Pour me something tall and strong its 5oclock somewhere, Alan Jackson

We have had a bit of everything this week, starting with JP Morgan’s earnings report, kicking off the 4th-quarter earnings season, then December’s CPI data, and finally a bit of geopolitics thrown into the mix as Trump weighs strikes on Iran, which could potentially push oil prices higher. In the past week, WTI has risen just under 10%. I mentioned early in the week that, in my view, geopolitics only really starts to affect investor sentiment when it drives the oil price higher due to concerns of a supply-side shock. We have also had some internal politics in the US in the past few days, after President Donald Trump called Federal Reserve Chair Jerome Powell either “incompetent” or “crooked”.  Trump’s Department of Justice faces growing Republican opposition over its criminal investigation of the central bank leader, which some say is more politically motivated, as Powell has become the focal point of Trump’s disapproval for not cutting interest rates as quickly as the President believes they should. Putting undue government pressure on what should be an independent body.

Let’s start with JP Morgan’s earnings, which sadly did not live up to expectations, and the stock ended the day down 4%. They were not the only ones: Delta Airlines issued a cautious outlook despite meeting expectations, and the stock fell by around 3%. JPMorgan’s profits fell 7 per cent in the final quarter of 2025 after a surprising drop in investment banking revenues and an increase in the reserves set aside for possible loan losses. I always feel Dimon tends to be a half-glass-empty man when discussing the current state of the US economy, but on this occasion, he was relatively optimistic, describing the economy as “resilient” despite some weakness in the labour market. President Donald Trump’s plans for a 10% cap on credit card rates continue to affect sentiment in the sector.

The December consumer price index showed headline inflation of 2.7%, pretty much in line with expectations. Some economists were slightly cautious, noting that, on closer inspection, there are indicators that inflation remains elevated. 2-year Treasury yields have been trending slightly higher this week, probably in response to higher oil prices, but did little on the news yesterday. This data is unlikely to change the odds on a cut later in the month, which currently remain for no cut. Pass Trump another toy to throw, please.

We discussed geopolitics and Iran, as well as the war of words between Trump and Powell. All in all, the Vix index rose, the S&P 500 fell just under 1% on Tuesday, although the Nasdaq outperformed. The best-performing sector was energy; the weakest was financials. Today, the focus will be on Bank of America, Citigroup, and Wells Fargo as they release their quarterly results.