"The path of policy is uncertain, and risks remain." ✍️

- Jerome Powell

SUMMARY

✅ Major U.S. stock indexes fell Tuesday, pulling back from record highs set by the S&P 500 and Dow Jones Industrial Average a day earlier, as investors weighed an in-line inflation report and the start of earnings season for major banks.

✅ Bipartisan resistance is growing on Capitol Hill against the Justice Department’s probe of Fed Chair Jerome Powell, with several Republicans warning it threatens central bank independence and could derail President Trump’s plans to reshape Fed leadership.

✅ A softer-than-forecast December core inflation report strengthened confidence that U.S. price pressures are easing, reinforcing expectations that the Federal Reserve will keep rates on hold in the near term.

✅ Apple’s decision to use Google’s Gemini AI models for a major Siri upgrade marks a strategic shift that underscores Google’s rising dominance in artificial intelligence while preserving Apple’s privacy-first approach.

✅ After reviewing extensive clinical trial data, the FDA concluded that popular GLP-1 weight-loss drugs do not increase suicide risk and asked manufacturers to remove related warning labels.

✅ Fanatics is expanding beyond merchandising with the launch of Fanatics Studios, a new media venture aimed at producing sports-focused films, documentaries, and live content to deepen fan engagement.

MARKET SNAPSHOT

↘ Dow 49,191.99 - 0.80%
↘ Nasdaq 23,709.87 - 0.10%
↘ S&P 6,963.74 - 0.19%

GOVERNMENT

Republican Opposition Intensifies Over Powell Investigation

Image courtesy of politico.com

Opposition on Capitol Hill is mounting against the Justice Department’s criminal investigation into Federal Reserve Chair Jerome Powell, with resistance now extending across party lines and threatening to complicate President Trump’s plans for the central bank.

Powell disclosed Sunday that the Justice Department has opened a criminal probe into his handling of renovations at the Federal Reserve’s headquarters and his related testimony to Congress. Powell characterized the investigation as an attempt to intimidate him for moving too slowly on interest rate cuts favored by President Trump.

Republican pushback is becoming increasingly vocal, with several lawmakers warning the investigation could undermine the Federal Reserve’s independence and destabilize financial markets.

Sen. Thom Tillis (R-N.C.) has vowed to block any nominee to replace Powell until the investigation is resolved—a move that could significantly disrupt Trump’s efforts to install a new Fed chair when Powell’s term expires in May.

“If the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer,” Sen. Lisa Murkowski (R-Alaska) said, calling the probe “an attempt at coercion” and urging Congress to investigate the Justice Department instead.

With the Senate Banking Committee split 13–11 in favor of Republicans, a single GOP defection is enough to deadlock the committee and stall any nomination, making Tillis’ threat especially potent.

President Trump has repeatedly said he intends to replace Powell when his term as chair ends in May, though Powell could remain on the Federal Reserve Board until 2028. The growing Republican backlash now complicates Trump’s ability to reshape the Fed’s leadership.

House Financial Services Committee Chair French Hill (R-Ark.) warned that pursuing criminal charges over testimony related to building renovations creates “an unnecessary distraction” at a critical moment for the U.S. economy. “This action could undermine this and future administrations’ ability to make sound monetary policy decisions,” Hill said.

Even longtime Powell critics are pushing back. Sen. Kevin Cramer (R-N.D.), a member of the Senate Banking Committee, said he does not believe Powell committed a crime despite frustrations over transparency. “I do not believe he is a criminal,” Cramer said. “We need to restore confidence in the Fed.”

Not all Republicans oppose the investigation. Sen. Cynthia Lummis (R-Wyo.) has voiced support for allowing the DOJ process to play out, saying Americans deserve clarity on whether Powell misled Congress about renovation costs.

ECONOMICS

December Core Inflation Comes in Cooler Than Expected

Image courtesy of Kyle Grillot / Bloomberg via Getty Images

Core U.S. consumer inflation eased more than anticipated in December, bolstering hopes that price pressures are continuing to cool as the Federal Reserve weighs its next policy steps.

