The Bad News? Inflation

Reading into uncertain times... The latest on inflation... Earnings season begins again... What JPMorgan and Delta are saying... The White House vs. Fed 'pissing contest' continues... Hold on to your hard assets...

The search for stability...

As uncertainties abound in the U.S. and abroad (i.e., Iran), most of us are looking for a little life stability. I (Corey McLaughlin) certainly didn't aim to find it in economic data releases.

But here we are.

The Bureau of Labor Statistics, after being shuttered during the partial government shutdown, is now back on schedule. This morning, it published its latest inflation report on time for the first time in months.

The bad news? Inflation.

The December 2025 consumer price index ("CPI") rose 2.7% year over year, and certain items saw much larger price gains – like some food categories (beef was up 16%), car parts and repair (up more than 5%), and natural gas service (up almost 11%).

Grocery prices and costs for "food away from home" (translation: restaurants) rose 0.7% from November. That's an annualized rate of more than 8%. So rising prices remain a challenge that Americans face every day.

That said, 'premium' spending continues...

Earnings season is underway again and, as usual, we'll be culling quarterly financial reports and company executive comments for insights on businesses and the economy in general.

This morning, JPMorgan Chase (JPM), a few other banks, and Delta Air Lines (DAL) got things going for the quarter. These companies illustrated something similar in different ways. Let's start with JPMorgan...

The financial giant beat on both revenue and earnings (excluding a pre-announced $2.2 billion charge related to its takeover of the Apple Card loan portfolio from Goldman Sachs). Nearly all of JPMorgan's segments grew revenue in the fourth quarter, with only its investment banking business seeing a decline.

And CEO Jamie Dimon gave a positive account of the U.S. economy. From the press release...

The U.S. economy has remained resilient. While labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy.

Delta was also positive about consumers – especially on the wealthier end of the spectrum. The company's fourth-quarter results were mixed (earnings beat estimates but revenue fell short), and its 2026 forecast missed expectations.

However, CEO Ed Bastian said that a year of record earnings is in reach for the company. He added that "virtually all" of Delta's growth will come from premium tickets, not "main cabin" bookings.

Still, investors punished Delta shares for its revenue and earnings forecast misses. And that's a trend we're seeing so far this earnings season...

Through this past Friday, 19 S&P 500 companies had reported their quarterly financials. Only four of these companies missed expectations, but investors haven't ignored it... with these companies' shares falling an average of 5.5% after reporting fourth-quarter 2025 earnings – double the average over the past five years.

Of course, there's still a long way to go this earnings season. We'll keep you posted.

Looking ahead to the rest...

All in all, Wall Street expects S&P 500 earnings per share to rise about 8% for the fourth quarter of 2025, according to FactSet. That would mark the 10th straight quarter of positive earnings growth for the index going all the way back to the "earnings recession" of 2022 and 2023.

Banks and other financial companies are among the first to report, but they won't be the most-watched group. That honor goes to AI stocks. Many of these companies fall into the "Information Technology" sector.

And folks have been getting more bullish about AI's impact on the tech sector. From FactSet's Earnings Insight report...

Heading into the start of the earnings season, both analysts and companies have been more optimistic than normal in their earnings outlooks for the fourth quarter. However, it should be noted that most of this optimism is concentrated in one sector: Information Technology.

The S&P 500's information tech sector includes companies like Apple (AAPL), Microsoft (MSFT), and Palantir Technologies (PLTR) – some investor favorites when it comes to AI.

But there's one company that's more important than the rest – chipmaker and AI darling Nvidia (NVDA). The AI boom has propelled Nvidia to become the largest company in the world by market cap, and that's made it both the largest weighting in the tech sector and the S&P 500.

More from FactSet's Earnings Insight...

At the company level, NVIDIA [at $1.52 vs. $0.89 earnings per share year over year] is expected to be the largest contributor to earnings growth for the sector. If this company were excluded, the estimated earnings growth rate for the Information Technology sector would fall to 18.1% from 25.9%.

As CNBC commentator Josh Brown noted at our annual conference in October, Wall Street is expecting more and more from Nvidia. And we don't know how Mr. Market will react if and when the company doesn't have a blowout quarter.

Folks will have to wait a while to find out, though. Nvidia's earnings likely won't come until late February (though the rest of the Magnificent Seven should report in about two weeks). Until then, investors will have plenty of other reports to dig through.

We'll be studying these releases for clues about what's going on in the real economy, as well as the ongoing AI boom.

More from CES...

Moving on, we're sharing some more takeaways from this year's CES electronics show in Las Vegas via Stansberry's Investment Advisory lead editor Whitney Tilson. (Yesterday, we shared a few highlights from Crypto Capital editor Eric Wade's experience.)

While getting a few ideas about companies to look into further – like equipment-makers Deere (DE), Caterpillar (CAT), and Brunswick (BC) – Whitney took note of how many "no-name Chinese companies" had a presence in just about every sector at the show.

This doesn't "bode well for the bigger brand-name U.S. and European companies," Whitney wrote in a report in his free daily e-letter. "For example, there were at least a dozen Chinese companies making various types of smart glasses like my Meta Ray-Bans."

Meanwhile, the White House versus Fed drama continues...

Yesterday, we wrote about the U.S. Department of Justice serving the Federal Reserve with grand-jury subpoenas on Friday... and Fed Chair Jerome Powell's response.

Earlier today, a reporter asked President Donald Trump if he's concerned about undermining confidence in the Federal Reserve and its "independence" with the Justice Department's criminal investigation.

"He's either incompetent or he's crooked," Trump said of Powell, who – it might be hard to believe now – Trump nominated as Fed chair back in 2017.

