Group 1 - President Trump has appointed Kevin Warsh as the new Federal Reserve chair, succeeding Jerome Powell, amidst significant turmoil surrounding the central bank [1][5] - Warsh's selection is expected to have minimal impact on the markets due to his previous experience with the Fed and the perception that he may not always align with Trump's directives [2][10] - The nomination process was competitive, initially involving 11 candidates, and was led by Treasury Secretary Scott Bessent, ultimately narrowing down to Warsh [8] Group 2 - The Federal Reserve is currently facing challenges such as persistent inflation, increasing government borrowing, and direct political pressure regarding its monetary policy [5][9] - Warsh has previously criticized the current Fed leadership, suggesting a "credibility deficit" among incumbents, which may lead to conflicts within the institution [4][3] - Market expectations indicate limited action from the new chair, with traders anticipating at most two more interest rate cuts this year, bringing the benchmark fed funds rate to around 3% [10]

Core Viewpoint - The Trump administration is preparing to nominate Kevin Warsh as the next Federal Reserve chair, with a formal announcement expected soon [8]. Group 1: Nomination Details - President Trump plans to announce his pick for the Federal Reserve chair on Friday morning, with the selection not being final until the formal announcement is made [8]. - Warsh, a former Fed governor, is one of four finalists on Trump's shortlist, having visited the White House recently [2][8]. - Other candidates considered include Kevin Hassett, Christopher Waller, and Rick Rieder [5][8]. Group 2: Market Reactions - Following the speculation of Warsh's nomination, stocks fell, Treasury yields increased, the US dollar gained, and precious metals declined [4][8]. - Prediction markets showed a surge in bets on Warsh being chosen earlier on the same day [5]. Group 3: Warsh's Background and Alignment - Warsh served on the Federal Reserve's Board of Governors from 2006 to 2011 and has previously advised Trump on economic policy [6][8]. - If confirmed, Warsh would succeed Jerome Powell, whose term ends in May [8]. - Warsh has recently aligned with Trump's views advocating for lower interest rates, contrasting his previous reputation as an inflation hawk [6][8].

Bloomberg, CME Bond futures traders are ramping up bets on a dovish policy shift at the Federal Reserve as BlackRock Inc.’s chief investment officer Rick Rieder is gaining momentum to succeed Jerome Powell. In recent days, a wave of flows in the interest rate futures market linked to the Secured Overnight Financing Rate and the fed funds rate, the Fed’s policy benchmark, has been gathering pace just as Rieder’s odds to be the next Fed chair climbed to the top spot in betting markets. Most Read from Blo ...

This story has been updated. From Main Street to Wall Street, there are questions as to when interest rates will drop again. The Jan. 28 meeting of the Federal Reserve’s policymaking panel paused interest-rate cuts as expected in its first meeting of 2026. The benchmark Federal Funds Rate influences short-term borrowing rates, such as those on credit cards, auto financing, and student loans. Fed Governors Stephan Miran and Christopher Waller dissented from the decision, voting to cut the funds rate by ...

Market Overview - The S&P 500 and Nasdaq experienced early gains driven by strong performance in Big Tech, while the Dow struggled [2][3] - Major tech companies such as Apple and Microsoft saw significant increases, with Apple rising nearly 2% and Microsoft adding 1.3% [3] - Over 90 S&P 500 companies are set to report earnings this week, including Meta, Microsoft, Tesla, and Apple [3] Sector Performance - Health insurers faced substantial declines, with Humana dropping 18% and CVS Health falling 10% due to a minimal proposed increase of 0.09% in Medicare Advantage payments for 2027 [3] - Precious metals saw a surge, with gold reaching a new high above $5,100, while silver recovered to the $110 level [5] Federal Reserve and Economic Indicators - The upcoming Federal Reserve meeting is a focal point, with expectations for interest rates to remain steady in the 3.5%–3.75% range, while markets are looking for hints on future rate cuts [4] - Futures markets are pricing in approximately two quarter-point reductions by the end of 2026 [4] Trend Tracking Indexes - The S&P 500 reached a new all-time high intraday but could not maintain above the 7,000 level [8] - The domestic Trend Tracking Index (TTI) closed at +7.40% above its moving average, while the international TTI closed at +11.45% above its moving average [9]

Core Insights - The Federal Reserve is expected to pause interest rate cuts during its upcoming meeting, with analysts looking for indications of potential future cuts later in the year [1][7] - The Fed has previously lowered interest rates three times in late 2025 to support a weakening job market, but the labor market is now stabilizing, supported by strong consumer spending [1][5] Interest Rate Outlook - Markets anticipate a delay in any potential interest rate cuts for 2026, with Fed Chair Jerome Powell's press conference being a focal point for validation of these expectations [2][4] - Powell is not expected to provide significant new information regarding the Fed's rate plans, but may hint at the possibility of future cuts without specifying a timeline [3][4] Economic Indicators - The Fed's actions influence a variety of interest rates, including those on credit cards and certificates of deposit, with the current federal funds rate set between 3.5% to 3.75% [4] - Recent economic data has shown a slight tilt towards hawkish sentiment within the Fed, with employment growth remaining sluggish and an unemployment rate of 4.4% [5] - Despite a government shutdown last year, real consumer spending growth was unaffected, leading to increased GDP projections following a rise in retail sales before the holidays [6]

