Iran on High Alert as US Weighs Strike Options

Federal Reserve Chair Jerome Powell is expected to guide the U.S. central bank to hold interest rates steady this week, signaling a pause after three consecutive reductions. The decision, set to be announced Wednesday, comes as the Fed navigates not just economic data but also intense political scrutiny.

Powell's press conference will be his first since the Fed received grand jury subpoenas and follows Supreme Court arguments over another governor's potential removal. This backdrop ensures that questions about political pressure and the central bank's independence will feature prominently.

A Consensus to Pause and Reassess

After a series of contentious rate cuts, the decision to hold rates is likely to find broad agreement among policymakers on the Federal Open Market Committee (FOMC). While previous meetings saw a split between officials focused on a weakening labor market and those concerned about high inflation, the current environment has fostered a temporary truce.

"Now it's kind of like a 'Kumbaya' moment," said Tim Duy, chief economist at SGH Macro Advisors. "They can almost all come together and say, 'All right, well, that's done. We can sort of take a breather here and reassess our need for rate cuts if the data changes.'"

Since September 2024, the Fed has lowered its benchmark rate by 1.75 percentage points, bringing it to a range of 3.5% to 3.75%. Many officials believe this level appropriately balances the risks to both employment and inflation.

Balancing a Cooling Economy with High Inflation

The economic data presents a mixed but stabilizing picture. The labor market has cooled over the past year, though the unemployment rate edged down from 4.5% to 4.4% in December. At the same time, inflation shows signs of softening but remains stubbornly above the Fed's 2% target.

Given these conditions, Powell may signal that interest rates are "in a good place for now," according to Karim Basta, chief economist for III Capital Management. Officials will be watching how fiscal stimulus and tariff policies impact prices and employment. Basta noted he is waiting to see if Powell views near-zero job growth as a concern or as a natural consequence of lower immigration.

Market watchers expect minimal changes to the Fed's post-meeting statement, though it may be updated to reflect the lower unemployment rate and stronger-than-expected economic growth from late last year.

Inside the FOMC: Dissent and New Voters

While a rate hold is the base case, it won't be without opposition. Fed Governor Stephen Miran, who dissented in the last three meetings in favor of deeper cuts, may do so again. Governor Michelle Bowman could also dissent, having recently argued the Fed should remain prepared to lower rates.

However, many officials who previously advocated for cuts now appear comfortable with a pause. Governor Christopher Waller, who was the first to publicly lean toward rate cuts last June, has stated he sees "no rush" to act while inflation is still elevated.

This meeting also marks a rotation of voting members on the FOMC, including:

• Beth Hammack (Cleveland Fed President)

• Lorie Logan (Dallas Fed President)

• Anna Paulson (Philadelphia Fed's new President)

• Neel Kashkari (Minneapolis Fed President)

Hammack and Logan have been vocal about inflation risks, while Paulson has expressed more concern for the labor market. Kashkari recently said rates should remain unchanged at this meeting.

Navigating Political Pressure and an Uncertain Future

With no new economic projections scheduled for release, investor focus will be squarely on Powell's guidance about the duration of the rate pause. The median projection from December anticipated just one quarter-point reduction this year.

Beyond monetary policy, Powell is certain to be questioned about external threats to the Fed's independence. He recently issued a forceful statement asserting that Department of Justice subpoenas were an attempt to influence policy through intimidation.

The increased political friction has also fueled speculation about whether Powell will remain at the central bank after his term as chair expires in May. His seat on the board does not expire until 2028, but he has consistently declined to comment on his future plans.

The S&P 500 barely managed a record closing high on Tuesday, its fifth straight day of gains with investor ​optimism ahead of megacap earnings reports being countered by a mixed reception to the latest earnings reports and a massive selloff in health insurer stocks.

UnitedHealth (UNH.N), led losses in ‌healthcare stocks and in the Dow Jones Industrial Average (.DJI), with a 19.6% tumble after the Trump administration proposed an increase in Medicare insurer payment rates. The plan was another woe added to the insurer's disappointing revenue forecast for 2026. Following suit were insurance peers Humana (HUM.N), opens new tab, down 21% and CVS (CVS.N), opens new tab, down 14.2%.

