Good Afternoon. Markets got a little bit of everything today, a hawkish rate cut from the Fed, trillion-euro ambitions from Brussels, and a new frontier where AI models now train in orbit. Wage floors are rising across the country as affordability strains linger, and corporate America is still handing out hefty buybacks. It’s a rare mix of cosmic leaps, policy tension and kitchen-table economics, proof that the future keeps arriving from both space and the checkout line. Let’s get into it.

—Rosie, Wyatt, Evan & Conor

🔥 What’s Hot: 🔥

🥶 What’s Not: 🥶

1. Dow Jumps Nearly 500 Points as Fed Delivers Split Decision

The News: The Federal Reserve cut rates by 25 bps in a rare 9–3 vote — the first meeting in six years with three dissents. Chicago’s Austan Goolsbee and Kansas City’s Jeff Schmid opposed any cut, while Governor Stephen Miran pushed for a larger half-point move. Stocks rallied as Chair Jerome Powell spoke in his press conference. The Dow rose about 1%, the Nasdaq gained ~0.3%, Treasury yields dipped, and silver hit another intraday record above $62.

Why It Matters: A split vote tells markets the Fed is deeply divided on whether inflation or a cooling labor market is the bigger threat. Powell’s concern about job-market softness reassured investors hoping for more cuts in 2026 but the dot plot showed six of 19 officials expect rates to end next year higher than pre-cut levels. Political overhang is rising too: comments from Kevin Hassett, the frontrunner to replace Powell in May, have already hardened expectations for a slower easing path. Meanwhile, earnings from Oracle and the Ellison family’s takeover push for Warner Bros. inject more volatility into the AI and media trade.

What to Watch: Whether January’s meeting pauses the cutting cycle, how labor data evolves amid rising layoffs, and how markets react if the next Fed chair proves more hawkish, or more political, than Powell. For now, investors heard what they wanted, and the rally says so.
Source: wsj.com

2. Fed Delivers “Hawkish Cut” as Officials Split on Path Forward

The News: The Federal Reserve approved its third rate cut of 2025, lowering the federal funds rate by 25 bps to 3.5%–3.75% in a sharply divided 10–3 vote — the most dissents since 2019. The Fed’s latest dot plot signals only one more cut in 2026 and one in 2027, revealing deep disagreement over how quickly to ease policy. Alongside the cut, the Fed announced it will resume asset purchases, starting with $40 billion in T-bills on Friday as it halts balance-sheet runoff and seeks to calm funding-market pressures.

Why It Matters: A split Fed means borrowers may not get the relief they expect: with inflation still at 2.8% and projected to stay above target until 2028, policymakers are reluctant to declare victory. For consumers, a slower cutting cycle means still high mortgage, credit-card, and auto-loan rates heading into 2026. For markets, renewed Treasury buying injects liquidity but also signals stress in short-term funding. The backdrop: a low-hire, low-fire labor market and 1.1 million announced layoffs so far this year, raising recession questions just as the Fed faces political pressure ahead of a leadership transition.

What to Watch: January’s meeting for signs of whether cuts pause; how long the T-bill purchases stay “elevated”; and who President Trump selects as the next Fed chair, a decision that will likely reshape policy for years. For now, Powell is playing steady, even as the ground under the Fed appears to be getting shakier.
Source: cnbc.com

3. Minimum Wages Rise in 2026 Across 19 States and Nearly 50 Cities

The News: On Jan. 1, 2026, minimum wages will rise in 19 states and 49 cities and counties, with four more states and 22 localities following later in the year, according to the National Employment Law Project. By year-end, 79 jurisdictions will have wage floors of $15 or more. States lifting wages include California, New York, Ohio, Virginia, and Washington; Alaska, Florida, and Oregon will raise theirs later in 2026. Cities from Seattle to Santa Fe will also boost pay, with Santa Fe pioneering a new formula tying future increases to both CPI and housing costs. Los Angeles is set to lift tourism-sector wages to $30 by 2028.

