, often abruptly and with different winners/losers.
• Diversification is a fragility test: The goal isn’t to own everything; it’s to avoid a portfolio that relies on one assumption (oil stays calm, one rate path, one equity style, one AI cluster).
• Make it practical: We have come up with a list of potential shocks and a conceptual “hero map” to show why different sleeves matter in different regimes.

Here some comments from Charu un the Fed: 

What Powell is saying (and why it matters)

• Powell is treating the subpoenas as pressure on the Fed because of its rate decisions, not as a genuine dispute about a renovation project.
• That framing matters because it shifts the story from “process and paperwork” to independence and credibility, and markets price an institutional risk premium, even before anything changes in actual policy.

What it means

• This headline makes investors ask a simple question: Will the Fed keep setting policy based on data, or will politics start shaping the outcome?
• Investors assume there are guardrails: central bank independence, predictable institutions, and a stable process for turning data into policy decisions. When those guardrails look shakier, even if temporarily, investors demand more compensation for uncertainty. It’s a reminder the rules of the game might be changing.
• The Fed has been trying to keep the market debate anchored to inflation, growth, and the path of cuts. This headline pulls the conversation toward governance and politics, which is harder to model and therefore increases uncertainty.
• It also raises questions about whether the timeline for Powell’s replacement, previously around May 2026, could shift if political pressure intensifies, and whether that uncertainty might alter the expected rate-cut path as markets reassess the Fed’s policy continuity.

How this shows up in markets

• Rates: The immediate impact is typically higher rates volatility rather than a clean directional repricing. The tail risk is an uncomfortable mix where the front end rallies on “forced easing” fears, while the long end demands a higher credibility/term premium—i.e., curve steepening risk.
• FX: Classic risk-off can support USD, but an “institutional risk” story is likely to pressure the US dollar and can push flows toward CHF and JPY.
• Gold: Gold is the cleanest hedge for this type of uncertainty. It’s not just a rate story; it’s a confidence hedge, so support can stay even without new macro news.
• Equities: Stocks like clarity. If the policy process starts to look political, investors pay less for risk, especially for long-duration growth, until the noise fades.

Two scenarios from here

• Base case: The headline eventually fades. Legal and political noise continues, but the Federal Reserve remains focused on growth/inflation, and the market gradually returns to normal. Gold gives back some of its premium, foreign exchange markets calm, and rates volatility eases.
• Tail risk: The situation escalates. If this develops into a sustained campaign involving calls for resignation, court appearances, and repeated headline cycles, markets may begin to price in a more persistent threat to Federal Reserve independence. That is when the risk premium becomes stickier and volatility remains elevated for a longer period.

Trade safely.

Monday January 12^th

G7 Finance ministers meet in Washington

Tuesday January13^th
Data: Japan Current Account, US CPI

Earnings: JP Morgan, Delta, BNY,
Central Bankers: Williams, Musalem Barkin

Wednesday January14th

Data: US Retail Sales, Canada Leading index, China Trade US Beige Book

Earnings: Wells Fargo, Citi, Infosys,

Central Bankers: Miran, Kashkari, Bostic, Williams,

Thursday January15^th

Data: UK GDP EU Trade Balance, Initial Jobless Claims, Philly Fed

Earnings: TSMC, Morgan Stanley, Goldman Sachs, First Horizon, Blackrock,

Central Bankers:Bostic, Barr, Barkin.

Friday January16^th

Data: Gernany Inflation,  US Industrial Producion

Earnings: Statestreet

Central Bankers: Bowman, Jefferson