📊 Is the Tariff Ruling the Next Big Policy Shock for Stocks?

The United States Supreme Court did not rule today on the legality of President Trump’s tariffs placed on a large share of United States trading partners. The Supreme Court is expected to issue its next set of decisions on Wednesday, January 14, and the Court does not say ahead of time which cases will be decided on a given decision day. The tariffs case, Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections), remains pending.

This case presents a significant constitutional challenge to presidential power. The case involves whether the government may validly wield a law that was enacted in 1977 to counter international emergencies, known as the International Emergency Economic Powers Act (IEEPA), to impose broad tariffs across nearly all United States trading partners. It’s been reported that Trump relied on IEEPA to justify “reciprocal” tariffs tied to trade deficits, and also used it for tariffs on China, Canada, and Mexico tied to fentanyl and illicit drug trafficking. Lower courts ruled that he exceeded his authority, and Reuters noted that during arguments on November 5, justices across ideological lines appeared skeptical about using IEEPA this way.

From the markets’ perspectives, the key concern is now the issue of uncertainty. When companies cannot predict how long a tariff regime will last, they tend to be more cautious on pricing, inventory, and guidance. Treasury Secretary Scott Bessent also framed the administration’s concern as primarily about losing leverage and flexibility, not losing tariff revenue, and said similar revenue could be pursued through other legal routes if needed. That means the Court’s timing matters: the longer the decision is delayed, the longer businesses and investors have to treat tariff policy as unsettled.

Budget Office rate path: The Congressional Budget Office said the Fed is likely to cut rates in 2026, and then the policy rate would settle around 3.4% toward the end of 2028, which would point to a lower medium-term financing backdrop for stocks and credit.

European Union digital rules soften: Draft plans for the European Union’s Digital Networks Act would put Big Tech into a voluntary best-practices framework instead of new binding obligations, easing near-term regulatory overhang for large United States platforms.

Defense spending shock: Defenses moved higher after Trump floated a $1.5 trillion United States military budget for 2027, a headline that investors read as supportive for multi-year order flow in the sector.

Mortgage-bond bid: Trump said he instructed officials to purchase $200B of mortgage-backed securities: a move designed to force mortgage rates down, which sent housing-linked stocks higher, even though the real-world impact depends on the degree of execution and on the underlying supply in housing.

Jobs soft, not broken: December payrolls rose 50,000, while the unemployment rate dipped to 4.4%, leaving Treasuries relatively steady as markets weighed "softening" versus "slowing" and keeping rate-cut expectations alive.

Equity flow reversal: Global equity funds saw about $6.1 billion of outflows in the week through January 7, a risk-appetite signal that can tighten the marginal bid for equities if it persists.

European Union antitrust overhang: The threat of stronger European Union competition and Digital Markets Act remedies kept in focus a longer-term threat for structural profit pools on these platforms, particularly in the digital advertising and app ecosystem areas.

Banxico slows pace of rate cuts: Mexico’s central bank eased its benchmark rate to 7.00%, but seemed more cautious, indicating that new tariffs and special taxes might trigger temporary inflationary pressures and an observation period.

Venezuela de-escalation: Trump said he canceled a planned second wave of attacks on Venezuela after the government began releasing political prisoners, a step that can trim the geopolitical risk premium in oil and reduce headline-driven volatility for energy and inflation-sensitive assets.

Saks bankruptcy prep: Saks Global plans to file Chapter 11 as early as Sunday and is in deep discussions for debtor-in-possession financing of as much as $1.25 billion to remain operating while the company tries to negotiate a restructuring plan.

Apple Card handoff: JPMorgan has actually agreed to assume responsibility for an Apple Card business that Goldman Sachs is now handling. This is a move that involves handing over a massive consumer lending book to the largest bank in the United States.

ByteDance valuation reset: HSG is structuring a continuation fund to divest certain ByteDance shares at $350-$370 billion valuation, which acts as a private market indicator for larger social and consumer AI assets.

Wegovy expands its reach: Amazon Pharmacy started offering the Novo Nordisk oral Wegovy drug via insurance plans, from $25 a month for qualified patients, and self-pay plans at a cost of $149 a month.