Excluding food and energy, the consumer price index rose 0.2% month over month and 2.6% year over year, according to the Bureau of Labor Statistics. Both readings were 0.1 percentage point below economists’ expectations. Core inflation is closely watched by Fed officials as a better indicator of underlying price trends.

Headline inflation was firmer but in line with forecasts, rising 0.3% on the month and pushing the annual all-items rate to 2.7%. While inflation is moving closer to the Fed’s 2% target, it remains above desired levels.

Markets reacted modestly to the report on Tuesday, with stock futures briefly edging higher and Treasury yields falling. Traders continue to expect the Fed to hold rates steady at its meeting later this month, with the first potential rate cut now seen as more likely in June.

Shelter costs remained a key source of inflation, increasing 0.4% in December and up 3.2% from a year earlier. The category accounts for more than one-third of the CPI basket. Food prices jumped 0.7% on the month, even as egg prices fell sharply, down more than 20% from a year ago. Energy prices rose 0.3%, while gasoline prices declined.

Other areas showing notable increases included recreation, airfares, and medical care, with recreation posting its largest monthly gain on record. By contrast, some goods categories showed deflationary pressures: used vehicle prices fell 1.1%, communications declined 1.9%, and new vehicle prices were flat.

The report is unlikely to prompt near-term action from the Fed. Policymakers cut rates three times in late 2025 and are expected to remain on hold in early 2026 as they assess the effects of those moves, alongside lingering inflation risks and evolving labor market conditions.

Adjusting for inflation, real wages were flat in December and up 1.1% from a year earlier, according to a separate BLS release.

TECH

Apple Taps Google’s Gemini to Power AI-Driven Siri

Image courtesy of gizchina.com

Apple is partnering with Google to use its Gemini AI models to power a major Siri upgrade expected later this year, marking a significant shift in Apple’s artificial intelligence strategy.

The multiyear agreement will rely on Google’s Gemini models and cloud technology as the foundation for Apple’s future AI features, according to a joint statement obtained by CNBC. Apple said it selected Google after determining Gemini offered the strongest technical base for its Apple Foundation Models.

“Google’s technology provides the most capable foundation for Apple Foundation Models,” Apple said, adding that the partnership will unlock new user experiences.

Importantly, Apple emphasized that the AI models will continue to run on Apple devices and its private cloud infrastructure, maintaining its focus on user privacy and on-device processing.

Reports first surfaced in August that Apple was in early talks with Google to use a custom Gemini model for Siri. Bloomberg later reported Apple could pay roughly $1 billion annually for access to Google’s AI technology, though neither company commented on financial terms.

The partnership underscores Google’s growing momentum in AI and its resurgence against rivals like OpenAI. In 2025, Google posted its strongest performance since 2009 and last week surpassed Apple in market capitalization for the first time since 2019.

Google already pays Apple billions to remain the default search engine on iPhones, though that relationship faced scrutiny after Google was found to hold an illegal search monopoly. A September court ruling avoided a worst-case outcome that could have forced Google to divest Chrome, clearing the way for continued partnerships such as this one with Apple.

Shares of both companies initially rose on the news before pulling back later in the session. Google briefly topped a $4 trillion market capitalization following the announcement.

HEALTH

FDA Moves to Drop Suicide Warnings from Weight Loss Drug Labels

Image courtesy of Getty Images

U.S. health regulators on Tuesday asked drugmakers to remove warnings about a potential risk of suicidal thoughts from the labels of popular GLP-1 weight-loss drugs, including Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound.

The request, which also applies to Novo Nordisk’s older obesity drug Saxenda, follows a comprehensive review by the Food and Drug Administration that found no evidence linking GLP-1 receptor agonists to an increased risk of suicidal thoughts or behavior.

GLP-1 drugs, originally developed to treat type 2 diabetes, work by mimicking a gut hormone that reduces appetite and promotes a feeling of fullness.

