Authored by Ron Paul via the Mises Institute,

It did not take long for President Trump to change the reason for sending the US military to “arrest” Venezuela President Nicolás Maduro and his wife. The allegation that President Maduro ran a drug cartel was front and center in the months leading up to President Maduro’s “arrest.” Afterwards, President Trump said the invasion was about Venezuela’s oil and announced plans for the US government to send American oil companies into Venezuela.

About a week after the invasion, President Trump had a meeting with executives from American oil companies to discuss plans for Venezuela. Some of the companies’ executives at the meeting were less than enthusiastic about developing Venezuelan oil. One reason for this is that, since the Venezuelan government nationalized oil activities twenty years ago, fracking has made the US the world’s leading producer of oil and natural gas. Rebuilding the oil industry in Venezuela could cost as much as a billion dollars for an uncertain payoff. Among the complications, Venezuelan oil does not easily flow though pipelines unless it is cut with solvents, making it more expensive to transport.

In his first press conference after the Venezuelan first couple was seized, President Trump said: “We are going to run the country until such time as we can do a safe, proper, and judicious transition.” He later stated that Maduro’s successor Vice President Delcy Rodriguez would “pay a very big price, probably bigger than Maduro,” if she does not adequately fulfill the US government’s demands.

Following the invasion of Venezuela, there have been suggestions that President Trump will direct the US military to invade other countries as well. For example, Secretary of State and National Security Advisor Marco Rubio said, “if I lived in Havana and I was in the government, I’d be concerned.”

To no one’ s surprise, Senator Lindsey Graham was delighted by the possibility that Venezuela was just the first of many regime change wars President Trump will wage. Senator Graham even got President Trump to autograph a Make Iran Great Again hat. Many Iranian victims of the Shah of Iran’s secret police might disagree with Senator Graham on whether having the CIA install another puppet government in Iran will make that country great.

President Trump’s newfound love of regime change wars may be one reason why he is seeking to increase the military budget to 1.5 trillion dollars. President Trump claims that tariff revenue can fund the increase, but that is simply not possible. The majority of the increase in spending would come from other taxes, including the Federal Reserve’s regressive and hidden inflation tax.

A recent poll by the Pew Research Center found that there is much less support for an “activist” US foreign policy among Americans under 50 than among older Americans. This is the case among both Democrats and Republicans. In fact, the differing view on foreign policy among younger people was a major factor behind President Trump’s support from younger people in 2024. Continued betrayal by President Trump of his no more regime change wars pledge will cause the president and the Republicans to lose support among younger voters.

Central Californians got a rare overnight spectacle as a SpaceX Crew Dragon capsule streaked across the sky during its de-orbit burn, ahead of a splashdown off the coast of San Diego.

Amazing @SpaceX @NASA pic.twitter.com/IzxTvd2CXN

— Nick Shelly (@NShelly) January 15, 2026

Video from my roof of @SpaceX Dragon streaking across the sky over LA tonight. Inside this 10,000 degree plasma cocoon traveling at 8 km/sec are four amazing humans. Welcome home @NASA Crew-11! 🇺🇸 pic.twitter.com/XoxkyaFppK

— Jon Edwards (@edwards345) January 15, 2026

SpaceX Dragon re entering! The speed was absolutely insane! Shot from Fresno area central Ca pic.twitter.com/pe9SHYLMVA

— ⚡️Dezmond Oliver⚡️ (@dezmondOliver) January 15, 2026

The SpaceX Crew Dragon capsule carried Mike Fincke, Zena Cardman, Kimiya Yui, and Oleg Platonov and splashed down in the Pacific Ocean off San Diego at 0341 EST, about 10.5 hours after undocking from the International Space Station.

The astronauts returned one month early after one of the astronauts experienced a medical issue. This marked the first time in ISS history – or about three decades of operation – that a mission was shortened due to astronaut health.

NASA has not identified either the astronaut or the medical issue, but it was severe enough that a spacewalk by two of its astronauts was canceled last week.

“It is not an emergency de-orbit, even though we always retain that capability, and NASA and our partners train for that routinely,” NASA Administrator Jared Isaacman told reporters last week. Instead, he added, the mission team decided to bring Crew-11 home early because “the capability to diagnose and treat this properly does not live on the International Space Station.”

Dragon’s four main parachutes have deployed pic.twitter.com/PAr3laJGN5

— SpaceX (@SpaceX) January 15, 2026

Welcome home. 

Authored by Chase Smith via The Epoch Times,

Senate Minority Leader Chuck Schumer (D-N.Y.), Sen. Chris Murphy (D-Conn.), and Rep. Jason Crow (D-Colo.) on Jan. 14 introduced the No Political Enemies Act, or the NOPE Act, a bill they said would protect Americans and organizations from politically motivated federal investigations, prosecutions, and enforcement actions.

In a Wednesday press call announcing the legislation, Murphy said it was necessary because, in his view, the Trump administration is trying to use federal power to punish critics.

“This is a White House that is out of control, seeking to use the Department of Justice to try to censure and censor American citizens … to try to make those who tell the truth pay a grave price.”

The White House responded to the criticism and introduction of the bill in an emailed statement to The Epoch Times.

“The Biden Administration repeatedly weaponized the Department of Justice against their political enemies, including using the Department of Justice to spy on GOP lawmakers—all while the media looked the other way,” said White House spokeswoman Abigail Jackson. “The Trump Administration is restoring integrity to our justice system and holding criminals accountable.”

Jackson’s statement referenced past FBI activity that Republicans have described as politically motivated, and their efforts to remedy it. Rep. Elise Stefanik (R-N.Y.) said in December that a provision in the annual defense policy bill would include language requiring the FBI to inform federal candidates if it opens a counterintelligence probe that involves them.

Stefanik framed the provision as a response to “illegal weaponization of the deep state,” pointing to “Arctic Frost,” an FBI-related probe tied to challenges to the 2020 election that she said included Trump and eight Republican senators among those investigated.

Stefanik also cited the FBI’s earlier “Crossfire Hurricane” investigation of Trump’s 2016 campaign and its alleged links to Russia.

Murphy and other speakers on the Wednesday call pointed to recent developments involving Federal Reserve Chair Jerome Powell.

Murphy said there were “revelations in the last few days that the president is threatening to throw in jail the chairman of the Federal Reserve, [Jerome] Powell, simply because of a policy disagreement between the president and the chairman over interest rates.

“But, of course, we have already seen how this administration has gone after the Attorney General of New York, the former director of the FBI, and members of the United States Senate, with threatened criminal charges. This isn’t what happens in a healthy democracy. This is what happens in a totalitarian state,” he said.

Schumer made a similar argument about the Powell investigation in floor remarks earlier Wednesday.

“Launching a criminal investigation to coerce the Federal Reserve is a dangerous crossing of the Rubicon,” Schumer said. The Fed “must always operate free of coercion,” he said, warning that “when there’s chaos in the Fed, interest rates go up,” and that could raise borrowing costs for housing, car loans, and credit cards.

Also on the call was Justin Vail, counsel for Protect Democracy, which helped draft the legislation.

“For years, members of each political party have accused presidents of the opposing party of improperly weaponizing government,“ Vail said. ”Well, now is the time for Congress to act in a bipartisan fashion … and ensure that no president, Democrat or Republican, can use the government to punish people or organizations for what they say or believe.”

Some Republicans have also criticized the Justice Department’s probe involving Powell.

Sen. Lisa Murkowski (R-Alaska) said she spoke with Powell on Jan. 12 and called the investigation “an attempt at coercion,” while Sen. Thom Tillis (R-N.C.) said on X on Jan. 11 that the probe raised fresh concerns about the Fed’s independence.

Meanwhile, the Trump administration and federal prosecutors have defended the inquiry as a response to the Fed’s handling of questions about renovation cost overruns and Powell’s June testimony.

U.S. attorney Jeanine Pirro said on X on Jan. 13 that outreach to the Fed was “ignored, necessitating the use of legal process—which is not a threat.”

“The word ‘indictment’ has come out of Mr. Powell’s mouth, no one else’s,” she said.

Pirro said her office “makes decisions based on the merits—nothing more and nothing less,” while Trump told reporters on Jan. 13 that Powell was “billions of dollars over budget” and “so, he either is incompetent, or he is crooked. I don’t know what he is, but he certainly doesn’t do a very good job.”

On the other side, Trump and his allies have argued for years that investigations and cases involving him amount to politically motivated “lawfare.”

