Global financial media focused on the following key headlines overnight and this morning:
1. White House: Diplomacy is the "Preferred" U.S. Approach to Iran Situation 2. GOP Leaders Criticize Powell Investigation; Treasury Secretary Bessent Reportedly Warned Trump of Potential Harm 3. Google's Gemini to Provide Technical Support for Apple's Siri and Other AI Features 4. Alphabet's Market Capitalization Surpasses $4 Trillion 5. Trump's Pressure on Fed Raises Concerns; Bond Giant Suggests Rates Could Actually Rise 6. JPMorgan No Longer Expects Fed Rate Cuts This Year, Predicts Hike in 2027
White House: Diplomacy is the "Preferred" U.S. Approach to Iran Situation White House Press Secretary Levitt stated on the 12th that, regarding the current Iran situation, President Trump views diplomacy as the "preferred" solution. Levitt said that Trump "has always emphasized that diplomacy is the first choice," but added that he "would not hesitate to deploy U.S. military forces" if he deems it necessary. Trump said on the 11th that Iranian officials had contacted U.S. government officials and proposed negotiations, with "meetings being arranged." Simultaneously, the U.S. is considering a range of measures to address the Iran situation, including military action and "some very tough options."
GOP Leaders Criticize Powell Investigation; Treasury Secretary Bessent Reportedly Warned Trump of Potential Harm After Federal Reserve Chair Jerome Powell accused the U.S. Department of Justice of pressuring and intimidating the central bank by initiating a grand jury investigation, Trump faced rare criticism from key Republican lawmakers. Senator Thom Tillis, a key Republican on the Senate Banking Committee who is not seeking re-election, swiftly vowed on Sunday evening to oppose any Fed nominees put forward by Trump until the issue is resolved. According to an Axios report on Monday, Treasury Secretary Bessent also warned Trump that the investigation "has created chaos" and could adversely affect financial markets. Citing anonymous sources, the report stated that prosecutors from the District of Columbia office, led by Jeanine Pirro, launched the investigation without prior notification to the Treasury Department, senior White House officials, or the main divisions of the Justice Department. White House Press Secretary Levitt indicated she had not discussed Tillis's threat with Trump but insisted that Trump did not order the Justice Department to conduct the investigation and that he respects the Fed's independence.
Google's Gemini to Provide Technical Support for Apple's Siri and Other AI Features The partnership has been formally finalized. Apple has chosen to collaborate with its long-term partner Google, with the latter providing technical support for AI features like Siri. Apple and Google stated in a joint announcement: "After careful evaluation, we believe Google's technology provides the most robust foundational support for Apple's base model. We are excited about the new innovative experiences this technology will unlock for users." This collaboration confirms earlier reports about a potential agreement between the two companies. Neither Apple nor Google disclosed the specific financial terms of the deal, but previous reports suggested Apple might pay Google around $10 billion for access to its AI technology. It is noteworthy that Apple had previously tested technologies from competitors like OpenAI and Anthropic for a period of time.
Alphabet's Market Capitalization Surpasses $4 Trillion The market capitalization of Google's parent company, Alphabet, has officially surpassed $4 trillion, making it the fourth company globally to cross this valuation threshold. On Monday, following Apple's announcement that it selected Google's Gemini as the foundational base for its AI model, which will also power the next generation of Siri, Alphabet's stock price rose 1%. This milestone places the search engine giant in the elite club of companies with a $4 trillion market cap, alongside Nvidia, Microsoft, and Apple.
Trump's Pressure on Fed Raises Concerns; Bond Giant Suggests Rates Could Actually Rise Fund managers at major bond investment firms like Pimco, PGIM, and DWS Group warn that President Donald Trump's challenge to the Federal Reserve's independence could backfire, potentially leading to higher interest rates instead of his intended goal of lower rates. They argue that the Trump administration's actions threaten the Fed's credibility in fighting inflation, injecting a new and significant risk into financial markets. As long as this risk persists, traders are likely to keep U.S. Treasury yields higher than they otherwise would be, thereby increasing the cost of mortgages, corporate loans, and other forms of credit. "The market will get very nervous if the Fed becomes a source of instability," said Gregory Peters, co-chief investment officer at PGIM Fixed Income, which manages approximately $900 billion in assets.
JPMorgan No Longer Expects Fed Rate Cuts This Year, Predicts Hike in 2027 Strategists and economists at JPMorgan Chase no longer expect the Federal Reserve to cut interest rates this year and now anticipate a rate hike next year, a revision based on the December jobs data released last Friday. A team including Michael Feroli, Phoebe White, and Jay Barry wrote in a January 9th report, "We now expect the Fed to hold rates steady throughout 2026, although additional front-end premium could persist for a few more months as the market is reluctant to rule out labor market weakness and is preoccupied with the Fed chair contest." The report stated, "The December labor report alleviated concerns about a slowdown in the labor market," as the unemployment rate fell from 4.5% to 4.4%; JPMorgan expects the job market to tighten further by the second quarter.
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