Archive for February, 2026

• Morning News: February 4, 2026
  Eddy Elfenbein, February 4th, 2026 at 7:09 am

  Bulgarians Adopt the Euro With a Whisper of Melancholy but Few Tears

  Why India Will Struggle to Reduce Its Reliance on Russian Oil

  America’s Critical-Minerals Strategy Looks Increasingly Chinese

  ‘Neoroyalism’ and What It Says About Trump

  Wall Street’s Rotation Into Value Has a Dot-Com Warning to It

  Once the Hottest Bet on Wall St., Private Credit Has Started to Crack

  Hedge Funds Use Leverage to Reap 28% Return From Safest Debt

  UBS Profit Beat Overshadowed by Worries Over US Wealth Outflows

  Stephen Miran, Temporary Fed Governor, Resigns From White House Role

  Warsh Will Need His Vaunted People Skills to Smooth Return to Fed He’s Scorned

  Warsh’s White House Honeymoon Will Be Brief

  With Jobs Data Delayed, Analysts Flock to Unofficial Data

  Trump’s Payments Industry Squeeze Will Tighten Consumer Credit

  Kalshi Claims ‘Extortion,’ Then Recants in Feud Over User Losses

  Jason Furman Has a Plan To Make All of Us Very Tall

  Home Builders Turn to White House for Help on Inventory Glut

  Voters Say Housing Prices Are Too High. Trump Wants Them Higher

  Congress Targets Housing Crisis as Solutions Elude Trump

  Congress Reins In Drug Middlemen in Effort to Lower Prescription Prices

  Trump’s Attempt to Make Drugs Cheaper Is Pushing Up Prices in Other Countries

  Lilly Sees Surging Sales in Break From Obesity Rival Novo

  The Telecom Act of 1996 Needs a Deregulatory Overhaul

  Henkel to Buy Coatings Company Stahl in $2.5 Billion Deal

  Texas Instruments Strikes $7.5 Billion Deal to Buy Silicon Labs

  Nasdaq Mulls New ‘Fast Entry’ Rule Ahead of Big IPOs Like SpaceX

  Musk’s AI Startup Is a Payload SpaceX Can’t Afford

  Prologis Might Fund Data Centers With New Pool of Investor Capital

  Anthropic Takes Aim at OpenAI’s ChatGPT in Super Bowl Ad Debut

  Some Brands Aren’t Spending Like YouTube Is the New TV

  N.F.L. Eyes New TV Deals Before the Old Ones Even Expire

  Disney’s CEO Pick Shows It’s a Tourism Company Now

  What Happens When the Winter Olympics Can’t Rely on Winter

  Meat Processors Take a Hit as Cattle Prices Remain High

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• CWS Market Review – February 3, 2026
  Eddy Elfenbein, February 3rd, 2026 at 5:40 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  Trump Selects Kevin Warsh to Lead the Fed

  One week ago, the S&P 500 closed at a new all-time high. Since then, the index broke above 7,000, but it hasn’t been able to close above that level.

  

  In last week’s issue, I mentioned the big bull market in silver. Well, that came to an abrupt end on Friday as the price of silver plunged on world markets.

  By the end of Friday’s trading, silver had lost 27%. That was the white metal’s biggest one-day loss in 45 years. Silver dropped again on Monday. Last week, silver got as high as $120 an ounce, then as low as $71 an ounce. Gold dropped sharply as well.

  

  So what caused gold and silver to fall off a cliff? On Friday, President Trump nominated Kevin Warsh to be the next chairman of the Federal Reserve. He’s seen as a more “hawkish” candidate than what had been expected. Gold and silver love lower interest rates, but higher rates are their kryptonite.

  In many ways, the selection of Warsh is both a conventional choice and a very unconventional choice. Warsh is largely within the mainstream of economic thought. Plus, he’s already served on the Federal Reserve board. In fact, he was the youngest member in the Fed’s history, and he helped shape the Fed’s response to the financial crisis. Warsh is currently a senior fellow at the Hoover Institution at Stanford.

  Warsh still needs to be confirmed by the Senate but that shouldn’t be a major obstacle, and the betting markets appear to agree. If confirmed, Warsh would be leading a Fed that’s at an important juncture. Jerome Powell has been harshly criticized by President Trump who wants to see much lower interest rates. While inflation has subsided in recent months, it’s still above the Fed’s target of 2%. Jerome Powell’s term ends in May.

  Warsh will likely face some doubts from members of Congress as to his independence from political pressure. Historically, the Fed has tried to distance itself from political pressures, but these efforts have not always been successful.

  Of course, the Fed is also facing an investigation by the Justice Department for actions surrounding the Fed’s new building. I suspect this won’t get far. Thom Tillis, a Republican senator of North Carolina, said he wouldn’t support any nominee until the DOJ’s investigation has concluded.

  For much of his career, Warsh was been seen as an inflation hawk, meaning someone who has favored higher interest rates. That probably helped cause the big drop in gold and silver. Only recently has Warsh been critical of higher rates. He has also said that tariffs will not lead to higher inflation.

