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Political attacks on Jerome Powell, including Trump‑driven criminal charges around the Fed building refurbishment, have triggered an unusually blunt defence of Fed independence and evidence‑based rate setting. With Powell’s governor term running to 2028, the episode likely hardens his resolve, complicates future rate cuts’ optics, raises the odds he stays on the Board, and makes confirmation of any successor more contentious, underscoring that Fed autonomy is under threat.
US CPI surprised positively at about 2.7%, with headline and core at their lowest levels since the post‑pandemic inflation cycle began, and core goods inflation near 1.4% despite tariffs. Beneath the surface, “supercore” services inflation excluding shelter sits near or above the Fed’s informal upper band around 3%, and near‑zero net migration may ease housing pressure but risks pushing up labour costs, leaving markets sceptical that inflation is fully tamed.
Japan’s new prime minister, Sanae Takaichi, is shaking up domestic politics and policy, with strong polling and speculation of an early snap election. Rising Japanese government bond yields, a yen at its weakest versus the yuan since the early 1990s, and renewed competitive export strength indicate the end of Japan’s “permanent low‑growth” label and a new phase in its economic rivalry and interconnectedness with China.
Trump’s push to cap credit card APRs around 10% has slammed large US consumer‑finance stocks and triggered open opposition from major bank CEOs, who argue it misprices risk and will curtail lending to lower‑income borrowers. While the policy would, in theory, save consumers roughly 0.5% of annual spending, the combination of banks tightening credit, potential loss of rewards models, and the administration’s tactical, election‑driven approach suggests it is more a political signal than a structural solution to affordability.
Despite exiting the FATF grey list in October, South Africa is advancing a bill to close remaining gaps in its anti‑money‑laundering and counter‑terror finance framework. The proposals would expand the Financial Intelligence Centre’s powers (including lifestyle audits), tighten oversight of non‑profits and digital platforms, and enhance whistleblower protections, supporting long‑term credibility and foreign‑investment prospects.
The piece describes Trump theatrically accepting Maria Corina Machado’s Nobel Peace Prize despite the committee’s non‑transfer rule, framing it as an act of flattery as she seeks influence over Venezuela’s future. US-led regime change in Caracas, Trump’s dismissal of Machado’s domestic support, and Washington’s willingness to govern via an interim administration are portrayed as a new phase of US colonial behaviour rather than a high‑ground peace project.
The argument is made that early‑2026 US actions in Venezuela and Greenland, combined with a confrontational stance toward the Fed and expansive use of tariffs and raids, mark a break from the post‑war order the US once championed. As Washington appears comfortable pursuing territorial and power‑projection goals, its moral authority to restrain Russia in Ukraine or China over Taiwan erodes, even as Western re‑armament risks morphing from a deterrent posture into the foundation of a broader “Western Empire”.
South Africa (RSA) Market & Economy
United States Market & Economy
Labour market mixed: weekly jobless claims fell but underlying conditions remain soft; December payrolls were modest (≈50 k), reflecting cooling labour demand.
Global (excluding US & RSA) Economics & Markets
The FED, Powell and Independence
Much of the econo-politicial news last week (excluding Trump’s new colonisation agenda) centred around Jerome Powell. His response to the Trump-inspired criminal charges around the refurbishment of the FED was uncharacteristically blunt. He’s had enough. To quote”:
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation.”
Just a recap: Jerome Powell was first appointed to the Federal Reserve Board of Governors by Barack Obama in 2012. He was then elevated to Fed Chair by Donald Trump in 2018, and later reappointed as Chair by Joe Biden in 2022. That is about as bipartisan as Washington ever gets.
The Chair’s term is 4 years, but a Fed Governor’s term is 14 years. Powell’s underlying term as a Governor runs until January 31, 2028. So when he eventually gives up the Chair, whether by choice or because a president wants a new face, he can remain a Governor. And if he stays a Governor, he automatically stays on the FOMC, the rate-setting committee (yes, it is set by a committee, not by Powell). Chairs come and go. Governors linger like long-dated bonds. Did Trump really think Powell would go quietly? If so, they don’t understand the man, his integrity and his commitment to the Fed’s independence.