Trump pleaded not guilty in the federal special counsel cases and said the prosecutions were “politically motivated attempts to harm his reelection campaign.”

In a separate civil legal fight in New York, a spokesman for Trump’s legal team called the E. Jean Carroll litigation and others “Witch Hunts” and said the president would keep “winning against Liberal Lawfare,” after Trump recently asked the Supreme Court to take up his defamation case.

Former special counsel Jack Smith has rejected the claim that his prosecutions were political. In a deposition transcript and video released by the House Judiciary Committee, Smith said the “decision to bring charges against President Trump was mine,” and said the basis for nine of the charges “rests entirely with President Trump and his actions, as alleged in the 10 indictments returned by grand juries in two different districts.”

What the NOPE Act Would Do

The NOPE Act would establish a prohibition on certain executive branch officials initiating or directing an investigative, regulatory, or enforcement action that is “substantially motivated by” a person’s “protected speech or participation,” according to the bill text. The bill defines “protected speech or participation” as “all constitutionally protected speech,” including criticism and dissent.

The legislation would create an affirmative defense that defendants could raise in federal criminal prosecutions or civil enforcement actions when they argue that protected speech was a motivating factor. If a covered person presents “substantial evidence” of political motivation, the bill says a court would order expedited discovery related to government motivations, with procedures for reviewing privileged materials.

The government would then bear the burden of proving by “clear and convincing evidence” that legitimate grounds unrelated to protected speech justified the action and that it was not substantially motivated by protected speech.

The bill directs courts to dismiss the claim or provide appropriate relief if the government does not meet that burden.

The bill also would allow a person to bring a civil action seeking an injunction against a covered federal official and agency when a covered government action is alleged to be substantially motivated by protected speech.

It would create a civil damages action against a covered federal official who “knowingly initiated or directed” a covered government action substantially motivated by protected speech, when constitutional rights are violated in connection with that action. The bill restricts indemnification by the United States in those cases unless certain conditions are met.

Separately, the bill would allow courts to order the United States to pay reasonable attorneys’ fees and costs in certain proceedings tied to covered actions or claims. The bill would also amend the Anti-Deficiency Act to bar obligating or spending federal funds for covered actions or claims substantially motivated by protected speech, and it would allow a civil action for injunctive or equitable relief for alleged violations.

Crow said on the press call that legislation like this was needed to create “a bulwark against this runaway presidency.”

“None of us will back down and be cowed and intimidated,” he added.

Murphy noted in the call that it would be hard to get buy-in from his GOP colleagues in both chambers, adding, “But we have no chance at trying to build a bipartisan coalition around saving our democracy if we don’t even offer these new ideas.”

President Trump’s race to secure the Western Hemisphere, in a foreign policy move called gunboat diplomacy, off the coast of Venezuela to dismantle and disrupt a dark-fleet tanker network, has now resulted in a sixth oil tanker being seized by U.S. forces in the Caribbean.

The Wall Street Journal reports that the dark-fleet tanker was seized in the U.S. Southern Command Area of Responsibility, covering Central and South America and the Caribbean.

News details are emerging. 

Through #OpSouthernSpear, the Department of War is unwavering in its mission to crush illicit activity in the Western Hemisphere in partnership with @USCG through @DHSgov and @TheJusticeDept.

In another pre-dawn action, Marines and Sailors from Joint Task Force Southern Spear,… pic.twitter.com/brxO9xXUu3

— U.S. Southern Command (@Southcom) January 15, 2026

“The cargo-empty US-sanctioned Aframax tanker VERONICA (9256860) was last seen in Venezuela on 2026-01-03 as she departed Amuay. She has directly exported Iranian oil 10 times, as well as received Iranian oil 5x via STS and Venezuelan 2x. This lady’s shady career began in 2020,” Tanker Trackers wrote on X. 

The tanker crackdown targets the dark fleet that transports sanctioned Venezuelan oil to Asia, especially to China. That oil revenue once fueled the Maduro regime, which has been dismantled in recent weeks after Nicolás Maduro was captured by U.S. Delta Force operators and flown to New York to face federal charges in the Southern District of New York. He is currently being held in a federal detention center in Brooklyn while awaiting trial.

Shipping analytics provider Kpler says Trump’s gunboat diplomacy has significantly affected Venezuela’s oil exports. Just this month alone, crude loadings have plunged to about half of normal levels. The only tankers able to make port calls are one bound for the U.S. and those transporting oil to Venezuelan refineries.

“The dark-fleet model with Venezuela, for now, has been broken because there are no cargoes,” Michelle Wiese Bockmann, a maritime-intelligence analyst at Windward, told WSJ.

Bockmann said, “Whether or not the dark fleet will be able to resume shipping to China, given that the U.S. is working with PdVSA, the Venezuelan state oil company, to control what’s going in and out of the country, it is quite possible that dark fleet tonnage will no longer call there.”

Latest on Venezuela’s oil industry:

• “Uninvestable”: Trump’s $100 Billion Venezuela Gamble Meets Oil Industry Reality

• Happening Today: Trump Meeting With US Oil Execs From Exxon, Shell, Others, To Discuss Venezuela

• Trump May Freeze Exxon Out Of Venezuela After CEO Darren Woods Called It “Uninvestable”

The era of the ‘Donroe Doctrine‘ is underway.

Authored by William desRosiers via American Greatness,

If anyone still doubts how serious the power situation unraveling in Pennsylvania has become, the warning signs are no longer abstract. PJM Interconnection, the regional transmission organization that coordinates wholesale electricity across all or parts of 13 states, including Pennsylvania, and the District of Columbia, made the problem unmistakably clear in its most recent capacity auction.

According to PJM’s own executive summary, the auction ended more than 6,623 megawatts (MW) below what PJM says it needed to keep the lights on safely, leaving far less backup power than recommended. To put that into perspective, that’s the amount needed to keep the lights on for roughly 6.6 million homes. Even more concerning, PJM noted only 774 megawatts of new generation cleared the auction, an extremely small amount relative to accelerating demand. Lastly, capacity prices hit the price cap, a clear signal of scarcity rather than healthy supply.

Under PJM’s own tariff, a shortfall of this magnitude triggers a formal investigation. Continued shortfalls could lead to a Reliability Backstop Auction, an emergency procurement mechanism that often results in higher costs with little immediate new infrastructure to show for it.

To be fair, PJM is set to release a revised load forecast this month, and the shortfall may narrow. Even if it does, that is not something to celebrate. The underlying problem remains unchanged: new power is not getting built fast enough.

Unsurprisingly, this has sparked a growing debate over who is to blame.

Some point squarely at PJM and its interconnection backlog. Others argue that Pennsylvania’s long-standing reputation as a difficult place to build, driven by permitting complexity, regulatory uncertainty, and tax policy, is equally responsible. At the same time, restrictive policies in states such as Maryland and New Jersey have weakened baseload power and deterred new generation, exporting reliability risk across the PJM footprint. Taken together, these dynamics have produced a regional market where new investment increasingly flows toward states offering clearer rules, faster timelines, and greater certainty.

Need more proof? Under PJM’s most recent Reliability Resource Initiative (RRI), Pennsylvania accounted for just 342 megawatts of proposed new or expanded natural-gas capacity. By comparison, Ohio accounted for 3,363 megawatts, Virginia for 3,320 megawatts, and Kentucky for 786 megawatts. Pennsylvania barely edged out New Jersey in this category, a state that has signaled little appetite for new natural-gas generation.

This lack of clear direction even has electric utilities, largely removed from power generation since Pennsylvania restructured and deregulated its electricity markets more than two decades ago, lobbying to re-enter generation in the name of reliability.

So, what can Pennsylvania learn from Texas?

Texas faced a similar looming power crunch and chose a different path. Over the past year, it committed nearly $1 billion through a generation loan and completion bonus program to accelerate dispatchable power. Multiple natural gas plants, some exceeding 1,000 megawatts, are already capitalizing on this. Texas reduced risk, shortened timelines, and sent a clear signal that reliability matters and the state is willing to act.

Before ending deregulation, let’s try to make targeted adjustments that support private investment.

Take state Sen. Gene Yaw’s proposal, SB 1106, for example.

This legislation would update Pennsylvania’s Local Resource Manufacturing (EDGE) Tax Credit to include baseload power generation that interconnects with the regional transmission system and contributes to grid reliability. Crucially, it doesn’t overhaul the current market to put the state in the business of picking winners and losers. Private companies would still decide what to build based on market demand.

