MEMORANDUM
From: The Ghost of Central Banking Past
To: Anyone Still Paying Attention
Re: The Week American Monetary Policy Became Reality Television

The meeting of the Federal Open Market Committee scheduled for January 27th will proceed as normal. This is the official line. But nothing about this week has been normal.

The S&P 500 and Dow Jones Industrial Average hit new all-time highs on Monday as investors "shook off" the Department of Justice opening a criminal investigation into Federal Reserve Chair Jerome Powell. "Shook off" is doing a lot of work in that sentence. The S&P 500 rose 0.16% to end at 6,977.27, while the Dow Jones Industrial Average ticked up 86.13 points to settle at 49,590.20.

Markets absorbing an existential threat to central bank independence with a shrug and a 0.16% rally. History will record this either as supreme confidence or profound denial. I'm genuinely not sure which.

THE DATA, FIRST

The Consumer Price Index released Tuesday showed that on a "core" basis—excluding food and energy—consumer prices rose 0.2% over the previous month and 2.6% over the previous year. The 2.6% increase matches the rise reported in November and equals the slowest pace of annual inflation since March 2021.

Good news? Sure. Progress? Certainly.

Following the December CPI report, data from the CME Group showed markets putting 95% odds on the Fed keeping rates unchanged at the conclusion of its Jan. 27-28 meeting.

Then came Wednesday. The producer price index rose just 0.2% for the month, below the Dow Jones consensus for a 0.3% gain. Excluding food and energy, core PPI was flat on the month against expectations for a 0.2% gain.

The inflation hawks have been circling for two years, and the data keeps refusing to cooperate with their apocalypse narrative. The Fed is expected to hold rates steady at its policy meeting at the end of January in the range of 3.5%-3.75%, after cutting rates three times last fall.

But here's the thing about this week: the data barely mattered.

THE SPECTACLE

JPMorgan CEO Jamie Dimon emphasized the importance of the Federal Reserve's independence following the bombshell criminal investigation of Chair Powell. "Everyone we know believes in Fed independence," Dimon said Tuesday during a call with media.

When Wall Street's apex predator starts issuing statements defending the institutional architecture of American monetary policy, we've entered strange territory.

And the banks themselves? Bank stocks were the hardest hit Monday, with Citigroup down about 3%. JPMorgan and Bank of America were off by more than 1%. Capital One shares slid 6%.

This wasn't just Powell anxiety. Credit card stocks fell on news that President Trump is calling for a 10% one-year cap on credit card interest rates. "Effective January 20, 2026, I, as President of the United States, am calling for a one-year cap on Credit Card Interest Rates of 10%," Trump said, as quoted by CNBC.

Monetary policy by social media. Rate caps by presidential proclamation. Criminal investigations into sitting Fed chairs. As Jim Lebenthal, chief markets strategist at Cerity Partners, told CNBC: "The impact of Chairman Powell being under investigation is likely a long-term impact, meaning it's not going to change interest rates in the near term; it's not going to change inflation in the near term."

Long-term impact. That's the polite way of saying: we're watching something break in slow motion.

THE ROTATION

A weeklong rotation has seen investors bail from richly priced technology names in favor of more economically sensitive industries, sending the Nasdaq 100 to its worst decline in a month while lifting the majority of companies in the S&P 500.

Wednesday's carnage: Microsoft, Meta, and Amazon each lost more than 2%. Oracle and Broadcom each slid 4%, while Nvidia dipped 1.4%.

Nvidia's troubles weren't purely rotational. Reuters reported that Chinese customs authorities advised customs agents this week that Nvidia's H200 chips are not allowed to enter the country. Then, in classic 2026 fashion, President Trump said the administration will approve China sales of Nvidia's H200 chip, but the U.S. government will take 25% of sales. "It's not the highest level, but it's a pretty good level, and China wants them and other people want them and we're going to be making 25% on the sale of those chips, basically," Trump said.

Trade policy as protection racket. Chip diplomacy as revenue stream. We've moved past neoliberalism into something that doesn't yet have a name.

Meanwhile, the little guys are having their moment. The Russell 2000 climbed 0.7%, posting its fourth positive session in the past five. The index touched a fresh all-time high during the day and closed at a record.

It has been old-economy stocks rather than buzzy technology names leading the Dow in the new year. Boeing has led the blue-chip index in 2026 with a gain of more than 12%. Caterpillar and Sherwin-Williams followed with advances of nearly 12% and 10%, respectively.

The AI narrative isn't dead. But the money is finding other homes.