Last week’s shenanigans has probably had 3 effects:
The Justice Department’s criminal investigation is bizarre, nonsensical and could come back to bite Trump. If it can really be a criminal offense to spend too much refurbishing an historic Washington building, it might set a precedent for examining the recent demolition of the East Wing of the White House.
The general consensus is that these are dark days for the independence of the FED. Frankly, it is the sort of behaviour that is more reminiscent of RSA Inc and other ‘emerging nations’ than the so-called bastion of capitalism.
The US macro data has started the year by administering a positive surprise in the CPI numbers at 2,7%. Wall Street was braced for consumer price inflation to rise in December as the problems caused by last year’s federal shutdown began to iron out. It didn’t happen. Both headline and core inflation are as low as they’ve been in the post-pandemic inflation cycle that began in 2021.
There has not been a blip in inflation from tariffs, a lot of that due to the TACO effect, which persists to today. Core goods inflation, where the tariffs should be most visible, is still running at only 1.4%.
Food inflation remains unremarkable in historical terms, despite ‘affordability’ being a key complaint from consumers last year.
These rosy numbers may, however, be hiding some underlying ‘stickiness’. The Fed’s “supercore” rate of services inflation excluding shelter all suggest that inflation is gently rising, and at or above the Fed’s 3% upper target. The market consensus is that inflation is probably closer to 3%. The oil price has been low for a few months now, and there were a couple of other anomalies that has pundits sceptical. Put all of this against a very noisy political background – you can see why the good CPI print wasn’t met with much jubilation.
Interestingly, and not surprisingly, the US migration is approaching net zero, which reduces housing pressure, but will increase inflationary pressure on labour costs in hospitality and restaurants.
In Japan, political and economic earthquakes are reinforcing each other. It’s hard to overstate the extent of the shifts since the ruling Liberal Democratic Party chose to name Sanae Takaichi their leader in October, making her the nation’s first female prime minister. The ripple effects beyond the Japanese islands have barely begun to be felt.
Takaichi is disruptive because she seems determined to jolt the economy out of the same old scene, and her strong polling numbers suggest that she has the political capital to deliver her policies. Three months in, the honeymoon continues:
That has prompted growing speculation that she’ll gamble on a snap election, perhaps as early as next month. Prediction markets are virtually certain that the next election will be within the first half of this year:
Exactly as might be expected, this has pushed up yields on Japanese government bonds. The benchmark 10-year yield rose 7.6 basis points last week for its biggest gain in seven months to touch 2.157%, a level last seen in 1999.
The view of Japan as a permanent low-growth economy seems to be over.
This has a massive impact on Japan’s critical economic relationship with its neighbour, China. The yen is now at its weakest compared to the Chinese yuan since 1991, when Deng Xiaoping was just advancing on his new model of export-driven growth. The yen is far weaker than in 2015, when a fall in the yen-yuan exchange rate sent China into an abrupt and badly received devaluation.
Chinese money is pouring into Japan through tourism and business investment, while Japanese exports grow more competitive.
Japan has dormant potential, but the US tech industry should be firing much stronger relative performance. Japan has low net interest payments as a proportion of gross domestic product, driven by the fact that debt is mostly held locally and financed at low rates.
Wall Street has weathered and tolerated all kinds of unconventional policies from Washington/Trump over the last year, but it seems to find a cap on credit card interest rates to be almost unfathomable. The stock market reaction since Trump made the proposal has been dramatic; these are the 10 worst-performing financial stocks since then, all of which have big credit card businesses:
Executives — notably including JPMorgan’s Jamie Dimon — who have largely avoided Trump’s crosshairs have now decisively broken ranks. For consumers buckling under mounting credit card debt, the threshold offers the allure of near-instant gratification. Trump’s belated embrace of affordability, and his adoption of an idea formerly championed by Democratic populists like Massachusetts Senator Elizabeth Warren, signal an urgency to address one of the most visible consumer pain points (obviously with an eye on the mid-terms).
The share of US consumer debt in delinquency rose in the third quarter to the highest level in more than five years. Around 4.5% of debt was at least 30 days delinquent in the July-to-September period, the most since the first quarter of 2020.
Something has got to give.