SB 1106 is not a silver bullet. It is not as generous or sweeping as Texas’s program. But it is practical. It builds on an existing incentive rather than inventing a new one, reflecting a reality long understood in Harrisburg.

Pennsylvania’s track record supports this approach. The Commonwealth has successfully deployed tax credit programs for decades. The Neighborhood Assistance Program (NAP) and Education Improvement Tax Credit (EITC) have driven hundreds of millions of dollars in private investment into communities, workforce development, and education. The ethane tax credit helped land Shell’s petrochemical cracker plant in western Pennsylvania, one of the largest private investments in state history. These programs work because they align public goals with private capital.

It is also important to clarify what tax credits are and are not. They are not grants. They require upfront investment, strict compliance, and performance. In the case of power generation, that means the plant must be online, interconnected, and consuming Pennsylvania natural gas.

That resource advantage matters. Pennsylvania sits atop one of the world’s largest natural gas supplies. The fuel is here. The workforce is here. The opportunity to site multiple new power plants is real if policy stops getting in the way.

To the Commonwealth’s credit, policymakers did get something right this year. By ending Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI) through the budget process, lawmakers sent a clear signal that affordability and grid reliability are priorities. That decision matters. Senate Bill 1106 is the logical next step to ensure Pennsylvania can attract a new generation and strengthen its energy position.

In what by now, nearly four years into the Ukraine war, seems a biannual exercise, President Trump has taken another swipe at President Volodymyr Zelensky, this time blaming him for holding up the potential peace deal with Russia.

The European allies have said the opposite, accusing Moscow of having no real interest in achieving ceasefire. But in a fresh interview given to Reuters from the Oval Office, Trump said it remains Putin who is more eager and willing, with Zelensky more reticent. “I think he’s ready to make a deal,” Trump said of the Russian leader, before turning to the other warring side: “I think Ukraine is less ready to make a deal.”

Asked directly why US-led negotiations have thus far proved elusive, Trump responded simply and bluntly: “Zelensky.”

In re-presenting the this section of the interview on the question of the so far failed deal, Reuters reviews, “Trump’s comments suggested renewed frustration with the Ukrainian leader. The two presidents have long had a volatile relationship, though their interactions seem to have improved over Trump’s first year back in office.”

“At times, Trump has been more willing to accept Putin’s assurances at face value than the leaders of some U.S. allies, frustrating Kyiv, European capitals and U.S. lawmakers, including some Republicans,” the report continues.

One big ask from Trump which Zelensky seems to be dragging his feet on is elections. Trump has mocked Ukraine for no longer being a “democracy” given the long canceled presidential elections under martial law. Ukrainian parliament has responded by setting up a special committee to examine the issue.

Elections seem a prospect far away given Zelensky as added demands like Russia agreeing to a temporary ceasefire while a vote process proceeds. Kiev also wants international backers to pledge protection and support for such a vote.

There’s also the big question of territorial concessions. The US has been pushing a major compromise in the Donbass, but Zelensky has still insisted he won’t given up territory. Instead he’s open to a “freeze” of the frontlines, but no political recognition of the Russian Federation’s annexed territories.

Zelensky last month in London while huddling with the so-called ‘coalition of the willing’ European leaders definitively ruled out that his country will agree to cede land as part of a peace deal.

Trump and Zelensky could soon meet again, per the interview:

Asked if he would meet Zelenskiy at the World Economic Forum in Davos, Switzerland, next week, Trump said he would but implied no plans were set.

“I would – if he’s there,” Trump said. “I’m going to be there.”

Asked why he believed Zelenskiy was holding back on negotiations, Trump did not elaborate, saying only: “I just think he’s, you know, having a hard time getting there.”

Meanwhile, there is speculation that Zelensky’s hands are effectively tied by his own hard right-wing Ukrainian militias and elements of the military. If he gives up territory for the sake of peace, groups like Azov or Right Sector will want a word…

Zelensky is probably in trouble the moment he comes out of office, and is probably going to be out of office in the first election after a peace deal

Source: The Telegraph
https://t.co/tKzBmMYUr9

— Paul Abbott SDP 🏴󠁧󠁢󠁥󠁮󠁧󠁿 🇬🇧 (@EndeavoursWake) January 15, 2026

Trump has lately appeared to be more willing to wash his hands of American involvement in the conflict. However, it remains anything but clear whether this will translate into halting US intelligence assistance to Ukrainian forces, or whether US arms and funds will be halted or at least significantly throttled. 

Russian officials have been quick to seize on President Trump’s renewed efforts in seeking a way ahead to take control of Greenland, accusing the West of “militarizing” the Arctic while also mocking Europe’s ability to defend the strategically important, mineral-rich island.

Trump had on Wednesday even suggested the large island is “vital” to his proposed Golden Dome air and missile defense system. The same day, European countries made clear they would bolster their forces on the territory which is a possession of Denmark. 

France, Sweden, Germany and Norway have confirmed they would deploy military personnel to Greenland, as Copenhagen tries to convince the White House to join a permanent NATO mission on the island as an alternative to taking it over.

Germany’s Defense Ministry has agreed that a European NATO mission is needed to bolster security “in light of Russian and Chinese threats in the Arctic.”

This has angered Moscow, which expressed “serious concern” and charged the West with “militarizing” Greenland, and that Europe is ready to seize the moment “solely to advance an anti-Russian and anti-Chinese agenda.”

“NATO has embarked on a course of accelerated militarization of the Arctic, increasing its military presence there under the fabricated pretext of a growing threat from Moscow and Beijing,” the Russian embassy in Belgium said late Wednesday.

It added that European officials were already discussing plans to encircle the island and deploy a large-scale collective landing force, accusing them of invoking “mythical threats that they themselves have created.” Meanwhile, ‘big talk’ from Von der Leyen…

VON DER LEYEN: GREENLAND CAN COUNT ON EU

Russia’s Foreign Ministry has further made clear the Kremlin believes the Arctic should remain “a region of peace, dialogue and equal cooperation.”

It’s interesting that Kremlin officials are focusing their harsh rhetoric and condemnations on Europe and not the Trump White House, and the reasons are clear. Moscow is trying to improve its bilateral relations with Washington, and to have Trump’s ear related to the Ukraine war and crisis.

The Gallic cock has crowed that, if the sovereignty of Denmark is affected, the consequences would be unprecedented. Ooh, what they will do?! Kidnap POTUS? Nuke the US? Course not. They’ll just shit their pants and give up Greenland. And that’d would be a great European precedent

— Dmitry Medvedev (@MedvedevRussiaE) January 14, 2026

Foreign Ministry spokeswoman Maria Zakharova further mocked the Europeans by saying “Let them look at what they said about Crimea… It would be very useful for them to fire themselves up over Greenland.”

“Why not focus all efforts on Greenland now?” she said. And then she invoked the Iran crisis: “Don’t you think the situation in Iran has become a ‘convenient excuse’ for EU officials to divert public attention from the fact that an island is being taken away from them – without a referendum?”

Security Council Deputy Chairman Dmitry Medvedev took the jokes further, writing on social media “According to unverified information, a sudden referendum may take place” – and followed by saying Greenland, with a population of about 55,000, could become Russia’s “90th federal subject.”

The foreign ministers of Denmark and Greenland nervously lit up a cigarette after the meeting with Vance and Rubio.

Earlier, they planned to convince the US to abandon its claims to Greenland.

They failed. pic.twitter.com/L1TOBDr1bj

— Chay Bowes (@BowesChay) January 15, 2026

He then mocked Europe’s total inability to defend the island, asking: “What [will they] do?! … Nuke the U.S.?”

“They’ll just shit their pants and give up Greenland. And that would be a great European precedent,” he wrote on X on Wednesday.

By Michael Every of Rabobank

Key data yesterday pointed directly to the tensions we should all have at back of mind. While the US Beige Book was, well, ‘beige’, China saw a trade surplus for 2025 of $1.2trn, the size of the Dutch economy, and up 20% y-o-y. If that pile grows at the same pace ahead then by 2030 it will be $3.0trn, around the size of the French economy. By 2035, it will be the German plus Italian economies. If you can’t see why isn’t sustainable, you’re in the wrong business. If you can’t plot out the ways this can be addressed, and the problems arising from doing so, the same holds true.

On which, Politico reports ‘EU foreign policy chief Kallas privately told lawmakers that the state of the world means it might be a “good moment” to start drinking. She’s late to the party, but by all means: when I mention geopolitics/geoeconomics/contentious politics, everybody drinks!

