After closing out the preceding week at a record high, the S&P 500 (Index: SPX) clocked a new record high close of 6,977.27 on Monday, 12 January 2026 before retreating a half percent to end the week at 6,940.01, about 0.4% below its previous week's close.

There really wasn't any single catalyst to prompt the retreat. Instead, the general flow of news during the week was mildly negative for the outlook of large publicly traded firms, with the result being that stock prices ended the week marginally lower.

For example, inflation news during the week that was did little to influence expectations for how U.S. interest rates will change during 2026. The CME Group's FedWatch Tool continues to project the Fed will hold the Federal Funds Rate steady until 17 June (2026-Q2), when it anticipates a quarter point rate cut. The tool forecasts another quarter point reduction on 28 October (2026-Q4), six weeks later than it forecast a week earlier.

Perhaps the biggest surprise during the week was President Trump putting potential new tariffs on the table on Friday, 16 January 2026 for European nations opposing U.S. negotiations to acquire the territory of Greenland from Denmark. Which considering how President Trump has transformed tariffs into a tool for the U.S.' international diplomacy over the last year isn't a terribly surprising development and did little to affect stock prices.

All in the all, we find the trajectory of the S&P 500 is right about in the middle of the redzone forecast range shown on the latest update of the alternative futures chart for 2026-Q1.

Here are the market moving headlines, such as they were, for the trading week ending on Friday, 16 January 2026.

Monday, 12 January 2026

• Signs and portents for the U.S. economy:
• Trump calls for one-year cap on credit card interest rates at 10%
• How Trump's proposed cap on credit card rates could reshape consumer lending
• Oil dips as investors assess Iran supply, Venezuelan export resumption
• US to push for quicker action in reducing reliance on China for rare earths
• Chief Fed minion claims to be subject of DOJ investigation:
• Trump team escalates attack on Fed's Powell with criminal indictment threat
• Powell says Trump administration has threatened him with a criminal indictment
• Behind the Scenes Steps Tied to the Investigation of Jay Powell
• Bigger trouble, stimulus developing in China:
• China's 2025 record export surge expected to slow in December
• Xi stresses the need to win the fight against corruption in China
• JapanGov minions looking to break reliance on rare earth materials from China:
• Japan sets sail on rare earth hunt as China tightens supplies
• S&P 500, Dow hit closing record highs; Walmart, tech climb
• Wall Street ended higher, shrugging off concerns over Powell investigation
• Spot gold rises more than 1% to hit all-time high at $4,563.61
• Shares in US credit card issuers slide after Trump calls for 10% rate cap
• Alphabet hits $4 trillion valuation as AI refocus lifts sentiment

Tuesday, 13 January 2026

• Signs and portents for the U.S. economy:
• Core CPI inflation comes in slightly cooler than expected in December
• US inflation stays at 2.7% in December
• Trump says inflation data means Fed can cut interest rates
• US new home sales fall marginally in October
• Oil prices surge on possible Iranian supply disruption
• WTI oil discount to Brent largest in eight months as more Venezuelan crude expected in US
• Current and former Fed minions back chief minion facing legal trouble, what chief Fed minion didn't say about his legal trouble:
• Musalem says Powell video was "very clear and very direct" - MNI Webcast
• Past three Fed chairs decry 'unprecedented' assault by Trump on Powell
• Three peculiarities about Jerome Powell’s statement
• Fed minions say their monetary policy is 'well-positioned', not sure what to make of rising productivity in U.S.:
• Fed's Williams says monetary policy well positioned amid a favorable outlook
• Fed officials cautious about rising productivity's contribution to inflation fight
• Bigger trouble, stimulus developing in China:
• Trump announces 25% tariff on countries ‘doing business’ with Iran
• Wall Street ends in the red as retail inflation comes in slightly cooler, earnings fail to lift sentiment
• Wall Street falls with financials amid credit card rate plan
• Wall St slips on credit card proposal, rate bets boost gold

