This Week
For a short week, it wasn’t short on news!
Today, the Supreme Court ruled against using the International Emergency Economic Powers Act (IEEPA) to enact tariffs, specifically the “reciprocal” country-specific tariffs and the fentanyl tariffs on China, Mexico, and Canada, which raised an estimated $175 billion in revenue (half of all tariff revenue since the start of 2025).
Shortly thereafter, President Trump announced a 10% global tariff on top of “our normal tariffs” via Section 122 of the Trade Act of 1974, which allows the president to enact tariffs to address “large and serious United States balance-of-payment deficits.” They can only be imposed for up to 150 days and cannot exceed 15%. President Trump also said that they will begin investigations under Section 301 to eventually enact longer-term tariffs. We’ll have to wait on more details to get a clearer picture.
But that’s not all! We also got:
- Q4 GDP growth much weaker than expected due to government shutdown: Q4 real GDP grew just +1.4% on an annualized basis – half consensus expectations. But, the Federal government shutdown took 1% off growth (and that should largely reverse in Q1), while domestic demand grew at a solid +2.4% pace.
- Headline PCE inflation up to 2.9% YOY: Unlike CPI, PCE inflation is still rising (partly because housing has a much smaller weight in PCE), and was pushed up by food and core goods.
- January Fed minutes show openness to hike: With “some signs of stabilization” in the labor market and inflation still above target, “several” participants were open to describing future rate decisions as “two-sided,” meaning a cut or a hike.
And after all that, the Nasdaq-100® is up +1% this week, and 10-year Treasury yields are up just a few basis points to nearly 4.1%.
Next Week
Here are the top events I’m watching next week:
- Tuesday: State of the Union
- Wednesday: NVDA earnings
- Thursday: Jobless claims
- Friday: Produce price inflation (Jan.)