In Ukraine –remember them?– President Zelensky declared a state of emergency in the energy sector as the crisis there worsens following Russian attacks targeting its power supply.

There remains a “fundamental disagreement” over Greenland following crunch talks in the US. The Danish foreign minister says they “Did not convince Trump to back off,” while Trump has reiterated that Europe cannot defend the territory, mocking the recent step up in military commitments there. While Denmark has done more than ‘adding another dog sled’, Germany did just send **13** soldiers, and France say it will open a consulate, not a military base.

In the vein of European realpolitik being more politic than real, European Commission President von der Leyen said the EU will become a “military powerhouse.” The rest of the world isn’t trembling in its boots and markets aren’t blinking – which tells you that this isn’t happening as needed. After all, it would require political union – as Brussels just refused to confirm that Greenland is covered by the EU defense clause(!) However big a crisis Greenland is, US-EU war is not going to happen; and if a NATO split does, markets will need to start drinking like sailors.

As a vol-au-vent to nibble on with your tipple, the US just indefinitely halted immigrant visa processing for 75 countries.

The true (toxic) cocktail is Iran. Trump says he’s received assurances “killing in Iran is stopping,” rather public hangings have been stopped, but declined to rule out military action. His options are limited by so much of the US Navy being in the Caribbean –a “military powerhouse” is VERY expensive– but the USS Abraham Lincoln Carrier Strike Group has been redirected to the Middle East from Asia; US troops were evacuated from Middle East bases – but may now be returning; armed Kurdish groups tried to cross into Iran from Iraq, which Turkish intelligence allegedly tipped Iran off about; European officials tip US military intervention in Iran may begin imminently; the Saudis denied the US the use of their airspace for any attack; Western embassies in Iran are closing; and an Israeli order for its public to stay near bomb shelters reportedly may soon go out, as the UK and US tell their citizens not to travel there as well as Iran.

This is as the US will announce the launch of phase two of its Gaza plan and its new technocratic government, following the signing of the Trump Route for International Peace and Prosperity (TRIPP) accord that places it in the heart of the Caucuses, right next to Iran and Russia. Everybody drink! But Europe should note it’s not being invited to any of these parties.

Dozens of ships are anchored outside Iran’s ports. Nobody knows when or how this ends. We may just have seen an off-ramp, with reported fears in the White House that the US can’t repeat its success with Maduro, and could either see casualties or get sucked into a new Afghanistan. On the other hand, this could be a head fake, as we saw in June last year, as other reports have it that the president wants to make a “definitive” strike, not a token one.

Given the current backdrop is potentially existential to the Iranian regime, the kind of actions one would normally dismiss out of hand as self-harm cannot be ruled out, i.e., mining the Strait of Hormuz or even attacks on Israel, or Saudi Arabia despite its hands-off stance. If markets only note geopolitical crises when they impact on supply chains, that fat tail risk could be present here.

In geoeconomics, the US approved the sale of Nvidia’s advanced AI chips to China – a major U-turn; and then China’s customs agents were told that those chips are not permitted, claims Reuters. Meanwhile, the US set a new 25% tariff on some chips as part of the Nvidia deal that isn’t actually a deal for China.

The US also made an initial $500m Venezuelan oil deal, with some proceeds headed to a Qatari bank, as China is reportedly looking for assurances over the billions in loans it’s made to Venezuela.

Canada’s Globe and Mail argues that ‘Rebuilding relations with China is a gamble Mark Carney has to take’, and the government said talks on reducing canola tariffs “have been fruitful.” Yet the PM is walking a tightrope: if he moves too close to China, the US will respond via economic statecraft; and if he stays too close to the US, China can do the same. As the Toronto Sun puts it: ‘Trump doesn’t want Canada building cars – and China wants total domination.’ In realpolitik terms, what does vaunted sovereignty then mean? The answer should be as obvious there as it is in Greenland and Iran.

Meanwhile, the FT explains, ‘Why the world has started stockpiling food again.’

In US domestic politics, Trump is to end federal funding to sanctuary cities and states from February, two Republicans flipped, defeating a Congressional war powers resolution that would have limited the president’s room for manoeuvre in Venezuela, and the FBI searched a Washington Post reporter’s home and devices.

In Australia, the US State Department criticised PM Albanese’s rushed new hate speech bill as “deeply perverse”, the latest in a series of interventions with allies if their policies differ from the goals in the US National Security Strategy. The Aussie opposition called the bill “unsalvageable.”

In the UK, 27 councils, 21 of which are Labour run, said they can’t hold elections this year, the police refused to sack a chief constable for using fake AI evidence to ban Israeli fans from attending a football game, and a far-right Dutch activist was denied entry to the country.

In Japan, a snap election date is close to being set, with PM Takaichi riding a wave of popularity over her tough stance on China, as a government panel proposed a “mandatory integration program” for foreign residents, showing a hard line on that front too.

This backdrop is sobering for many. Yet few will currently be sober if they’ve been following their ‘drink!’ instructions.

US equity futures are higher led by Tech stocks which bounced back on Thursday after chipmaker TSMC revived confidence in the durability of artificial-intelligence demand, as signalling a strong outlook with $56BN in CapEx spending in 2026 (a 25% increase), restoring confidence in global AI growth and sending Europe’s ASML to a record high. Silver dropped for the first time in 5 days from a record high as the US held off from attacking Iran and refrained from imposing import tariffs on critical minerals. As os 8:00am ET, S&P 500 futures were 0.4% higher with Nasdaq 100 contracts +0.7%. Pre-market, Mag 7 are all higher led by NVDA (+1.4%), AMZN (+0.7%), TSLA (+0.5%) and MSFT (+0.5%).Goldman Sachs and Morgan Stanley are also higher after reporting solid Q4 earnings. Bond yields are unchanged; The US dollar is 7bps higher. Commodities are mostly lower: oil fell 4.4%; silver is down 2.0%; metals are mostly lower today. Situation in Iran is closely watched, as an Iran official pledged not to execute protesters. Trump said he has no plan to fire Powell in a RTRS article. Today’s US economic calendar includes January Empire manufacturing and Philadelphia Fed business outlook, November import/export prices, and weekly jobless claims (8:30am) and November TIC flows (4pm).

In premarket trading, Nvidia leads Mag 7 stocks after TSMC’s stellar outlook. All Mag 7 stocks are higher (Nvidia +1%, Amazon +0.7%, Tesla +0.4%, Alphabet +0.5%, Microsoft +0.4%, Meta Platforms +0.3%, Apple is little changed)

• Applied Materials (AMAT) rises 7% as Barclays upgrades to overweight. The chip-tool maker is also getting a boost after TSMC set a bullish capital spending target, signaling strong demand for AI chips.
• Chip equipment stocks lead gains in the semiconductor sector after TSMC set its 2026 capital spending target above investor expectations, signaling confidence in the AI boom.
• Bitmine Immersion Technologies (BMNR) rises 1.1% after investing $200 million in Beast Industries, a content creation company founded by YouTube creator MrBeast.
• BlackRock (BLK) gains 1.9% after the asset manager reported adjusted EPS and net inflows that came in above the average analyst estimates.
• Calavo Growers (CVGW) rises 14% after Mission Produce agreed to buy the avocado producer for $27 per share in cash and stock, at enterprise value of about $430 million. Mission Produce (AVO) -6%.
• Morgan Stanley (MS) rises 1.3% after posting quarterly results.
• Penumbra (PEN) rises 11% as Boston Scientific agreed to buy the company in a cash and stock deal that values Penumbra at $374/share.
• Talen Energy Corp. (TLN) gains 10% after signed agreements to acquire three natural gas power plants from Energy Capital Partners for $3.45 billion.

In corporate news, Amazon is challenging Saks’ bid to fund its bankruptcy with financing that would provide the retailer with fresh cash, saying it would harm Amazon and other unsecured creditors. Paramount Skydance named a new CFO as it continues to fight for control of Warner Bros. Elon Musk’s xAI is disabling the ability for people to use Grok to create sexualized images of real people, following widespread criticism.