But Wall Street doesn’t see capping interest rates as the right remedy. The selloff in the S&P 500’s consumer-finance stocks is the starkest indication of how destructive investors expect the policy to be for consumer credit:
This isn’t necessarily a dealbreaker for the government. It’s not about banks’ profits — obviously likely to suffer if they’re not allowed to set the interest rate they deem necessary to cover their risks — but about signalling a willingness to prioritise affordability for Main Street over the interests of Wall Street. And this ought to mean some relief. All else equal, Morgan Stanley’s estimates that an average 10% APR would indeed save consumers around $100 billion in monthly payments. That is about 0.5% of annual consumer spending. However, Berger points out that the multiplier on the savings is likely less than 1x — or in other words, they wouldn’t spend all of it. It’s more plausible, with delinquencies rising, that consumers would opt to use their savings to pay down existing debt, thereby not increasing spending.
Positioning the president as putting cost-of-living concerns ahead of Wall Street would be a good election-year message.
Because the administration views the affordability crisis as a messaging problem, it’s more willing to throw any and every idea at it. That includes populist/democrat proposals reminiscent of ideas pitched by former Vice President Kamala Harris on the campaign trail, even if they are unlikely to become a reality.
The problem is that the issue may turn out to hinge less on credit’s affordability and more on its availability. Banks’ logical response, in the interests of their shareholders, would be to cut off lending to borrowers for whom a 10% interest rate is insufficient to cover the risks. High Frequency Economics’ Carl Weinberg argues that Trump’s efforts could harm the low-income families he’s seeking to shield. His caution is premised on the notion that banks’ high interest rates compensate them for the risk of uncollateralized lending.
If public policy makes the credit card business less lucrative, they will abandon that business, withdrawing credit from all but the most well-heeled borrowers. Those silk-stocking customers are the ones who need personal credit the least.
This is how interest rates compare across consumer groups. Unsurprisingly, the riskiest consumers are incurring the most interest expense, and nobody gets a rate as low as 10%.
If card issuers reduce their overall exposure to the riskiest consumers, Morningstar’s Yanni Koulouriotis expects they’ll prioritise prime or ultra-prime, high-spending cardholders. Competition in those sectors would intensify. Other issuers might divest or shrink their credit card portfolios, reducing credit availability.
To quote William Stern, CEO of small-business lender Cardiff, “You can’t legislate the price of risk.” If the cap comes into effect in a matter of days, Stern predicts it would stifle innovation:
You might see the end of cash-back rewards, airline points, and the return of massive annual fees. The consumer isn’t actually saving money; the bank is just changing how they bill for it. It’s a political shell game, not an economic solution.
In the TACO (Trump Always Chickens Out) universe, the president is notorious for sharp course reversals. It’s hard to treat any policy announcement as a done deal. His aim to get the cap passed into law by Jan. 20 is unrealistic, and his penchant for brinkmanship makes a last-minute reversal entirely plausible. But a temporary ceiling wouldn’t require congressional approval (unlike a permanent one), and Republican senators have come forward to sponsor the necessary legislation. Trump may just get a cap across the finish line. Bank stocks are unlikely to recover as long as this remains a possibility.
While RSA Inc is off the grey list, there are some lingering concerns that are being addressed.
The South African govt has proposed changes to laws that would give the government stronger tools to monitor money flows and impose tougher penalties on those engaging in financial crimes.
The National Treasury on Wednesday last week issued a call for public comment on a bill that aims to combat money laundering and terrorism financing by amending four pieces of legislation, including those governing non-profit entities and companies. It also proposes giving South Africa’s Financial Intelligence Centre, a unit mandated to assist in identifying the proceeds of crime, broader powers.
If passed, the bill would allow the FIC to conduct lifestyle audits and expand the tools it has to track cash moving into and out of the country. It would also compel banks to more closely scrutinise new technologies and digital platforms for money-laundering and the financing of terrorist activities, and expand protection for whistleblowers who report suspicious activities.
The Paris-based FATF – Financial Action Task Force, a global watchdog, removed South Africa from its dirty-money list in October, boosting its prospects of attracting more foreign investment. The continent’s largest economy was included on the so-called grey list in February 2023.
The bill addresses “the remaining deficiencies” the FATF identified in a 2021 report and also during the remedial process that saw South Africa exit the grey list, the National Treasury said in a statement Thursday.
Who is Venzuelen Maria Corina Machado?