Investors were more encouraged by General Motors (GM.N), earnings, which saw its shares rally 8.7% after it reported higher fourth‑quarter core profit.

And with some high-profile earnings reports due out this week, technology stocks extended Monday's gains, with heavyweights Microsoft (MSFT.O), opens new tab, Amazon (AMZN.O), opens new tab, Nvidia (NVDA.O), opens new tab, Apple (AAPL.O), opens new tab, and Broadcom (AVGO.O), providing the market's biggest boosts.

With this, the Nasdaq touched its highest level since late October and the S&P 500 also touched ‌an intraday record high and neared the 7,000 milestone, while also marking its fourth record closing high so far in 2026.

"There's a little bit of a bifurcated ​market today with the Dow down because of the announcements around Medicare premiums," said Phil Blancato, chief market strategist at Osaic Wealth in New York. "When you look at everything else, the market seems to be hanging in there waiting for a big week of earnings."

Also on Tuesday, U.S. consumer confidence unexpectedly deteriorated in January, slumping to its lowest level since 2014, but Blancato noted that surprisingly, the "pretty terrible number" didn't have ‍much of an impact on the stock market.

Along with investor focus on earnings reports and U.S. policy decisions, Adam Rich, deputy chief investment officer and portfolio manager at Vaughan Nelson Investment Management noted that the recent decline in the U.S. dollar, including a drop of over 1% on Tuesday, is good news for U.S. equities as a weak dollar helps U.S. exports.

"This currency move is really positive for S&P earnings going forward," said Rich.

The Dow Jones Industrial ⁠Average (.DJI), fell 408.99 points, or 0.83%, to 49,003.41, the S&P 500 (.SPX), gained 28.37 points, or 0.41%, to 6,978.60 and the Nasdaq Composite (.IXIC), gained 215.74 points, or 0.91%, to 23,817.10.

The technology sector (.SPLRCT), rose 1.4% ‍to lead gains among the S&P 500's 11 major industry sectors. Corning(GLW.N), was the biggest gainer in the S&P 500 and the technology sector with a massive 15.6% rally. The Gorilla Glass maker signed a deal with Meta (META.O), ‌worth up to $6 ‌billion for fiber-optic cables in AI data centers.

All eyes will be on Meta , Microsoft and Tesla (TSLA.O), on Wednesday when they kick off earnings reports for the so-called "Magnificent Seven" group of high-flying stocks. Their reports will test the resilience of the AI trade, which has underpinned Wall Street's rally for much of the past year.

In total, 102 S&P 500 companies are set to post earnings results this week. Of the 64 that had reported as of Friday, 79.7% have topped analyst expectations, as per data compiled by LSEG.

Elsewhere in earnings, trading in Boeing (BA.N), was choppy after it swung to a fourth-quarter profit due to a unit sale but ⁠reported bigger-than-expected losses in its two biggest divisions. ⁠Shares in the aerospace company ended down 1.6% ​after rising more than 2% earlier in the day.

And in airlines, American Airlines (AAL.O), closed down 7% with the weekend's winter storm expected to weigh on its first-quarter results although its 2026 profit forecast topped estimates. JetBlue (JBLU.O), shares tumbled 6.9% on a wider‑than‑expected quarterly loss as it cited bad weather and the government shutdown during the quarter.

Bellwether United Parcel Service (UPS.N), projected higher revenue for 2026 but by the end of the day its advance had dwindled to 0.2% ‍while shares in rival FedEx (FDX.N), rose 2.6%.

FED WATCH

As if that wasn't enough, investors were also waiting to hear from the U.S. Federal Reserve, which will make a policy announcement on Wednesday after its two-day meeting.

Investors have been broadly expecting the central bank to leave interest rates unchanged but attention will be on policymakers' guidance on rates and its commentary on the economy while traders will also be alert to any signals around the Fed's next leadership.

Advancing issues outnumbered decliners by a 1.61-to-1 ​ratio on the NYSE where there were 693 new highs and 95 new lows. On the Nasdaq, 2,725 stocks rose ‍and 2,056 fell as advancing issues outnumbered decliners by a 1.33-to-1 ratio.