Wednesday, 14 January 2026

• Signs and portents for the U.S. economy:
• US producer prices increase moderately in November
• US banking giants reap bigger profits as borrowers seek more loans
• US existing home sales accelerate in December
• Oil climbs on concerns over potential Iranian supply disruption
• Trump imposes 25% tariff on imports of some advanced computing chips
• Fed minions debate when and how much to cut rates next:
• Fed's Miran says Trump's deregulation will help lower inflation, justifying rate cuts
• Fed's Barkin calls December inflation data encouraging
• Fed's Kashkari tells NYT it is 'way too soon' to cut rates
• Fed's Kashkari upbeat on 2026, expects inflation to moderate
• Fed's Paulson reiterates more rate cuts could follow moderating in inflation
• Trump imposes 25% tariff on imports of some advanced computing chips
• Bigger trouble in the form of new U.S. tariffs developing in China:
• China's trade ends 2025 with record $1.2 trillion surplus despite tariff jolt
• China blames US for trade imbalances as surplus hits record $1.2tn
• China's vehicle sales, exports set to cool in 2026
• BOJ minions won't fight for Powell, have bigger problems to deal with:
• BOJ puts self defense ahead of solidarity with Fed's Powell
• Japan’s Takaichi to call snap election
• Yen tumbles and Japan stocks soar as election talk reignites ‘Takaichi trade’
• Wall Street ends lower, led by drop in Nasdaq, with tech, banks falling
• Big Tech stocks fall as broader market sees red
• Gold, silver and copper prices hit new highs as global tensions mount

Thursday, 15 January 2026

• Signs and portents for the U.S. economy:
• Oil settles down 4% as Trump comments ease Iranian supply concerns
• US 30-year fixed-rate mortgage drops to near 3-1/2-year low of 6.06%
• US reaches trade deal with Taiwan that could boost US chipmakers
• Trump says no critical minerals tariffs for now, will seek overseas supplies
• US farm economy shows widening cracks as costs rise, jobs vanish
• Fed minions say they are fighting inflation pretty darn well:
• Goolsbee tells CNBC lowering inflation is Fed's main job
• Fed's Daly: policy in good place, calibration should be deliberate
• Fed's Schmid: Cutting rates could make inflation worse
• BOJ minions game-planning next rate hikes, on guard against collapse in Japan's currency:
• BOJ to raise rates again to 1% or higher by end-September, possibly by July
• Fears of BoJ intervention keeps dollar/yen below 160
• Bessent urges 'sound' BOJ policy to address excess FX volatility
• ECB minions cooperating with Fed minions, say their banking rules are right but need to be balanced, while Germany's economy may have hit bottom in the Eurozone:
• ECB's de Guindos: Fed cooperation is 'business as usual'
• ECB's de Guindos says bank valuations show supervisory approach is right
• ECB's De Guindos says "balanced" approach needed on Basel 3 bank rules
• German economy breaks 2-year slide with modest 2025 growth
• Wall Street ended higher as chip stocks climbed and Trump paused critical mineral tariffs
• Wall Street ends up as banks gain following results; chips rally with TSMC
• TSMC smashes forecasts with record profit, flags more US factories

Friday, 16 January 2026

• Signs and portents for the U.S. economy:
• Oil prices settle up as US begins holiday weekend
• "Emergency Intervention": Trump To Cap Residential Electric Bills By Forcing Tech Giants To Pay For Soaring Power Costs
• White House seeks emergency power auction for largest US electric grid
• Trump Says Wants To Keep "Hassett Where He Is" Sending Warsh Fed Chair Odds Soaring; Gold Slides
• Fed minions keep claiming they've achieved the perfect monetary policy for 2026's economy, some worry rate cuts will be needed to boost jobs:
• Fed's Jefferson says current policy stance 'well positioned'
• Fed should be ready to cut rates again amid job market risks, Bowman says
• Bigger carbon dioxide emissions developing in China:
• China Leads Global Coal Power Additions Despite Renewables Push
• BOJ minions thinking about surprising markets by hiking Japan's interest rates sooner:
• Exclusive: Some in BOJ see scope to raise rates sooner than markets expect
• U.S. stocks post marginal losses, notch weekly decline
• Wall Street ends flat ahead of long weekend; S&P 500 down for week

The Atlanta Fed's GDPNow toolestimates real GDP growth in the U.S. during 2025-Q4 ticked up to +5.3% from the +5.1% growth it was anticipating on 9 January 2026.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull and bear watching the news and worrying over it".

Mathematician Paul Erdős died nearly 30 years ago, but left behind a massive legacy. Famously known for his collaborations with other mathematicians and his eccentric practice of showing up unannounced to their doorsteps and staying only as long as they provided him with interesting challenges to ponder, the prolific mathematician left behind 1,135 problems for succeeding mathematicians to advance the field by either proving or disproving them.