THE GOLD QUESTION

Analysts at UBS say gold could rally to $5,000 by the third quarter, with potential for $5,400 if political and economic risks mount. Bank of America is calling for $5,000 gold. JPMorgan is calling for $5,000 gold by the end of 2026.

Three major banks. Same number. Same year. Either they're all reading the same playbook or they're seeing the same writing on the wall.

What kind of world prices gold at five thousand dollars an ounce? Not a stable one. Not a confident one. A world where the institutions that anchor monetary credibility are under criminal investigation.

THE CRYPTO SITUATION

Bitcoin continues its purgatory tour. During a four-day losing streak, Bitcoin and Ethereum ETFs lost $1.3 billion of their collective $1.5 billion worth of inflows since the start of January.

Bitcoin recently traded for $91,722. The shift in sentiment is mainly due to lower Fed rate cut expectations for March.

The thesis was always that crypto would thrive in a world of debased fiat and captive central banks. Well, we're getting the captive central bank. The debasement pressure. The institutional chaos.

And Bitcoin trades sideways around $91k, bleeding ETF money.

James Butterfill, head of research at CoinShares, expects to see bitcoin in a range of between $120,000 and $170,000 in 2026, with "more constructive price action likely occurring in the second half of the year." Butterfill said investors will be watching to see who the new chair of the U.S. Federal Reserve will be after Jerome Powell's tenure ends in May. The new person is "likely to be dovish," but markets will wait for clarity "before repricing risk assets more decisively."

So the crypto trade now hinges on... who runs the Fed? The asset class that was supposed to transcend monetary policy is now hostage to it.

Irony doesn't begin to describe this.

WHAT THE BEIGE BOOK TELLS US

The Fed's Beige Book showed that cost pressures from tariffs were a consistent theme for the first couple of weeks of January. Companies that initially absorbed tariff-related costs were beginning to pass them on to customers to preserve profit margins, though some industries—like retail and restaurants—were reluctant to do so. Businesses expect some moderation in price growth but foresee prices remaining elevated as they work through increased costs.

Translation: the tariffs are working their way through. Not as a one-time shock. As a new baseline.

Overall, the economy appeared to pick up slightly in eight of the 12 Fed districts, with three districts reporting no change and one reporting a modest decline. That marked an improvement over the past three report cycles, where a majority of districts reported little change.

The American economy refuses to cooperate with either the doom narrative or the boom narrative. It grinds forward. Stubbornly. Messily.

GREENLAND, BRIEFLY

The Trump administration is poised for crunch talks with Greenlandic and Danish officials Wednesday, amid the president's ongoing push to take control of Greenland. Greenland Foreign Minister Vivian Motzfeldt and her Danish counterpart Lars Lokke Rasmussen are expected to convene at the White House for talks with Vice President JD Vance and Secretary of State Marco Rubio.

Markets don't know how to price territorial acquisition attempts. So they're ignoring them.

History suggests this is usually a mistake.

THE WEEK AHEAD

Traders will watch for earnings reports from Goldman Sachs, Morgan Stanley, and BlackRock on Thursday. A new Federal Reserve Chair will likely be selected as Jerome Powell's term expires on May 15, 2026.

Fed Governor Stephen Miran told Bloomberg he is looking for 150 basis points of interest-rate cuts this year. Describing monetary policy as restrictive, Miran said underlying inflation is likely running at 2.3%, which means Fed officials have room to cut further. "I'm looking for about a point and a half of cuts. A lot of that is driven by my view of inflation," Miran said.

The Fed's latest median projection or "dot plot" suggested there would be only one additional quarter-point cut—moving the rate to around 3.25% to 3.50% by year's end.

Miran sees six cuts. The median sees one. The spread between those positions tells you everything about where American monetary policy stands: confused, contested, and under siege.

FINAL THOUGHT

Richmond Fed President Tom Barkin said: "People have jobs, wages are up, and the stock market's healthy. So people have money and even though they don't feel good about it, they're still spending."

This is the American consumer in 2026: doing well, feeling terrible, and spending anyway.

Perhaps the markets are right to shrug. Perhaps the investigation goes nowhere, Powell finishes his term, a competent successor is named, and the Fed continues doing what the Fed does.

Or perhaps we're watching the first cracks in something that takes decades to build and months to destroy.

The data this week was fine. The institutions are not.

I'll be watching from here.

—The Morning Brief

If this landed, subscribe. If it didn't, tell me why. Either way, the week's not over.

