Trump Can't Decide on Fed Chair, Russell 2000 Sets Historic Streak, Taiwan Writes $500B Check – Market Breakdown #161
President publicly friendzoned his own economic advisor on live television and small caps beat the S&P 500 for an 11th straight day because apparently we've all been doing portfolio construction wrong
📊 THE MARKET BREAKDOWN
Weekly market intelligence for traders who think in systems, not headlines.
Issue #161 – January 16, 2026
🔥 Headlines & Hysteria (powered by Forked Feed)
Trump Tells Hassett He’d “Rather Keep Him” at White House, Throwing Fed Chair Race Into Chaos
Forked Feed says: In what can only be described as the most awkward workplace moment since your manager CCed HR on a “great job” email, Donald Trump publicly rejected Kevin Hassett for the Fed chair job while Hassett was literally standing in the same room. “I actually want to keep you where you are, if you want to know the truth,” Trump told his top economic advisor at a healthcare event, which is corporate-speak for “it’s not you, it’s me, but also definitely you.” Prediction markets immediately sent Kevin Warsh’s odds to 60% while Hassett cratered to 16%. Bond yields jumped because Warsh is a hawk and markets suddenly realized we might get a Fed chair who actually believes in higher interest rates. Trump later told reporters he’s already made up his mind, saying “In my mind, done!” without specifying who, because why would anyone provide clarity when chaos is so much more entertaining? The Senate Banking Committee, meanwhile, is refusing to consider any nominee until the DOJ stops subpoenaing Jerome Powell over building renovations. This is the most dysfunctional hiring process since Elon tried to find someone to run Twitter.
Russell 2000 Beats S&P 500 for 11th Straight Day
Forked Feed says: Eleven consecutive sessions. The last time small caps outperformed large caps this consistently, we were months away from Lehman Brothers turning into a verb. The Russell 2000 is up 8% year-to-date while the Magnificent Seven ETF is flatter than a Kansas highway. All those “just buy NVDA and go to sleep” bros who spent three years mocking value investors are now quietly googling “what is P/E ratio” and pretending they always believed in diversification. Goldman says the rally has legs but warns full-year returns might converge. Translation: “We have no idea what’s happening but our clients own small caps now so we need to sound bullish.” The market has essentially decided that there are, in fact, 2,000 other companies in America worth owning, which is either the beginning of a multi-year rotation or the setup for the most spectacular rug-pull since... well, 2008. Either way, that value investor crying into his spreadsheets since 2020 just bought a boat.
Taiwan Signs $500B “Silicon Pact” with US, Commits to Reshoring Half Its Chip Industry
Forked Feed says: Taiwan just agreed to invest $250 billion in American chip factories with another $250 billion in credit guarantees, which is either the most important trade deal of the decade or the most expensive protection racket since the Ottoman Empire. Commerce Secretary Howard Lutnick celebrated by telling CNBC that the goal is to move 40% of Taiwan’s semiconductor supply chain to Arizona, because nothing says “we’re definitely not trying to avoid a potential Chinese invasion” like physically relocating the chips before anyone can steal them. In exchange, Taiwan gets tariffs capped at 15% instead of the threatened 100%, which is basically the international trade version of “nice semiconductor industry you’ve got there, shame if something happened to it.” TSMC already bought hundreds of acres adjacent to its Arizona facility, presumably to house the army of engineers who will spend the next decade wondering why they moved from Taipei to Phoenix in August. China is reportedly furious, which means the deal is working exactly as intended.
Novo Nordisk Surges 9% After UK Approves Triple-Strength Wegovy
Forked Feed says: The UK just approved a Wegovy dose three times higher than the current maximum, because apparently regular-strength semaglutide wasn’t melting people’s fat deposits fast enough. The new 7.2mg version, administered as three separate injections because even obesity treatment has to feel like work, achieved 20.7% weight loss in trials versus 2.4% on placebo. Novo Nordisk shares jumped nearly 9% on the news, which is hilarious considering the company spent all of 2025 getting absolutely bodied by Eli Lilly. The MHRA is now the first regulator in the world to approve triple-strength Wegovy, meaning Britain has officially beat America at something pharma-related for the first time since... actually, has this ever happened? Meanwhile, the Wegovy pill launched in the US last week at $149 per month, available through TrumpRx because of course it is. We’ve reached the point where you can get weight loss drugs through the President’s personal pharmaceutical website. What a time to be alive and trying to lose 50 pounds.
