Good morning! President Trump called for a one-year cap on credit-card interest rates at 10%. The six biggest U.S. banks are on pace for their second-best year ever, pulling in a combined $157B despite Trump’s policy swings. And Meta signed nuclear-energy deals with Vistra, TerraPower, and Oklo to power its Prometheus AI supercluster.

D1 Capital’s private portfolio jumped 39% last year, thanks to a huge bet on SpaceX (Musk’s company is now worth $800B). Rolls-Royce has hit a record high every trading day of 2026 as its defense pivot fuels a 1,000%+ five-year run.

Plus: The U.S. added just 50,000 jobs in December, capping the weakest hiring year since 2020, hedge funds are turning bullish on oil amid unrest in Venezuela and Iran, and how to choose between sleep and exercise.

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SQUEEZ OF THE DAY

Powell Claps Back

On Friday, the DOJ served grand jury subpoenas to the Fed, an unprecedented escalation in President Trump’s long-running war with Chair Jerome Powell.

By Sunday night, Powell fired back with a rare, forceful statement, warning that the threat of criminal charges is less about a building renovation and more about who controls U.S. monetary policy.

The official justification centers on Powell’s June testimony about the Fed’s headquarters renovation, a project whose estimated cost has risen to roughly $2.5B from $1.9B in two years.

Administration officials and Republican critics have accused Powell of misleading Congress about features like VIP dining rooms and rooftop gardens. Powell disputes those claims, saying many of the cited features are no longer in the plans.

Powell argues the investigation fits a broader pattern of political pressure on the Fed, particularly after it declined to cut rates more aggressively: “The threat of criminal charges, is a consequence of the Federal Reserve setting interest rates based on evidence and economic conditions, rather than following the preferences of the president.”

Markets reacted quickly. Stock futures slipped, the dollar weakened, and gold hit a record high, forcing investors to price in a scenario once considered unthinkable: a direct legal assault on Fed independence.

Trump denied knowledge of the DOJ probe, but the pressure campaign is well documented. He has criticized Powell for keeping rates too high, floated firing him, and is signaling a successor when Powell’s term as chair expires in May. Powell could still remain on the Board until 2028, complicating Trump’s efforts to reshape the Fed.

Some Republicans are pushing back. Senator Thom Tillis said he would block any Fed chair confirmation until the matter is resolved, arguing the credibility of the DOJ, not the Fed, is now at stake.

The Fed meets again January 27–28, with futures showing little chance of a rate move. But rate decisions are no longer the main focus. The bigger question is whether the Fed can operate without fear of political or legal retaliation.

Takeaway: While the investigation centers on renovation costs, the broader implications point to a test of Fed independence. If monetary policy becomes vulnerable to subpoenas and criminal probes, markets may start demanding a political risk premium on U.S. assets for the first time in decades.

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HEADLINES

Top Reads

• Fed Chair Powell under criminal probe by federal prosecutors (CNBC)

• Trump orders mortgage bond purchases to lower rates (CNBC)

• Six banks seen reaping $157 billion on Trump's return (BB)

• Meta signs nuclear energy deals to power Prometheus AI supercluster (CNBC)

• Hedge fund D1's SpaceX bet fuels its 39% private book gain (BB)

• Rolls-Royce has hit a record high every trading day of 2026 (CNBC)

• US economy adds 50,000 jobs in December to cap worst year of hiring since 2020 (YF)

• Hedge funds turn more bullish on oil amid Venezuela, Iran unrest (BB)

• Big banks kick off Q4 earnings this week, with inflation data on deck (YF)

• US success in Venezuela could be trouble for Canadian oil producers (YF)

• Wall Street’s start to 2026 is going exactly according to plan. Are investors too confident? (CNBC)

• Trump is reportedly weighing military options against Iran (CNBC)

• Google, Shopify and retailers push AI shopping standard (Axios)

• Intel stock jumps 10% after CEO meets with Trump as U.S. stake doubles value (CNBC)

• U.S. oil giants tell Trump they're noncommittal on Venezuela (Axios)

• Uber’s lesson for the marijuana market (WSJ)

• Amazon Pharmacy starts offering Novo Nordisk's Wegovy weight loss pill (CNBC)

• Oklo and Vistra shares surge as Meta turns to nuclear power for AI (YF)

• Venezuela investors eye start of $60 billion bond restructuring (BB)

• Sona adds $6.6 billion as investors look beyond big hedge funds (BB)

• What’s going on with smart rings? (Wired)

• High costs and family fallouts prompt wealthy to close investment offices (FT)

• AIG edges back towards risk two decades after financial crisis bailout (FT)

CAPITAL PULSE

Markets Rundown

Market Update

• U.S. equities ended the week on a strong note, with the S&P 500 +0.7% and now +1.8% YTD

