Trump’s New Fed Chair Sends Markets Into A Tailspin; Gold, Silver, and Copper Collapse; Asia Slides, and China’s AI Arms Race Heats Up

Markets were thrown off balance after President Donald Trump nominated Kevin Warsh to replace Jerome Powell as Federal Reserve chair, a move investors quickly interpreted as a shift in the future path of U.S. monetary policy. The announcement sent shockwaves through the so-called debasement trade, triggering a brutal sell-off in gold and silver and spilling into Asian equities as leveraged positions were unwound. At the same time, China’s tech giants are escalating an all-out AI user-acquisition war ahead of the Lunar New Year, with Alibaba leading the charge in a high-stakes chatbot battle. From central bank politics and commodity meltdowns to global markets and AI competition, all this and more in today’s Read It and Eat!

MAJOR HEADLINES

• America, Meet Your New Federal Reserve Chairman; Kevin Warsh [A fiscal Hawk]

 

President Donald Trump said Friday he is nominating Kevin Warsh to be the 17th chair of the Federal Reserve after Jerome Powell’s term ends in May. “I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Trump wrote on his social media platform on Friday morning. “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best.” In an Oval Office meeting later Friday, Trump further touted his pick, saying, “I would say that this was the perfect candidate. This was the man that’s most qualified man, top student, best schools, everything was perfect, the youngest person ever to serve on the Fed. Got the whole package. Looks don’t mean anything, but he’s got the look, right?”

Warsh is a somewhat conventional candidate for Fed chair: a former Fed governor who was previously under consideration to be Treasury secretary in Trump’s second term and was a candidate for the top job at the Fed during Trump’s first term. Warsh was appointed to the Fed in 2006 at the age of 35, making him the youngest person to have ever served on the Fed’s powerful board. Warsh, now 55, has recently shifted his stance on monetary policy. A former inflation hawk, Warsh now favors lower interest rates, according to numerous public statements he’s made in recent months as Trump launched a reality-show-like spectacle for his Fed chair decision. He’s also called for overhauling the central bank’s workforce.

“It’s reasonable to assume that he told the President he favors reducing interest rates today, otherwise he would not have been nominated,” wrote Samuel Tombs, chief US economist at Pantheon Macroeconomics, in commentary issued Friday. “Our instincts tell us Mr. Warsh will be more preoccupied with how history will view his record than with continuing to pander to the President.”

Selecting a new Fed chair is one of the most important hires any president makes – but the nomination takes on even greater importance under this president. Trump has vowed to drive down the cost of living, and the Fed is responsible for maintaining price stability. CNN

• Gold and silver keep spiraling after market meltdown

Gold was down 6.4% at around $4,581 per ounce, after tumbling more than 10% on Friday. Despite the pullback, the yellow metal remains up about 10% year to date. Silver was 9.50% lower at around $77.10 an ounce after plunging as much as 36% on Friday. Trade was volatile on the first trading day of the week as prices spiked briefly into positive territory before slumping as much as 16%. Silver prices are up 3% so far this year.

The declines followed a sharp meltdown on Friday after Donald Trump tapped Kevin Warsh to run the Federal Reserve after Fed Chair Jerome Powell's term ends in May. Warsh is viewed as more hawkish and more likely to preserve the central bank's independence than other candidates. That outlook hit the debasement trade, pushing the US dollar higher, weighing on dollar-denominated commodities such as gold and silver.

Before the sell-off, gold had been on a blistering yearlong rally, fueled by heavy central bank buying and geopolitical tensions. Those forces remain in place and could continue to provide support, even as speculation eases. "I think the fundamentals remain pretty well in place despite those risks around Fed independence," Daniel Hynes, a senior commodities analyst at ANZ , told Bloomberg TV, on Monday. Business Insider

• Stocks slide in Asia as metals melt down, as traders. unwind

Asian shares and indexes followed Wall Street futures deep into the red on Monday as chaotic selling in precious metals made for a nervous start to a week that is packed with ​corporate earnings, central bank meetings and major economic data. Silver lost another 10% at one stage, as Friday's 30% plunge squeezed leveraged positions in what had become a very ‌crowded trade. 

