Evening digest: Powell probe shakes Fed, Trump hits banks, media war escalates

Markets head into the week grappling with an unusual convergence of political risk, regulatory shock, and strategic realignment.

In Washington, a Justice Department probe into Federal Reserve Chair Jerome Powell is unsettling investors and reigniting fears over central bank independence.

Wall Street is also reeling from President Trump’s surprise call to cap credit card interest rates, hammering financial stocks.

Meanwhile, a high-stakes media power struggle escalates in the US, and Europe moves closer to a landmark EU–India trade pact amid shifting global alliances.

DOJ’s Powell probe threatens Fed independence

Federal prosecutors have launched a criminal investigation into Fed Chair Jerome Powell over his June congressional testimony about the central bank’s $2.5 billion headquarters renovation project in Washington.

The probe, approved by Trump-aligned US Attorney Jeanine Pirro, scrutinizes whether Powell downplayed the renovation’s ballooning costs and luxurious features, including private dining rooms and marble finishes, when testifying under oath.

The project is running roughly $700 million over budget due to asbestos remediation, lead abatement, and retrofitting 1930s buildings.

Powell has called the investigation “unprecedented” and claimed it’s retaliation for his refusal to slash rates at Trump’s behest.

The escalation raises alarm bells about Fed autonomy, with gold surging and equities declining as markets digest potential threats to institutional independence.

Financial stocks tank on Trump’s surprise 10% credit card rate cap call

Bank and credit card stocks plummeted on Monday after Trump announced a one-year cap on credit card interest rates at 10% effective January 20, sending shockwaves through Wall Street.

Synchrony Financial tanked nearly 9%, Capital One dropped over 6%, and Citigroup fell roughly 4% in premarket trading.

JPMorgan Chase, Bank of America, and payment networks Visa and Mastercard also slid between 2% to 3%.

Trump claims companies violating the cap would be “in violation of the law,” though he provided no implementation details.

Analysts doubt Congress will pass legislation by January 20, questioning how Trump will enforce the order unilaterally.

But the real damage is theoretical: subprime lenders like Synchrony and Bread Financial face earnings obliteration; banks would tighten credit, reducing lending to risky borrowers and potentially cratering consumer spending across retail, airlines, and restaurants.

Paramount escalates WBD fight with lawsuit

David Ellison’s Paramount Skydance escalated its hostile takeover of Warner Bros. Discovery on Monday, filing suit in Delaware Chancery Court and launching a proxy battle to kill the Netflix deal.

Paramount demands WBD disclose valuation metrics for Netflix’s $82.7 billion offer and the Global Networks spin-off, data that the company claims shareholders need to make informed decisions.

The company will nominate directors at WBD’s 2026 annual meeting and oppose Netflix approval if a special meeting is called, with shareholder votes due by January 21.

Paramount’s $30-per-share all-cash bid ($108.4 billion) contrasts with Netflix’s $27.75 per share involving stock and assets.

WBD’s board maintains that Netflix is superior and cites regulatory risks from Paramount’s deal.

The saga threatens CNN’s editorial independence under Ellison’s control and underscores legacy media’s desperate consolidation race against streaming giants.

Germany’s Merz pushes EU-India trade deal closer to January finish line

German Chancellor Friedrich Merz signaled optimism that the EU and India could clinch a comprehensive free trade agreement by month’s end, meeting Prime Minister Narendra Modi in Ahmedabad on Monday.

If finalized, EU Commission and European Council presidents will visit India in late January to formalize the deal, Merz said.

The pact would cover market access, tariffs, investment protections, and regulatory cooperation after years of stalled negotiations.

Bilateral trade hit a record $51.23 billion in 2024-25, with Germany accounting for roughly a quarter of India’s EU trade.

Beyond commerce, both nations signed 19 agreements spanning defense co-development, critical minerals, AI innovation centers, and renewable energy partnerships.

The deal marks Europe’s strategic pivot toward India as Washington reshapes global trade dynamics and China restricts mineral exports critical to automotive and semiconductor industries, diversifying EU supply chains away from geopolitical headwinds.

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