President Trump just brought a nuclear bomb to a knife fight with Fed Chair Jerome Powell.

On Sunday, the Federal Reserve released a video announcing the central bank had received grand jury subpoenas from the Justice Department over the $2.5 billion renovation of the bank’s headquarters. What that really means is that Powell himself is being criminally investigated—a steep escalation in the ongoing feud between the president and the Fed. But Powell didn’t take the attack lying down.

“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation,” Powell said in the video.

Sell America 2.0

The market, at least initially, freaked out. Stocks fell in overnight trading as investors revamped the “sell America” trade, fearing that a central bank without independence would wreak havoc on the economy. But despite the initial drop, equities bounced back by the end of Monday.

The greenback plummeted to its lowest level in three weeks in overnight trading, though it, too, recovered by the end of the day Monday. Gold reached a record high today, given the safe haven asset is where investors park their money when sh*t hits the fan. Bitcoin rose 0.92%, silver jumped 7.37%, and the ten-year treasury yield rose for much the same reason.

Why do things seem so…normal?

Considering how unprecedented this news is, perhaps the real story is that we aren’t seeing an even bigger reaction from investors today.

“I’m surprised the market isn’t more concerned,” said former Fed Chair Janet Yellen today, according to CNBC. “It is the road to a banana republic,” she added of Trump’s investigation.

Last time the “sell America” trade made headlines in the spring, the phenomenon turned out to be more of a fad than a long-term re-alignment of capital. But according to the experts, there’s some logic behind hedging your bets on America, given the events of the last week.

“We maintain a favorable view on international diversification, and this event reinforces that stance,” explained Global Head of Client Portfolio Management & Portfolio Manager at Janus Henderson Seth Meyer. “Near-term volatility will hinge on whether Congress or the Treasury Department can orchestrate another simmering down of the administration’s rhetoric.”

Considering how global stocks crushed US equities last year, maybe increasing your international exposure isn't the worst idea.—LB

🟢 What’s up

• Walmart jumped 3% after joining the Nasdaq 100 and announcing a partnership with Google.
• Albemarle climbed 4.98% following a Scotiabank upgrade on a more constructive lithium market outlook. The call lifted peers as well, with Lithium Argentina jumping 7.31% and Lithium Americas popping 6.86%.
• Dexcom advanced 5.31% after the medical device company posted preliminary fourth-quarter results that came in ahead of expectations.
• Beam Therapeutics soared 22.29% after announcing it had reached an agreement with the US Food and Drug Administration on a possible accelerated approval path for its lead genetic disease treatment, BEAM-302.
• Abivax jumped 3.15% on a report that Eli Lilly may be interested in acquiring the biotech company in a deal valued at $17.5 billion, pending regulatory assurances from France.
• Cloud computing and cybersecurity company Akamai Technologies rose 3.57% after Morgan Stanley issued a rare double upgrade and called the stock its “top value idea” for 2026.

What’s down

• Airline stocks slid after President Donald Trump called for a 10% cap on credit-card interest rates, a potential blow to a major profit engine for carriers. Delta Air Lines fell 1.77% and United Airlines dropped 1.73%.
• Credit-card issuers also moved lower on the rate-cap proposal. Capital One slid 6.40%, Synchrony Financial fell 8.36%, and American Express dropped 4.27%.
• Duolingo sank 8.45% after the company disclosed that CFO Matt Skaruppa is stepping down.
• Allegiant Travel Company fell 6.28% after agreeing to acquire Sun Country Airlines in a $1.5 billion cash-and-stock deal.

Alphabet is now the fourth member of the vaunted $4 trillion club, a conglomerate of companies with insanely large market caps that includes Microsoft, Apple, and Nvidia.

It’s all thanks to AI. Alphabet soared 65.4% in 2025, its best year since 2009, as investors applauded its control of the TPU market, while hype surrounding new features for its Gemini 3 chatbot wowed users. The company has kept the pedal to the metal this year, with two back-to-back announcements pushing its market cap to new heights.