In the last few months, three of those problems have been cracked by Artificial Intelligence (AI) systems harnessed with the well established Lean proof assistant. NeuronDaily tells the story of the third, which is impressive because there was little-to-no online material the AI system could have accessed to develop its proof, which means the AI paired with a proof assistant is generating genuinely original work:

Remember those brain-teaser math problems from school that made you want to throw your pencil? Now imagine ones so hard they've stumped mathematicians for decades. Paul Erdős, who published more papers than anyone in math history, left behind hundreds of these puzzles when he died in 1996. This weekend, GPT-5.2 Pro solved one.

Neel Somani prompted the AI to tackle Erdős Problem #397, which asks whether infinitely many solutions exist for a specific equation involving central binomial coefficients. GPT-5.2 generated the proof, the tool Aristotle formalized it in Lean (a verification language), and Fields Medalist Terence Tao accepted it.

Here's Neel Somani's X tweet announcing the accomplishment:

NeuronDaily explains why the proof of Erdős Problem #397 is a big deal:

It’s part of a wave of autonomous solves: GPT-5.2 has now cracked Problem #728, #729, and 397.

Verified mathematics: The Aristotle system auto-corrected gaps in proofs and produced Lean-verified code.

Self-contained reasoning: Unlike October 2025's GPT-5 controversy (which just found existing literature), Tao says these are original proofs.

While impressive for the technology, the new proofs don't yet represent the kind of ground-breaking accomplishment that would permanently leave human mathematicians in the dust.

The catch? Tao emphasizes these are “lowest hanging fruit”; problems solvable with standard techniques, not profound breakthroughs. GPT-5.2 scores 77% on competition-level math but only 25% on open-ended research requiring genuine insight.

Three years ago, having any computing system score 77% on competition-level math would have been a remarkable achievement, but scoring 25% on open-ended research was a pipe dream. Considering the amazing progress that's been made with the use of AI in maths in just the past three years, what lies in store for the next three years?

Image credit: Paul Erdős and Terrence Tao in 1985. Wikimedia Commons. Creative Commons Attribution-Share Alike 2.0 Generic Deed. We were surprised that Erdős collaborated with Tao when the latter was just 10 years old! Terence Tao, of course, went on to have an equally remarkable career and has an Erdős Number of 2.

The new home affordability crisis is showing signs of ending for the first time in nearly three-and-a-half years. The median sale price of a new home sold in the United States has dropped below the upper threshold of affordability that determines whether the typical American household can afford the monthly mortgage payment on the typical new home sold in the U.S.

That threshold is defined by having a mortgage payment that represents no more than 36% of household income, which lenders have historically used to determine whether they will loan money to a household that has no other debt. For October 2025, a household earning the median household income would that bought a new home at the month's median sale price of $392,300 would see their mortgage payment consume 34% of their monthly household income, which puts the typical new home within affordable reach.

For households that do carry other debt, lenders prefer their monthly mortgage payments consume no more than 28% of their pre-tax household income to ensure they have financial resilience to deal with unexpected expenses when their mortgage payments fall below these affordability thresholds. At 34% of its monthly household income, the median new home sold in October 2025 would be affordable for median income-earning households that carry low levels of other debt, the first time that's even been possible since March 2022.

The latest update of our chart tracks the changing relative affordability of the typical new home sold in the U.S. is for the typical American household with respect to the mortgage lending industry's key affordability thresholds from January 2000 through October 2025.

The National Association of Realtors explains the main factor why new homes have suddenly dropped into the range of affordability:

Prices for newly built homes fell to a four-year low in the fall as builders cut prices, according to a report delayed by the government shutdown.

The median sales price for new homes that went under contract in October was $392,300, down 8% from a year earlier and the lowest level since 2021, the U.S. Census Bureau reported on Tuesday.

New-home prices have been trending down since late 2022, after the affordability crisis priced many potential buyers out of the market. Homebuilders responded by cutting prices and boosting incentives.

This month, 40% of builders reported cutting prices, while 67% reported using sales incentives such as mortgage rate buydowns, according to the leading survey of homebuilder sentiment.

Meanwhile, sales of new homes improved year-over-year as mortgage rates were also lower on average in October 2025, contributing to the improved affordability of new homes for the typical American household:

Sales of new single-family houses were at a seasonally-adjusted annual rate of 737,000 in October, little changed from the prior month but up 19% from a year earlier.

Transactions rose as falling mortgage rates and prices both contributed to making new homes more affordable for prospective homebuyers.

Mortgage rates averaged 6.25% in October, down from 6.43% in October 2024, according to Freddie Mac.