  On Truth Social, President Trump said of Warsh, “He will go down as one of the GREAT Fed Chairmen, maybe the best.” Bear in mind that we don’t get new Fed Chairs very often. In the last 75 years, there have only been eight Fed chairs.

  

  President Trump has often said that he wanted to fire Jerome Powell, but that’s a tricky area legally. The president probably can’t fire a Fed chair over a simple policy dispute. In fact, the Supreme Court is currently looking at the case of Lisa Cook, a Fed governor, whom Trump wanted to fire from the Fed. The Supreme Court appears to be leaning against Trump’s decision.

  We should also remember that the Federal Reserve isn’t just one person. The Federal Open Market Committee, which sets interest rate policy, is a 19-member committee. Even with that, only 12 members are voting members. The 12 are composed of the seven Federal Reserve board members plus five regional bank presidents. The head of the New York Fed is a permanent member, and the four other seats rotate.

  The Fed recently voted to keep interest rates between 3.5% and 3.75%. Two members dissented. They wanted lower rates immediately. Futures traders currently expect the Fed to cut rates two more times this year.

  Mr. Warsh has been very critical of the Fed in recent years. In particular, he blames the Fed for missing the surge in inflation during Covid. He was also against the Fed’s quantitative easing policies.

  Now here’s where things get interesting. Warsh’s father-in-law is Ronald Lauder who is an heir to the Estee Lauder fortune. Lauder is estimated to be worth $5 billion. He’s been a big supporter of President Trump and a major financial backer of Republican candidates. In 1989, he ran for mayor of New York City but lost in the primary to Rudy Giuliani. It’s been reported that he encouraged Donald Trump to buy Greenland. Obviously, Warsh can’t be assumed to share his father-in-law’s views, but I’m sure Congress will ask him.

  I expect Warsh to be confirmed by the Senate and he will generally try to steer the Fed toward lowering interest rates, but Warsh may not always get his way. Historically, reality has an odd way of interfering with the bold plans of money politics.

  Speaking of which, my friend Gary Alexander notes that this time of year has been notable for several important events in the history of gold, silver and money. Here’s a sample:

  At 9:30 on February 5, 1894, J.P. Morgan stormed into President Cleveland’s White House office and demanded an audience. After cooling his heels while Cleveland called the Treasury for details on what this invasion might mean, Morgan was ushered in. By now, the U.S. only had $9-million in gold to meet claims, and there were $12-million in current drafts against a shrinking supply, so President Cleveland sheepishly asked Morgan, “Well, sir, what would you suggest?” This comment passed the power of the purse from the White House to Morgan and Wall Street. In short order, Morgan saved the Treasury with an infusion of gold from London. From 1895 to his death in 1913, Morgan served as America’s central banker – and he did a better job than the Federal Reserve did in its first 20-years, from 1913 to 1933.

  This Friday, the government will release the January jobs report. The last few job reports haven’t been that good. In its last policy statement, the Fed noted that “job gains have remained low, and the unemployment rate has shown some signs of stabilization.”

  The ADP payroll report is due out tomorrow. For that report, Wall Street expects to see a gain of 45,000 jobs. For Friday, economists estimate that the economy created 60,000 net new jobs in January. They’re also pegging the unemployment rate at 4.4%.

  For hourly average earnings, economists expect to see a gain of 0.3% for last month, and a 3.7% gain for the last 12 months. This is an important stat. Wage growth has a way of quickly becoming business revenue and that becomes a profit. If employment continues to be weak, that may help the interest rate doves on the FOMC.

  This continues to be a good earnings season for Wall Street. The S&P 500 is on pace to post earnings growth of 11.9% for Q4. If this holds up, it will be the fifth quarter in a row that the index has delivered a double-digit increase in profits. The last time it reported five straight quarters of 10% or more earnings growth was in 2017 and 2018. Analysts currently expect the S&P 500 to have double-digit earnings growth for all four quarters of 2026.

  Analysts have been busy raising their Q4 earnings estimates. At the end of Q3, Wall Street had been expecting earnings growth for Q4 of just 7.2%. By the end of Q4, that forecast was raised to 8.34%. Now it’s at 11.9%. For the tech sector, Q4 earnings growth is tracking at 29.8%.

  The overall net profit margin is currently running at 13.2%. That’s very high. If it holds, it will stand as the highest profit margin since FactSet started tracking this data in 2009. The current record is 13.1% which happened last quarter.

  Technology has increased its profit margin from 26.8% last year to 29.0% this year. Industrials are up to 12.5% from 10.7% last year. Wall Street expects to see profit margins get even higher. By Q3, analysts expect profits to be over 14%.

  That’s all for now. Expect more earnings news this week. We also have the big jobs report on Friday. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

  P.S. From S&P Global Intelligence: Over the past 59 years, the median combined final score of the Super Bowl has been 47 points. When the two teams score 47 or more points, the S&P 500 posts an average return of +17.8%. When the combined score is less than 47 points, the average return is only +6.6%.