After a week filled with geopolitical tensions and Trump wild cards, the AI story is back and boosting stocks. TSMC’s big beat and huge capex forecast, is fueling optimism that the AI boom has plenty of room to run.  The AI-bellwether said it would lift capital spending by at least a quarter to as much as $56 billion in 2026 and forecast faster-than-expected revenue growth. Here is a summary of the blowout results and guidance that TSMC just reported:

• Net Profit 505.7bln (exp. 467bln),
• Revenue 1.046tln (exp. 868.46bln),
• CapEx USD 40.9bln (exp. USD 40-42bln).
• Q4 gross margin 62.3% (exp. 60.6%), +3.3ppts Y/Y.
• Q4 revenue from high performance computing +4% Q/Q.
• Q4 revenue from smartphones +11% Q/Q.
• Q4 revenue from IoT +14% Q/Q.
• Guides Q1 Revenue between USD 34.6-35.8bln (exp. 33.2bln),
• Guides Gross Margin between 63-65% (exp. 59.6%),
• Sees Operating Margin between 54-56% (exp. 50%),
• 2026 CapEx to come in between 52-56bln (prev. 40.9bln in 2025)
• Capex is to be higher in the next three years. Cost of tools are becoming more expensive. Long term gross margins of 56% and higher is achievable. In 2026 there are uncertainties from tariffs.
• Will be prudent in business planning. Robust AI-related demand. Increasing AI model adoption. 2026 sales to grow by close to 30% in USD terms. Preparing to increase capacity to support customers.
• Customers are providing strong signals and reaching out directly to request capacity. Firms have been showing TSMC that AI is a significant help to their businesses. Announces plans to expand its fabrication facilities in Arizona. Co. is worried about electricity in Taiwan. Co. informed that Silicon from TSMC is a bottleneck with the Co. aiming to deal with the bottle neck first and foremost. Reduced their 6 and 8 inch wafer capacity to optimise resources.

Chip-equipment makers led gains within the sector. ASML Holding NV, which counts TSMC as its biggest customer, jumped more than 5% in Amsterdam. TSMC suppliers Applied Materials Inc. and Lam Research Corp. rose more than 7% in premarket trading. AI heavyweights such as Nvidia Corp. and Alphabet Inc. also advanced, though the gains were more muted.

TSMC’s “approach to guidance suggests further upside to consensus estimates and supports a constructive outlook,” said Gary Tan, a portfolio manager at Allspring Global Investments.

The renewed optimism around AI follows weeks of steady rotation away from mega-cap technology stocks and toward a broader set of companies leveraged to improving growth prospects. The trend saw the S&P 500 post its first back-to-back losses on Wednesday even though a majority of its members advanced.  The rotation trade sweeping through equities is highlighted in a Goldman Sachs survey. “Technology remains the top pick, though its lead has narrowed compared to last year — mirroring the decline in enthusiasm for the US market,” strategist Guillaume Jaisson wrote.

Elsewhere, in tech news, OpenAI signed a $10 billion deal with Cerebras for computing power, with ambitions to make ChatGPT the fastest platform in the world. Alibaba showcased plans to link flagship services and build Qwen into a one-stop AI platform. Today’s Tech Watch looks at how soaring prices for memory and storage are causing headaches for customers.

In other assets, oil was down for the first time in six days as Trump indicated he’s holding off on any attack on Iran for now, a statement that also put the rally in gold on pause. Silver dropped after the US refrained from imposing tariffs on critical minerals. But it did levy a 25% tariff on imports of certain advanced semiconductors, a key step in allowing Nvidia to ship Taiwan-made H200 AI processors to China.

In geopolitics, China banned cybersecurity products from American and Israeli firms, including Palo Alto Networks and Fortinet. Trump told Reuters he sees Ukraine’s leader Volodymyr Zelenskiy as the main obstacle to an agreement to end the war Russia launched four years ago. And Germany will take the lead of European nations sending military personnel to Greenland. Trump also told Reuters that he doesn’t plan to fire Powell despite the DoJ probe. 

European stocks are mostly positive with a TSMC-led surge in ASML shares lifting the Euro Sstoxx 50 higher by 0.5%. CAC 40 lags with the luxury sector weighed down by Richemont’s margin concerns. Here are some of the biggest movers on Thursday:

• VAT Group hares gain as much as 18%, the most since April, as preliminary net sales for the full year show an earlier upswing than analysts had previously expected.
• ASML shares soar as much as 7.7% to a record high, after its key customer Taiwan Semiconductor Manufacturing Co. gave a stronger-than-anticipated outlook for 2026.
• Schroders shares gain as much as 8.9%, hitting their highest level since August 2023, after the asset management group said annual adjusted operating profit will come in ahead of expectations.
• Swedbank shares jump as much as 6.7% to a record high after the US Department of Justice closed a yearslong investigation without imposing penalties.
• Ashmore Group shares rally as much as 17% after the emerging markets-focused asset manager reported the first monthly net inflows since 2021.
• Richemont shares reverse earlier gains to slide as much as 3.4%, as worries over margins at the Swiss owner of Cartier and Van Cleef overshadow a robust sales report.
• Repsol shares drop as much as 7%, the most since April, after the Spanish oil company released a trading statement that analysts view as mixed, with a miss on upstream production.
• OMV shares drop as much as 2.9% after the Austrian oil and gas company reported fourth-quarter production that missed estimates.
• Dunelm shares slide as much as 18%, the most since March 2020, after the homeware retailer reported softer-than-expected results and downgraded first-half pretax profit guidance.
• Taylor Wimpey shares fall as much as 5.2%, the most in three months, as the UK homebuilder guides that margins will be lower in 2026 than in 2025.

Asian stocks were slightly lower, with declines in some of last year’s big AI winners pulling down the regional benchmark. The MSCI Asia Pacific Index fell 0.2% as markets consolidated after three straight sessions of gains. Japan’s Advantest and Tokyo Electron lost more than 3% each. Trip.com’s shares were another big drag, plunging more than 20% in Hong Kong after Chinese regulators said the online travel agency was being investigated over alleged antitrust conduct.

In FX, the yen was able to claw back losses versus the dollar after a report that the BOJ is increasingly focused on the weak currency. Bloomberg Dollar Index is flat. The pound is down despite a beat for monthly UK GDP.

In rates, treasuries hold small losses amid similar price action in European government bonds as US stock futures climb. Front-end tenors lead gilts selloff after UK GDP beat estimates, curbing wagers on BOE rate cuts. US session includes weekly jobless claims data and five scheduled Fed speakers. US yields are 2bp-3bp cheaper with belly leading losses, flattening 5s30s spread by 1.2bp; 10-year at 4.15% is near session high, 2bp cheaper on the day, with UK front-end yields higher by 4bps. IG dollar new-issue slate includes five names so far; seven borrowers priced a combined $12.65 billion Wednesday, led by JPMorgan with a three-part, $6 billion offering. Issuers paid negative concessions on deals that were 5.6 times oversubscribed. US, German and UK 10-year yields are higher by 1-2 basis points. UK curve has bear-flattened post-GDP.

In commodities, spot gold and silver are lower but off worst levels following a slide during APAC hours. Crude futures fall after US President Donald Trump signaled he may refrain from attacking Iran for now. Bitcoin is down 0.8%. 

Today’s US economic calendar includes January Empire manufacturing and Philadelphia Fed business outlook, November import/export prices, and weekly jobless claims (8:30am) and November TIC flows (4pm). Scheduled Fed speakers include Goolsbee (8:30am), Bostic (8:35am), Barr (9:15am), Barkin (12:40pm) and Schmid (1:30pm).

Market Snapshot

• S&P 500 mini +0.4%,
• Nasdaq 100 mini +0.7%
• Russell 2000 mini +0.2%
• Stoxx Europe 600 +0.3%
• DAX little changed, CAC 40 -0.3%
• 10-year Treasury yield +1 basis point at 4.14%
• VIX -0.5 points at 16.22
• Bloomberg Dollar Index little changed at 1210.7
• euro little changed at $1.1638
• WTI crude -4.5% at $59.24/barrel

Top Overnight News

• Oil fell for the first time in six days after Donald Trump signaled he may hold off on attacking Iran for now after being reassured that Tehran would stop killing people involved in protests. BBG
• U.S. President Donald Trump said on Wednesday he has no plans to fire Jerome Powell despite a Justice Department criminal investigation into the Federal Reserve chair, but it was “too early” to say what he would ultimately do. RTRS
• Volodymyr Zelenskiy is the main obstacle to an agreement to end Ukraine’s war with Russia, Trump claimed, telling Reuters that Vladimir Putin is “ready to make a deal.” BBG
• Nasdaq futures swung to a gain (NDX futs +85 bps pre mkt) after TSMC renewed confidence in AI demand, earmarking as much as $56 billion in capital spending for 2026. ASML’s shares rallied to a record on its client’s upbeat outlook. BBG
• The US is intensifying pressure on Mexico to allow US military forces to conduct joint operations to dismantle fentanyl labs inside the country. NYT
• Coinbase Global Inc. has pulled its support for the current version of the market-structure bill due for markup in the Senate Banking Committee on Thursday. Coinbase’s CEO Brian Armstrong cited “too many issues” with the bill, including a defacto ban on tokenized equities and DeFi prohibitions. BBG
• China’s central bank rolled out targeted easing measures to bolster support for sectors deemed strategic by Beijing, as policymakers seek to ensure a strong start to the year. The PBOC will cut rates on its structural policy tools by 0.25 percentage point, lowering the rate on one-year relending facilities to 1.25%. WSJ
• Leaders of Japan’s main opposition Constitutional Democratic Party of Japan and the lay Buddhist organization-backed Komeito agreed on Thursday to establish a new party bringing together “centrist forces” to fight a snap parliamentary election in February. Nikkei
• Hedge funds are betting the yen may slide to 165 a dollar before authorities intervene, with traders using options to position for a weakening currency. BBG
• BofA card spending, week to January 10th: +4.6% Y/Y (prev. 1.7%). Strong growth across most categories, partially due to favorable base effects.