The average price of a new home sold in October 2025 was $498,000, which was three percent higher than September 2025's average sale price of $483,500.

Looking at what that means for new home builders, we find time-shifted (centered) trailing twelve month average of the total value of new homes sold in the United States is $29.11 billion. We find the lower sale prices of new homes is contributing to an upward trend in the number of sales, but we find the average sale price of a new home is relatively stable, or flat.

The following charts present the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through October 2025.

Rising trend for new home sales

Rising trend for average home prices

Following up our coverage of August 2025's potential statistical fluke increase in the number of new home sales, revisions to the sales data released on 13 January 2026 confirms the August 2025 sales figures were indeed a fluke.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 13 January 2025. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 13 January 2025. 

Image credit: Microsoft Copilot. Prompt: "An editorial cartoon featuring a real estate agent meeting a young family that earns the median household income who tells them they can afford to buy a new home, a calendar in the room shows it is October 2025", followed by a second prompt to "Make the family's expression happy and make the cartoon more colorful."

Trade between the U.S. and China has been almost fully cut in half since its October 2021 peak. The latest available trade data for October 2025 reveals the combined value of all goods exchanged between the two nations stood at $32.8 billion, which compares with the record peak of $64.7 billion in October 2021.

October is a significant month for U.S.-China trade because U.S. exports of soybeans to China typically peak during the month. In 2025 however, even though China has been buying U.S. soybeans, sales have been muted with the result exports have significantly lagged the typical seasonal boost seen in previous years.

That outcome is a direct consequence of the tariff war between the two nations. Part of China's trade war strategy has been to purchase soybeans from other nations, with Brazil gaining much attention from China's soybean purchasers.

The following chart shows how the combined value of trade between the U.S. and China stands through October 2025 in the context of how trade between the nations has developed since January 2017.

The chart features a counterfactual of how the rolling twelve month average value of goods exchanged between the U.S. and China would have grown in the absence of the global tariff war between the two nations. Through October 2025, we find the gap between that counterfactual and the actual trajectory of U.S.-China trade has opened up to $11.5 billion, with a cumulative loss of $43.4 billion since February 2025.

Looking forward, the U.S. and China reached a one-year trade deal on 1 November 2025. We'll see over the next several months how that deal might change the overall trajectory of the rolling twelve month average. Assuming that deal is not disrupted by President Trump's just-announced 25% tariff on nations trading with Iran because of that nation's repressive government's crackdown against protestors.

All this discussion emphasizes a critical point. Rather than a tool to raise revenue, tariffs have become a tool for addressing geopolitical concerns during President Trump's second term. They've become more than a means of regulating trade.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 8 January 2025.

Image Credit: Close up of a metal container with writing photo by Zalfa Imani on Unsplash.

The U.S. Bureau of Labor Statistics released its employment situation data through December 2025, resuming their regular reporting schedule after the delays caused by 2025's Senate Democrats' government shutdown fiasco.

The jobs data was mixed for working U.S. teens. Older teens, Age 18-19, saw their numbers among the ranks of the employed rise in December 2025. With a seasonally-adjusted 3,547,000 older teens earning wages, the percentage of the older teen population rebounded to 42.9%.

Unfortunately, younger teens, Age 16-17, saw their numbers fall again, dropping to a seasonally adjusted 1,938,000 and continuing a multi-year, long-running trend. That downward trend is most evident when looking at the share of the younger teen population with jobs. The employment-to-population statistic for this demographic dropped to 20.3%, its lowest level since January 2021's 20.4%.

The following chart visualizes these trends along with the seasonally-adjusted total Age 16-19 employment level:

Sharp-eyed readers will catch that the number of employed Age 16-17 teens and Age 18-19 teens doesn't add up to the combined Age 16-19 figures in these charts. That's because each age demographic gets its own seasonal adjustment. If you want numbers that do add up within a small margin of error, you'll want to access the BLS' non-seasonally adjusted employment figures.

Really sharp-eyed readers will also note the seasonally adjusted data presented in the charts doesn't match our last edition in this series. The BLS revised its seasonally adjusted data with the December 2025 employment situation report, with the revisions affecting all previously reported data from January 2021 onward. The revisions do not affect the nonseasonally adjusted data, which remains unchanged from their previously reported figures.

Reference

U.S. Bureau of Labor Statistics. Labor Force Statistics (Current Population Survey - CPS). [Online Database]. Accessed: 9 January 2026.

Image credit: Jobs - get the facts about occupations poster by Library of Congress. Public domain.