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Hey everyone,
Happy Monday.
I hope you had a good weekend, because we are walking into a completely different market than the one we left on Friday. The USA won the gold in men’s and women’s hockey, and I can finally take this jersey off…
There’s a lot to unpack this morning, and I want to make sure you are caught up before the opening bell.
The biggest story is tariffs.
On Friday, the Supreme Court struck down President Trump's IEEPA tariffs. The market initially rallied on the news because traders assumed it meant tariff relief. That lasted about five minutes.
Trump immediately pivoted to Section 122 of the 1974 Trade Act and imposed a 10% global tariff.
By Saturday, he raised it to 15%, which is the legal maximum under that statute.
Section 122 tariffs can remain in place for only 150 days, so the clock is ticking.
During that window, the administration is launching Section 301 investigations on every major trading partner. When those probes are complete, they plan to enforce what they call fair tariff rates.
The Treasury says 2026 tariff revenue will be unchanged from prior estimates because the new tariffs are designed to offset the lost IEEPA revenue.
USMCA goods are exempt, but allies like the UK, the EU, and Japan are getting hit the hardest.
The European Parliament is already threatening to freeze trade ratification. Germany's new Chancellor Merz says he will go to Washington with a coordinated European position. ECB President Lagarde literally walked out of Commerce Secretary Lutnick's speech at Davos because she said his anti-European rhetoric was just too much.
That tells you everything about where the transatlantic relationship stands right now.
On top of that, the situation in Iran is escalating.
The New York Times is reporting that Trump is considering a targeted military strike on Iran, followed by a larger attack if they refuse to cooperate. He is reportedly open to deposing the Supreme Leader by force.
At the same time, US-Iran talks are set to resume in Geneva on Thursday, mediated by Oman.
Iran's foreign minister says they will not be pressured by the military buildup.
And the Financial Times is reporting that Iran secretly agreed to a shoulder-fired missile deal with Russia. So you have diplomacy and military escalation running in parallel, and the defense sector is catching bids as a result.
Blue Owl is the other story that demands your attention this morning.
They permanently restricted withdrawals from a $1.6 billion private credit fund. This is not a walk-back like they tried to spin last week. This is a gate.
They are selling roughly a third of the loan portfolio to return capital. The selloff hit Ares, Blackstone, and Apollo, too.
Private credit is a $1.8 trillion market, and the questions about liquidity structures and AI-linked lending exposure are getting louder. Some industry veterans are comparing the warning signs to those seen before the 2008 financial crisis.
Others say it is overstated because the loans are sold at near-face value.
Either way, it is a story that is not going away. So join us this morning…
The Fed is adding to the cautious tone. Governor Hammack said over the weekend that they can be very patient on rate cuts.
Inflation has made amazing progress, but it is still a problem. And tariffs have the potential to further complicate the outlook. Fed Governor Logan echoed a similar view, saying upside inflation risks remain and that economic uncertainty persists.
This is also a blockbuster earnings week. NVIDIA reports on Wednesday after the close.
Analysts expect revenue and earnings to surge about 70 percent year over year. The consensus is $1.53 EPS on $65.7 billion in revenue. Oppenheimer sees a two-to-three-billion-dollar upside surprise.
Meanwhile, OpenAI revised its spending target down from $1.4 trillion in total compute to $600 billion by 2030. Their 2025 revenue hit $13.1 billion, beating their own target. So AI spending is real, but the expectations are coming back to earth.
Beyond NVDA, we have Home Depot on Tuesday, then Salesforce, Snowflake, Lowe's, and Zoom on Wednesday.
Thursday brings Baidu, Dell, Zscaler, and Intuit. It is a packed week.
This is a Monday when you need to pay close attention.
Stay positive,
Garrett Baldwin