Markets Drift Into Long Weekend, S&P Posts Weekly Loss
Forked Feed says: The S&P 500 closed down 0.06% on Friday, which in market terms means “absolutely nothing happened but we need to write a headline anyway.” The Dow fell 83 points, the Nasdaq dropped 0.06%, and everyone went home early because it’s a three-day weekend and nobody wanted to hold risk into MLK Day. The major averages hit session lows right after Trump’s Hassett comments, because even the algorithms are trading on Fed chair vibes now. For the week, the S&P lost 0.38% and the Nasdaq dropped 0.66%, both of which are rounding errors compared to the complete chaos happening in small caps, Taiwan, and whoever has to explain to Kevin Hassett why he didn’t get the job. The VIX settled at 15.86, which suggests either complete market complacency or a coiled spring of volatility waiting to explode. Given everything else happening, we’re betting on the latter.
🔎 Today’s Focus — “The Fed Chair Musical Chairs”
The most powerful unelected position in the American economy is currently being filled via public humiliation and prediction market arbitrage.
In the span of 24 hours, Kevin Hassett went from frontrunner to also-ran because the President decided to compliment him in the most devastating way possible. “You were fantastic on television today” sounds great until it’s followed by “I actually want to keep you where you are,” which is how you tell someone they didn’t get the promotion without having to file HR paperwork.
The markets reacted immediately. Bond yields jumped from 4.17% to above 4.2% as traders priced in higher odds of Kevin Warsh, who is historically hawkish and therefore less likely to cut rates aggressively. Prediction markets swung from a near dead heat to 60-16 Warsh over Hassett. The entire process has been reduced to real-time odds updates like it’s a horse race, which it basically is, except the horse is the Federal Reserve and the jockeys are White House staff trying to figure out what Trump actually wants.
The backdrop makes this worse. The DOJ is currently investigating the Fed over building renovations. Senator Tillis says he won’t consider any nominee until the probe is resolved. Republican senators are publicly questioning whether the administration is trying to undermine Fed independence. And through all of this, the President is teasing Fed chair announcements like he’s dropping an album.
This matters because whoever runs the Fed determines interest rates, which determines everything else. If Warsh gets the job, markets are pricing in fewer rate cuts. If Hassett somehow recovers, more cuts. If someone else entirely emerges, we start over. The uncertainty itself is now a market factor.
Powell’s term ends May 15. That’s four months of this.
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⚡ The Setup
SPY ~ 691.66 | BTC ~ 95,276 | US10Y ~ 4.227% | DXY ~ 99.38
The S&P 500 slipped 0.06% to close at 6,940.01, posting a losing week as Trump’s Fed comments and geopolitical noise overshadowed yesterday’s chip optimism. The Dow Jones Industrial Average fell 83.11 points, or 0.17%, to 49,359.33. The Nasdaq Composite edged down 0.06% to 23,515.39.
For the week, the S&P 500 declined 0.38% and the Nasdaq fell 0.66%. Both indexes gave back gains from Thursday’s TSMC-fueled rally as Friday’s session drifted lower into the close.
The Russell 2000 continued its historic run, beating the S&P 500 for an 11th straight session. The small-cap index is now up over 8% year-to-date versus 1.5% for the S&P 500. This is the longest outperformance streak since June 2008.
Bond yields rose after Trump’s Hassett comments. The 10-year Treasury yield climbed to 4.227% from 4.17%, reflecting market expectations that Kevin Warsh, a known hawk, has become the frontrunner for Fed chair.
Precious metals held near recent levels, with gold at $4,595 and silver around $90 after Thursday’s sharp pullback. Oil stabilized near $59.50.
🧩 Market Archetype — “The The Chaos Premium”
Sometimes the market trades on earnings. Sometimes it trades on macro. Sometimes it trades on whatever the President said in the last three hours.
Today was the third kind.
The chaos premium is what you pay when uncertainty itself becomes the dominant factor. It’s not about whether Warsh or Hassett would be better for the economy. It’s about the fact that the selection process involves public rejection, competing Senate investigations, prediction market swings, and a President who says he’s “made up his mind” without saying what he decided.
Markets hate uncertainty more than they hate bad news. Bad news can be priced. Uncertainty just sits there, generating premium, forcing wider bid-ask spreads, and making everyone hedge their hedges.
The 10-year yield move today wasn’t about inflation expectations or growth forecasts. It was about the market collectively realizing that the Fed chair selection has turned into a reality TV show, and hawkish Warsh is apparently the contestant most likely to get the rose.
Just so we’re clear, that isn’t fundamentals. I’d call it narrative volatility. And it’s going to be the dominant market factor until someone actually gets nominated and confirmed, which at this rate might be never.
🧭 Flow Pulse
Small-cap inflows extended. IWM saw continued buying as the Russell 2000’s historic streak attracted momentum players. The ETF has added $220 billion in market value in the first 15 days of 2026. Broad-based participation with 77% of Russell 2000 constituents positive year-to-date.
Bond selling accelerated. TLT experienced outflows as traders repositioned for a potentially hawkish Fed chair. The Warsh trade is higher yields, and the market started pricing it immediately after Trump’s comments.