Why It Matters: For millions of lower-wage workers, especially in day care, home health, retail, hospitality, and immigrant-heavy sectors, an extra dollar or two an hour can meaningfully offset soaring basics. Since 2020, overall inflation is up 23.6% and grocery prices 26.4%, while federal minimum wage hasn’t budged from $7.25 since 2009. These local hikes won’t materially raise national inflation, economists say, but they will help households squeezed by child-care and housing costs that often consume far more than official CPI weights suggest. Politically, ballot-led wage measures remain highly popular and often succeed where legislatures stall.

What to Watch: How quickly wage gains translate into improved financial stability for care-sector workers, how businesses adjust hiring and pricing, and whether more cities adopt Santa Fe–style cost-of-living formulas. Given how disparate living costs are from one place to another, its not shocking to see the minimum wage unchanged at the federal level and good to see more states exercising their rights.
Source: usatoday.com

4. Mastercard Unveils $14B Buyback and 14% Dividend Hike in Biggest Capital Return Yet

The News: Mastercard announced its largest-ever share repurchase authorization—a $14 billion buyback—alongside a 14% dividend increase to $0.87 per share, payable Feb. 9, 2026, to holders of record Jan. 9. The program begins once the company completes its existing $12 billion authorization, which had $4.2 billion left as of Dec. 5. The move extends Mastercard’s December pattern of escalating capital returns, following $12B, $11B, and $9B buyback programs in the past three years.

Why It Matters: For investors, few companies have returned capital as aggressively as Mastercard: a ~45% net margin, ROE above 200%, and strong Q3 results (EPS $4.38 vs. $4.32 est.; revenue $8.6B) give it room to keep buying back stock without slowing growth. Those repurchases turbocharge EPS and help justify bullish price targets like UBS’s $700 call. Mastercard’s value-added services—AI fraud tools, cyber intelligence, analytics—grew 20%+ YoY, outpacing core payments and fueling 2026 EPS growth expectations of ~16%. Healthy holiday spending (+4% Black Friday; e-commerce +10.4%) reinforces the company’s confidence.

What to Watch: Whether elevated consumer spending holds into 2026, how quickly Mastercard executes the new buyback, and whether rivals match its capital-return pace. In payments, the swipe fees matter and you should do everything you can to benefit from those yourself, whether that’s credit card points or owning the companies charging the fees.
Source: investor.mastercard.com

5. U.S. November Budget Deficit Shrinks 53% as Tariffs Lift Revenues

The News: The U.S. recorded a $173 billion budget deficit in November, down sharply from $367 billion a year earlier and well below economists’ $205 billion estimate, according to Treasury data. Outlays fell to $509 billion from $669 billion last November, partly due to delayed payments following the 43-day government shutdown. Revenues hit a record $336 billion for the month, powered by $30.8 billion in customs duties as Trump-era tariffs continue to reshape federal intake. Through the first two months of fiscal 2026, the deficit totals $458 billion, down from $624 billion in the same period last year.

Why It Matters: A narrower deficit offers short-term breathing room, but much of the improvement stems from timing quirks and tariff-fueled revenues that may not persist. Higher customs duties mean higher consumer prices down the line, even as they bolster Treasury inflows. Meanwhile, the CBO now estimates Trump’s tariff regime will reduce deficits by $3 trillion over the next decade, down 25% from earlier projections, highlighting how uncertain tariff-driven budgeting is. For markets, smaller deficits can ease Treasury issuance pressure, but the broader fiscal trajectory remains steep.

What to Watch: How fast outlays rebound as delayed payments normalize, the pace of tariff renegotiations, and whether Treasury’s borrowing needs fall enough to influence yields. Deficits may be shrinking month to month, but the long-term math still isn’t doing us any favors.
Source: money.usnews.com

1. Starcloud Trains First AI Model in Orbit

The News: Starcloud has trained and run an AI large language model from space for the first time, using an Nvidia H100 GPU aboard its Starcloud-1 satellite launched Nov. 2. The chip is 100x more powerful than any GPU previously sent to orbit, enabling the satellite to run Google’s open-source Gemma model and even train NanoGPT on Shakespeare. The company says orbital compute could cut energy costs tenfold versus Earth-based data centers as power-hungry AI strains grids and water supplies. Starcloud plans a 5-gigawatt solar-powered orbital data center, larger than any U.S. power plant and will add Nvidia Blackwell chips on its next launch in Oct. 2026.