The S&P 500 posted 36 new 52-week highs and 13 new lows while the Nasdaq Composite recorded 104 new highs and 123 new lows.On U.S. exchanges 18.03 billion shares changed hands, ​just ahead of the 17.99 billion moving average from the last 20 sessions.

Reporting by Sinéad Carew in New York, Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Krishna Chandra Eluri and Aurora Ellis

Source: Kitco

President Donald Trump announced on Tuesday that he will name his choice for the next head of the Federal Reserve soon, signaling that he expects interest rates to fall under the central bank's new leadership.

A Change at the Top of the Fed

Speaking at a rally in Des Moines, Iowa, Trump stated his intention to appoint a new Fed chairman who would align with his goals for monetary policy.

"When we have a great Fed chairman, I think we're going to have one. I'll announce it pretty soon… you'll see rates come down a lot," Trump said.

The announcement comes as current Fed Chair Jerome Powell's term is set to end in May, giving the president an opportunity to select a successor in the coming months.

Persistent Criticism of Powell

Trump has consistently and publicly pushed for the Federal Reserve to implement sharp cuts to interest rates, arguing that the central bank has moved too slowly to ease monetary conditions.

During his address on Tuesday, the president continued his criticism of Powell, whom he referred to as "too late Powell."

The tension between the White House and the central bank escalated earlier this month when Powell revealed he had been threatened with a criminal investigation by the Department of Justice over his cautious approach to cutting rates.

Market Concerns Over Fed Independence

President Trump's persistent pressure on Powell has fueled significant concerns among investors about the independence of the Federal Reserve. These worries have had tangible market consequences, contributing to a sell-off in U.S. bonds and a decline in the value of the dollar as market participants weigh the implications of political influence on monetary policy.

Consensus Points to a Hold, But Inflation Casts a Shadow

Singapore's central bank is widely expected to keep its monetary policy unchanged for a third consecutive review this Thursday. An overwhelming majority of economists—19 out of 20 surveyed by Bloomberg—predict the Monetary Authority of Singapore (MAS) will maintain its current stance.

Despite the strong consensus, growing inflation concerns are fueling debate about a potential hawkish pivot. Bank of America stands as the sole dissenter, forecasting a policy tightening. United Overseas Bank has also noted that a "preemptive" move by the MAS cannot be entirely dismissed. This underlying tension is reflected in sentiment, with nine out of 13 survey respondents anticipating a more hawkish tone in the official policy statement.

The MAS, which manages the Singapore dollar's exchange rate rather than interest rates, last eased its policy in April 2025 to support economic growth.

Rising Prices Fuel Tightening Speculation

Recent data has put inflation squarely back on the central bank's radar. Consumer prices in December remained high for the third month in a row, pushed up by costs in healthcare, education, and food.

Selena Ling, chief economist at Oversea-Chinese Banking Corp Ltd., noted that these figures suggest price "momentum is picking up." She anticipates the central bank's language will shift from a neutral position to a "slightly more hawkish tone."

The MAS itself has signaled that higher inflation is coming. In a statement last week, it projected that both core and all-items inflation gauges would rise in 2026. This "rare heads-up" was significant enough to cause economists at Bank of America to change their forecast. In a note, Kai Wei Ang and Rahul Bajoria wrote that they now expect the MAS to steepen its policy slope by 50 basis points on Thursday.

Strong Economy Provides Room to Maneuver

Singapore's robust economic performance gives the MAS flexibility. The economy expanded by 5.7% in the final quarter of 2025 compared to the previous year, driven by strong output from pharmaceutical and electronic manufacturers alongside healthy consumer spending.

According to Bloomberg Economics, growth in 2025 was "much stronger than expected" and countered headwinds from US trade policy. Economist Tamara Mast Henderson concluded that with low inflation so far, the current policy setting is "about right."

This economic strength, combined with regional safe-haven demand, has propelled the Singapore dollar up by approximately 6% over the past year to its highest level since 2014. The benchmark Straits Times Index is also trading at a record high.

Analyst Outlook: Patience Now, Tightening Later?