Despite the Nobel laureate committee categorically stating that their award could not be transferred, in a supreme brown-nosing gesture at the White House last week President Donald Trump accepted Venezuelan opposition leader Maria Corina Machado’s Nobel Peace Prize. I expect she wants Trump to install her as the new leader of Venezuela.
Trump, in a social media post hours later, called it a “great honour” to meet Machado, and described her as a “wonderful woman who has been through so much.”
“María presented me with her Nobel Peace Prize for the work I have done,” Trump said. “Such a wonderful gesture of mutual respect. Thank you María!” Trump accepted the medal, according to a White House official.
Machado, who has been shut out of Venezuela’s leadership transition since US forces ousted President Nicolas Maduro on Jan. 3, said she gave Trump the medal as “a recognition of his unique commitment with our freedom.”
She drew a parallel to the early 1800s when the Marquis de Lafayette presented Venezuela’s Simon Bolivar, who liberated much of South America from Spanish rule, a medal that featured the likeness of George Washington, a gift she called “a sign of brotherhood between the people of the United States and the people of Venezuela.”
Trump has long contended that he deserves the peace prize, which was awarded to President Barack Obama in his first term (which is the real issue!).
Ironically, after toppling Maduro, Trump said he didn’t believe Machado had “support” or “respect” in the country and cleared the way for the vice president, Delcy Rodriguez, to become acting president.
Trump’s disparagement of Machado stunned opposition leaders and her allies abroad, including some Republican lawmakers. The White House has said the US will run the country until new presidential elections can take place, but has not offered a timeline. In a further sign that Machado may struggle to gain more power in Venezuela, White House spokeswoman Karoline Leavitt said Thursday that Trump is pleased so far with how Rodriguez and the interim government have run Venezuela.
“They have thus far met all of the demands and requests of the United States and of the President of the USA (and Venezuela apparently),” Leavitt told reporters. “The president likes what he’s seeing and will expect that cooperation to continue.”
The Venezuelan ‘troubles’ have had little impact on the price of oil, but have ushered in a new era of US colonialism, which is going to egg on other dictators and aggressors. World peace is probably not on the 2026 agenda. Trump better hang on to his second-hand peace prize, it’s the last he’s likely to see.
Author: Dawn Ridler
There goes the US’s credibility.
In a year or so, the Trump administration has hastened the rise of a new world order.
Evidence of this could already be seen during the Covid years and then President Trump was a lot more measured than he is today. Emboldened by his first term, he is hoping to make sweeping changes to the world order and isn’t scared or polite in how he wishes to achieve this. At the heart of his efforts lies the US debt situation. In FY 2025, net interest on the national debt was about $970 billion, equal to roughly 19% of all federal revenue and the third‑largest federal outlay. This number is set to increase unless the US can meaningfully grow GDP or push interest rates lower so that interest payments can become more muted. This is why the President is in an all-out conflict with the Federal Reserve, who are the keepers of interest rates. Pushing interest rates down is a strategy but it comes with its own set of problems. Push it down too far, and exchange rates start suffering, which perversely starts driving up inflation again.
As in everything, and so it seems in economics … there is no free lunch.
But the US is on a trajectory to grow their debt pile. Firstly, they have to keep their citizenry on side and this will cost money. ICE raids are there to rid the US of unwanted immigrants which drains the public purse. The Venezuelan saga exists because the US can control the price of oil better into the future and by default US inflation. Control inflation, then it becomes possible to keep interest rates lower for longer. Tariffs exist to create income for the Federal Government and to give local manufacturers the ability to sell their wares more competitively. Again, this is a double-edged sword as one is artificially manipulating competition. By putting “America First” comes with trade-offs some of which will only play out in time.
The US knows that the rise of China cannot be stopped.
Hence the new catchphrase is to become a “Western Power”. The US of the past was the global superpower. The world looked to them for currency stability, smooth foreign affairs and ensuring that the rule of law was enforced alongside the UN. The UN, even though it has its seat of power in New York, has become toothless because their power has been taken away by the very people who championed the idea of a new post‑second world war order. Then the US wanted to create an international organisation, drawing lessons from the failure of the League of Nations and pushing allies to back a more effective body for collective security. If Fraklin D Roosevelt was alive today, he would be advising President Trump to tread very carefully as he attempts to carve a new world order. This is dangerous territory.