Trade/Tariffs

• Japanese Finance Minister aims to make progress in selecting projects as part of Japan and US bound investment package if PM Takaichi meets with US President Trump. Fiscal reform is impossible with economic growth. said next years financial budgets reliance on debt is at a sustainable pace.
• Canada and China sign a trade cooperation MOU. Both sides committed to resolving outstanding agricultural trade issues by maintaining open channels of communication.
• Indian Trade Secretary on the India-EU trade deal negotiation said some agricultural items remain off the table.
• Indian Trade Secretary said a deal with the EU is very close but there’s still room for further negotiations to solve various issues.
• China’s Foreign Minister said they are ready to strengthen cooperation and trust with Canada.
• China is said to be drafting purchase rules for NVIDIA’s (NVDA) H200 chips, Nikkei reported, as an attempt to balance its desire to foster domestic chip development with Chinese tech firms.
• Taiwan’s government said Taiwan and the US have previously held multiple discussions and reached consensus on preferential tariff treatment for semiconductors and related products under Section 232. Taiwan’s government said Taiwan will subsequently schedule a separate meeting with the Office of the U.S. Trade Representative to sign the Taiwan–US trade agreement documents.
• The White House said President Trump imposed a 25% tariff on certain advanced computing chips, such as NVIDIA (NVDA) H200 and AMD (AMD) MI325X chips. Depending on the outcome of negotiations, President Trump may consider alternative remedies in the future, including minimum import prices for specific types of critical minerals. The Secretary and the trade representative should consider price floors for trade in critical minerals and other trade-restricting measures. The US chip tariff will not apply to chips imported for US technology supply.
• The White House said that in the near future, US President Trump may impose broader tariffs on semiconductor imports and their derivative products.
• US President Trump ordered the Commerce Dept. and USTR to negotiate agreements with foreign suppliers to reduce US reliance on imported processed critical minerals, citing national security risks. Negotiators have 180 days to secure binding or enforceable agreements.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly in the green, outperforming their US counterparts, though the Nikkei lagged the region. ASX 200 continued its trend higher as mining and materials names advanced, supported by fresh ATHs in metals and news that Rio Tinto and BHP are collaborating on iron ore extraction in the Pilbara. Nikkei 225 underperformed, slipping back below 54,000 as reports that opposition parties CDP and Komeito have begun talks to form a new party weighed on sentiment. KOSPI traded comfortably in the green, extending to new ATHs and nearing 4,750, whilst the BoK kept rates steady as expected in a unanimous decision. Hang Seng and Shanghai Comp saw mixed trade, with the Hang Seng hovering just below ATHs near 27,380 while the Shanghai Composite oscillated around the unchanged mark as Chinese markets struggled for traction.

Top Asian News

• Earthquake of magnitude 5.5 in the Hokkaido region in Japan, EMSC reported.

European equities (STOXX 600 +0.4%) opened mixed to higher. AEX (+1%) outperforms, lifted by strong gains in ASML (+5.5%) following robust TSMC earnings & guidance, which showed a 35% jump in Q4 profit. European sectors are mixed. Tech (+1.7%) leads, driven by strength in ASML (+5.5%), while Financial Services (+1.2%) are boosted by post-earning strength in Partners (+6.2%). Consumer Products initially boosted by gains in Richemont (-2.2%), but the Co. has since slipped into negative territory. Q3 earnings were strong, but Richemont did highlight that rising material costs continuing to weigh on margins.

Top European News

• BoE Credit Conditions Survey: Demand for secured lending for remortgaging was unchanged in Q4, and was expected to increase in Q1. Within the overall figure, demand for credit card lending increased in Q4, and was expected to be unchanged in Q1. Demand for corporate lending in Q1 was expected to be unchanged for small, medium-sized, and large businesses.
• ECB’s de Guindos said “it is very important for all of us that the principle of central bank independence is also applied to the Federal Reserve.”.

Central Banks

• US President Trump said no plans to remove Fed Chair Powell.
• US President Trump rejects criticism from Senate Republicans of the Justice Department probe of Fed chair Jerome Powell and said “they should be loyal.”; speaks highly of Kevin Hassett and Kevin Warsh.
• BoJ is reportedly likely to keep rates steady in January; some officials are said to be concerned over the economic impact of a weak JPY, Bloomberg reported. If the JPY continues to weaken, then the pace of future rate hikes could be accelerated. But, policy will remain on hold in January. Possible that the negative aspects such as a further JPY depreciation and the impact on personal consumption, will become a point of concern.
• BoJ Governor Ueda said mechanism under which wages and prices rise moderately in tandem likely to be sustained. BoJ is expected to keep raising interest rates if targets are met.
• ECB’s Kazaks said policy rates are optimally positioned as inflation trends improve. Warns that inflation and growth risks are balanced and emphasises the need for vigilance.
• PBoC cuts the one-year relending facility rate to 1.25% (prev. 1.50%), to increase tech innovation quotas by CNY 400bln to CNY 1.2tln. Central Bank to boost relending quotas to power tech innovation. Pledges continued liquidity support via open market tools. Overnight rates will be guided to hover near policy rates. Will maintain ample liquidity to support bond issuance. Will flexibly conduct government bond operation going forward. Lowers minimum down payment for commercial property loans to 30% to boost market inventory clearance. No intention to use currency depreciation for trade advantage. Will guide expectation and prevent overshooting in CNY risk.
• China’s PBoC Deputy Governor announces plans to release a series of monetary and financial measures.
• Bank of Korea keeps Base Rate unchanged at 2.50%, as expected. Removes “potential rate cut” reference from the statement.
• BoK Governor Rhee said the Government is to make an announcement on the US trade deal and the FX market later in the day.
• BoK Governor Rhee said rate decision was unanimous, need to remain cautious on FX volatility. 5 members see a ‘high chance’ of a hold in the next 3 months, 1 sees a cut in the near-term. Addressing FX volatility requires immediate steps as well as structural reforms. A weak KRW is not likely to trigger any financial crisis and have ample amounts of USDs.

FX

• DXY is flat and trades within a very thin 99.08-23 range; currently just above its 50 DMA at 99.02. Focus overnight has been on geopols, whereby President Trump said Iran has “no plan” to execute protestors. Back in the US, Trump said he has no plans to remove Fed Chair Powell, whilst also speaking highly of the prospective new Fed Chairs Hassett and Warsh.
• GBP currently trades flat, within a 1.3423-1.3446 range; the peak for today is a handful of pips short of its 21 DMA at 1.3452. Some strength was seen in Cable following the region’s GDP series, which topped expectations and has Q4 GDP on track to surpass the BoE’s forecast of no growth. Pantheon Macroeconomics said it expects UK growth to improve to 0.4% Q/Q in Q1 as Budget uncertainty fades, seasonality lifts the New Year, and September’s cyber-attack volatility limits spare capacity, keeping the MPC cautious.
• JPY is flat this morning, but subject to volatility, after Bloomberg reported that the BoJ is likely to keep rates steady in January; some officials are said to be concerned over the economic impact of a weak JPY. The piece added that if the JPY continues to weaken, then the pace of future rate hikes could be accelerated. But, policy will remain on hold in January. This spurred immediate pressure in USD/JPY, falling from 158.68 to 158.33.
• China’s FX regulator will formulate a basket of policy measures to promote cross-border financing.

