DOJ Subpoenas the Fed, Trump Caps Credit Cards, and Alphabet Hits $4 Trillion – Market Breakdown #157

The Justice Department is criminally investigating Jerome Powell over building renovations, the President wants credit card rates at 10%, and somehow the market still closed at record highs.

📊 THE MARKET BREAKDOWN

Weekly market intelligence for traders who think in systems, not headlines.

Issue #157 – January 12, 2026

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🔥 Headlines & Hysteria (powered by Forked Feed)

• DOJ Opens Criminal Investigation Into Fed Chair Powell Over Building Renovations

  Forked Feed says: We’ve reached the part of the timeline where the President of the United States is threatening to indict the Fed Chair over drywall costs. The investigation is technically about whether Powell lied to Congress regarding granite countertops and HVAC upgrades, but Powell went on camera and said what everyone knows: this is about getting rates lower before the midterms. One analyst called it “the Maduro option” - a reference to the Venezuelan president we literally kidnapped two weeks ago. Kevin Hassett, the likely replacement, said this morning that markets should be “happy to see more transparency at the Fed.” The 10-year yield disagreed, ticking higher. Senator Thom Tillis, a Republican, said he’ll block any Fed nominee until this is resolved. Central bank independence: it was nice while it lasted.

• Trump Calls for One-Year 10% Cap on Credit Card Interest Rates

  Forked Feed says: The average credit card APR is 22%. Trump wants it at 10%. The difference, according to the banking lobby, is the entire American economy. Banks say they’ll simply stop lending to anyone with a credit score below “excellent,” which should play well with the exact voters Trump is trying to help. The best part is nobody knows how this gets implemented - executive order? Legislation? A really stern look? One bank exec told CNBC anonymously: “It’s not a stretch to suggest this will very quickly tank the economy.” But sure, let’s see what happens. What’s the worst that could go wrong with price controls?

• Alphabet Hits $4 Trillion Market Cap After Apple Chooses Gemini for Siri

  Forked Feed says: Apple spent years telling everyone Siri was the future, then quietly admitted defeat and outsourced the whole thing to Google. MacDailyNews summarized it perfectly: “From threatening ‘thermonuclear war’ to ‘please, please fix our shitty Siri because we can’t.’” Meanwhile, Alphabet is now worth more than Apple despite having its entire search business under antitrust threat approximately eighteen months ago. The AI boom giveth and the AI boom taketh away, and right now it’s giving everything to Sundar Pichai while Tim Cook updates his LinkedIn.

• Iran Protests Enter Third Week as Death Toll Passes 500, First Execution Sentence Issued

  Forked Feed says: The Iranian regime’s response to people protesting economic collapse has been to (1) cut off the internet, (2) kill 500 of them, and (3) sentence a 26-year-old to death within 72 hours of arrest with no lawyer, no trial, and no appeal. This is what “decisive action” looks like when you’re a theocracy watching your currency lose 56% of its value in six months. Trump is threatening military intervention while slapping tariffs on anyone who trades with Tehran, which is either brilliant leverage or the setup for something much worse. Gold is paying attention. So is oil. So is everyone who remembers what “locked and loaded” meant the last three times.

• Markets Rebound From Opening Selloff to Hit Record Highs

  Forked Feed says: The market opened Monday morning, saw the Department of Justice threatening to imprison the Fed Chair and the President declaring war on credit card companies, and decided this was all extremely bullish. Down 500 points at the lows, record highs by the close. The VIX is at 15.12. Gold is at $4,585 because at least someone is paying attention. Tomorrow we get December CPI, which will be either too hot or too cold but definitely not just right, and the market will probably rally on that too. At this point, you could announce an asteroid impact and SPY would finish green on “reduced long-term liability concerns.”

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🔎 Today’s Focus — “The Federal Reserve Is Under Criminal Investigation”

Let that headline sit for a moment. The Department of Justice served grand jury subpoenas to the Federal Reserve of the United States threatening criminal indictment of its Chairman.

The official pretext is that Jerome Powell may have lied to Congress about a $2.5 billion building renovation project. The renovation, which Powell says was necessary to remove asbestos and upgrade decades-old electrical systems, has been criticized by Trump allies as wasteful. Rep. Anna Paulina Luna referred Powell to the DOJ last summer for potential perjury. Now the Justice Department, under Attorney General Pam Bondi and U.S. Attorney Jeanine Pirro, has taken action.

Powell’s response was extraordinary. In a video posted to the Federal Reserve’s official website Sunday night, the Chair directly accused the administration of using criminal prosecution as a tool of political intimidation. “This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. “Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”

The implications are staggering. Powell’s term ends in May. Trump has already selected a replacement, reportedly Kevin Hassett. But Powell’s term on the Board of Governors doesn’t expire until 2028, meaning he could remain as a voting member even after his chairmanship ends. The investigation creates pressure for Powell to resign entirely - what one analyst called “the Maduro option,” a reference to the Venezuelan president seized by U.S. forces two weeks ago.