The FDA had reached a similar conclusion in a preliminary review last year but said at the time that limited data prevented it from ruling out a small potential risk. In its latest assessment, the agency analyzed additional placebo-controlled clinical trials and found no higher incidence of suicidal thoughts or behavior compared with placebo. The review also found no increased risk of other psychiatric side effects, including anxiety, depression, irritability, or psychosis.

Overall, the analysis included 91 clinical trials involving 107,910 participants, of whom 60,338 received a GLP-1 drug and 47,572 received a placebo, according to the agency.

ENTERTAINMENT

Fanatics to Launch Sports Media and Entertainment Studio

Image courtesy of AP Photo/Jeff Chiu

Fanatics announced Tuesday that it is launching a new media and entertainment venture, Fanatics Studios, through a joint partnership with OBB Media.

The new studio will focus on creating, producing and distributing content at the intersection of sports and culture. Its slate will span feature films, documentaries, scripted and unscripted programming, live events, and digital series, according to the company.

OBB Media founder and CEO Michael Ratner will serve as chief executive of Fanatics Studios.

“I’m incredibly excited about launching Fanatics Studios and adding a major content and media arm to our growing sports platform,” Fanatics CEO Michael Rubin said in a statement, noting that the new venture will also support the company’s existing businesses.

Since acquiring Fanatics in 2011, Rubin has transformed the company from an e-commerce retailer into a diversified sports powerhouse, expanding into collectibles, sports betting, live shopping, and events.

Fanatics now employs more than 22,000 people and is valued at over $30 billion, according to a person familiar with the matter. The company expects to generate $13 billion in revenue in 2026. Fanatics estimates that the new studio will deliver nine-figure revenue in its first year, making it a meaningful contributor to the overall business.

Fanatics Studios already has a robust pipeline of projects, including a content partnership for the 2028 Los Angeles Olympics, coverage of a flag football tournament in Saudi Arabia, and a multi-part documentary on seven-time Super Bowl champion Tom Brady. The studio will also collaborate on projects with ESPN, WWE, and Major League Baseball.

Rubin said the venture aims to deepen fan engagement by delivering content that brings audiences closer to the teams, athletes, and cultural moments they care about in new and distinctive ways.

📉 ON THE MOVE AND NOTABLES 📈

✔️ Short-term U.S. Treasuries are rallying on the cooler inflation data, with the 2-year yield edging down to 3.53%, though these gains have not carried through to longer-dated bonds.

✔️ The U.S. dollar is slightly weaker against a basket of global currencies, while gold prices are broadly steady near $4,600 per ounce, consolidating the sharp gains seen earlier this week.

✔️ Crude oil prices rallied Tuesday after U.S. President Donald Trump promised Iranian protestors that help is on the way. He also canceled meetings with Iranian officials.

✔️ Mining stocks surged early as precious metals rallied. Silver surged more than 8% to fresh highs, fueled by heavy speculative buying over the past two months, while gold appeared supported by Fed-related uncertainty. Copper also rose buoyed by growing industrial demand tied to data-center construction.

✔️ Abercrombie & Fitch (ANF) plunged after cutting the upper end of its holiday guidance, according to CNBC.

✔️ American Eagle Outfitters (AEO) fell despite raising its fourth-quarter operating income outlook.

✔️ Bitcoin edged higher and held above $90,000, potentially signaling lingering risk-on sentiment.

✔️ Thursday’s Senate Banking Committee markup on comprehensive digital asset market structure legislation has cryptocurrency investors in anticipation.

✔️ Walmart (WMT) rose after announcing a partnership with Alphabet (GOOGL) to integrate Google’s Gemini AI into Walmart and Sam’s Club shopping experiences. Walmart will be added to the Nasdaq-100 index (NDX), potentially boosting demand from ETFs that track the benchmark.

✔️ Salesforce (CMR) is releasing an upgrade to the Slackbot feature in Slack, making it capable of answering users’ questions about information stored in the app and elsewhere.

✔️ Google parent company Alphabet (GOOGL) has become the fourth member of the $4 trillion club. Alphabet’s stock climbed to record highs after investment firms said they see more upside for Google in 2026.