MEMORANDUM
From: The Ghost of Central Banking Past
To: Anyone Still Paying Attention
Re: The Week American Monetary Policy Became Reality Television

The meeting of the Federal Open Market Committee scheduled for January 27th will proceed as normal. This is the official line. But nothing about this week has been normal.

The S&P 500 and Dow Jones Industrial Average hit new all-time highs on Monday as investors "shook off" the Department of Justice opening a criminal investigation into Federal Reserve Chair Jerome Powell. "Shook off" is doing a lot of work in that sentence. The S&P 500 rose 0.16% to end at 6,977.27, while the Dow Jones Industrial Average ticked up 86.13 points to settle at 49,590.20.

Markets absorbing an existential threat to central bank independence with a shrug and a 0.16% rally. History will record this either as supreme confidence or profound denial. I'm genuinely not sure which.

THE DATA, FIRST

The Consumer Price Index released Tuesday showed that on a "core" basis—excluding food and energy—consumer prices rose 0.2% over the previous month and 2.6% over the previous year. The 2.6% increase matches the rise reported in November and equals the slowest pace of annual inflation since March 2021.

Good news? Sure. Progress? Certainly.

Following the December CPI report, data from the CME Group showed markets putting 95% odds on the Fed keeping rates unchanged at the conclusion of its Jan. 27-28 meeting.

Then came Wednesday. The producer price index rose just 0.2% for the month, below the Dow Jones consensus for a 0.3% gain. Excluding food and energy, core PPI was flat on the month against expectations for a 0.2% gain.

The inflation hawks have been circling for two years, and the data keeps refusing to cooperate with their apocalypse narrative. The Fed is expected to hold rates steady at its policy meeting at the end of January in the range of 3.5%-3.75%, after cutting rates three times last fall.

But here's the thing about this week: the data barely mattered.

THE SPECTACLE

JPMorgan CEO Jamie Dimon emphasized the importance of the Federal Reserve's independence following the bombshell criminal investigation of Chair Powell. "Everyone we know believes in Fed independence," Dimon said Tuesday during a call with media.

When Wall Street's apex predator starts issuing statements defending the institutional architecture of American monetary policy, we've entered strange territory.

And the banks themselves? Bank stocks were the hardest hit Monday, with Citigroup down about 3%. JPMorgan and Bank of America were off by more than 1%. Capital One shares slid 6%.

This wasn't just Powell anxiety. Credit card stocks fell on news that President Trump is calling for a 10% one-year cap on credit card interest rates. "Effective January 20, 2026, I, as President of the United States, am calling for a one-year cap on Credit Card Interest Rates of 10%," Trump said, as quoted by CNBC.

Monetary policy by social media. Rate caps by presidential proclamation. Criminal investigations into sitting Fed chairs. As Jim Lebenthal, chief markets strategist at Cerity Partners, told CNBC: "The impact of Chairman Powell being under investigation is likely a long-term impact, meaning it's not going to change interest rates in the near term; it's not going to change inflation in the near term."

Long-term impact. That's the polite way of saying: we're watching something break in slow motion.

THE ROTATION

A weeklong rotation has seen investors bail from richly priced technology names in favor of more economically sensitive industries, sending the Nasdaq 100 to its worst decline in a month while lifting the majority of companies in the S&P 500.

Wednesday's carnage: Microsoft, Meta, and Amazon each lost more than 2%. Oracle and Broadcom each slid 4%, while Nvidia dipped 1.4%.

Nvidia's troubles weren't purely rotational. Reuters reported that Chinese customs authorities advised customs agents this week that Nvidia's H200 chips are not allowed to enter the country. Then, in classic 2026 fashion, President Trump said the administration will approve China sales of Nvidia's H200 chip, but the U.S. government will take 25% of sales. "It's not the highest level, but it's a pretty good level, and China wants them and other people want them and we're going to be making 25% on the sale of those chips, basically," Trump said.

Trade policy as protection racket. Chip diplomacy as revenue stream. We've moved past neoliberalism into something that doesn't yet have a name.

Meanwhile, the little guys are having their moment. The Russell 2000 climbed 0.7%, posting its fourth positive session in the past five. The index touched a fresh all-time high during the day and closed at a record.

It has been old-economy stocks rather than buzzy technology names leading the Dow in the new year. Boeing has led the blue-chip index in 2026 with a gain of more than 12%. Caterpillar and Sherwin-Williams followed with advances of nearly 12% and 10%, respectively.

