This week looks set to bring robust earnings and a Federal Reserve confident enough in the U.S. economy to pause its interest-rate cutting cycle. But bigger issues loom that are likely to keep the "sell America" trade going.
After weeks of geopolitical turmoil, a Fed decision and Big Tech earnings would normally bring back a sense of routine to markets. Traders are pricing in a 97% chance the central bank will hold rates at current levels on Wednesday according to the CME FedWatch tool. Microsoft, Meta Platforms, and Tesla will all report this week, with the so-called Magnificent Seven megacap companies expected to report average earnings growth of 20% for the fourth quarter, according to FactSet.
But a slumping dollar and gold surging above $5,000 an ounce indicate nervousness around U.S. assets, which is unlikely to be settled easily. A second government shutdown looms as Democrats rail against the fatal shooting of a U.S. citizen by a federal agent in Minneapolis and push for the removal of funding for the Department of Homeland Security from the spending bill. Meanwhile, President Donald Trump's threat to impose a 100% tariff on Canada if it strikes a trade deal with China is a reminder of turbulent global politics.
The biggest threat to U.S. assets continues to be the potential loss of Fed independence when Chair Jerome Powell steps down in May. The latest name floated as a potential replacement is BlackRock executive Rick Rieder. But no matter who Trump ultimately chooses as the central bank's next leader, the perception is they will come under immense political pressure to lower rates. Powell's press conference on Wednesday will be watched more for his comments on the future of the Fed than his views on the U.S. economy.
"Never bet against America" was one of Warren Buffett's maxims and has been a good guideline for decades. But just as the former Berkshire Hathaway CEO departs the scene, the market looks to be turning against Uncle Sam.
-- Adam Clark
***Join Barron's senior managing editor Lauren R. Rublin today at noon when she speaks with associate editor Andrew Bary and Cathy Seifert, a senior vice president at CFRA Research, about the leadership transition under way at Berkshire Hathaway. Both have followed Berkshire's evolution and the stock's performance for many years. We will also have a look at other insurance and financial stocks, and what is moving in the markets. Sign up here.
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***
The Risk of Another Government Shutdown Is Rising This Week
The risk of another federal shutdown is rising after Democrats pulled their support for a spending bill that includes money for the Department of Homeland Security. This is after a second fatal shooting by a federal law enforcement agent in Minnesota this weekend prompted big business CEOs to call for a de-escalation.
-- Kalshi and Polymarket put the chance of a shutdown at nearly 80% Sunday,
rising from around 10% on Saturday. Several prominent senators said
Sunday they wouldn't approve the spending, which has already passed the
House, because of DHS funding. Polymarket has a data partnership with
Barron's publisher Dow Jones.
-- Sen. Minority Leader Chuck Schumer said Democrats won't provide the votes
needed to pass the bill. Fellow Democrat Catherine Cortez Masto from
Nevada called on lawmakers to advance five of the spending bills while
separately addressing DHS funding. Masto was one of the Democrats who
voted to end the last shutdown.
-- Lawmakers have to pass the funding bill by Jan. 30, four days from now.
Sen. Majority Leader John Thune's office postponed a scheduled vote today
because of a winter storm that has snarled travel across two-thirds of
the U.S., and rescheduled it for late Tuesday afternoon.
-- Minnesota is home to many big companies, and the CEOs of dozens of them
urged peace and focused cooperation. Signatories of the letter include
leaders from 3M, Best Buy, Cargill, General Mills, Target, UnitedHealth
Group, and U.S. Bancorp, among others.
What's Next: While Sen. Lindsey Graham (R., S.C.) called Democrats' threats to oppose the funding "reckless," Sen. Jeanne Shaheen (D., N.H.) told Fox News Sunday that there was going to need to be a lot of discussion. She also called for the tensions to de-escalate.
-- Liz Moyer and Janet H. Cho
***
All Eyes on Fed Chair Powell After Wednesday's Meeting
What Federal Reserve Chair Jerome Powell says after Wednesday's policy meeting -- and how he says it -- could overshadow the meeting itself. The futures market nearly unanimously expects Fed officials to keep interest rates unchanged this week, according to the CME FedWatch tool.
-- After cutting the federal-funds rate three times late last year, Citi
economists say Fed officials will be comfortable leaving policy rates on
hold. But they say the signal that matters will come from Powell's tone,
particularly how much he keeps the door open to future cuts.
