Market Report.
🌍 Once again, geopolitical events are overshadowing market developments, with two notable exceptions: the dramatic remarks made yesterday by Jerome Powell regarding political interference in the Federal Reserve, and Friday’s US employment data. Let’s look at the details.
📉 Last Friday, the U.S. labor market ended 2025 on a soft note, with nonfarm payrolls rising by only 50,000 in December, lower than the expected 73,000 increase.
👥 The unemployment rate fell to 4.4%, better than the expected 4.5%, while a broader measure that includes discouraged workers and the underemployed dropped to 8.4%.
📆 For the full year 2025, payroll gains averaged just 49,000 per month, a significant slowdown from the 168,000 average in 2024.
🏢 Experts noted the labor market is experiencing a “jobless boom” where growth is strong but hiring is not, which is positive for Wall Street but uneasy for the people.
⚖️ The Trump administration threatened to indict Powell for testifying to Congress about plans to renovate the Federal Reserve building last summer. Chairman Powell said this was an “excuse” to increase his influence over the central bank and monetary policy.
🗣️ “The question is whether the Fed can continue to set interest rates based on evidence and economic conditions, or whether monetary policy will instead be driven by political pressure and intimidation,” Powell said in a new statement yesterday.
💱 Markets initially sold the dollar, though the implications for interest rates remain uncertain. Gold surged past $4,600 an ounce for the first time, reflecting a rush to safe havens.
📈 Investors may now be pricing in expectations that the Fed will bend to Trump’s pressure and cut rates more aggressively once a new chair takes over after Powell’s term ends in May. For now, futures still imply two rate cuts this year.
🌐 Geopolitics.
🇮🇷 Iran appears to be the next target on President Trump’s list, after his recent actions against Venezuela and threats regarding Greenland.
📢 “The United States will come to their aid,” President Trump wrote in Friday’s Truth Social article, referring to Iranian protesters.
🛡️ These were not empty words. White House officials are expected to give Trump a plan on how to carry out the threat and brief him on military, cyber and economic operations on Tuesday, according to MS Now and other media outlets.
🏛️ Senator Rand Paul argued that bombing Iran risks rallying its citizens to the government’s side, while Senator Mark Warner warned of the dangers of U.S. intervention based on historical precedent.
🔥 This comes as Iran is facing the biggest anti-government protests since 2022, with over 500 people killed amid a crackdown by the government, according to US sources.
🛢️ Any U.S. operation against Iran would likely have significant energy market implications, as Iran is a major oil producer. A broader conflict could also affect overall market sentiment.
⚠️ Iranian Parliament Speaker Mohammad Baker Qalibaf has warned of possible retaliation if the United States attacks his country. “If Iran is attacked, not only the (Israeli) occupied territories, but also all US military bases and ships will become our legitimate targets,” Qalibaf said, according to a Reuters report.
🎲 Polymarket traders are speculating that Trump and Israel could overthrow Iran’s Supreme Leader Ayatollah Ali Khamenei in 2026, reflecting growing bets on heightened geopolitical escalation rather than a confirmed outcome.
🛰️ Forbes reports that Iran has successfully shut down Starlink internet services, marking what it describes as a major escalation. The article refers to the move as a potential “kill switch”, with the author noting, “We have not seen this before,” underscoring the unprecedented nature of the development.
🇻🇪 Trump also has stated that no more Venezuelan oil or money will go to Cuba, and he suggested the Communist-run island should strike a deal with Washington.
🇨🇺 Cuba’s leadership has responded defiantly, with President Diaz-Canel rejecting Trump’s threat and stating that Cuba is a “free, independent, and sovereign nation” that does not take dictation from the U.S.
⛽ Cuba relies heavily on imported crude and fuel, mainly from Venezuela, to keep its power generators and vehicles running. The loss of this vital energy lifeline could worsen the island’s economic and political situation.
❄️ Trump on Greenland said its defense amounts to “two dog sleds,” adding that the U.S. is discussing acquiring—not leasing—the territory, arguing that “if we don’t do it, Russia or China will.”
🇪🇺 European countries, led by the UK and Germany, are actively discussing plans to establish a NATO military presence in Greenland in response to President Trump’s threats to take control of the self-governing Danish territory.
🧭 The proposed European deployment serves multiple strategic objectives: Demonstrating Europe’s commitment to Arctic security and deterring Russian/Chinese influence in the region. Internationalizing Greenland’s security, turning any hostile action into an incident involving multiple European nations. Increasing the political and strategic cost of any coercive actions or attempts to seize control of Greenland.
📜 Denmark could strengthen deterrence by formally notifying EU partners that it would request activation of the EU’s mutual defense clause (Article 42.7) in the event of armed aggression against Greenland.
🚨 Danish leaders have warned that US armed action in Greenland could destabilize NATO and threaten Arctic security cooperation.
📊 Market View.
💵 The US Dollar Index (DXY) has undergone a sharp reversal following Powell’s comments, released in a video recorded last night. After maintaining a clear upward trajectory, the index retreated from 99.25 to around 98.80. This move triggered a strong rebound in major currency pairs, particularly EUR/USD, which had been at risk of losing the 1.1620 level last Friday and has since climbed to around 1.1680 in recent hours.
📉 US futures appear to have interpreted these developments cautiously. S&P 500 futures have pulled back from the 7,000‑point level to around 6,965 points, while Nasdaq 100 futures have also retreated, falling from 25,975 points on Friday to approximately 25,730 points.
📈 In Europe, futures are showing a more optimistic tone. DAX 40 futures have reached 25,360 points, while Euro Stoxx 50 futures are also displaying strong momentum, moving above 6,020 points. However, it remains to be seen how the European session ultimately unfolds.
🛢️ The oil market has posted gains in recent hours, likely influenced by renewed unrest in Iran, with spot Brent crude approaching $64 per barrel.
🏆 This rising instability has also boosted gold, with futures climbing above $4,600 per ounce, marking a new all‑time high.
₿ Bitcoin has staged another sharp move in recent hours, attempting to break above the $92,300 level, but has since pulled back and is currently trading around $91,300.