As we wrote yesterday, this isn't new. We have been writing about the pressure the White House has been putting on Powell to lower rates for over a year.

More people in Washington and Wall Street are talking publicly about it now.

Here's Republican Senator John Kennedy, who is part of the Senate Banking Committee and always colorful, commenting yesterday...

If you wanted to design a system to guarantee that interest rates would go up and not down, the best way to do that would be to have the Federal Reserve and the executive branch of the United States get in a pissing contest.

And here's JPMorgan Chase CEO Jamie Dimon today after his company's earnings release...

Everyone we know believes in Fed independence. Anything that chips away at that is probably not a great idea. And in my view, it will have the reverse consequences. It will raise inflation expectations and probably increase rates over time.

Currency debasement and rising debt is a tale as old as fiat currency (which dates back to at least 10th-century China).

So hold on to your hard assets (like gold). And if you don't have exposure to those in your portfolio already, click here to learn more about our Commodity Supercycles team's "No. 1 gold stock to buy in 2026" and many more ideas.)

As for the "criminal charges" part of the story related to Powell's comments last summer about renovations to the central bank's office building, those may already be fading. Here is U.S. Attorney Jeanine Pirro on X last night...

The United States Attorney's Office contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman's congressional testimony, but were ignored, necessitating the use of legal process – which is not a threat.

The word "indictment" has come out of Mr. Powell's mouth, no one else's. None of this would have happened if they had just responded to our outreach.

If this is the end of this part of the dustup, the market can return to waiting out the rest of Powell's term as chair, which is up in May. Then it can bank on lower rates afterward. That's what the fed-funds futures market continues to signal about expectations right now.

New 52-week highs (as of 1/12/26): Agnico Eagle Mines (AEM), First Majestic Silver (AG), Altius Minerals (ALS.TO), Applied Materials (AMAT), ASML (ASML), Atmus Filtration Technologies (ATMU), Barrick Mining (B), BAE Systems (BAESY), CBOE Global Markets (CBOE), Century Aluminum (CENX), Donaldson (DCI), WisdomTree Japan SmallCap Dividend Fund (DFJ), Western Asset Emerging Markets Debt Fund (EMD), iShares MSCI Emerging Markets ex China Fund (EMXC), Enel (ENLAY), EnerSys (ENS), Ero Copper (ERO), iShares MSCI Germany Fund (EWG), iShares MSCI South Korea Fund (EWY), Expeditors International of Washington (EXPD), Cambria Emerging Shareholder Yield Fund (EYLD), Fanuc (FANUY), FirstCash (FCFS), Freeport-McMoRan (FCX), SPDR Euro STOXX 50 Fund (FEZ), Comfort Systems USA (FIX), Franco-Nevada (FNV), Cambria Foreign Shareholder Yield Fund (FYLD), VanEck Gold Miners Fund (GDX), VanEck Junior Gold Miners Fund (GDXJ), SPDR Gold Shares (GLD), Alphabet (GOOGL), iShares U.S. Aerospace & Defense Fund (ITA), Kinross Gold (KGC), L3Harris Technologies (LHX), Lockheed Martin (LMT), Mueller Industries (MLI), VanEck Morningstar Wide Moat Fund (MOAT), Newmont (NEM), New Gold (NGD), Natural Resource Partners (NRP), Ormat Technologies (ORA), Pan American Silver (PAAS), Sprott Physical Gold Trust (PHYS), Sprott Physical Silver Trust (PSLV), Royal Gold (RGLD), Robo Global Robotics and Automation Index Fund (ROBO), Sibanye Stillwater (SBSW), Sprott (SII), Skeena Resources (SKE), iShares Silver Trust (SLV), Torex Gold Resources (TORXF), Taiwan Semiconductor Manufacturing (TSM), Sprott Physical Uranium Trust (U-U.TO), ProShares Ultra Gold (UGL), Vanguard FTSE Europe Fund (VGK), Wheaton Precious Metals (WPM), and State Street Industrial Select Sector SPDR Fund (XLI).

In today's mailbag, we have a bunch of feedback on yesterday's Digest about Federal Reserve Chair Jerome Powell's response to the central bank being served subpoenas by the Department of Justice... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"It's so rich of [Powell] to say '...This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions.'

"This is the man who let inflation run hot while Biden pumped up the economy with the IRA act and then he only belatedly jacked up rates 'to fight inflation.' Was that based on 'evidence and economic conditions'?

"The point now is that the deficit is so big and so much is funded by short term treasuries that the Fed Funds rate has to come down or else there will be a debt crisis to match 2008 or worse. Powell knows this." – Subscriber S.J.I.

"Screaming for independence while shirking responsibility reminds me of an unruly teenager. Americans have watched their purchasing power erode by 30%+ while the Fed splurges $2.9B on a remodel and educates us about the meaning of 'transitory.' The dog needs a shorter leash." – Subscriber Dave S.

"Amazing coincidence that Maduro and Powell are both pleading their innocence. May they share a cell." – Stansberry Alliance member Paul J.

"I think we should put the criminal investigation of Powell into the proper context to understand its real intent. This is all about juicing the economy ahead of midterm elections. Liquidity is drying up in the U.S. economy, and that would send everything lower and hurt both the U.S. economy and consumer. Trump needs lower rates to stimulate the economy and hide its scars long enough to win the midterms. If he waits for Powell's term to end, it's too late. The effects of rate changes can take 6 to 12 months to ripple through the economy, and by then people will have gone to the polls..." – Subscriber Darren N.

All the best,

Corey McLaughlin and Nick Koziol
Baltimore, Maryland
January 13, 2026