VIDEO: After Trump Noise We're Expecting More Volatility Ahead

We are starting this week with a considerable amount of noise in the markets following weekend developments that included the Department of Justice going after Federal Reserve Chair Powell and President Trump calling for a 10% cap on credit card fees.

Trump’s comments about potential military action in Iran are adding to geopolitical tensions as well.

TheStreet Pro's Chris Versace breaks it down one step at a time and shares why we are likely to see market volatility continue as we move toward the 2026 midterm elections. Along the way, we remind you what drives 70% of American Express’s (AXP) revenue stream, and why the gold and silver plays in our EPS Diplomats model are moving higher on Monday. We also lay out the key events that will likely be drivers of the market over the next several days.

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At the time of publication, TheStreet Pro Portfolio was long AXP.

Transcript

Between the DOJ and the Fed, Trump and Credit Cards, Iran Tensions…

Where to begin…. Where to begin.

Let’s back things up a bit so we can get some likely context.

Friday – jobs report – 50K - weaker than expected. Not a disaster, but you know my thoughts on what the trailing 3-month data shows.

Friday night JPMorgan comes out and says no cuts in 2026 and a rate hike in 2027. Barclays and Goldman Sachs joined Morgan Stanley in postponing the rate cut calls to mid-2026 as data suggested that the labor market was not rapidly deteriorating.

Against that, we have the DoJ investigating Fed Chair Powell for a criminal indictment over testimony he gave to a Senate committee about renovations to Federal Reserve buildings. C’mon… Powell is out in May…

Powell pushed back, calling out Trump over the Fed's refusal to cut interest rates despite repeated public pressure from the president.

Trump denied this, but man, does this smell bad. So much so that Republican Sen. Thom Tillis (N.C.), a senior member of the Senate Banking Committee, is questioning the “credibility” of the Department of Justice’s (DOJ) investigation.

Tillis is also vowing to keep Trump’s nominees to the Fed bottled up in the Banking Committee until the criminal investigation is “fully resolved.” Has the potential to be a bit of noise.

The issue, I think, is, and it’s one we discussed on last week’s podcast, Trump is angling toward the mid-term elections, and we know there is a lag between cutting the Fed funds rate and its impact on the economy.

Would cutting rates help the economy? Sure. It may not be the salvo the housing market is looking for but it would help address affordability.

However, to move like this on the Fed …. Looks like it is more likely to backfire than help identify a scapegoat for the economy.

And consumer sentiment. Probably why Trump is saying he knew nothing about it. Ah politicians.

Sticking with the topic of addressing affordability, the same goes for Trump’s comment about a 10% interest rate cap on credit cards, which is hitting the likes of Capital One, Synchrony, and others.

Even Amex, but let’s remember AXP derives ~70% of its revenue stream from net card fees.

As far as whether or not this will happen, here’s the thing Trump’s demand to cap rates was not backed up by legislation, and he did not explain how the lenders would be breaking the law.

And if it were to happen, have to wonder what the impact would be to folks who could no longer get credit or have their credit cut back.

The impact on consumer spending, which drives a significant part of the US economy, and how could it be put in place by Trump’s January 20 deadline? The most straightforward approach, through legislation in Congress, isn’t possible by the proposed Jan. 20 start date.

So we are starting the week off with a lot of noise, and we’ll look to see if there is anything of substance that follows… doesn’t appear likely. But we’ll continue to track things.

There is also Trump’s comment that the U.S. is considering military operations in Iran, as the Islamic Republic is starting to cross his red line with a more intense crackdown on protests. Trump was to meet with senior advisers on Tuesday to discuss options for Iran.

Add that to the mix, and you can see why the Gold and Silver plays in the EPS Diplomats Model, are moving higher today.

On top of it, the Supreme Court could rule on Trump’s tariffs later this week. We have the JPMorgan Healthcare conference, the ICR conference, which focuses on retail and restaurant companies.

Earnings from the big banks start tomorrow. JPMorgan tomorrow, and that will bring comments from Jamie Dimon, which many, including us, will want to hear. We also have quarterly results and guidance from TSM later this week, December CPI and PPI, Fed heads making the rounds. A lot to come this week

We have our shopping list that we shared in Friday’s Weekly Roundup. We have office hours coming later today.

But let me leave you with this. Over the last year, we’ve seen a lot of noise, escalation, and subsequent de-escalation, and that has meant a volatile market. With the path to the mid-term elections very near, we are likely to see more of this in the coming months.

We’ll keep our wits about ourselves, follow the data, and move accordingly.

Now let’s get on with the week.