The AI narrative isn't dead. But the money is finding other homes.

THE GOLD QUESTION

Analysts at UBS say gold could rally to $5,000 by the third quarter, with potential for $5,400 if political and economic risks mount. Bank of America is calling for $5,000 gold. JPMorgan is calling for $5,000 gold by the end of 2026.

Three major banks. Same number. Same year. Either they're all reading the same playbook or they're seeing the same writing on the wall.

What kind of world prices gold at five thousand dollars an ounce? Not a stable one. Not a confident one. A world where the institutions that anchor monetary credibility are under criminal investigation.

THE CRYPTO SITUATION

Bitcoin continues its purgatory tour. During a four-day losing streak, Bitcoin and Ethereum ETFs lost $1.3 billion of their collective $1.5 billion worth of inflows since the start of January.

Bitcoin recently traded for $91,722. The shift in sentiment is mainly due to lower Fed rate cut expectations for March.

The thesis was always that crypto would thrive in a world of debased fiat and captive central banks. Well, we're getting the captive central bank. The debasement pressure. The institutional chaos.

And Bitcoin trades sideways around $91k, bleeding ETF money.

James Butterfill, head of research at CoinShares, expects to see bitcoin in a range of between $120,000 and $170,000 in 2026, with "more constructive price action likely occurring in the second half of the year." Butterfill said investors will be watching to see who the new chair of the U.S. Federal Reserve will be after Jerome Powell's tenure ends in May. The new person is "likely to be dovish," but markets will wait for clarity "before repricing risk assets more decisively."

So the crypto trade now hinges on... who runs the Fed? The asset class that was supposed to transcend monetary policy is now hostage to it.

Irony doesn't begin to describe this.

WHAT THE BEIGE BOOK TELLS US

The Fed's Beige Book showed that cost pressures from tariffs were a consistent theme for the first couple of weeks of January. Companies that initially absorbed tariff-related costs were beginning to pass them on to customers to preserve profit margins, though some industries—like retail and restaurants—were reluctant to do so. Businesses expect some moderation in price growth but foresee prices remaining elevated as they work through increased costs.

Translation: the tariffs are working their way through. Not as a one-time shock. As a new baseline.

Overall, the economy appeared to pick up slightly in eight of the 12 Fed districts, with three districts reporting no change and one reporting a modest decline. That marked an improvement over the past three report cycles, where a majority of districts reported little change.

The American economy refuses to cooperate with either the doom narrative or the boom narrative. It grinds forward. Stubbornly. Messily.

GREENLAND, BRIEFLY

The Trump administration is poised for crunch talks with Greenlandic and Danish officials Wednesday, amid the president's ongoing push to take control of Greenland. Greenland Foreign Minister Vivian Motzfeldt and her Danish counterpart Lars Lokke Rasmussen are expected to convene at the White House for talks with Vice President JD Vance and Secretary of State Marco Rubio.

Markets don't know how to price territorial acquisition attempts. So they're ignoring them.

History suggests this is usually a mistake.

THE WEEK AHEAD

Traders will watch for earnings reports from Goldman Sachs, Morgan Stanley, and BlackRock on Thursday. A new Federal Reserve Chair will likely be selected as Jerome Powell's term expires on May 15, 2026.

Fed Governor Stephen Miran told Bloomberg he is looking for 150 basis points of interest-rate cuts this year. Describing monetary policy as restrictive, Miran said underlying inflation is likely running at 2.3%, which means Fed officials have room to cut further. "I'm looking for about a point and a half of cuts. A lot of that is driven by my view of inflation," Miran said.

The Fed's latest median projection or "dot plot" suggested there would be only one additional quarter-point cut—moving the rate to around 3.25% to 3.50% by year's end.

Miran sees six cuts. The median sees one. The spread between those positions tells you everything about where American monetary policy stands: confused, contested, and under siege.

FINAL THOUGHT

Richmond Fed President Tom Barkin said: "People have jobs, wages are up, and the stock market's healthy. So people have money and even though they don't feel good about it, they're still spending."

This is the American consumer in 2026: doing well, feeling terrible, and spending anyway.

Perhaps the markets are right to shrug. Perhaps the investigation goes nowhere, Powell finishes his term, a competent successor is named, and the Fed continues doing what the Fed does.

Or perhaps we're watching the first cracks in something that takes decades to build and months to destroy.

The data this week was fine. The institutions are not.

I'll be watching from here.

—The Morning Brief

If this landed, subscribe. If it didn't, tell me why. Either way, the week's not over.