When Central Banks Become Political Targets: What Happens to Your Money

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The market is rotating. Concentration is cracking. And the strategies we've deployed are built for exactly this environment.

Corporate Overview

The criminal investigation into Fed Chair Jerome Powell isn't about a building renovation—it's about who controls the price of money in America.

Markets shrugged it off initially, hitting fresh all-time highs before reality set in mid-week. Meanwhile:

• Gold blasted past $4,600 per ounce

• Silver surged above $90 as investors hedged institutional breakdown

• The message: when central bank independence erodes, asset prices don't follow textbook patterns

At Daly Asset Management, we don't sugarcoat the chaos:

• We build systematic, data-driven strategies designed for exactly this volatility

• No hidden fees, no handholding—just edge

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💡 Stock of the Week: Taiwan Semiconductor (TSM) – The AI Trade Just Got Validation

Ticker: TSM | Sector: Semiconductors | Market Cap: ~$1.77T | Yield: ~1.2%

TSMC crushed Q4 earnings on January 15 with 35% year-over-year profit growth and dropped the most bullish guidance of the AI era:

• $52-56 billion in 2026 capex, up at least 27% from 2025

• Revenue for Q4 topped NT$1.05 trillion (US$33.73 billion), beating estimates

• Net income hit NT$505.74 billion, up 35% year-over-year

The company manufactures every advanced AI chip that matters—Nvidia, AMD, Apple—and just signaled hyperscalers have locked in multi-year capacity commitments.

Key metrics that matter:

• High-performance computing (AI/5G) accounted for 55% of Q4 sales

• Advanced chips (7nm or smaller) represented 77% of wafer revenue

• Forecasts nearly 30% revenue growth in 2026

• Will ramp 2nm production with "good yield" across two facilities

Wall Street responded immediately:

• TSMC ADRs surged 5%+

• Dragged Nvidia (+3%), AMD (+6%), and ASML (record high) along

• Analysts consensus: Strong Buy with average price target $342-373

Trading near $342, TSMC sits at ~35x forward earnings. Not cheap, but analysts note it's "attractive relative to tech peers" given visibility into AI infrastructure spending through 2028.

Risks to monitor:

• Memory shortages could crimp smartphone/PC demand

• Geopolitical tension over Taiwan remains binary risk

• Trump tariff threats on semiconductors create policy uncertainty (though Taiwan just secured a $250 billion trade deal with tariff reductions)

Verdict: TSMC validated that the AI capex cycle has years, not quarters, left. This is the supplier everyone depends on, and they just told us demand is real.

📉 Market Snapshot (Week of January 9-16, 2026)

• Major indexes hit fresh all-time highs Monday before pulling back Wednesday on tech weakness

• Russell 2000 is crushing 2026—up 5.6% YTD vs S&P's 1.2%

• Suggests domestic rebound trade and rotation from overcrowded large-cap names

• Breadth is expanding, but volatility is rising

Market Commentary

🔥 Fed Independence Under Fire – The Institutional Crisis That Moved Markets

The Department of Justice served Federal Reserve Chair Jerome Powell with grand jury subpoenas on Friday, January 10, threatening criminal indictment related to his June 2025 testimony about the Fed's $2.5 billion headquarters renovation.

Powell's response was extraordinary:

• Posted video statement Sunday night calling the investigation a "pretext"

• Stated: "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"

• Drew support from Treasury Secretary Scott Bessent, Jamie Dimon, and 12 global central bankers

Markets initially dipped Monday—Dow fell 388 points—before rallying to record highs. This reaction was wrong.

Why this matters more than markets think:

• When the Fed's ability to set rates without political intimidation is questioned, safe-haven flows accelerate

• This isn't a building dispute—it's a stress test of institutional credibility

• The next Fed chair (Powell's term ends May 2026) will face continuing pressure to lower rates regardless of economic conditions

💰 Precious Metals Explode on Systemic Fear – Gold $4,600, Silver $90+

Gold surged to record highs above $4,600 during the week, up 7% YTD. Silver outperformed violently:

• Rose 25.9% in just two weeks to breach $90/oz

• Fastest two-week gain since August 2020

• Wednesday saw silver climb 6%+ intraday, hitting fresh all-time high

The drivers aren't just Powell:

• Geopolitical chaos: Venezuela, Iran tensions, Greenland annexation threats

• Resource nationalism: China's silver export controls, critical minerals scramble

• Central bank buying: 297 tonnes accumulated through November 2025

• Supply constraints: Physical silver "disappearing" to China and India with $10 premiums in Shanghai

Analyst targets that seemed crazy three months ago are now consensus:

• Jupiter Asset Management: "absolutely" possible for gold $5,000 and silver $100 this year

• UBS: $5,000 gold "in the coming months"

What changed: Gold no longer moves solely on inflation or dollar weakness—it's pricing geopolitical instability and monetary policy uncertainty. This is a barometer of institutional trust, not a commodity trade.

