Edward Meir's Week in Review: Feb. 1, 2026

Silver plunged from a Thursday close of $114/ounce to an intraday low of $74/ounce on Friday before closing the session at $85/ounce, down roughly $30/ounce on the day. (Ironically, the $30/ounce decline was the equivalent of silver’s entire price only seven months ago.) For its part, nearby gold futures sank by 11% on Friday to $4,713/ounce, its steepest one-day decline since January 1980. The weekly loss in gold was not as bad (about 5%). But silver did not fare as well (down 20% on the week) as the week’s earlier gains were not enough to offset Friday’s brutal sell-off.

For January as a whole, both complexes managed to close higher. Elsewhere, platinum and palladium ended down by a sizable 16% each on Friday and ended lower on the week.

Base metals

The selling in precious spilled over into base metals, but the declines were not as dramatic. Copper and nickel lost about 4% on Friday, while zinc and aluminum were off by about 1.5% and 3%, respectively. Lead dropped by only 1%, with tin being the biggest loser in the group, down 9%. However, given that base metals had rallied sharply earlier in the week, their weekly performance was mixed. Copper, for example, ended the week just about flat. Aluminum ended with a slight gain (0.8%), as did zinc (up 4.3%). Tin and nickel lost ground (down by about 4% each).

Some commentary suggests the appointment of the new Federal Reserve chairman, Kevin Warsh, was partly responsible for the selling as it led to a spike in the dollar. We suspect the more likely reason for Friday’s decline was attributable to a massive unwind of excessive speculative positions that were building up in precious metals (and less so in base metals) for some months now.

Oil and gas

Outside of metals, crude oil prices settled about $4/barrel higher on the week, finishing close to a six-month peak. Both gasoline and distillates had solid showings as well, up by about $0.10/gallon and $0.20/gallon, respectively.

Crude markets remain on edge as Trump is weighing potential military action against Iran now that a US carrier group has arrived in the region. It seems a decision will be made once the Iranians react to a US proposal passed on to them that severely curtails their ability to pursue nuclear and missile programs. We doubt the regime will agree to the rather onerous terms, so the likelihood of some kind of strike seems high. Adding to the confusion, over the weekend there were a series of explosions at various apartment buildings in at least five Iranian cities. At least one of the apartments belonged to a naval Revolutionary Guard commander. (Israel denied it was involved.)

In the natural gas complex, prices settled at $4.35 on Friday, but two days earlier, valuations soared to a 3 1/2 year high of $7.82 before backing off. For the week, gas prices were down by about $0.90/bcf despite the fact that large sections of the US remain in a deep freeze. Next week’s report is widely expected to wipe out this surplus as record withdrawals are expected in the wake of cold weather and the impact of Winter Storm Fern.

Equities

In the US equity markets, stocks sold off on both Thursday and Friday but gains from earlier in the week kept the overall changes on the week fairly modest. The S&P 500 managed to eke out a 0.3% advance for the week, while the NASDAQ and Dow finished down by 0.2% and 0.4%, respectively. Several big tech names came out with earnings over the past few days, among them Microsoft, Meta and Apple. Market reaction to their numbers was mixed. Still, by and large, earnings are running well above street estimates.

Trump names Fed chair

As noted earlier, Fed Governor Kevin Warsh was picked by Trump to be the new Fed chairman. Warsh was under consideration in Trump’s first term as well, but he did not get the nod. Below are excerpts of a Reuters article readers could find of interest.

President Donald Trump on Friday chose former Federal Reserve Governor Kevin Warsh to head the US central bank when Jerome Powell’s leadership term ends in May, giving a frequent Fed critic a chance to put his idea of monetary policy “regime change” into practice at a moment when the president has pushed for more control over the central bank. “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is ‘central casting,’ [always a major selling point for Mr. Trump] and he will never let you down,” Trump said in announcing his latest move to put his stamp on a Fed he persistently lambasts for not caving to his demands for lower interest rates. The position requires confirmation by the Senate.

While Warsh is no White House insider, he has been a confidant of the president and a guest at his Florida estate and looks poised to push many of Trump’s priorities as a “shadow” Fed chair until Powell’s chair term ends in mid-May. A lawyer and a distinguished visiting fellow in economics at Stanford University’s Hoover Institution, Warsh has said he believes that the president is right to press the central bank for steep interest-rate reductions and has criticized the Fed for underestimating the inflation-busting potential of productivity growth supercharged by artificial intelligence.

He has also called for a broad overhaul of the central bank that would slim its balance sheet and ease bank regulations. Warsh, 55, was nearly named to the job in Trump’s first term before being passed over for Powell, and since then has kept a steady public profile through speeches and essays that have taken Powell and his colleagues to task for their management of the Fed’s balance sheet, interest rates and other actions.

He now will be responsible for an institution he has said should scale back its footprint in the economy and change the way it manages monetary policy. It is not clear how the pick may affect the trajectory of rates in the short term. The Fed’s three rate cuts in 2025 brought short-term borrowing costs to the 3.50%-3.75% range. In January, citing stronger growth and a stabilizing labor market, it left rates on hold and signaled a pause ahead; markets for now don’t expect another rate cut until the next chair is in place, in June.