Tech mixed, semis held. Despite the broader market drift, semiconductor names retained most of yesterday’s TSMC-fueled gains. SMH flat to slightly higher as the Taiwan trade deal provided additional support.
Pharma rotation. Novo Nordisk’s 9% jump pulled money into the GLP-1 space. XLV healthcare sector showed relative strength as weight loss drug competition intensified.
Defensive bid emerged. Utilities (XLU) and real estate (XLRE) led sector gains as traders positioned defensively heading into the long weekend. The Fed uncertainty premium is showing up in sector rotation.
Energy stabilized. XLE found a floor after Thursday’s Iran-related selloff. Oil holding near $59.50 suggests the de-escalation trade has largely run its course.
Forked Feed says: The flow story today was “nobody wants to hold risk into a three-day weekend when the President might tweet about the Fed chair at any moment.” Defensive sectors led. Bonds sold off but not aggressively. Small caps kept attracting momentum flows because that’s where the action is. The most interesting tell was the immediate bond market reaction to Trump’s Hassett comments. Within minutes, yields were higher because traders decided Warsh was now the favorite and Warsh means fewer rate cuts. This is what it looks like when the bond market trades on prediction market odds, which is what it looks like when monetary policy selection becomes entertainment content. Meanwhile, Novo Nordisk proved that pharmaceutical stocks still respond to actual news like FDA approvals and regulatory wins, which feels almost quaint compared to trading on who might lead the Federal Reserve based on who the President complimented at a healthcare event.
🔮 Forked Forecast
Base Case (50%): Grinding Consolidation, Fed Uncertainty Persists
Markets enter a holding pattern as Fed chair selection dominates headlines. Small-cap outperformance continues but at a slower pace as the streak attracts mean-reversion bets. Bonds stay volatile on Fed appointment speculation. S&P range-bound between 6,850 and 7,000. Tech consolidates TSMC gains. Earnings season takes over narrative next week with Netflix, J&J, and regionals reporting.
Bull Case (25%): Warsh Named, Clarity Rallies Markets
Trump announces Warsh quickly, removing uncertainty. Markets rally on clarity despite hawkish implications because known quantities are tradeable. Small caps extend run as rotation thesis gets confirmed. Earnings come in strong. S&P pushes toward 7,100. Bond yields stabilize at higher levels but stop rising. Risk-on resumes.
Bear Case (25%): Fed Drama Escalates, Risk-Off
Nomination process drags on. Senate pushback intensifies. Bond yields keep rising on uncertainty rather than fundamentals. Small-cap rally reverses as risk appetite fades. VIX climbs toward 20. S&P tests 6,800. Defensive rotation accelerates. Earnings season can’t overcome the policy chaos.
Triggers to Watch:Any Trump announcement on Fed chair selection, whether it’s Warsh, a surprise candidate, or more teasing
Senate Banking Committee response to any nomination given Tillis’s stance on DOJ probe
Powell’s next public appearance and whether he addresses the investigation
Next week’s earnings: Netflix Tuesday, J&J Wednesday, Intel Thursday
Continuation or reversal of Russell 2000 streak, now at levels not seen since 2008
Bond yield trajectory, especially 10-year above 4.25% as Warsh odds price in
💬 Final Thought
Kevin Hassett had a very bad day.
Not because he did anything wrong. By all accounts, he’s been a loyal soldier for Trump since the first administration. He goes on TV. He defends the policies. He does exactly what the President asks. And today, he got to watch his boss tell him, in front of a room full of people, that he’s too good at his current job to get promoted.
This is the cruelest form of professional rejection. Not “you’re not qualified.” Not “we’re going a different direction.” But “you’re fantastic, which is why I need to keep you exactly where you are forever.” It’s the economic advisor equivalent of “you’d make such a great friend.”
But here’s the thing: the market doesn’t care about Kevin Hassett’s feelings. The market cares about what this means for interest rates, and what it means is that Kevin Warsh is suddenly the frontrunner, and Kevin Warsh thinks the Fed should be more aggressive about fighting inflation.
So bond yields rose. Not because of economic data. Not because of earnings. Because the President complimented someone in a way that sounded like rejection, and traders extrapolated that to mean a different monetary policy regime.
This is where we are now. The selection process for the most important economic position in the country is being conducted via public events, Truth Social posts, and prediction markets. The market is trading on vibes and reading comprehension. Bond yields move on subtext.
Meanwhile, small caps just posted their longest outperformance streak since 2008, Taiwan committed half a trillion dollars to building chips in Arizona, and the UK approved triple-strength weight loss drugs. Real things are happening in the real economy. But the dominant story is still “who did the President semi-reject today and what does it mean for rates.”
Four months until Powell’s term ends. Four months of this.
