Dear readers,
Yesterday we examined the stagflationary whisper emerging from a 1.4% GDP print. Today, that whisper has been drowned out by something louder: the sound of constitutional machinery grinding against executive ambition.
While most of America was winding down for the weekend on Friday, Washington delivered a legal earthquake followed by an immediate aftershock. The Supreme Court struck down presidential tariff authority in a 6-3 ruling. Hours later, the White House invoked a different statute to reimpose levies. The result is a trade policy environment that now operates on a 150-day countdown clock—and corporate treasurers reaching for their calculators.
The chaos extends beyond the Beltway. The Federal Reserve’s internal discord has deepened. Walmart delivered a beat but spooked investors with caution. And crypto futures are about to trade around the clock.
Let’s unpack it.
The Plan B Economy
In a landmark decision delivered Friday, the Supreme Court declared President Trump’s use of the International Emergency Economic Powers Act to impose tariffs unconstitutional. The 6-3 ruling effectively voided the legal foundation for his previous trade levies.
The Immediate Windfall:
Legal experts estimate companies could now pursue up to $175 billion in refunds for tariffs paid under the invalidated authority. That figure represents a potentially massive retroactive capital injection into corporate balance sheets—assuming firms can navigate the bureaucratic machinery to claim it.
The Rapid Countermove:
The celebration proved short-lived. Within hours, the President pivoted to Section 122 of the Trade Act of 1974, announcing a blanket 10% global tariff on imports.
The critical details for portfolio positioning:
- The 150-Day Limit: Section 122 permits these tariffs for only 150 days. Trade policy has transformed from strategic positioning into a pressure cooker with an expiration date.
- The Carve-Outs: Most Canadian exports under CUSMA remain exempt. Steel, aluminum, and automotive tariffs under Section 232 stand untouched by the ruling.
- Friday’s Market Response: Wall Street absorbed the news with surprising composure. The S&P 500 climbed 0.69% to 6,909.51, the Dow added 0.5% to 49,625.97, and the Nasdaq rose 0.9% to 22,886.07. Investors appear to be weighing potential refund windfalls against the inflationary drag of the new levy.
The calculus is now extraordinarily complex: companies must price in a temporary cost spike while simultaneously pursuing refunds from the past. Uncertainty has a price, and the market will extract it.
The Fed’s Internal Fracture
While the executive and judicial branches clash, the Federal Reserve is waging its own quiet civil war.
The January FOMC minutes, scrutinized by analysts over recent days, reveal deeper divisions than the 10-2 vote to hold rates at 3.50%-3.75% would suggest.
- The Dovish Camp: Governors Waller and Miran pushed for a cut, arguing current policy remains too restrictive.
- The Hawkish Contingent: “Several” participants wanted explicit language preserving the option for rate hikes should inflation prove stubborn.
- The Uncomfortable Reality: With core PCE inflation at 3.0%—a full percentage point above target—and Q4 2025 growth limping in at 1.4%, the soft-landing thesis has lost its narrative force.
Futures markets have repriced aggressively. March cut expectations have evaporated. The consensus has shifted to June 2026 for any potential move. But with a 10% global tariff now adding inflationary pressure, even that timeline looks ambitious.
The Consumer Paradox
For the clearest read on the American consumer, earnings calls often prove more illuminating than economic models.
Walmart’s Q4 results arrived Friday with headline strength: $190.7 billion in revenue (up 5.6%), beating estimates. Global e-commerce surged 24%, demonstrating the retailer’s successful digital transformation.
The stock fell 1.4%.
The explanation lies in the gap between performance and pricing. Trading at nearly 50 times earnings, Walmart is valued for flawless execution. Management’s cautious outlook for 2026—describing expected growth as “modest”—signaled that consumers, while still spending, are hunting for value with increasing intensity. When the world’s largest retailer tempers expectations, the message reverberates.
Crypto’s Institutional Milestone
Bitcoin has stabilized around $68,000 this weekend, recovering from a dip to $65,600 following the tariff announcement. The resilience is notable, but the structural news carries greater long-term significance.
The CME Group announced it will launch 24/7 trading for crypto futures beginning May 29, 2026.
For years, the “CME Gap”—the price differential between Friday’s close and Sunday’s open—has generated volatility and speculation. Continuous trading allows institutional players to hedge risk throughout the weekend, potentially dampening the wild swings that have characterized Saturday and Sunday price action.
This represents the final stage of crypto’s institutionalization. The asset class that once prided itself on operating outside traditional finance is now fully integrated into its infrastructure.
The Week Ahead
Two events demand attention:
NVIDIA Earnings (Wednesday, February 25): With shares near highs and the AI trade facing increased scrutiny, anything short of exceptional results could drag the technology sector lower. The bar has been set extraordinarily high.
The Refund Wave: Monitor announcements from major importers—retailers, auto parts suppliers, electronics manufacturers—regarding IEEPA tariff refund filings. These claims could emerge as an underappreciated catalyst for Q1 earnings.
The Takeaway
The interplay between the Supreme Court and the White House this weekend illustrates a reality that 2026 has made unavoidable: political risk is no longer a concern reserved for emerging market specialists. It now sits at the center of Wall Street’s calculus.
The 150-day timer has started. Companies must simultaneously manage a temporary cost surge, pursue retroactive refunds, and navigate a Federal Reserve paralyzed by internal disagreement. The economy has entered a phase where legal briefs matter as much as earnings reports.
I hope you enjoy the rest of your weekend.
Best regards,
The StocksToday.com Editorial