-- Goldman Sachs' chief U.S. economist David Mericle expects two rate cuts,
in June and September. J.P. Morgan chief U.S. economist Michael Feroli
sees nothing until a hike in 2027. The longer officials wait to cut, "the
higher the hurdle," Wells Fargo senior economist Sarah House said.
-- Political headlines, trade uncertainty, and shifting expectations around
Fed leadership have made investors quicker to react to Powell's tone than
to the data. Investor sentiment can turn quickly when policy speculation
collides with politics, says Ben Fulton, chief executive of WEBs
Investments.
-- President Trump has mentioned former Fed governor Kevin Warsh or
BlackRock executive Rick Rieder as potential successors when Powell's
term as chair ends in May. Markets have viewed Warsh as a more hawkish
choice, and Treasury yields have moved higher as investors price in a
later start to rate cuts.
What's Next: Trump could nominate Powell's successor soon, and that person could join Powell on the Fed's Board of Governors as early as the March meeting. Powell hasn't said whether he will resign from the board entirely after May, or remain a governor until 2028.
-- Nicole Goodkind and Janet H. Cho
***
Gold Tops $5,000 for First Time as Silver Soars
The prices of gold and silver hit record highs Monday, extending their blistering rallies on the back of geopolitical uncertainty, growing concerns around Federal Reserve independence, and renewed fears of a U.S. government shutdown.
-- Continuous gold futures topped $5,000 an ounce for the first time ever on
Monday. That comes on the back of an impressive start to the year, in
which the yellow metal has rallied by 17.5%. The price of silver also
continued to soar, and it is now up 250% over the past year.
-- Gold and silver's impressive run can be chalked up to the so-called
debasement trade, in which investors retreat from assets such as the U.S.
dollar due to concerns about the Trump administration's unpredictable
stance on everything from foreign policy to central bank independence.
-- Monday's move higher was driven by the risk of a second U.S. government
shutdown in just a few months, which sent investors piling into haven
assets.
-- Piqued by the recent shooting of a U.S. citizen by a federal agent in
Minneapolis on Saturday, several Senate Democrats threatened to block a
federal funding package, which expires on Jan. 31, without changes to
domestic policing standards.
What's Next: Gold and silver will remain attractive investments so long as global upheaval and U.S. political uncertainty persist. Trump's latest tariff threat against neighbor Canada indicates this rally will roll.
-- Alex Kozul-Wright
***
Airlines, Utilities Grapple With Winter Storm Aftermath
Airlines and utilities are still grappling with the aftermath of a massive winter storm that forced the cancellation of more than 15,000 flights Saturday and Sunday and left more than 1 million households without power. Thousands more flights are canceled today, and utilities caution it will take time to restore all service.
-- Airport officials in Dallas, Atlanta, and Charlotte and those in the New
York region canceled more than half their flights on Sunday. Airports
from Boston to New York are bracing for thousands more cancellations
today, with Republic Air, JetBlue, and American Airlines with the highest
percentage as of Sunday, according to FlightAware.
-- Nearly 1 million homes and businesses were without power as of Sunday,
mainly across the South and Southeast, according to PowerOutage.us.
Nashville Electric Service said freezing rain and ice caused significant
damage, including snapping at least 67 utility poles, with the potential
for wind gusts to cause more outages.
-- Duke Energy restored power to thousands but warned that outages could
rise and last several days. It also explained that the absence of utility
trucks in a neighborhood doesn't mean its crews are idle, but that crews
were working on parts of the grid that needed to be prioritized.
-- Property insurers are already under pressure for unusually high losses
from natural catastrophes in recent years. Between 2021 and 2025, the
average annual insured loss in the U.S. was more than $7 billion,
compared with around $2 billion between 2011 and 2020, according to Swiss
Re.
What's Next: The National Weather Service said heavy snow, sleet, and freezing rain stretching from the Southern Rockies to New England will continue through today, followed by bitterly cold air and dangerously cold wind chills that will prolong dangerous travel conditions throughout this week.
-- Janet H. Cho and Evie Liu
***
(MORE TO FOLLOW) Dow Jones Newswires
January 26, 2026 07:03 ET (12:03 GMT)
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