🔥 TSMC Crushes Doubts, AI Capex Cycle Accelerates

Taiwan Semiconductor's Thursday earnings were a definitive answer to "AI bubble" skeptics. Beyond the numbers, CEO C.C. Wei revealed:

• Customers are "directly approaching" TSMC to lock capacity

• Management "reassured around AI bubble concerns" after checking "directly in detail with customers and customers' customers"

• Translation: hyperscalers (Microsoft, Google, Meta) aren't bluffing on infrastructure buildouts

The $56 billion capex guidance implications:

• TSMC will spend 50% more than its 2022 cycle peak

• Analysts believe Nvidia may now contribute ~20% of TSMC revenue, surpassing Apple

• Semiconductor equipment makers (Applied Materials +5.6%, ASML record high) rallied in sympathy

What the market missed: This isn't about one quarter. TSMC's 2nm production capacity is reportedly sold out for the year, and any new capacity should help fulfill more orders. The company is building for multi-year demand visibility, not speculative hope.

⚠️ Tariffs and Geopolitics – The Noise That Could Become Signal

Trump announced 25% tariffs "effective immediately" on countries doing business with Iran, targeting China and India. Other flashpoints:

• Greenland: White House talks ended in "fundamental disagreement" over ownership

• Venezuela: Ouster of Maduro triggered 130% stock rallies and energy market speculation around US majors gaining access to oil reserves

Markets are treating tariffs as "negotiating posture"—Chinese tech stocks held firm—but this is the same playbook that preceded actual tariff escalation in 2018.

The pattern: Announce aggressive stance → markets shrug → implementation follows months later. Don't get comfortable.

🧭 Tactical Map: Where to Lean In

• Physical metals allocation (3-5%): insurance against monetary/geopolitical risk. Gold $5K, silver $100+ increasingly consensus. Consider exposure through ETFs (GLD, SLV) or allocated physical.

• AI infrastructure layer: TSMC validated the build-out. Consider exposure to:

  • Semiconductor manufacturers (TSM, NVDA, AMD)

  • Equipment makers (ASML, AMAT, LRCX)

  • Data center REITs and utilities serving hyperscaler demand

• Small-cap value (Russell 2000): Domestic rebound + relative valuation reset + broadening participation signal potential rotation continuation. RWM (inverse ETF) for hedges, IWM for long exposure.

🔍 Theme to Watch: Resource Nationalism and the Critical Minerals Scramble

China's December silver export controls and Trump's executive order on rare earth import restrictions highlight a structural shift:

• Resources are now geopolitical leverage, not just commodities

• The Greenland push isn't about ice—it's about critical minerals for tech supply chains

What matters long-term:

• Rare earth stocks (MP Materials, US Rare Earth) spiked mid-week on policy speculation

• China pays $10 premium on silver in Shanghai—physical markets are fragmenting

• Mining equities, royalty plays, and producers with secure supply chains outside adversarial jurisdictions will see premium valuations

Alpha opportunity: Companies controlling critical mineral supplies for EVs, defense, and tech manufacturing will trade at premium multiples as supply chain security becomes national security.

📅 Forward View: Week of January 19-23, 2026

Economic calendar:

• Monday, Jan 19: Markets closed (MLK Day)

• Tuesday, Jan 20: Netflix (NFLX), US Bancorp (USB), D.R. Horton (DHI) earnings

• Wednesday, Jan 21: Johnson & Johnson (JNJ), Truist (TFC), Halliburton (HAL)

• Thursday, Jan 22: Procter & Gamble (PG), Intel (INTC), Q3 GDP final estimate

What to watch:

• Big bank earnings this week were strong but mixed—trading desks crushed it, investment banking lagged

• Consumer credit concerns lurk (JPMorgan's $2.2B Apple Card provision)

• Retail earnings next week will provide demand signals amid tariff uncertainty

• Manufacturing data has been surprisingly strong (Empire State +11 points, Philly Fed +21 points)

💬 Final Words

Central bank independence isn't a boring institutional detail—it's the foundation every asset price sits on. When that foundation gets attacked and precious metals rocket in response, the market is screaming: investors are hedging systemic risk, not inflation. At Daly Asset Management, we design portfolios for reality, not CNBC fantasies. Data-driven, systematic, fee-transparent. Start investing at dalyassetmanagement.com—because the market doesn't care about your politics, and neither do we.

Disclosures: This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own due diligence or consult with a financial advisor before making investment decisions.