The irony of the world today is that the very ideals that the US stood for has finally been given up early in 2026. Up to the end of 2025, the US efforts in other parts of the world could be argued existed for the greater good or to create peace. This is the US everyone knows.
Their effort in Venezuela and now Greenland shows something completely different.
They seem to be equally happy in grabbing territory, just as totalitarian regimes have done or threatened to do across the globe. Their fear has been that the US would either stop or frustrate their efforts, but with the US now also stooping to the same levels… why should anyone take them seriously?
Take the Russian offensive in Ukraine. The US alongside the Europeans have been trying to get a peace deal for some time. What credibility does the US have today in asking the Russians to stop their offensive and find peace? What power is left in their words when it comes to China and Taiwan?
The re-armament of the West it seems will not only be there as a warning to the Chinese to tread carefully but the US seems quite happy to use their might in creating a Western Empire of some sorts. To what lengths they are prepared to go, only time will tell.
Author: Cobie Le Grange
EXCHANGE RATES and other Indices:
The Rand/Dollar closed at R (R16.50, …R16.91, R17.13, R17.36, R17.13, R17.27, R17.31, R17.25, R17.38, R17.50, R17.22 , R17.35, R17.33, R17.37, R17.58, R17.65, R17.44, R17.61, R17.74, R18.15,R17.76, R17.72, R17.90, R17.58, R17.89, R17.99, R17.92, R17.77, R17.95, R17.88)
The Rand/Pound closed at R (R22.13, …R22.57, R22.68, R22.74, R22.56, R22.69, R22.76, R22.96, R23.34, R23.37, R23.19, R23.22, R23.35, R23.55, R23.73, R23.84, R23.53, R23.84, R23.84, R24.09, R23.88, R23.76, R24.22, R24.08, R24.49, R24.22, R24.35, R24.05, R24.18)
The Rand/Euro closed the week at R (R19.20, …R19.68, R19.86, R19.99, R19.96, R19.98, R20.02, R20.06, R20.26, R20.33, R 20.22, R20.30, R20.35, R20.38, R20.61, R20.62, R20.44, R20.56, R20.64, R21.04, R20.86, R20.61, R20.93, R 20.70, R20.91, R20.74, R20.68, R20.24, R20,37)
Brent Crude: Closed the week $ ($63.34, …$63.71, $63.19, $62.42, $63.94, $63.61 $64.66, $65.04, $61.27, $62.14, $64.28, $69.67, $66.57, $66.80, $65.52, $67.38, $67.73, $66.08, $66.07, $69.46, $68.29, $69.21, $70.58, $68.27, $67.39, $77.27, $74.38, $66.56, $62.61, $65.41)
Bitcoin closed at $ ($90,585, … $90,809, $86,334, $94,990, $101,562, $109.936, $112,492, $106,849, $111,888, $124,858, $109,446, $115,838, $115,770, $110,752, $108,923, $114,916, $117,371, $118,043, $113,608, $118,139, $118,214, $117,871, $108,056, $107,461, $103,455)
Articles and Blogs:
Holiday checklist NEW
Next year – Action Plan NEW
Next year – Vision, Mission etc NEW
Medical Risk Mitigation
Next Year – Consolidation
Abdication or diversification?
Carbo-loading your retirement
Spoiled for choice
Who needs a plan anyway
8 questions you need to ask about retirement
What to do when interest rates drop
How to survive volatility in your investments
What to do when interest rates drop
Difficult Financial Conversations
Financial Implications of Longevity
Kick Start Your Own Retirement Plan
You matter more than your kids in retirement
To catch a falling knife
Income at retirement
2025 Budget
Apportioning blame for your financial state
Tempering fear and greed
New Year’s resolutions over? Try a Wealth Bingo Card instead.
Wills and Estate Planning (comprehensive 3 in one post)
Pre-retirement – The make-or-break moments
Some unconventional thoughts on wealth and risk management
Wealth creation is a balancing act over time
Wealth traps waiting for unsuspecting entrepreneurs
Two Pot pension system demystified
Cobie Legrange and Dawn Ridler,
Rexsolom Invest, Licensed FSP 45521.
Email: cobie@rexsolom.co.za, dawn@rexsolom.co.za
Website: rexsolom.co.za, wealthecology.co.za