With a background on Wall Street, including as a partner in the office managing the wealth of investing giant Stanley Druckenmiller, and family ties to major Trump supporter Ron Lauder, Warsh will be under an intense spotlight to prove his independence from the president. As a Fed governor from 2006 to 2011, Warsh’s familiarity with Wall Street executives and investors made him a chief liaison to the financial community for then-Fed Chair Ben Bernanke during the 2007-2009 financial crisis.

Though he did not dissent against the massive bond purchases Bernanke used to nurse the economy out of what proved a long downturn, he was concerned they would stoke inflation and eventually resigned. Warsh’s inflation concerns proved misplaced, but the large size of the Fed’s balance sheet, and the role it plays in managing interest rates, have remained a concern. He now argues that shrinking the Fed’s big balance sheet would allow it to “redeploy” excess liquidity in financial markets to the real economy by lowering the Fed’s policy rate.

Given his reputation as a dove, we thought the Warsh announcement would have weakened the dollar and cheered the US equity markets, but it did not. Instead, the dollar index strengthened on Friday while stocks sold off. A currency analyst pointed out Warsh’s dovish stance on interest rates did not seem to matter as much to investors as opposed to perceptions he is likely to stand his ground as an independent chairman and not get too politicized. Others suggested Warsh’s dovish view on rates is too simplistic and he has been much more hawkish in the past.

Bond market

We don’t read too much into any of these claims and preferred to look instead to the US bond markets for a more reliable reaction to his appointment. Here, there was no noticeable shift in treasury yields materializing on Friday, while expectations regarding future interest rate cuts remained unchanged as well. Investors are assigning a 13% probability for a rate cut in March, essentially unchanged from prior to the announcement, while the likelihood of an April cut moved up by 2% to about 31%. June odds rose to 65% from 62% and so none of these changes suggest a particularly significant change in expectations as far as the bond markets are concerned. Moreover, we should also remember Warsh is going to be only one of several votes on the Fed board and cannot single-handedly determine the course of interest rates.

More from the Fed

In other Fed developments, Wednesday also brought us the Fed policy statement and Powell’s news conference. We thought Powell’s Q&A was a rather tame affair as there was hardly any market reaction to his remarks. The Fed held rates unchanged, as expected, with the vote being 10 to 2. There was no signal as to when the next cut could be expected, with Powell noting, “We’re not trying to articulate a test for when to next cut…What we’re saying is we’re well positioned.”

Powell acknowledged that US growth was getting stronger since the last meeting and there were tentative signs the labor market was stabilizing. But the stabilization was on account of rather unusual trends setting in. In this regard, Powell noted labor supply had shrunk thanks to less immigration and this was offsetting softer hiring demand, keeping overall unemployment rate from rising all that much. AI was also having an impact on jobs, Powell noted, although its overall influence is still up for debate.

Regarding tariffs, Powell pointed out the price increases generated by them have caused less damage than feared, as businesses or consumers have absorbed them. Powell said the Fed is tracking the tariffs closely and estimates should they remain on their current trajectory, the full brunt of the price increases should work themselves out of the economy (and the data) by the summer. We are not sure about “things staying the same” as new tariff threats seem to crop up each passing week. Last week, Trump threatened an additional 100% on Canadian imports if Ottawa signed a comprehensive trade deal with China. He also warned of a hike to 25% (from 15%) on South Korean imports if promised investments that Seoul was supposed to make into US projects (like shipbuilding) do not materialize.

Powell was also asked several questions regarding his imminent exit and the video he posted recently, but he declined to address those queries. He did say, however, he felt it was important to attend Gov. Lisa Cook’s Supreme Court hearing in person, describing her case as being the most important legal issue in the Federal Reserve’s history. He also had some pointers for his successor, saying he should stay out of the political spotlight (hard to do currently), maintain the central bank’s independence and communicate through the Congress. Powell also praised the extraordinary Fed staff the new chairman will be working with.

It promises to be yet another volatile week coming up. We don’t think the selling is over just yet in commodities (with crude oil being the exception). We would not be surprised to see a negative start to the week before things start to stabilize going into the latter part of the period. US equity markets will likely follow the same trajectory.

Macro readings and other news from the past week

• Producer prices came in on the disappointing side in December, increasing by their greatest amount in some five months. There were rather large price increases reported for hotel and motel rooms as well as airline fares, but goods prices were unchanged. The index came in at 0.5% after a 0.2% advance in November. For the 12 months through December, PPI was up 3%, unchanged from November. For 2025 as a whole, producer prices rose by 3% as well, down from the 3.5% seen in 2024. The Bureau of Labor Statistics is now caught up on all its delayed producer and consumer price indices and so the data should start to normalize going forward. The BLS also has a new proposed commissioner at the helm, but he awaits Senate confirmation.

• In housing news, November FHFA housing price index came in at 0.6% on Tuesday, slightly higher than the 0.4% increase seen in October. The S&P Case-Shiller home price index rose to 1.4% year over year, about in line with last month’s increase.

