Good morning, investors. Jerome Powell’s latest snag with President Trump made a lot of headlines but the stock market surged to all-time highs to start the week nonetheless.

Let’s unpack the play by play.

Playing politics

What looks like a dispute over construction costs is really just the latest test of the Federal Reserve’s independence.

The Justice Department’s inquiry into Fed Chair Jerome Powell appears politically motivated, yet it exploits a headquarters renovation so expensive and poorly timed that it’s as indefensible as the pressure campaign itself.

To be clear, the project’s ballooning costs and delayed timelines did not create the conflict.

But they do give President Trump a tangible line of attack that provides cover for a political move, recasting his calls for lower interest rates as a question of mismanagement rather than an attempt to influence the central bank.

The investigation centers on Powell’s testimony last June about the Fed’s multi-year refurbishment of its Washington headquarters.

Powell disputes that framing.

In his view, the larger budget is tied to labor and materials costs, asbestos removal, security upgrades, and other steps toward modernization.

He also maintained that the “lavish” features cited in the planning documents — including private elevators and rooftop amenities — were removed.

Two things can be true at once:

Whichever side you believe, the optics are difficult to defend.

With affordability top of mind for Americans and federal debt climbing, a taxpayer-backed renovation of this scale looks detached from the economic reality facing most of the country.

Particularly for the man tasked with controlling inflation in the country, failing to manage a budget in his own building is hard to overlook.

Plus, no matter what Powell says about politics, the perception of excess is hard to shake.

At any rate, stocks broke records Monday anyway, suggesting that investors do not believe the investigation will gain traction.

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📊 Inflation comes due Tuesday morning. The December CPI report is expected to show a 2.7% rise from a year ago, which would be unchanged from November. To be sure, alternative measures like Truflation suggest the number is closer to 2%. (Yahoo Finance)

🏦The Fed probe “made a mess,” according to Scott Bessent. The Treasury Secretary wasn’t happy with the news about Jerome Powell and he let the president know, two sources close to the matter said Monday. (Axios)

💳The credit card rate cap plan is full of uncertainty. That’s what banking insiders are saying, as shares of JPMorgan, Wells Fargo, Bank of America and other firms have all fallen on the news of President Trump wanting to cap interest rates on cards at 10% for one year. (CNBC)

I sat down with Anthony Pompliano, CEO of Professional Capital Management, to unpack the outlook for AI and bitcoin in the year ahead. We discuss what asset prices could do in the coming months, how tech booms impact the labor market, and how young people can leverage AI.

Tune in on YouTube, Spotify, or Apple Podcasts.

🗓 January 13, 1987: US stocks tumbled and the Dow Jones Industrial Average fell nearly 4% in a single session, one of the worst drops in history and an early warning sign of the coming crash in October 1987.

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