  Go offense!

• Morning News: February 3, 2026
  Eddy Elfenbein, February 3rd, 2026 at 7:05 am

  The Global Economy’s Warning Signals Are Broken

  ECB Survey Records ‘Unexpected’ Tightening in Bank Lending

  Top Consulting Firms Test Boundaries with China Workarounds

  Abu Dhabi Builds a New Deal Machine Around Its Crown Prince

  Trump and India Call Off Their Trade War, but the Terms of Peace Are Murky

  Modi Got a Nice US Deal. But What Did He Give Away?

  US Foreign Policy Is Now Medieval

  In Trump’s Fraud Crackdown, Political Foes Face Harshest Scrutiny

  Trump’s Base Is Tiring of Him at a Bad Time

  Here’s The Real Reason Gold Prices Plunged — And Why The Selloff Likely Isn’t Over Yet

  On the National Debt, Left and Right Have Become One

  This Tax-Refund Bonanza Won’t Do What Bessent Says It Will

  The US Economy Needs the Hudson River Tunnel Project

  What Kevin Warsh Learned Working for Stanley Druckenmiller

  The Arguments Made by Coinbase and Others Don’t Add Up

  Let Coinbase and Others Truly Compete With Banks for Deposits

  The High Cost of Good Intentions, Credit Card Edition

  PayPal Replaces CEO Chriss After Profit Falls Short of Estimates

  U.S. Manufacturing Is in Retreat and Trump’s Tariffs Aren’t Helping

  Trump Unveils $12 Billion Critical Minerals Stockpile

  Why China’s Grip on Critical Minerals Is So Hard to Break

  Siemens Energy to Spend $1 Billion to Boost Manufacturing of Electrical-Grid Equipment

  Orsted Sells Onshore Business for $1.7 Billion After Judge Rules U.S. Wind Project Can Resume

  Chinese Tech Stocks Near Bear Market as Tax Concerns Mount

  Data Services Stocks Sink After Anthropic Launches Legal Tool

  What Oracle Has to Lose From OpenAI and Nvidia’s Rocky Relationship

  Apple’s iPhone 17 Upgrades Hit the Spot for Chinese Consumers

  China Bans Retractable Door Handles on Cars as Safety Concerns Grow

  The Accounting Behind Music Royalties In the Streaming Era

  Disney Warns of Hit From Flagging Foreign Visits

  PepsiCo to Cut Prices for Doritos and Other Snacks

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• Morning News: February 2, 2026
  Eddy Elfenbein, February 2nd, 2026 at 6:11 am

  South Korea Exports Off to Strong Start in 2026

  Squeezed Between Trump and China, India Looks for Faraway Friendships

  Britain’s China Engagement Is a Message to America

  China Has Withstood the Export Restrictions That Hold the U.S. Back

  How China Uses a ‘National Team’ to Influence Trading

  Luxury Brands Need a Comeback in China. They Shouldn’t Count on It.

  Japan PM Takaichi Must Face Bond Investors Before Winning Over Voters

  The Effects of Tariffs, One Year Into Trump’s Trade Experiment

  The Key to Managing Tariffs: Be Big and Have the President’s Ear

  There’s a Perception Gap With the U.S. Economy

  Gold Plunge Deepens as Traders Unwind ‘Crowded’ Bets on Rally

  Rookie Trader’s Rapid 84% Wipeout Shows Depth of China Gold Bust

  Meet the Young Men Rushing Into Betting Markets

  Private Credit Is Headed for a Software Shock

  Warsh’s Return Revives Tensions Over the Fed’s $6.6 Trillion QE Hangover

  Saying You Want to Shrink the Fed Is One Thing. Doing It Is Another.

  Kevin Warsh’s Three Tasks: Shrink the Fed, Tame Inflation, Manage the President

  A Hawk or a Dove? Understanding Kevin Warsh

  U.A.E. Firm Quietly Took Stake in the Trump Family’s Crypto Company

  Will the Spirit of 1976 Come to 2026?

  Move Fast, but Obey the Rules: China’s Vision for Dominating A.I.

  Trump’s UAE Chip Deal Is a National Security Risk

  AI Could Vastly Improve Healthcare While Bringing Down Its Costs

  Oracle to Raise Up to $50 Billion in 2026 for Cloud Buildup

  Target’s New C.E.O. Faces Hometown Crisis as He Begins Turnaround Effort

  French Firm to Sell Division That Helps ICE Track Immigrants

  Metals Traders Lose at Least $144 Million as ‘Hat’ Flees China

  The Hottest Commodity in the Mining Business: American Generals

  Carvana’s Red-Hot Growth Runs on a Cycle of Borrowed Money

  Building Suppliers’ Earnings Hurt by US Shutdown, Storm Reprieve

  Snow Drought in the West Reaches Record Levels

  Western Ski Resorts and Their Terrible, Horrible, No Snow, Very Bad Year

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