The market’s reaction was telling. Futures cratered overnight. The S&P opened down nearly 1%. Then buyers stepped in and pushed indexes to record highs by the close. Either the market doesn’t believe the investigation will go anywhere, or the market has decided that Fed independence was never real anyway and has priced in whoever Trump picks next.

The bond market was less sanguine. The 10-year yield ticked higher, not lower, despite the risk-off open. If the Fed is perceived as politically compromised, long-term rates could rise to compensate for the credibility discount. Gold’s 2% surge suggests at least some investors are hedging against the scenario where the Fed becomes an extension of the executive branch.

What happens next is genuinely uncertain. Senator Thom Tillis, a Republican, said he would block any Fed nominee until the investigation is resolved. Former Goldman CEO Lloyd Blankfein warned the probe would “damage multiple U.S.” (the quote was truncated, but the sentiment was clear). And CPI drops tomorrow, which Powell’s Fed would normally respond to based on the data. Now the data might matter less than the political winds.

Welcome to 2026.

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⚡ The Setup

SPY ~ 695.16 | BTC ~ 91,197 | US10Y ~ 4.18% | DXY ~ 98.95

The S&P 500 staged a remarkable intraday reversal, opening down nearly 1% on the Powell investigation headlines before climbing to a record close of 6,977.27. The Dow Jones Industrial Average added 86 points to finish at 49,590, also a record. The Nasdaq Composite gained 0.26% to 23,734, led by Alphabet’s surge to $4 trillion market cap after Apple announced Gemini would power the next-generation Siri. The Russell 2000 hit a fresh all-time high as well, continuing its January outperformance.

Bank stocks got crushed on the credit card rate cap headlines. Citigroup fell nearly 4%. Capital One dropped 6%. JPMorgan, Bank of America, and Wells Fargo all declined between 1% and 3%. Visa, Mastercard, and American Express joined the selling. The KBW Bank ETF lost 1.5%. Analysts warn the cap would force banks to cut off credit access to millions of subprime borrowers, though whether it actually gets implemented remains unclear.

Walmart jumped 3% on news it will join the NASDAQ 100 on January 20th, its first week as a Nasdaq-listed stock. The company also announced AI partnerships with Alphabet, using Gemini for shopping assistance and expanding drone deliveries through Alphabet’s Wing subsidiary. The timing is perfect branding: Walmart wants to be seen as a tech company now.

Bitcoin sits at $91,197, holding above the $90,000 psychological level as risk sentiment whipsaws. Ethereum trades at $3,100. The crypto market is consolidating, with AI and DePIN tokens outperforming while meme coins and CeFi lag. ETF flows remain negative, though Bernstein says the market has “bottomed” and maintains its $150,000 target for 2026.

Gold surged nearly 2% to $4,585, its best day in weeks as safe-haven demand spiked on the Fed investigation headlines and Iran developments. Silver ripped to $84.29. WTI crude trades at $59.64, elevated on Iran supply concerns but not panicking. The 10-year yield ticked up to 4.18% despite the risk-off open, suggesting the market doesn’t quite believe the Fed independence narrative yet. VIX is at 15.12, slightly elevated but nowhere near panic. MOVE is at 62.90, bond vol equally contained.

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🧩 Market Archetype — “The Teflon Market”

Nothing sticks.

Criminal investigation of the Fed Chair? Record highs. Credit card rate caps that would “tank the economy”? Record highs. 500 dead in Iran with Trump threatening military intervention? Record highs. Bank stocks down 4%? The index still closes green.

This is a market that has learned, through repeated conditioning, that selling is wrong. Every dip gets bought. Every crisis passes. Every headline that should matter doesn’t. The Teflon Market doesn’t process information rationally - it processes information through the lens of “how quickly can I buy this before someone else does.”

The Teflon coating started forming in late 2024 and has only gotten thicker. AI optimism, rate cut hopes, and now mortgage bond purchases and credit card caps have created a market that believes policy will always bend toward higher prices. The risks are obvious. Teflon eventually wears off. But timing that moment has been a widow-maker trade for months.

The only cracks showing are in the sectors directly targeted by policy: banks down hard, credit card companies bleeding, defense stocks whipsawing daily on executive orders. The broad market shrugs. Alphabet hits $4 trillion. Walmart joins the Nasdaq 100. Everything is fine until it isn’t.

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🧭 Flow Pulse

The most dramatic flow of the day was into gold. The yellow metal surged nearly 2% to $4,585 as the Fed investigation headlines triggered safe-haven buying at scale. Silver followed, ripping to $84.29. The move suggests at least some institutional money is hedging against the scenario where Fed independence becomes a quaint historical concept. Gold is now up over 73% from a year ago.

Bank flows were uniformly negative and heavy. Citigroup led the selling with nearly 4% losses. Capital One dropped 6%, its worst day since the regional banking crisis. JPMorgan and Bank of America fell 2%. The entire sector traded as if the credit card cap were already law, even though implementation remains entirely unclear. Options flow in financials tilted heavily toward puts.