The MAS decision comes as central banks worldwide follow divergent paths. While emerging Asian economies are expected to cut borrowing costs, countries like Japan, Canada, and Australia are leaning toward hikes. The US Federal Reserve may consider further easing, while the euro zone is likely to hold steady. Geopolitical factors and US trade policies remain key uncertainties.

Against this backdrop, some analysts believe the MAS can afford to wait. Khoon Goh, an economist at ANZ Banking Group Ltd., expects the central bank to sound "more positive on the outlook" and acknowledge that inflation risks are tilting upward, but stop short of an "outright hawkish" stance.

"While the MAS core inflation is forecast to rise, it is still far from the de facto target of 2%. Hence the MAS can afford to be patient," Goh explained, maintaining his call for a policy tightening in July. With the national budget set to be unveiled on February 12, markets will be watching closely for both fiscal and monetary signals.

U.S. intelligence reports are raising serious doubts about whether Venezuela's interim president, Delcy Rodriguez, will align with Washington's strategic goals, according to four sources familiar with the matter.

After capturing former President Nicolas Maduro on January 3, the Trump administration backed Rodriguez. However, there is now uncertainty over her willingness to formally cut ties with key U.S. adversaries, including Russia, China, and Iran.

Washington's High-Stakes Bet in Caracas

The U.S. has been public about its expectations for the new government. Officials want Rodriguez to sever diplomatic relations with these rival nations, which would involve expelling their diplomats and advisors from Venezuelan soil. This geopolitical pivot is central to the Trump administration's strategy to curb its foes' influence in the Western Hemisphere and open up Venezuela's vast oil reserves to U.S. investment.

The challenge is that Rodriguez has not yet publicly committed to this course of action. Representatives from Russia, China, and Iran even attended her swearing-in ceremony.

The situation underscores the risks of Washington's approach. If Rodriguez resists U.S. directives, it could undermine the administration's ability to steer the country's future from a distance and potentially force a deeper American military role.

CIA Director John Ratcliffe traveled to Caracas on January 15 to discuss the country's political future with Rodriguez, though it remains undetermined if their conversation shifted the intelligence community's assessment.

When asked for comment, a senior Trump administration official stated that President Donald Trump "continues to exert maximum leverage" over Venezuela's leaders and "expects this cooperation to continue."

The Challenge of Abandoning Old Allies

For Venezuela, complying with U.S. demands means abandoning its closest international partners. These alliances are deeply integrated into the country's economy and security:

• Iran has provided technical assistance to help repair Venezuela's oil refineries.

• China has accepted Venezuelan oil as repayment for significant debt.

• Russia has been a primary supplier of weaponry, including missiles, to the military.

• Cuba has offered security and intelligence support in exchange for discounted Venezuelan oil.

Breaking these ties would represent a fundamental and difficult shift in Venezuela's foreign policy.

Rodriguez's Mixed Signals and Washington's Dilemma

Since taking office, Rodriguez has sent contradictory messages. On one hand, she has taken steps to placate Washington, including releasing political prisoners and authorizing the sale of 30 million to 50 million barrels of oil to the United States.

On the other hand, she declared in a recent speech that she has had "enough" of U.S. intervention. Despite this public defiance, two sources confirmed that U.S. officials have held positive calls with her in recent days.

The CIA had previously assessed that officials loyal to Maduro, like Rodriguez, were the best positioned to govern after his removal. However, critics of the strategy have long been concerned about the reliability of Maduro's inner circle.

With no immediate alternative, the Trump administration appears committed to working with Rodriguez for now, given its strong public backing of her. In the background, however, U.S. officials are developing contacts with senior military and security leaders as a contingency plan.

Maria Machado: A Potential Long-Term Option?

Another figure being considered is opposition leader Maria Corina Machado. President Trump recently told reporters he wanted Machado "involved" in the country's leadership.

However, recent intelligence reports conclude that she is not currently capable of running the country, primarily because she lacks strong ties to Venezuela's powerful security services and oil sector.

Machado remains popular among Venezuelans, and her movement claims she won a 2024 election by a large margin, though the state recognized Maduro as the victor. One source familiar with the administration's discussions said the White House views her favorably as a "longer-term option" for a leadership position, possibly starting in an advisory role. No firm decision has been made.

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Source: Bloomberg