First, Alphabet unveiled its new Universal Commerce Protocol this weekend. It sounds fancy, but the idea is simple: More customers are using AI these days when they’re shopping online, so Alphabet created a single standard protocol for AI agents to use to connect with retailers. Companies like Walmart, Target, Shopify, and Wayfair have bought in, and with a new “checkout feature” coming soon to Google search and Gemini, Alphabet may have just revolutionized e-commerce.

As if that wasn’t enough, Apple revealed this morning that it will use a custom Gemini model to build its new AI-powered Siri. While Alphabet has caught up to competitors in the AI race, Apple has continued to lag behind—and rather than build its own LLM from scratch, the company has apparently chosen to cut a corner and simply use what Alphabet has already created.

Alphabet surpassed Apple’s market cap for the first time since 2019 just last week. Now, Apple has bent the knee, acknowledging its need for Alphabet’s help in the AI race. So far, 2026 is shaping up to be another very good year for Alphabet.—MR

Turns out Santa showed up this year, but with a strict no-splurging policy.

Some retailers shared early holiday updates today, revealing a pivotal shopping season that failed to impress. Birkenstock, Savers Value Village, and Five Below were among those reporting ahead of the ICR conference in Orlando, with results largely confirming expectations: a few standouts, but no broad-based boost in consumer spending.

Here’s how some of the more notable names shook out:

• Abercrombie & Fitch posted “record” quarter-to-date sales, but trimmed the top end of its full-year outlook, cutting expectations for sales growth, operating margin, and EPS. Management said holiday demand was solid across its brands, but the numbers hinted at slowing momentum after years of strong growth. Shares plummeted 17.69%.
• Urban Outfitters, too, delivered “record holiday sales,” with total net sales rising 9% year over year in the two months ending December 31. Growth was broad-based across brands, with comparable sales rising 9% at Urban Outfitters, 5% at Free People, and 3% at Anthropologie, while FP Movement led the pack with an 18% jump. The biggest standout, however, was its Subscription segment, including its Nuuly clothing rental business, where net sales jumped 43%. Despite the strong performance, shares still fell 11.59%.
• American Eagle Outfitters followed a familiar pattern, calling the holiday period a “record” season after beating expectations, with quarter-to-date comparable sales up between 8% and 9%, and Aerie comps rising “in the low twenties.” The strong performance led the company to raise its fourth-quarter operating income outlook. But, like its peers, the stock still fell 3.54%.
• Lululemon said its fiscal fourth-quarter results are tracking toward the high end of prior guidance, signaling a strong finish to the holiday period. The update comes as the company prepares for a leadership change, with CEO Calvin McDonald set to depart at the end of this month and the search for a successor underway, marking a much-needed reset as competition in the athleisure space intensifies. Shares rose 2.52% today.

Retail reality check

The holiday season broke records across much of retail, but stocks are still sliding, a sign that confidence in outlook is weakening. While the National Retail Federation projects healthy annual sales growth of 3.7% to 4.2% from November and December, much of that gain is likely driven by higher prices rather than increased demand. After accounting for tariff-related price hikes, analysts see little real volume growth, leaving consumer and retailer sentiment cautious.

That caution is weighing on the rest of the sector, too. Shares of Gap, Under Armour, Macy’s, and Kohl’s all moved lower today, suggesting investors are treating the mixed holiday read-through as a warning sign rather than a buying opportunity—for now.—SY

• Upping the ante: Paramount is launching a proxy fight to get control of Warner Bros. Discovery.
• Trump vowed to block ExxonMobil from doing business in Venezuela after its CEO called the country “uninvestable” in a meeting with the administration last week.
• Strategy just purchased $1.25 billion worth of bitcoin, its biggest splurge on the digital asset since July.
• Nvidia and Eli Lilly are teaming up to spend $1 billion building a joint research lab.
• The AI titans will issue up to $300 billion worth of corporate bonds in the next three years, according to Bank of America.
• The Pentagon took a $150 million stake in a gallium company, as the critical minerals race with China heats up.

Tomorrow’s a big day: First, we get the December CPI report, the final CPI reading before the next Federal Reserve decision on January 28 and the first full report since the government shutdown last year. Economists expect inflation to rise 2.8% year over year.

We’ll also kick off a new earnings season with a slew of big banks like JPMorgan Chase and Bank of New York Mellon, as well as Delta Air Lines.