Tech flows split sharply. Alphabet attracted heavy buying on the Apple-Gemini news and $4 trillion milestone. Walmart caught a bid ahead of its NASDAQ 100 inclusion. But mega-cap tech ex-Alphabet was mixed to weak as investors rotated toward the AI winners and away from the also-rans. Apple fell slightly despite (or because of) the Siri announcement.

Equity inflows broadly continued their January pattern. The S&P’s intraday reversal from -1% to +0.16% came on steady buying throughout the session, suggesting institutional dip-buyers remain active. Small caps joined the party with the Russell 2000 hitting records. The “Great Rotation” into domestic small caps remains in play.

Treasury flows were modest despite the headline risk. The 10-year yield ticked higher, not lower, which is notable given the typical flight-to-quality response to institutional stress. Either the bond market doesn’t believe the investigation matters, or it’s pricing in the inflationary implications of a compromised Fed. Neither interpretation is particularly comforting.

Crypto flows remained negative. Bitcoin ETFs posted outflows as BTC held the $90K-$92K range without conviction. The risk-off open didn’t trigger a safe-haven bid into Bitcoin, which continues to trade more like a risk asset than digital gold. The divergence between BTC (flat) and actual gold (up 2%) was stark.

Forked Feed says: The flow story today was gold doing what Bitcoin was supposed to do. When the news broke that the U.S. government is criminally investigating its own central bank chair for political reasons, gold rallied 2% and Bitcoin did nothing. The “digital gold” narrative has been on life support for a while, but today might have been the death certificate. Meanwhile, bank stocks are pricing in a scenario where credit cards become unprofitable and credit access gets rationed, which is definitely what struggling consumers need right now. The VIX at 15.12 says this is all totally normal and nothing to worry about. The VIX has been wrong before.

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🔮 Forked Forecast

• Base Case (50%): Volatility Continues, Trend Intact

  Markets digest the Powell probe and credit card headlines while awaiting Tuesday’s CPI. The investigation creates noise but no immediate action, and the market continues to treat policy chaos as background radiation. Banks remain under pressure but don’t break. Gold consolidates its gains. Bitcoin holds $90K. We grind higher into earnings season with elevated headline risk but no fundamental break.

• Bull Case (25%): CPI Soft, Investigation Fizzles

  December CPI comes in cooler than expected, reviving rate cut hopes. The Powell investigation is seen as political theater that goes nowhere, especially after Tillis’s threat to block nominees. Banks recover as the credit card cap is dismissed as unenforceable posturing. Alphabet’s $4 trillion milestone kicks off a renewed AI rally. S&P pushes toward 7,100.

• Bear Case (25%): CPI Hot, Fed Crisis Deepens

  December CPI comes in hot, forcing the Fed to stay hawkish even as it faces political pressure to cut. The investigation escalates with more subpoenas or an actual indictment threat. Banks continue selling on credit card fears. Iran situation deteriorates with oil spiking above $65. Gold continues ripping as institutions hedge Fed credibility risk. VIX breaks above 20.

  
  Triggers to Watch:

  1. December CPI (Tuesday 8:30 AM ET) - consensus 0.3% MoM, 3.2% YoY

  2. Any escalation in Powell investigation - additional subpoenas, indictment threat

  3. Iran developments - execution of Soltani, Trump military posturing

  4. Bank earnings preview commentary on credit card cap impact

  5. Supreme Court tariff ruling (possible Wednesday)

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💬 Final Thought

There’s a moment in every market cycle when the news gets so absurd that you start questioning whether you’re reading it correctly. The Department of Justice is criminally investigating the Federal Reserve Chairman. The ostensible crime is lying about building renovations. The actual grievance, per the Chairman himself, is that he didn’t cut rates when the President wanted him to.

This isn’t normal. It’s not normal for the Fed Chair to post a video accusing the administration of political intimidation. It’s not normal for Republican senators to threaten blocking all Fed nominees. It’s not normal for gold to rip 2% on domestic institutional headlines. None of this is normal.

And yet the S&P 500 closed at a record high. The Nasdaq closed at a record high. The Dow closed at a record high. The Russell 2000 closed at a record high. Walmart is joining the Nasdaq 100 and Alphabet is worth $4 trillion and the market has decided that all of this is fine, actually.

Maybe it is fine. Maybe the Powell probe goes nowhere and the credit card cap never happens and Iran sorts itself out and we all make money at all-time highs forever. Markets have a way of climbing walls of worry, and this wall is particularly climbable if you squint.

But somewhere in the back of every investor’s mind should be a small voice asking: what happens when Teflon wears off? What happens when the buy-the-dip reflex fails? What happens when the news actually matters?

We don’t know. The market doesn’t know. Nobody knows. All we know is that today, it didn’t matter. Tomorrow, CPI. Wednesday, maybe tariffs. The week after, earnings.

Keep your eyes open and your stops tight.

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That’s all for issue #157. The news is getting weirder, but the market doesn’t seem to care.

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