✔️ Snowflake (SNOW) slipped after Barclays downgraded the stock to equal weight from overweight, citing valuation concerns and rising competition despite a constructive long-term outlook for software.

✔️ A proposal to cap credit-card interest rates at 10% for one year is creating near-term volatility in payment stocks, JPMorgan noted, even as it raised its price target on AXP while maintaining a neutral rating.

✔️ Costco Wholesale Corporation (COST) has been included among the 13 Best Consumer Staples Dividend Stocks to Invest in Now.

✔️ Delta Air Lines (DAL) slid 5% even after posting quarterly earnings per share that topped Wall Street expectations. Revenue met forecasts, but the midpoint of the airline’s full-year 2026 profit outlook fell short of consensus estimates, according to Bloomberg. The company also announced a new agreement with Boeing (BA), increasing its order number with the jet maker.

✔️ Palantir (PLTR) gained following an upgrade from Citigroup, which pointed to accelerating demand from both enterprise and government customers.

✔️ Arm Holdings (ARM) dropped after Bank of America downgraded the stock to neutral from buy. The firm cited expectations that global smartphone shipments could fall by low single digits year over year, compared with low single-digit growth in 2025, due to higher memory costs and supply constraints.

✔️ Intel (INTC) rose after KeyBanc upgraded the stock to overweight from sector weight. The firm said Intel is largely sold out of server CPUs for 2026 and expects outsized data center demand from hyperscalers to be a significant tailwind for its data center and AI revenue this year. Shares surged over 10% on Friday, when the chipmaker received public praise from President Trump following a meeting with its CEO. The U.S. government took a stake in Intel last year.

✔️ JPMorgan Chase (JPM) reported earnings Tuesday morning that capped off a record year for the firm while reporting a hit to net income resulting from its deal to take over the Apple Card portfolio from Goldman Sachs.

✔️ Moderna (MRNA) said on Monday it expects to report around $1.9  billion in sales for 2025, putting it near the upper end of its previously projected $1.6  billion to $2  billion forecast but well below revenue levels achieved during the COVID-19 pandemic.

✔️ Chipotle (CMG) reaffirmed Monday that its outlook for same-store sales will decline in the low-single digit range for fiscal year 2025.

✔️ Cardinal Health (CAH) jumped Tuesday after the pharmaceutical distributor boosted its fiscal-year outlook and pointed to continued growth in its specialty medicine business.

💲What Else to Watch This Week💲

Earnings to look forward to this week include Bank of America, Wells Fargo, and Citigroup. With bank shares near record highs, expectations heading into earnings remain elevated. Health-care stocks may also draw attention this week during the 44th annual J.P. Morgan Healthcare Conference which runs from Monday to Thursday.

🟢 Wednesday (Jan. 14): PPI, Current Account Balance, EIA Crude Oil, Existing Home Sales, MBA Mortgage Applications Index, New Home Sales, Retail Sales. Earnings from Bank of America Corp. (BAC), Bitmine Immersion Technologies Inc. (BMNR), Citigroup Inc. (C), H. B. Fuller Company (FUL), Home BancShares Inc. (HOMB), Infosys Ltd. (INFY), Wells Fargo & Co. (WFC).

🟢 Thursday (Jan. 15): Continuing Claims, EIA Natural Gas Inventories, Empire State Manufacturing, Export Price, Import Prices, Initial Claims, Net Long-Term TIC Flows, Philadelphia Fed Index. Earnings from. Earnings from BlackRock Inc. (BLK), First Horizon Corp. (FHN), Goldman Sachs Group Inc. (GS), J.G. Hunt Transport Services Inc. (JBHT), Morgan Stanley (MS).

🟢 Friday (Jan. 16): Capacity Utilization, Industrial Production, NAHB Housing Market Index. Earnings from M&T Bank Corp. (MTB), PNC Financial Services Group Inc. (PNC), State Street Corp. (STT), Regions Financial Corp. (RF), Wipro Ltd. (WIT).

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