What mattered this week: Stocks are still calling the shots
Trump's warmongering simmers down, except in Minnesota
Key Takeaways:
Greenland war canceled.
Stocks boss Trump around.
Minnesota war still heating up.
Tiktok survives.
Some good news on crime.
No Greenland war after all. With luck, we can stop worrying about Greenland. After escalating to the point that the stock market quivered, Trump called off his quest to buy or conquer the giant frozen island that’s a territory of Denmark. Trump said he made a deal to expand US military and mining operations on the island, but who knows. Greenland and Denmark have been longstanding close allies of the United States, with Denmark a founding member of the NATO military alliance. The relationship is now shaky but it still stands.
The most important takeaway from the Greenland climbdown is that once again, the stock market checked Trump’s wildest impulses. With Trump threatening either imminent new tariffs or some kind of military action, the S&P 500 fell by nearly 1% on January 20, and turned negative for the year. That was all it took. The next day, Trump said he wasn’t contemplating military action after all, and then announced the “framework of a deal.” Nobody knows whether there will be a deal or not. It doesn’t really matter as long as Trump calms down.
Stocks recovered from the January 20 selloff but the major indexes ended the week down a hair. Gold and silver, however, hit new record highs, and gold is closing in on $5,000 per ounce for the first time ever. We’ll have more analysis soon on what the surge in precious metals means for ordinary investors.
The gold and silver charts are crazy:
Here’s where Trump’s other military adventures stand. Venezuela is now more of a project than an operation. Trump is nominally running the country and he recently appointed a kind of viceroy to be his woman on the ground in Caracas. Venezuela shouldn’t affect markets or require further US military action unless something goes wrong.
Iran seems to be cooling off, with fewer protests over the horrible economy and despotic government. The Islamist regime has killed thousands or protesters, but Trump seems to have decided he doesn’t see any good military options. Still, an American aircraft carrier and other warships are heading to the region, so this one could heat up again.
Trump’s main war now is in Minnesota, where he seems to be testing how far he can go toward imposing martial law. Peaceful protesters are completely outclassing federal thugs Trump sent there to chase down undocumented migrants. Local authorities classified the January 7 shooting of Renee Good by a federal immigration agent a homicide, and the situation could still escalate—Trump has put active-duty US military troops on notice for possible deployment to Minneapolis. One dark interpretation of Trump’s actions is that this is a warmup for finding some pretext to disrupt the November elections.
Minnesota has some great local media worth following on this issue, such as Minnesota Public Radio, the Star Tribune, the Pioneer Press and Axios Twin Cities.
TikTok clears the bar. The social-media phenom finally reached a deal to abide by the 2024 law Congress passed requiring non-Chinese ownership of the app’s US operations. That was supposed to happen a year ago, but Trump delayed the deadline several times to allow more time for a deal. The owners of the new US operation include Oracle, investing firm Silver Lake and tech billionaire Michael Dell. The Chinese parent, ByteDance, will own about 20% of the US business.
The law and the Trump delays were controversial, with TikTok’s 200 million US users worried they’d lose access to the app permanently. That would have endangered thousands of businesses that rely on TikTok promotions. The outcome seems like a reasonable compromise that keeps all parties as whole as possible. Analysts at Raymond James said the deal “could be used as a template that could be applied to future cases involving foreign tech deals” when national security is a concern.
Supremes back the Fed. In an important hearing for financial markets, the Supreme Court seemed skeptical of Trump’s efforts to fire Fed governor Lisa Cook. Brief background: President Joe Biden appointed Cook to the Federal Reserve’s seven-person Board of Governors in 2022. She’s the first black woman to hold a Fed board seat. Trump tried to fire her last August, on what look like bogus charges of mortgage fraud. Cook sued to stay in the job pending the outcome of litigation, which lower courts allowed. The Supreme Court will now decide whether Trump can basically fire a Fed governor for any reason he chooses. If he can, that would allow Trump to purge the Fed’s rate-setting committee and install lackeys who could push interest rates dangerously low.
Skeptical questions from a majority of the justices in the Cook hearing suggest they will leave her in her job and deny Trump’s effort to stack the Fed. That would be a win for investors. The Court will rule in the Cook case any time through late June, when its term typically ends.
Violent crime plunges. Americans feel morose about the direction of the country, but one thing ought to make everybody feel better: The murder rate has hit the lowest level in more than a century. Rates of other crimes are falling too, including assaults, burglaries, robberies, drug offenses, and carjackings. The only thing really going up is car theft, probably because cars have gotten so expensive. The data comes from the Council on Criminal Justice, a reputable think tank with no political agenda.
There’s no simple or obvious answer for why violent crime rates are dropping, although many crimes did spike during the Covid pandemic, when everybody went a little crazy. The trends predate President Trump’s second term, so it’s not the immigration agents and National Guard troops Trump has been sending around to flex federal muscle. Better policing may be part of the reason, along with widespread security systems and an aging society. Whatever the causes, many cities are getting safer.
The Council on Criminal Justice has a ton of crime data that’s quite interesting, including changes in crime rates for 35 cities. Well worth a look.
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WHAT WILL MATTER NEXT WEEK:
Tariff watch. As these dispatches keep reminding everybody, the Supreme Court could invalidate Trump’s emergency tariffs any week now. Trump is preparing other types of tariffs as a backup plan, but the closer we get to the midterm elections in November, the less leverage Trump has to impose tariffs, because they raise costs and undermine his “affordability” plans. The court might end up doing Trump a favor if it bans emergency tariffs, which account for at least half of the import taxes Trump has imposed during his second term.
The Fed probably won’t do anything when it concludes its next meeting on January 28. The Fed has lowered short-term interest rates by 1.5 percentage points since September 2024, and that’s probably enough for now. Investors think there’s just a 3% chance of a rate cut next week. If that’s the case, expect Trump to throw a fit and call Chair Powell all kinds of nasty names, as he usually does when Powell behaves rationally.
If you’re not aware, prediction markets such as Kalshi and Polymarket provide odds of Fed rate cuts and all kinds of other economic and political eventualities. (Plus, people can bet out the outcomes, which The Pinpoint Press does not endorse.) Prediction markets have about the same rate-cut odds for next week as more traditional indicators such as the CME FedWatch Tool. Most users will probably find the prediction-market interfaces more user-friendly.
ExxonMobil and Chevron report earnings on January 30 and execs could comment on Trump’s desire to get US oil giants more involved in Venezuela. Chevron already operates there but Exxon pulled out years ago, and CEO Darren Woods said recently that Venezuela was “uninvestable.” Trump scowled at that.
Shutdown odds 👇. January 30 is also the deadline for Congress to pass new funding bills to keep the government operating. Another shutdown is unlikely this time around. Many of the needed bills are making progress and Democrats aren’t signaling that they’ll stand in the way.
Re Minnesota
Bondi now trying to extort voter rolls
Is that extortion?
States rights “Right” and 2nd amendment folks, where are you?