Core Viewpoint - The Russell 2000, a small-cap index, has shown strong performance at the start of 2026, outperforming the S&P 500 in the first 14 trading days of the year, indicating a potential shift in market dynamics favoring small-cap stocks [1][4]. Performance Comparison - The Russell 2000 has built a significant lead over large-cap stocks in the first three weeks of 2026, contrasting its underperformance in the previous five years [2][4]. - Historically, the S&P 500 has outperformed the Russell 2000, particularly during the AI boom, but the current trends suggest a possible reversal in 2026 [4]. Valuation Insights - The S&P 500 has seen a price-to-earnings (P/E) ratio of 28, making it one of the most expensive periods in its history, while the Russell 2000 ETF trades at a P/E ratio of 19.5, representing a discount of about one-third compared to the S&P 500 [5][6]. - For the Russell 2000 to match the valuation of the S&P 500, it would need to increase by approximately 50%, which may encourage a rotation from large-cap to small-cap stocks [6][7]. Interest Rate Impact - Small-cap stocks are more sensitive to macroeconomic factors, particularly interest rates. The Russell 2000 has increased by 17% over the last six months due to three rate cuts by the Federal Reserve, lowering the benchmark rate by 75 basis points [8]. - The Federal Reserve is currently forecasting one additional rate cut this year, but there is potential for more cuts, which could further benefit small-cap stocks [9]. Investment Opportunities - The iShares Russell 2000 ETF (IWM) is the largest small-cap ETF with net assets of approximately $75 billion, providing a straightforward way to gain exposure to small-cap stocks [10]. - Individual small-cap stocks such as Amplitude, a digital product analytics software company, and Innodata, a data-labeling specialist, are highlighted as potential breakout candidates for 2026 due to their growth prospects [11]. - The overall outlook for small-caps in 2026 appears positive, with various investment vehicles available for capitalizing on the expected market rotation [12].

Federal Reserve Meeting Insights - The Federal Reserve is widely expected to hold interest rates steady, with no new economic projections anticipated [1][2] - Fed Chair Jerome Powell's press conference is anticipated to focus on the neutral interest rate range and the duration of the Fed's hold on rates before potential cuts [2][3] - Recent comments from policymakers indicate that the current policy is in a good place, allowing for flexibility to adjust if economic risks change [3] Dissenting Opinions - There is speculation about potential dissents from Fed Governors, particularly Steven Myron and Michelle Bowman, who have expressed concerns about the job market and advocate for continued rate cuts [4][5] - The presence of dissenting opinions may provide insight into the committee's positioning as it approaches a potential leadership change [28][29] Economic Outlook - The bond market does not expect a rate cut until late July, indicating a cautious approach to monetary policy [6] - The economy is showing relative stability, with inflation around 2.7%, suggesting that the Fed may choose to wait before making further adjustments [15] - The first quarter of the year is expected to show a GDP hit of about 0.5% to 1.5%, which could impact earnings but is not expected to lead to drastic market changes [36][37] Leadership Speculation - There is ongoing speculation regarding the next Fed chair, with candidates like Rick Reer gaining attention in betting markets [31][32] - The choice of the next Fed chair may not significantly alter the overall direction of monetary policy, as most candidates support a more aggressive rate-cutting approach [33][34] Market Reactions - The market is currently pricing in expectations for two rate cuts, with the first anticipated in June when a new Fed chair may be in place [52] - The overall sentiment suggests that while rate cuts are expected, they may not be necessary unless significant economic changes occur [53]

Group 1 - US stocks experienced a rise on Tuesday, driven by optimism in the tech sector, despite political concerns and a decline in UnitedHealth's stock [1][2] - The Nasdaq Composite led the gains with an increase of 0.6%, while the S&P 500 rose by 0.3%, and the Dow Jones Industrial Average fell by 0.8% due to UnitedHealth's significant drop [1][2] - UnitedHealth's shares fell over 15% after a quarterly profit beat, as the Trump administration's Medicare payment rate proposal did not meet Wall Street's expectations [2] Group 2 - General Motors reported a fourth-quarter earnings beat, raised its dividend, and announced a $6 billion share buyback plan [4] - The S&P 500 is approaching record highs, buoyed by positive news from memory chipmakers ahead of major earnings reports from key tech companies [3] - The Federal Reserve began a two-day meeting, with expectations to maintain the benchmark interest rate, while markets are looking for indications on future rate cuts [4]

The Federal Reserve has had a tough time lately. Sticky inflation and rising unemployment, driven by layoffs and less hiring, boxed it into a corner until September last year, prompting fierce pushback from the White House and likely costing Fed Chair Jerome Powell his job when his term as Chairman expires on May 15, 2026. Still, the Fed cut interest rates three times by year's end, prompting hope among would-be borrowers that the trend would continue at the first Federal Open Market Committee (FOMC) me ...