Trade accordingly. And maybe send Kevin Hassett a nice card.
That’s all for issue #161. The S&P fell 0.06%, which is rounding error. The Russell 2000 beat it for an 11th straight day, which is historic. And Kevin Hassett learned that “you’re so good I can’t let you go” is not actually a compliment. Enjoy part 3 of Fiboswanny’s 16-part series below.
— Forked Feed
Issue #3 - Breakeven Is Not Risk Management
Breakeven is one of the most dangerous ideas people bring into markets.
It sounds disciplined. It feels responsible. It gives the illusion of control. In reality, it quietly turns traders into hostages to their own past decisions.
Breakeven assumes the market cares where you entered, remembers your cost basis, and is somehow obligated to return so you can feel whole again. It assumes price has memory, sympathy, and a sense of fairness. None of that exists. The market does not negotiate with your entry. It does not pause to reconcile your emotions. It simply continues forward, responding to current behavior, not past intent.
Breakeven is not a market level. It is a psychological anchor.
Once breakeven becomes the objective, behavior changes in subtle but destructive ways. Risk management stops being adaptive and starts being emotional. Stops get widened. Decisions get delayed. Conviction quietly turns into negotiation. The position is no longer managed according to structure or conditions, but according to how close the trader is to emotional relief.
Markets exploit this relentlessly.
Price does not move to help you get back to even. It moves to locate stress. Breakeven zones are dense with unresolved emotion because they concentrate hesitation, regret, and hope in one place. That is why price so often revisits these areas and then reverses. Not because the level matters, but because the behavior does. Some participants exit in relief. Others freeze. Others double down. The market already got what it came for. It does not need to go further.
This is where the distinction between economic thinking and financial thinking becomes critical.
Breakeven logic comes straight out of economic models, not financial reality. Economics assumes relatively static systems that tend toward balance, where inputs, costs, and outcomes can be reconciled over time if one simply waits long enough. In that framework, returning to breakeven feels reasonable because the system is presumed to cooperate. Financial markets do not work that way. They are dynamic, reflexive systems where price is not solving equations but responding to behavior under pressure in real time.
Markets are not trying to make participants whole. They are constantly evolving environments shaped by confidence, leverage, positioning, and social mood. Every new price is information, not reconciliation. When someone fixates on breakeven, they are assuming the market owes them a return to fairness, when in reality the market has already moved on to testing the next layer of conviction.
This is why breakeven thinking feels logical but fails repeatedly. It treats price like an accounting adjustment instead of a behavioral signal. It assumes time is neutral, when time is the most aggressive variable in the system. While one participant waits to be made whole, the market is actively redistributing risk, transferring ownership, and recalibrating conviction among participants responding to entirely different pressures.
Bitcoin exposes this mistake with no mercy.
There is no equilibrium price to hide behind, no earnings multiple to anchor to, no policy mechanism designed to shepherd price back toward comfort. Bitcoin trades where behavior allows it to trade. When someone waits for breakeven in Bitcoin, they are not engaging with the market as it exists now. They are bargaining with a past version of themselves that no longer has relevance.
Financial thinking accepts that markets are adaptive, indifferent, and forward-looking. Economic thinking assumes they are restorative and fair. That difference matters because breakeven is not a neutral reference point in a dynamic system. It is a signal that the participant has stopped responding to current conditions and started negotiating with history.
Bitcoin does not reward negotiation. It rewards adaptation.
This is where Threshold Theory draws the line. Thresholds are not personal. They are collective. They exist where groups are forced to act, not where individuals want emotional closure. Above a threshold, participants tolerate discomfort and wait. Below it, tolerance collapses. That signal is clean. Breakeven thinking muddies it.
Bitcoin does not reward people who wait to feel comfortable again. It rewards people who understand when discomfort is doing the work for them.
Social Mood Read
Relief is replacing ambition, and people are anchoring to exits instead of opportunity.
When social mood contracts, participants stop thinking about what comes next and start thinking about how to undo what already happened. Breakeven fixation is not caution. It is fatigue. It marks the shift from engaging with the future to negotiating with the past.
Mood Signal
Hope anchored to old decisions.
This mood shows up when participants stop responding to what the market is doing now and start negotiating with what they already did. Instead of reassessing risk, they wait for price to return so their past decision can feel justified. Hope replaces adaptation, and time is spent protecting an entry rather than engaging with current conditions. Markets exploit this state because it delays action and concentrates hesitation at the worst possible moments.
What to Watch This Week
Pay attention to where the price stalls and ask why. Is it because the market found balance, or because too many participants are waiting to feel better before acting? Breakeven is not protection. It is often the place where conviction quietly expires.
Bitcoin does not know where you entered.
It only knows how long you can tolerate being wrong on the way to being right.
And most people underestimate how expensive waiting for relief really is.
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