• January consumer confidence readings plunged to an 11-year low of 84.5, coming in well below the 90 consensus forecast. Although the prior reading was revised up by almost 5 points to 94.2, the latest reading obviously is more relevant.

“References to prices and inflation, oil and gas prices, and food and grocery prices remained elevated,” the chief economist at the Conference Board was quoted as saying. “Mentions of tariffs and trade, politics and the labor market also rose, and references to health insurance and war edged higher,” she added. If there is a sliver of good news in all this, it is consumer confidence readings generally do not correlate all that well with actual US consumer spending.

• Weekly initial jobless claims came in at 209,000 (consensus 205,000), pretty much in line with the week prior. Continuing jobless claims were 1.827 million, down 38,000 from the prior week.

• The November US trade deficit widened to $57 billion (consensus -$43.5 billion) from $29 billion in October.
• Q3 productivity readings was unchanged from the first estimate of 4.9%. Maintaining high productivity readings is going to be essential in keeping inflation pressures under check.

• Durable goods orders jumped 5.3% month-over-month in November (consensus 1.1%) following a revised 2.1% decline for October. Excluding transportation, orders rose 0.5% month-over-month (consensus 0.3%) following a revised 0.1% increase for October. The key takeaway from this report is it showed good business spending activity, evidenced by the 0.7% month-over-month jump in nondefense capital goods orders (excluding aircraft). Separately, the January Chicago PMI came in at 54.0, well ahead of the 43 consensus forecast.

More trade news

Recent tariff tensions with the US have pushed several regional trade accords over the finish line last month while giving fresh impetus to new ones. The EU and the “Mercosur” bloc in Latin America (Brazil, Argentina, Paraguay and Uruguay) signed off on a massive trade accord that reduced a host of duties on each side, bringing nearly 20 years of talks to an end. India and the EU also struck a deal last week. EU exports to India are expected to double by 2032, while European tariffs on virtually all Indian imports will be phased out over the next seven years. Importantly, agricultural items like beef, sugar, rice and dairy were kept out of the agreement. There were no tariff exemptions for Indian companies hit by CBAM though, as duties on Indian exports of steel, aluminum, cement, and fertilizers will all remain in effect.

Various European leaders are also taking time to visit China with large business delegations in tow. French President Macron visited late last year, while the Canadian premier was in Beijing earlier in January. Last week, UK Prime Minister Keir Starmer came calling – the first visit to China by a British leader in eight years. The German chancellor is expected to visit later in February as German foreign investment in China hit a four-year high last year. The world’s trading landscape is changing before eyes as new alliances gel, while traditional ones seem to be receding.

The Eurozone economy grew quicker than expected in Q4 of last year as consumption and investments kicked into higher gear. The bloc grew by 0.3% in the quarter, slightly above the 0.2% expected. For 2025 as a whole, the Eurozone grew by 1.5%, better than the 0.9% expansion recorded in 2024, but still not all that strong. Spain remained the primary driver of European growth in Q4, expanding by a quicker-than-forecast 0.8%. Germany seemed to be doing better, growing by 0.3% in the quarter. Italy, too, beat forecasts with 0.3% growth, but France and Ireland both lagged.

Meanwhile, macro numbers out of China remain grim. We learned over the weekend the official manufacturing PMI dropped to 49.3 from 50.1 in December as sub-indexes for new orders and export orders both declined rather sharply. (New orders fell to 49.2 in January from 50.8 in December, while export orders dropped to 47.8 from 49.0 in December. The non-manufacturing PMI, which includes services and construction, dropped to 49.4 from 50.2 in December as well, falling to its lowest since December 2022. Some of the declines could’ve been exaggerated by seasonal influences in January. But even allowing for that, the numbers have to be quite disappointing for the Chinese authorities.

Corporate news

In corporate news, Century Aluminum and Emirates Global Aluminum announced last week they will join forces to build a new smelter in Oklahoma, expected to produce 750,000 tons of metal a year. If constructed as planned over the next several years, the facility would practically double US aluminum output. The Department of Energy had previously awarded Century $500 million for a smelter, but the joint venture will have to secure additional financing and, more importantly, lock in an affordable power contract. In the meantime, we are not sure what happens to EGA’s original plan to build a separate $6 billion smelter itself in the US.

Coming up

This week’s US macro readings: Monday brings us the January ISM manufacturing number (expected at 48.4%, last 47.9%). On Tuesday, we get December job openings (expected at 7.1 million, unchanged on the month) followed by January ISM services (expected at 53.5%, prior 54.4%). On Wednesday, we get the January ADP report (expected at 45,000, last 41,000) followed by weekly initial jobless claims (expected at 212,000, last 209,000). Friday brings us January nonfarm payrolls (expected at 55,000, last 50,000) while the unemployment rate is expected to come in unchanged at 4.4%. Consumer sentiment readings for February (preliminary) are expected to come in at 54 (last 56.4), while December consumer credit will be the final reading of the week (expected at $8 billion, last $4.2 billion).