Fixed Income

• A contained start for fixed benchmarks. Haven allure that was helping on Wednesday has been removed by the updates around Iran (see Commodities for details).
• That aside, newsflow has been a little light and largely focused on nation-specifics rather than broader macro drivers; though, TSMC earnings are the exception, again, see the feed for details.
• USTs have spent the morning in a narrow 112-11 to 112-17+ band, Bunds in equally slim 128.23 to 128.46 confines with both benchmarks flat overall. However, a modest bullish bias is beginning to emerge, more so for EGBs than USTs, potentially as the morning’s supply from Spain has now passed and was well received, digestion of the Ukraine-Russia-US situation and/or the pulling back of crude benchmarks weighing on yields. Though, the latter narrative is clouded by the gains in European gas.
• Gilts opened marginally softer and then slipped a few ticks further to a 92.67 base despite the firmer lead from EGBs. UK debt weighed on by strong GDP data for November, a series that has the Q4 trend tracking above the BoE’s estimate of no growth for the period. However, this pressure proved shortlived with Gilts grinding higher and the marginal outperformer, posting upside of just over 10 ticks.
• Spain sold EUR 5.86bln vs exp. EUR 5-6bln 2.35% 2029 Bono & 3.50% 2041, 1.45% 2071 Bonds.

Commodities

• Crude benchmarks are on the back foot and remain near lows of USD 58.99/bbl and USD 63.46/bbl for WTI and Brent after some of the pressure was let out of the US-Iran situation. A move driven in late US hours by President Trump saying he had been told that the killing within Iran was stopping. However, we then saw some reports of explosions in Tehran, an update that sparked a short-lived spike of c. USD 0.50/bbl, before paring amid some uncertainty around the validity of that report.
• As discussed earlier in the week, gas benchmarks remain bid with gains of nearly a EUR/Mwh at a EUR 33/MWh peak for Dutch TTF. Drivers for the space include any potential impact to Iranian flows to Turkey, the above Ukraine situation escalating and the continued cold spell in Europe.
• Precious metals are broadly in the red this morning, following on from the subdued action seen overnight. Negative action this morning due to some unwinding of recent geopolitical risk premia after US President Trump said that he had been told the killing in Iran is stopping and that there is no plan for executions. As a reminder, the President had repeatedly threatened action against the Iranian regime, if they killed protestors. As it stands spot gold trades at the lower end of a USD 4,580.98-4,632.45/oz range.
• Base metals are also following precious peers lower; 3M LME Copper trades just above the USD 13k/t mark, in a USD 12,914-13,216.35/t range – downside which also follows the negative sentiment seen across the Chinese equities space.
• US Ambassador announces plan to work with Belgium on a USD 50bln LNG deal.
• The US is said to be considering private contractors to safeguard oil in Venezuela, CNN reported citing sources.
• US President Trump said it would be better for Venezuela to remain in OPEC but is unsure if this would be beneficial to the US.

Geopolitics: Ukraine 

• US President Trump said Ukrainian President Zelensky is to blame for the current stalemate in Russia–Ukraine negotiations, adding that Russian President Putin is “ready to make a deal.”.

Geopolitics: Middle East

• “Flight restrictions in Iran lift, without explanation,” AP reported.
• UN Security Council plans to meet with Iran at 15:00 EST / 20:00 GMT on Thursday, AFP reported.
• Iran has extended its airspace closure NOTAM until 03:30 UTC (~2 hours from now).
• US President Trump said Iran’s government could fall due to unrest but “any regime can fail”.
• US President Trump has told his National Security team that any US military action in Iran to be swift and decisive, NBC News reported citing sources; adds that a sustained war is undesirable. Trump’s advisors have so far not been able to guarantee a quick collapse of Iran’s regime.
• NOTAM over Iran has expired, according to reported.
• Iran’s Foreign Minister Araghchi said there have been many threats by US President Trump and others but we are in control, hopes tensions do not reach a high level; no plans to carry out executions against protestors. Not ready to give up our legitimate right to the peaceful use of nuclear technology.
• Iran issues NOTAM to close all airspace, according to reported; “NOTAM is valid for a little more than 2 hours”; closes airspace to all flights except international flights to Iran with prior permission.
• “All the signals are that a US attack [against Iran] is imminent, but that is also how this administration behaves to keep everyone on their toes. Unpredictability is part of the strategy,” Reuters reported, citing a Western military official.
• The X account which flagged the initial explosions in Tehran said they have deleted the post “as the source appears to be a bit flimsy, though reporting on any potential action is going to be difficult due to the ongoing internet blackout across Iran”.
• US President Trump has made it clear to the National Security team his goals for any US military action in Iran, NBC news reported.
• Maersk (MAERSKB DC) MECL service returns to trans-Suez route; following improved stability in the Red Sea, enabling more efficient transit times while maintaining safety as the top priority.

Geopolitics: Other

• Colombia President Petro is to meet with US President Trump on February 3rd.
• US President Trump posted “had a very good call with the Interim President of Venezuela, Delcy Rodríguez. We are making tremendous progress, as we help Venezuela stabilize and recover.”. “Many topics were discussed, including Oil, Minerals, Trade and, of course, National Security.”.
• The US Senate votes 51-50 in favour to allow US President Trump to act on Venezuela military action without Congressional approval; VP Vance casting the deciding vote.
• Chinese officials have reached out to counterparts in Venezuela and the US to seek assurances regarding their loans to Venezuela, Bloomberg reported citing people familiar with the matter.

US Event Calendar

• 8:30 am: United States Jan Empire Manufacturing, est. 1, prior -3.9
• 8:30 am: United States Jan Philadelphia Fed Business Outlook, est. -1.35, prior -10.2, revised -8.8
• 8:30 am: United States Jan 10 Initial Jobless Claims, est. 215k, prior 208k
• 8:30 am: United States Jan 3 Continuing Claims, est. 1897k, prior 1914k
• 8:30 am: United States Fed’s Goolsbee Speaks on CNBC
• 8:35 am: United States Fed’s Bostic Delivers Remarks at Metro Atlanta Chamber
• 9:15 am: United States Fed’s Barr in Penal Discussion on Stablecoins
• 12:40 pm: United States Fed’s Tom Barkin Speaks on Virginia Economic Outlook
• 4:00 pm: United States Nov Total Net TIC Flows, prior -37.3b

DB’s Jim Reid concludes the overnight wrap

Markets faced a growing array of geopolitical risks yesterday, with oil prices seeing large swings as investors focused on the latest developments in Iran. At one point, Brent crude even reached its highest intraday level since September as speculation about a US intervention gathered pace, at $66.82/bbl, but this morning it’s fallen back to $64.24/bbl after Trump suggested he’d hold off an attack for now. That also led to huge swings in precious metals, with yesterday seeing new records for gold (+0.87% to $4,627/oz) and silver (+7.14% to $93.16/oz), before they also came down this morning after Trump held off on imposing tariffs on critical minerals. Otherwise, the main equity story was a slide for tech stocks, with the Mag 7 (-1.56%) pushing down the S&P 500 (-0.53%). But despite all that, there was still a lot of resilience among equities more broadly, as most of the S&P’s constituents still advanced, pushing the equal-weighted index (+0.40%) to a record high, alongside a new record for Europe’s STOXX 600 (+0.18%). So, for now at least, most equities have been unfazed by the geopolitical developments.

In terms of those various market drivers, Iran was the main story yesterday as oil prices reacted to different headlines. The initial surge was caused by a Reuters report, which said that some personnel had been advised to leave the US military’s Al Udeid Air Base in Qatar. That was significant because the base previously saw an Iranian missile attack last June, so the story added to fears that some sort of escalation might take place imminently. However, Trump later downplayed the magnitude of tensions, saying “we’ve been told that the killing in Iran is stopping — it’s stopped… And there’s no plan for executions”. So that was taken as a signal that the US might hold off on a potential military response, with Brent falling by $3 in just over half an hour before partially recovering. There’s clearly lingering caution, not least given the unexpected timing of US strikes on Iran in June 2025, and at $64.24 this morning Brent crude is still clearly above its lows below $60/bbl last week, but Trump’s comments had a clear impact. Bear in mind as well that Iran is a more significant oil producer than Venezuela, producing 4% of the world’s total in 2023, so developments there have the potential for wider spillovers in the oil market.

