The Dividend Cafe Monday - January 12, 2026
Jan 12, 2026
In this discussion, the investigation into Fed Chairman Jerome Powell takes center stage, raising questions about market reactions. President Trump's recent policy announcements on housing and defense are analyzed for their potential impact. Economic insights spotlight job creation trends and the trade deficit nuances. As the upcoming earnings season approaches, the tech sector's performance and its valuation concerns are highlighted. Additionally, geopolitical factors affecting oil prices and the housing market mechanics reveal critical shifts in the economic landscape.
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Fed Investigation Shakes Markets Briefly
- The DOJ opened a criminal investigation into Fed Chair Jerome Powell related to his testimony and Fed renovation issues.
- Markets fell on the news but later largely shrugged it off as political maneuvering rather than structural risk.
Markets Recovered Despite Early Panic
- Markets recovered intraday after an initial sell-off and closed modestly up despite early futures weakness.
- Bahnsen attributes the rebound to expectations that political moves against the Fed won't materially change policy or composition.
Powell's Term Creates Political Leverage
- Powell's chair term ends in May but his Fed governor term runs until January 2028, creating political leverage.
- The investigation may be intended as insurance to ensure Powell departs rather than a substantive legal route.