Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojkt
Stocks are lower this morning as bank earnings come in. Bonds and MBS are up.
The bond market seems to be taking the Powell / Trump situation as symbolic and not a true threat to Fed independence.
The issue of credit card interest caps came up on the JP Morgan earnings call yesterday:
John McDonald
Truist Securities, Inc., Research DivisionOkay. And then maybe you or Jamie could provide some thoughts on the idea of regulators putting caps on credit card APRs, just potential impacts on the industry and how you would think through strategic reactions as a big issuer.
Jeremy Barnum
Executive VP & CFOYes. Thanks, John. And I appreciate the way you framed the question because the thing that I’m sort of trying to avoid doing is spend a lot of energy or time speculating on the probability that this does or doesn’t happen in whatever form it does or doesn’t happen. So I think for the purposes of this call and, obviously, you can assume that institutionally, we’ll be doing all the relevant contingency planning. But for the purposes of this call, given how little we know at this point, the way I would prefer to talk about it is, just assume for the sake of argument that something in the general mode of price controls on credit card interest rates goes through, what would be the consequences of that.
And I think the first thing to say, which you obviously know very well, is that the card ecosystem is an exceptionally competitive ecosystem. It’s among the most competitive businesses that we operate in. And that’s true for all levels of borrower credit score, from high FICO to low FICO. And so in that context, when you — just basic economics, when you start with that as your starting point, the right assumption about what the response of the system is going to be to the imposition of price controls is not that you will simply compress the profit margins, which are already at their sort of competitively optimal level, and thereby pass on benefits to consumers. What’s actually simply going to happen is that the provision of the service will change dramatically.
Specifically, people will lose access to credit, like on a very, very extensive and broad basis, especially the people who need it the most, honestly. And so that’s a pretty severely negative consequence for consumers and frankly, probably also a negative consequence for the economy as a whole right now.
I don’t want to let this pass without saying that I think it should be obvious that, that would also be bad for us. I’m not going to get into quantifying but in a narrow sense, this is a big business for us. It’s a very competitive business, but we wouldn’t be in it if it weren’t a good business for us. And in a world where price controls make it no longer a good business, that would present a significant challenge clearly. Beyond that, the way we actually respond would have a lot to do with the details and I just don’t think we have enough information at this point.
Two things to note: First JP Morgan doesn’t sound like they plan to cap interest rates in 6 days (the Jan 20 deadline Trump imposed). My guess is that they probably talked to someone in the Administration who said nothing is really imminent. Second, interest caps are price controls, and price controls create shortages, which should be obvious.
Wholesale inflation rose 0.2% MOM in November, according to the Producer Price Index. On a YOY basis they rose 3.0%. The monthly number was below consensus while the annual number was higher. The PPI for goods rose 0.9% while the PPI for services was flat. More than half the increase in goods was attributable to gasoline, and fuel prices were up across the board.
Final demand ex-food and energy rose 3.5% YOY, which was the highest since March. The 2026 new models for cars and trucks entered the index and it looks like it caused a bump as well.
Overall, the PPI came in a touch higher than expected, but this is old data.
New home sales rose 18.7% annually to 737,000 units. Note this is October data, so it is quite old. Builders are sitting on 7.9 month’s worth of inventory so the market is a touch oversupplied.
Notably the median home price fell 8% YOY to $392,300. This indicates a shift away from luxury and towards starter homes. This is below the median home price for existing homes.
Mortgage applications increased 29% last week as purchases rose 18% and refis rose 40%. “Mortgage rates dropped lower last week following the announcement of increased MBS purchases by the GSEs. Lower rates, including the 30-year fixed rate declining to 6.18%, sparked an increase in refinance applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Compared to a holiday-adjusted week, refinance applications surged 40 percent to the strongest weekly pace since October 2025.The average loan size for refinance applications was also higher, as borrowers with larger loan sizes are typically more sensitive to changes in rates.”
Retail sales moved up smartly in November, according to the Census Bureau (we don’t have December data yet). Sales rose 0.6% MOM and 3.5% YOY. It looks like we might be getting December retail sales tomorrow.
Small business optimism improved in December, according to the NFIB. Much of this was driven by a decline in the uncertainty index which it the lowest levels in over a year. Optimism about the overall economy improved despite a more negative outlook on sales.
The number of firms raising prices decreased as well, although we are still above historical averages.
2025 ended with a second consecutive monthly uptick in small business optimism. Small business owners anticipate economic conditions remaining generally favorable going into 2026 and all signs from questions outside the index appear to support their sentiment. Costs pressures moderated, employment challenges eased (for most), and capital investments picked up. Consumer sentiment might be at historic lows, but consumer spending continues to support economic growth.