In the meantime, there were fresh headlines on Greenland, as Trump posted that “The United States needs Greenland for the purpose of National Security.” That came ahead of a meeting between Vice President JD Vance and Secretary of State Marco Rubio with the foreign ministers of Denmark and Greenland. After the meeting, the sides agreed to set up working groups to see if a way forward could be found, but Denmark’s foreign minister said that they “still have a fundamental disagreement” with the US, adding that demands that would violate Denmark and Greenland’s sovereignty were “totally unacceptable”.

Whilst the geopolitical developments had a big impact in commodity markets, there wasn’t much direct effect on bond and equity markets. Admittedly, the S&P 500 was down -0.53% yesterday, but that was because of a slump for tech stocks, with the Magnificent 7 down -1.56%, in contrast to most of the S&P’s constituents which rose yesterday, with 318 moving higher. So we saw more of the rotation pattern at play since the start of the year, with the small-cap Russell 2000 (+0.70%) hitting a new record as it outperformed the S&P 500 for the ninth session in a row. Indeed, the Russell 2000 is now up +6.84% YTD, in contrast to a -1.49% decline for the Mag-7. Otherwise, there was ongoing weakness among US banks, with the KBW Bank index (-0.70%) down for a 4th consecutive session, which came as Wells Fargo (-4.31%), Citigroup (-3.89%) and Bank of America (-2.06%) all fell back after their latest earnings reports.

In the meantime, it was a very strong session for US Treasuries, with the 2yr yield (-2.3bps) falling to 3.51%, whilst the 10yr yield (-4.7bps) posted its biggest decline in almost two months, down to 4.13%. That came as investors priced in more rate cuts ahead, with futures now pricing in 54bps of cuts by the December meeting, up +1.8bps on the day. Interestingly, that was despite some hawkish comments from Fed officials, with Minneapolis Fed Kashkari expressing concern on inflation in an NYT interview, saying that it was “entirely plausible that we are sitting here well above our target for two to three more years”, and “Then we’re looking at seven or eight years of elevated inflation. That’s very concerning to me.” On similar lines, Atlanta Fed President Bostic also said that “The inflation challenge has not been won yet”. But Philadelphia President Paulson said that she saw “inflation moderating, the labor market stabilizing and growth coming in around 2% this year”, and that if that happened, “some modest further adjustments to the funds rate would likely be appropriate later in the year”.

In Asia, the main news yesterday came from Japan, where it looks increasingly as though Prime Minister Takaichi is going to call a snap election. That hasn’t been officially confirmed, but Hirofumi Yoshimura, who is the leader of the Japan Innovation Party, said that Takaichi had told colleagues that she’d be dissolving the lower house soon after it reconvenes on Jan 23. Nevertheless, Japanese assets had already reacted to the speculation, and this morning the 10yr yield has come off of its post-1999 high the previous day, down -1.7bps to 2.15%. That’s also despite BoJ Governor Ueda’s comments which reiterated that rates would keep rising if its outlook were realised. Otherwise in Asia, several equity indices are down this morning, including the Nikkei (-0.82%), the Hang Seng (-0.48%), the Shanghai Comp (-0.46%) and the CSI 300 (-0.07%). However, in South Korea, the KOSPI (+1.38%) has continued to outperform, on track for another record high this morning. Looking forward, US equity futures are basically steady, with those on the S&P 500 up +0.01%.

Earlier in Europe, markets had put in a relatively stronger performance, with both the STOXX 600 (+0.18%) and the FTSE 100 (+0.46%) moving up to new records. However, the DAX (-0.53%) was a relative underperformer, ending a run of 11 consecutive daily gains. Meanwhile for bonds, there was also a rally across the continent, with yields on 10yr bunds (-3.3bps), OATs (-3.1bps) and BTPs (-2.9bps) all moving lower. UK gilts were a particular outperformer, with the 10yr yield (-5.8bps) falling to its lowest since December 2024, at 4.34%.

Finally yesterday, we also had a few US data releases that were delayed by the government shutdown. First, the November retail sales were a bit stronger than expected at +0.6% (vs. +0.5% expected). Then for PPI inflation, the headline measure was running at +0.2% as expected in November, with the year-on-year measure at +3.0%. And existing home sales came in at an annualised rate of 4.35m in December (vs. 4.22m expected), which was their fastest pace since early 2023. Otherwise, the Atlanta Fed’s latest GDPNow update is now estimating Q4 GDP growth at an annualised pace of +5.3%, up from +5.1% before.

Looking at the day ahead, data releases include the UK GDP and Euro Area industrial production for November. Then in the US, we’ll get the weekly initial jobless claims, the Empire State manufacturing survey for January, and the Philadelphia Fed’s business outlook for January. From central banks, the ECB will publish their Economic Bulletin, we’ll hear from ECB Vice President de Guindos, the ECB’s Panetta, and the Fed’s Bostic, Barr, Barkin and Schmid. Finally, earnings releases include Goldman Sachs, Morgan Stanley, and BlackRock.

Europe’s semiconductor stocks moved higher on Thursday, with ASML Holdings surging to a record high after Taiwan Semiconductor Manufacturing Co. (TSMC) reported a 35% jump in fourth-quarter profit and signaled plans to boost capital spending by nearly 40% this year.

TSMC, a supplier to tech giants including Nvidia and Apple, raised its 2026 capex guidance to $52 billion to $56 billion, up from a previous estimate of $40 billion. Management also indicated that the three-year investment plan will be significantly higher, reducing the likelihood of a near-term pullback in spending.

“Our business in the fourth quarter was supported by strong demand for our leading-edge process technologies,” said Wendell Huang, Senior VP and CFO of TSMC. “Moving into first quarter 2026, we expect our business to be supported by continued strong demand for our leading-edge process technologies.”

It reported a net profit of $16 billion for the October-December quarter, a 35% surge from a year earlier, exceeding analysts’ average estimates.

“We expect our business to be supported by continuous strong demand for our leading-edge process technologies,” Huang said. He said spending would be “significantly higher” in the next three years.

An analyst asked TSMC chairman and CEO C. C. Wei about the risk that the AI investment cycle is a bubble. Wei replied, “I’m also very nervous about it, you bet … AI is real. Not only real, but it’s also starting to grow into our daily life.”

Earlier, Goldman analyst Sean Johnstone told clients, “Anyone hoping for a pullback is going to be disappointed.”

Johnstone continued:

SEMICAP/AI POSTIVE as TSMC has been seen as major bottleneck for AI given how cautious mgt have been and now its raised capex ABOVE the bulls expectations. There was lots of debate in on the name in esp. around capex its guided well above both sellside and buyside at $52-56bn and saying the 3 year will be significantly higher. For 2026 sellside was $45-46bn, Buyside $47-52bn hoping the 2026 initial guidance range would include a $50bn. Anyone hoping for a pullback is going to be disappointed.

Q4 beat on GM at 62.3% street just over 60%, and operating profit at 54% (Street 51%). Guides Q1 above: 1Q rev +4% q/q or +38% y/y (Q1 guide is top end of bulls plus its guided FY at 30% – bulls expected TSMC to guide to 25% and walk it up over the year. The 5 year CAGR of 25%); GM further expands q/q to 63-65% driven by higher UTR and cost efficiencies, OM 54-55%. Overseas fab expansion would be the dilute from 2h26 by 2-3ppt. Capex FY25 was$40.9bn…. Note VAT an underweight for many saw orders beat this morning and GIR expect to see MSD u/g to cons, real risk of a squeeze

MORE +VE PRESS:SK Hynix is speeding up new fab operations to meet surging DRAM memory chip demand, Reuters reports, citing CEO Sungsoo Ryu. OpenAI’s first AI chip, Titan, will launch by end-2026, media report. Co-developed with Broadcom, it will be made on TSMC’s 3nm mfg process. Titan II, the next-gen chip, will use TSMC’s A16 process. OpenAI has tapped Samsung’s 2nm Exynos chip for its AI earbuds, ‘Sweetpea’. Intel is reported evaluating price hike for its server CPU following AMD who raised CPU including Ryzen 9000 earlier more pressure on PC names

Software remained under pressure yesterday and today TSMC numbers likely to exacerbate the software vs. Semis vs. trade already -15% ytd. Plus sentiment not helped with Claude Cowork

In markets, the Taiwan Stock Exchange closed up 80 bps at 30,941. TSMC’s earnings provided a bullish start for European chip stocks, notably ASML, and US chip companies, which moved higher in premarket trading. TSM shares in New York are up 6%.

This is certainly not the earnings report AI bubble bears were hoping for, as Goldman analysts echoed one another, saying that anyone hoping for a pullback is unlikely to get it.