• Russell 2000 extended its early-year surge, now +5.8% YTD, reflecting continued pro-cyclical strength

• Short-dated Treasuries sold off as payrolls data showed no signs of labor-market stress, tempering expectations for near-term Fed cuts

• Long-duration bonds rallied after the administration directed Fannie Mae and Freddie Mac to purchase $200B in mortgage-backed securities

• The U.S. dollar continued firming, now +0.8% YTD; WTI crude rose ~2% on Iran-related geopolitical tensions

• Gold briefly traded above $4,500/oz, continuing its remarkable momentum

Economic Data Highlights

• December nonfarm payrolls rose 50K, undershooting expectations

• Prior months were revised down by a combined 76K, highlighting sluggish hiring trends

• Payrolls increased 584K in 2025, sharply lower than the 2M added in 2024; 277K federal layoffs explain part of the slowdown

• Unemployment rate fell to 4.4%, a reassuring sign of stability despite soft hiring

• Recent readings continue to point to a slow-hiring, low-firing labor environment

Sector Trends

• Pro-cyclical sectors and small caps continued to lead early-year performance

• Energy benefited from higher oil prices

• Growth sectors were mixed as investors digested the implications of the jobs report

• Long-duration bonds strengthened following mortgage-market support from the administration

Looking Ahead

• The Fed has cut rates at three consecutive meetings, but signals point to a pause in January

• Hiring remains sluggish but not deteriorating

• With GDP tracking firm and policy seen as restrictive at current levels (3.5%–3.75%)

• The base case: 1–2 cuts of 25 bps each this year, bringing policy rates to 3%–3.5%

Movers & Shakers

• (+) Opendoor ($OPEN) +13% after Trump announced a $200B mortgage bond plan.

  (+) Intel ($INTC) +11% because the company’s CEO met with Trump; the government doubled its stake.

• (–) General Motors ($GM) -3% after taking a $6B hit on the company's EV business.

Prediction Markets

• CPI announcement is tomorrow at 8:30am.

• Trade on real-world events with Kalshi. Use code OWS to get a $10 bonus when you trade $10.

Private Dealmaking

• AirNexis Therapeutics, a biotech developing treatments for chronic obstructive pulmonary disease, raised $200 million

• EpiBiologics, a biotech developing protein degraders for cancer and immune diseases, raised $107 million

• Rakuten Medical, a biotech focused on photoimmunotherapy for cancer, raised $100 million

• Pomelo Care, a virtual maternal and infant care company, raised $92 million

• Beacon Therapeutics, a biotech focused on treatments for retinal and vision disorders, raised $75 million

• Bit.bio, a synthetic biology platform focused on engineered human cells, raised $50 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

BOOK OF THE DAY

The Baron of Wall Street

Description: A definitive, richly reported biography of Clarence Dillon, the once-shadowy financier whose influence shaped Wall Street in the Roaring Twenties and beyond. Loomis Jr. brings to life the man behind Dillon, Read & Co., showing how Dillon’s bold deals, strategic vision, and elite networks helped define the modern financial world. Equal parts business history and character study, this is the story of ambition, power, and the unseen forces behind Wall Street’s evolution.

Book Length: 336 pages
Release Date: November 4, 2025

Ideal For: Investors, business historians, strategists, and anyone fascinated by how individual leadership and deal-making helped shape today’s financial systems.

“In an age of titans, Dillon mastered both the art of finance and the influence behind the curtain.”

DAILY VISUAL

US Is the Most Dynamic Economy in the World

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DAILY ACUMEN

Struggle

In the 1990s, researchers studied cocoons. To "help" butterflies, they made a small cut in the cocoon to ease emergence. Every butterfly that was helped died shortly after. Why?

The struggle to escape the cocoon forces fluid from the butterfly's body into its wings. Without the struggle, the wings never develop strength. The butterfly needs the hardship. We do too. Yet modern life eliminates struggle at every turn.

Immediate answers from Google. Food delivered instantly. Comfort on demand. We've optimized away the very friction that builds character and capability.

Robert Greene writes that every master goes through an "apprenticeship" - a period of struggle and learning. There are no shortcuts.

Mozart practiced 10,000 hours before his first masterwork. Michael Jordan was cut from his high school team.

Your struggles aren't obstacles to your success, they're the curriculum. What difficulty are you avoiding that you should be embracing? What easy path are you taking that's keeping you weak?

Remember, smooth seas never made a skilled sailor.

ENLIGHTENMENT

Short Squeez Picks

• How to improve cognitive performance through physical activity

• Between sleep and exercise, choose sleep 

• How to take a happiness break

• Does the Scandinavian sleep method really work?

• Why strength training is the most powerful thing you can do for health

MEME-A-PALOOZA

Memes of the Day

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