Dealers said pressure on the UBS SDIC silver futures fund in China added to the rout, with talk of investors having to sell profitable assets to cover margin calls. Adding to the unease was a move by the CME to raise margins on a number of futures contracts, including gold and silver. Oil prices also fell more than 4% as President Donald Trump said over the weekend Iran was "seriously talking" with Washington, perhaps lessening the risk of a U.S. military strike on the country.

The jitters saw South Korea's formerly high-flying KOSPI (.KS11), shed 5.5%, the biggest one-day loss since the tariff-induced market mayhem of last April. MSCI's broadest index of Asia-Pacific shares outside ‌Japan sank 2.8%, while Chinese blue chips lost 1.0%, with heavy falls in gold indexes. Japan's Nikkei fell 1.0%, supported only briefly by an opinion poll ​suggesting Prime Minister Sanae Takaichi's Liberal Democratic Party was likely to score a landslide victory in next week's lower house election. Reuters

• Alibaba to spend $431 million for Lunar New Year AI push as Chatbot War Heats Up

Alibaba said on Monday it will spend 3 billion Yuan ($431 million) to attract users to its Qwen AI app during the Lunar New Year holiday, heating up a race between China's largest tech firms. The pledge by Alibaba, which triples the spending promised earlier by rivals Tencent and Baidu, is set to start on February 6. It will involve incentives for dining, drinks, entertainment, and leisure, with "large red envelopes distributed continuously," Alibaba said in a statement.

Tencent and Baidu announced late last month that they would spend 1 billion yuan and 500 million yuan, respectively on similar promotions for their AI chatbots. Chinese tech companies have long used the Lunar New Year festive period, when hundreds of millions travel home and spend time with family, as a marketing battleground to acquire new users. The most notable case was in 2015, when Tencent leveraged its WeChat messaging app to distribute digital red envelopes, helping its WeChat Pay service gain ground against Alipay, which then dominated China's mobile payments market.

The public holiday period this year begins on February 15 and is nine days long, longer than in most previous years. Competition in China's AI sector has accelerated since DeepSeek's R1 model launch in January last year rattled global AI markets, spurring both faster adoption and fiercer rivalry among domestic players. Tencent's campaign focuses on its Yuanbao chatbot app and starts on Sunday. Users must upgrade the app to the latest version to claim digital red envelopes that can be withdrawn to their WeChat wallets. Users can also share links with cash rewards for others to claim. Alibaba did not specify whether rewards would be distributed as cash red envelopes or discount coupons redeemable on its platforms, including e-commerce site Taobao. Reuters

Minor Headlines

• Europe's $955 billion recovery fund struggles to transform economy. Reuters

• CFTC is writing new rules for prediction markets Bloomberg

• Disney is Close to Picking Parks Chief D’Amaro as Next CEO. Bloomberg 

• Barry Callebaut CEO left after a high-level split over cocoa. Reuters

• Musk says steps to stop Russia from using Starlink seem to have worked. Reuters

• UK Treasury offers up to 100,000-pound exit packages to cut hundreds of jobs Reuters

• CFTC is writing new rules for prediction markets Bloomberg

• Super Bowl ad rates hit $10M for a 30-second spot Talkspot

• Olivia Dean takes home best new artist Grammy Reuters

Earnings Headlines

Financials, Payments & Capital Markets

• Blackstone beat Q4 earnings as dealmaking hit 'escape velocity' with distributable earnings jumping on a 60% surge in exit realizations and carried interest rising 15%; the firm has lined up 'one of largest IPO pipelines in history' (BBG)

• Visa beat Q4 earnings and revenue estimates on resilient consumer spending as payment volumes rose 8% on strong holiday demand and continued strength in value-added services (BBG)

• Mastercard beat Q4 earnings as consumer and business spending remained resilient amid a favorable macro backdrop and continued adoption of card-based payments (BBG)

Digital Infrastructure & Advanced Technology

• ASML issued a Q4 beat-and-raise on record orders driven by robust AI-related chip spending; the firm will also cut 1.7k jobs (WSJ) 

• Microsoft beat Q4 earnings and revenue estimates but issued light operating margin guidance as cloud growth slowed and CapEx rose to $37.5B (CNBC) 