Why It Matters: If orbital compute works at scale, it could ease Earth’s data-center crunch—meaning lower AI costs, faster models, and less pressure on domestic grids already facing rising electricity prices. For enterprises and governments, space-based inference could offer always-on solar power, global coverage, and new real-time sensing applications (think wildfire detection or maritime search). But harsh radiation, space debris, and regulatory limits make this far from plug-and-play. Investors should watch whether costs fall fast enough to justify moving compute off-planet—a sci-fi step that’s suddenly looking plausible.

What to Watch: Upcoming orbital data-center launches in 2026–27 from Starcloud, Google’s Project Suncatcher, and Aetherflux; Nvidia’s Blackwell performance in space; and early commercial workloads like satellite imagery inference. If nothing else, your next “cloud” bill might literally come from the clouds.
Source: cnbc.com

2. Norway, Germany partner on 100-satellite defense network

The News: Norway’s Kongsberg and Germany’s Helsing announced a plan to deploy a sovereign European satellite constellation for defense-grade intelligence, surveillance, and targeting by 2029. The system will integrate SAR, electro-optical, and RF sensors from Germany’s Hensoldt, with launches handled by Isar Aerospace. The companies say the project responds directly to Europe’s growing reliance on U.S. space intel—highlighted when Washington paused data sharing with Ukraine earlier this year. The constellation will be supported by Kongsberg’s ground network and new satellite production facilities in Germany.

Why It Matters: For European militaries, homegrown space intelligence means faster targeting, less political risk, and higher resilience—critical as conflicts increasingly rely on orbital sensing. A sovereign constellation could shrink Europe’s dependency on U.S. and commercial providers (like ICEYE, which sold at least eight radar birds this year) and give NATO’s European members more autonomy in crisis scenarios. For defense contractors and investors, it signals a major funding wave toward dual-use space and AI systems, with Helsing’s algorithms already battle-tested in Ukraine. Expect procurement, industrial-policy fights, and questions around who ultimately owns the satellites.

What to Watch: Details on funding, constellation size, and national participation, plus whether France, Italy, or the EU seek integration with their own programs. Europe’s quest for “sovereign sensing” is accelerating; whether partners can move fast enough is the real test. The EU is known more for bureacracy than for speed.
Source: defensenews.com

3. EU Readies €1.2 Trillion Plan to Upgrade Electric Grids

The News: leaked document shows the European Commission will unveil a near-€1.2 trillion “Grids Package” this week to modernize the EU’s power infrastructure and fast-track permits for grid, renewable, storage, and hydrogen projects. Eight priority projects include Iberian–France interconnections, a Cyprus–EU link, a Baltic connector between Lithuania and Poland, a Danish offshore hub, and new hydrogen corridors stretching from Tunisia to Germany. The plan aims to cut permitting times—now up to nine years—and close gaps that left 14 member states below the 2030 interconnection target.

Why It Matters: Obsolete grids are slowing Europe’s clean-energy transition and keeping power prices two to three times higher than in the U.S. A modernized system could ease household bills, accelerate EV charging infrastructure, reduce blackout risks, and unlock stalled solar and wind projects stuck in queue. For industry, better cross-border capacity helps electrify heavy manufacturing and stabilize power markets. But the scale is massive: €730B for distribution and €477B for transmission, requiring EU funds, national budgets, and private capital, not to mention political buy-in for new lines that often face local opposition.

What to Watch: How Brussels structures financing in 2026–27, whether permitting reforms actually cut timelines, and which member states sign onto priority interconnectors. Europe’s grid is the bottleneck; removing it will determine how fast the continent can decarbonize and how much consumers pay to keep the lights on.
Source: euronews.com

Q: How did the man get hit by a bike every day?

A: He was stuck in a vicious cycle.

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