Self-driving reboot attempt: Nvidia and a network of automakers and suppliers rolled out new partnerships to reduce autonomy development costs and speed deployment, which could expand the market for “platform” providers, but still leaves demand and safety hurdles.

Crypto risk pulse: Bitcoin dipped below $90,000, a move that can spill into broader risk sentiment and pressurize crypto-linked equities during weak tape.

Venture Capital investment: Andreessen Horowitz announced that the company raised more than $15 billion across five funds. The company said the raise includes $6.75 billion for its growth fund and $1.7 billion earmarked for infrastructure.

Meta locks in power: Meta inked 20-year nuclear power agreements and development deals that target up to 6.6 GW by 2035, reflecting how AI data-center growth is pulling Big Tech deeper into long-duration energy procurement and execution risk.

Other interesting reads:

Greenland Price Tag Puzzle: Denmark asserts that Greenland is not up for sale, yet the Trump Administration is still kicking around what might constitute a purchase price. According to the economic community, a realistic price tag on a region does not actually exist, and Greenland’s small, fishing-based economy (about $3.6 billion Gross Domestic Product in 2023) is heavily supported by Danish subsidies, while any mineral upside is tangled up in environmental bans, politics, and Indigenous rights. Analysts think the talk may be less about an actual deal and more about pressure tactics ahead of United States Secretary of State Marco Rubio’s meeting with Danish leaders next week. (The Almost Untouchable)

Rio & Glencore Megadeal Talks: Rio Tinto and Glencore have agreed that there have been initial talks about an all-share merger that could result in the world’s largest mining conglomerate, estimated to be worth $207 billion. The biggest questions raised for investors, which caused Rio Tinto’s shares to decline and Glencore's shares to rise, include what Glencore plans to do with its coal mines and what the government acceptance of the merger, including acceptance from China, would look like. Rio Tinto has until the 5th of February to make an offer. (The Coal Mines)

Childcare Funds Freeze Lawsuit: California, Colorado, Illinois, Minnesota, and New York brought the suit against the Trump administration following the action by the Department of Health and Human Services, which withheld over $10 billion in federal funds for childcare and family assistance in the wake of alleged fraud concerns against the programs. This action by the administration threatens the cash assistance and childcare assistance provided through the Temporary Assistance for Needy Families Program, among others. (The Alleged Fraud)

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🟩 Up this week

Sandisk Corporation (SNDK) +33.86% WTD: Data-storage names led an AI-linked rally early in the week, reinforcing a capex-driven hardware trade. (The Right Move)

Northrop Grumman Corporation (NOC) +3.61% WTD: Defense headlines lifted the group, but broader uncertainty and prior-session volatility kept follow-through uneven. (The Sneaky Uncertainty)

Palantir Technologies Inc. (PLTR) +5.65% WTD: Continued enthusiasm for AI buoyed expectations of durable demand in data analytics infrastructure. (The AI Enthusiasm)

Lockheed Martin Corporation (LMT) +9.70% WTD: Defense-budget headlines improved demand visibility and supported forward revenue assumptions for contractors. (The Defence Road)

🟥 Down this week

Apple (AAPL) -4.18% WTD: The stock was down after a fall related to market fears regarding its short-term situation, with an analyst downgrade story contributing to it. (The Troubles & Worries)

Broadcom (AVGO) -0.46% WTD: Broadcom weakened during the week as investors turned more selective in mega-cap AI exposure and tech positioning. (The AI Week)

Advanced Micro Devices (AMD) -8.78% WTD: Chip-related company names pulled back in a risk-off cycle within semis despite being at the center stage regarding the overall story of AI. (The Chip Drama)

Valero Energy Corporation (VLO) -2.77% WTD: Energy refining companies had some near-perfect situations as crude slacked, supporting cash-flow prospects for the downstream players. (The Energy Move)

That’s the wrap for this week’s market movements. We’ll be back next week with more updates on our live portfolio.

Until then, happy investing!
— The Investogy Team, Kätlin & Siimon

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