The December data also delivered good news on a major 2025 pain point, with a welcome improvement in uncertainty. Specifically, the Uncertainty Index dropped 7 points to 84, the lowest level since June 2024. The mid-term election coverage will soon enter the main stage, taking oxygen from the stock market rallies and AI investments that currently dominate the airwaves. As the news cycle shifts, small business owners will be front and center voicing their concerns on issues related to running their business.
Filed under: Economy |
All Things in Moderation 
Good piece:
Coleman Hughes: Scott Adams Made Me a Better Thinker
https://www.thefp.com/p/coleman-hughes-scott-adams-made-me
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I think that there’s also reports that Trump is considering partnering with Richard Durbin’s Credit Card Competition Act on swipe fees.
https://www.americanbanker.com/news/trump-backs-durbin-marshall-swipe-fee-bill
https://www.bloomberg.com/news/articles/2026-01-13/trump-targets-card-swipe-fees-after-lambasting-interest-rates
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For you George:
https://www.theargumentmag.com/p/the-toxic-modernity-narrative
I can hear the “rock solid” now.
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lol! Thanks, that was good.
Years ago The Atlantic did a piece on a Greek professor and his students debunking, or at least finding fault with, a lot of pharmaceutical pivotal studies. In essence, he proved that the outcome was guaranteed by the study design. It really opened my eyes about data and manipulation. I’ve never been able to find the piece again and it wouldn’t surprise me to learn that is was memory-holed as a courtesy to their pharma advertisers.
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Lol!
https://x.com/emilyngo/status/2011901199696740811?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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This is an electoral winner and will clinch the next 10 elections for the Democrats.
https://x.com/remarks/status/2013007987758010860?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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Last I read, the plan was that they would do a CR instead of the actual annual appropriation and call it a win.
“Many Democrats feel that voting for any FY2026 funding for DHS is a non-starter and are increasingly in favor of enacting a continuing resolution for the department.”
https://punchbowl.news/article/house/dems-turn-dhs-funding/
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Interesting. Are there enough pro-illegal lefties to force a shutdown?
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It’s a face saving move to allow Democrats to say they voted against it.
As Punchbowl notes, ICE funding was increased so much in the BBB that Republicans are fine with a CR preserving the current spending levels.
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I was hoping the Democrats go to the wall, I enjoyed the last shutdown, to the extent I noticed it.
Also, I was hoping Congress would hold out for an appropriations bill for it rather than a CR. Ultimately, empowering committees more is a good thing.
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“Somewhat amazingly, the House is on the brink of passing the entire slate of FY2026 funding bills 10 days ahead of the Jan. 30 deadline. Party leaders aren’t there yet, but they’re nearing that point.”
https://punchbowl.news/article/house/minibus-house/
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Nova if you are still around you may find this of interest:
https://chrisbray.substack.com/p/dont-you-dare-interrupt-our-collapse
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Aren’t these lefties, you know, racially profiling?
https://x.com/scootercasterny/status/2013755249345839562?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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Worth noting:
https://www.thebignewsletter.com/p/boom-the-break-up-of-big-medicine
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Fortune should have booked the speech at The French Laundry.
https://x.com/govpressoffice/status/2014023173033910527?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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Yeah, it would be terrible precedent.
https://x.com/westernlensman/status/2014013597102334132?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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Worth reading
https://hollymathnerd.substack.com/p/you-are-not-sufficiently-terrified
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jnc:
Interesting article on fraud detection. But it seems to me that the more fundamental problem…the absence of due process, the inversion of innocent until proven guilty…seems to exist independently of the problem she is raising. The mathematically inevitable false-positive problem that she identifies will increase the number of victims that fall prey to this more fundamental problem, but it exists even now and in the absence of AI fraud detection.
The author writes:
The algorithm flags you. The case opens. Now you must explain yourself, document yourself, justify yourself, while the government takes its time.
Whether you are flagged by the algo or by human judgement, it is what happens after the case is opened that represents the real problem for a small business, and that process exists now, independently of any AI fraud detection. I agree that the problem will likely expand massively, for the mathematical reasons she lays out, and that is worth opposing. But the underlying process, what happens after getting flagged, is what really needs to be fixed.
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There is a lot to criticize in how government money is spent, the enormity of the budget and the breathtaking fraud, but credit where it’s due, Mike Johnson has returned the House to regular order.
https://x.com/derrickvanorden/status/2014469512628785659?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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Things are going to get very, very bad.