• Meta crushed Q4 earnings and revenue estimates and issued upbeat guidance, but projected sharply higher 2026 CapEx of $115B-$135B to fuel its AI investment (BBG) 

• IBM issued a Q4 beat-and-raise on a 14% jump in software revenue, signaling continued momentum in its higher-margin software business (BBG) 

• AT&T beat Q4 earnings and revenue estimates driven by strength in its wireless and consumer businesses, including broadband growth (BBG)

• Intel swung to a Q4 loss and forecast further pain for Q1 as supply shortages and manufacturing yield issues constrained shipments (WSJ)

• Apple crushed Q4 earnings and revenue estimates as iPhone demand drove a 16% sales surge led by a 38% jump in Greater China, though Mac, wearables, and services revenue came in slightly below expectations (CNBC) 

Aerospace, Defense & Industrial Systems

• General Dynamics crushed Q4 earnings and revenue estimates on a 22% surge in Marine Systems and 6% increase in Combat Systems revenue (WSJ) 

• Northrop Grumman issued a Q4 beat-and-raise on a record $96B backlog as heightened global tensions boost defense spending (BBG) 

• RTX Q4 earnings and revenue estimates on a 12% sales jump and 'great momentum' with backlogs climbing to a record $268B (BRN)

• Boeing Q4 revenue estimates on a  57% jump in sales with cashing rising for a second-straight quarter on its most jet deliveries since 2018, though wider losses tempered investor enthusiasm (CNBC) 

• GE Vernova beat Q4 earnings and revenue estimates but cited wind-unit setbacks that could cut ~$250M from its top line revenue and pressure backlogs (RT)

• Lockheed Martin missed Q4 earnings estimates but beat on revenue and raised guidance as its missiles unit led growth amid elevated geopolitical demand (BBG)

• L3Harris beat Q4 earnings estimates but missed on revenue as a prolonged US government shutdown delayed contracts and pressured procurement (RT)

• Honeywell topped Q4 earnings and raised FY guidance on robust demand in its Aerospace Technologies and Energy and Sustainability Solutions segments ahead of its earlier-than-planned aerospace spinoff (BBG)

Transport, Logistics & Mobility

• UPS beat Q4 earnings and revenue estimates and issued optimistic guidance despite another 30k jobs cut amid growing volume cuts from Amazon (RT) 

• Union Pacific reported strong Q4 earnings but posted a revenue decline as lower rail volumes were only partly offset by gains from land sales ahead of a historic merger with Norfolk Southern (WSJ) 

• American Airlines missed Q4 earnings estimates as the government shutdown weighed, but projected FY growth on traction in its premium-focused strategy (CNBC) 

• Tesla beat Q4 earnings and revenue estimates but capped its first-ever FY revenue decline due to growing competition and Musk's unpopular political rhetoric (CNBC) 

• General Motors (GM) Q4 earnings but missed on revenue estimates, projecting higher US vehicle production and flagging $4B in tariff costs despite an optimistic tone on operating performance (CNBC)

• Southwest Airlines missed on Q4 revenue estimates but beat on earnings and forecast a 4x surge in FY profits as new seat assignments, bag fees, and capacity growth takes hold (CNBC)

• Royal Caribbean missed Q4 earnings and revenue estimates but raised FY guidance on record bookings and strong demand (BBG) 

Consumer, Retail & Luxury

• Starbucks Q1 earnings estimates but beat on revenue as same-store sales rose for the first time in two years amid early progress in new CEO Brian Niccol's high-stakes turnaround plan (CNBC)

• LVMH beat Q4 sales estimates on improving China demand (RT)

Healthcare, Insurance & Life Sciences

• UnitedHealth Group beat Q4 earnings but issued a weak FY forecast with its first expected revenue decline in over 30 years as higher medical costs, enterprise 'right-sizing,' and a Trump decision to hold Medicare rates steady sent shares crashing 20% (CNBC) 

Consulting, Government & Professional Services

• Booz Allen Hamilton beat Q3 earnings estimates but missed on revenue due to the historic government shutdown and a decline in its civil business (YH)