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Hope y’all are safe, warm, and dry. There is snow on my deck in Austin and the temperature is in the low 20s.
This probably means nothing to Brent and Scott, living in Yankee land. But I have read that it is a bad storm for you guys too.
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We are supposed to get 12+ inches, but it is the super-light fluffy snow since it is 9 degrees out right now.
Shoveling tomorrow should be hard but not terrible. Prefer light fluffy snow to the wet heart-attack stuff that sticks to the shovel.
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All good here in Houston, Mark. Though temps is the 30’s in Houston are equivalent to -50 degrees in Minnesota.
Stay warm and safe!
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Hey Mark…I am no longer in Yankee land. Been living in North Carolina ever since I came back from the UK, for 4 years now, just outside of Charlotte. We were supposed to get the worst of the ice storm, but it missed us. A little accumulation of ice crystals, but no sheets of ice covering everything, so no trees down and no power loss. It’s colder than normal…temps down into the teens over night…but all manageable.
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Good read
https://hollymathnerd.substack.com/p/how-to-demean-yourself-properly
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Indeed. This person is very interesting. Just read an old article on Sam Harris. Very good.
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Raise them through the roof, my brother!
https://x.com/thechiefnerd/status/2016573554158927874?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
Double the rates! Triple them! No price is too high! Give them the government they voted for; good and hard!
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McWing:
Double the rates! Triple them! No price is too high! Give them the government they voted for; good and hard!
Yes! I am all for this.
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Ask not for whom the taxman comes
He comes for thee
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The match up on the numbers is perfect.
https://chrisbray.substack.com/p/gasp
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Fucking savage.
https://x.com/lizcollin/status/2017307528514707678?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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It takes a heart of stone not to laugh.
https://freebeacon.com/media/mamdani-voter-ezra-klein-tries-fails-to-achieve-solidarity-with-student-activists-who-called-him-a-zionist-pig/
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Bluesky hates Klein too, mostly for saying that Charlie Kirk “was practicing politics the right way”. They view that as an act of professional solidarity (as a public speaker he’s overly concerned with his personal safety) that betrayed ideological solidarity. They also hate his Abundance arguments which are viewed as simply updated neo-liberalism.
A smarter Republican party would be able to build a majority coalition of everyone to the right of Klein.
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The party refuses to do it, they hate their base, so Trump built it and when he’s not on the ballot you return to the “traditional” Republican Party – a rump, regional party.
It is what it is.
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Another good piece:
“Hostage Negotiation As Coalition Politics
what Gov. Shapiro’s book reveals about the Harris campaign
Holly MathNerd
Feb 01, 2026
https://hollymathnerd.substack.com/p/hostage-negotiation-as-coalition
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The universal media whining about the layoffs at The Washington Post is something to behold. The sense of entitlement that reporters bring to their jobs is amazing.
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and D politicians. As if Bezos has a civic duty to keep propagandists who hate him employed.
They REALLY don’t like that he invested in the Melania film while canning them.
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The level of hubris and entitlement here is truly a sight to behold.
https://www.newyorker.com/news/annals-of-communications/how-jeff-bezos-brought-down-the-washington-post
Absolutely zero introspection into their own roles in the failure of the Washington Post to retain it’s readership.
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Trust me, this is true.
https://x.com/brandonhathaw12/status/2019098563943493879?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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It takes a heart of stone…
https://x.com/kane/status/2019828421577359682?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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Good piece:
https://www.theargumentmag.com/p/jon-stewart-has-become-his-own-worst
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Matt Taibbi is expanding Racket News and stepping down as editor.
https://www.racket.news/p/from-the-old-editor-we-care-if-its
https://www.racket.news/p/from-the-new-editor-a-message-from
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The intelligent critique of the politics of the Superbowl halftime show:
https://www.theradicalist.com/p/no-bad-bunny-we-are-not-all-americans
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jnc:
The intelligent critique of the politics of the Superbowl halftime show:
Yeah, I enjoyed the article. Unfortunately he did make one egregious mistake. The lyrics from the song he said that Bad Bunny sang during the halftime show were not, I don’t believe, actually the lyrics that he sang. If the translation that I found is correct, he only sang one verse, the one that begins “My dick is being chased…”, and he censored himself on some of the lines. For example, he said “my d” instead of “my dick”, and he skipped the words “eat your ass” and “fuck off”. Although, again according to the translation I found, he did sing “She fucks in the Audi”.
That notwithstanding, though, I agree 100% with what the article said.
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