Wall Street Brunch: Megacaps And The Fed (undefined:MSFT)

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Apple and Microsoft lead a packed earnings week. (0:15) Fed decision looms as Powell faces White House investigation. (1:51) Winter storm grounds thousands of flights. (2:47)

The following is an abridged transcript:

Those shouts you hear are echoing from the Five Points to Wall Street, where we see who holds sway over the market. The megacap companies, born rightwise with the AI trade, or the Federal Reserve, and its monetary policy?

Apple (AAPL), Microsoft (MSFT) and Meta Platforms (META) headline a heavy earnings calendar, alongside results from Tesla (TSLA), Boeing (BA), Visa (V), Mastercard (MA), Exxon Mobil (XOM) and Chevron (CVX).

In the old rivalry of DOS vs. Mac, Microsoft’s report will be closely watched for signs of AI-driven Azure growth and margins, while Apple’s numbers should shed light on iPhone demand and its slower-moving AI strategy.

SA analyst KM Capital says the technical setup looks favorable, with Microsoft near oversold territory heading into earnings on Wednesday, while AI and cloud investments — backed up by the recent U.S. Air Force contract — continue to underpin growth.

Despite tariffs and geopolitical friction with China, Apple is still expected to deliver its largest year-over-year revenue jump in four years when it reports fiscal Q1 2026 results on Thursday.

HSBC analyst Nicolas Cote-Cool says Apple’s success is being driven largely by the iPhone 17 series — especially the Pro and Pro Max — as well as continued strength for the iPhone 16 in key emerging markets.

Also on the earnings calendar:

• Tuesday we hear from Boeing (BA), UnitedHealth (UNH), Texas Instruments (TXN), RTX (RTX) and General Motors (GM).
• On Wednesday, Microsoft and Meta are joined by Tesla (TSLA), IBM (IBM) and AT&T (T).
• Thursday brings payments and heavy machinery with Visa (V), Mastercard (MA) and Caterpillar (CAT).
• And we wrap up on Friday with Exxon Mobil (XOM), Chevron (CVX), American Express (AXP) and Verizon (VZ).

Turning our attention to the Fed, the FOMC rate decision comes Wednesday, but with the market pricing in a 99% chance rates are on hold, never mind all that.

The question is what Chairman Jerome Powell will say about the criminal investigation launched by the White House into him and the Fed about the renovation of the central bank’s HQ.

The easy answer is that he’ll say he can’t comment on an ongoing investigation, but he already had – coming out with one of the boldest challenges of any part of the government to President Trump when he tied the subpoenas directly to Trump’s desire for lower rates.

Seeking Alpha analysts have emphasized that the investigation represents an unprecedented escalation since the Fed’s creation in 1913.

This past week Powell got some perceived backing from the Supreme Court, as justices expressed unease over Trump’s attempt to oust Federal Reserve Governor Lisa Cook.

In Davos, Trump said he had no plans to fire Powell, but also said the Fed chief would not be happy if he stays on as a governor when his term as chairman expires.

In the news this weekend, the powerful winter storm disrupted air travel across much of the United States, triggering thousands of flight cancellations at major airports.

The storm brought snow, ice and freezing rain across a wide swath of the country, putting nearly 180M people under weather alerts. Forecasters say the system will move into the Northeast after hitting the South, with heavy snowfall expected from Washington to Boston.

Trump threatened to implement 100% tariffs on goods imported from Canada if the country goes ahead with a newly signed trade agreement with China.

He posted “If Canada makes a deal with China, it will immediately be hit with a 100% tariff against all Canadian goods and products coming into the U.S.A.”

And American workers have embraced artificial intelligence at a remarkable pace, according to a new Gallup poll showing AI tools are now embedded in daily routines across multiple industries.

A survey of more than 22,000 U.S. workers found that 12% of employed adults now use AI daily in their jobs, with about a quarter using it a few times a week. Nearly half report using AI at least a few times a year — a big jump from 2023, when just 21% used AI even occasionally.

That last segment was edited by my beloved AI assistant.

And for income investors, Clorox (CLX) and Paychex (PAYX) go ex-dividend on Wednesday.

Clorox pays out on Feb. 13, and Paychex pays out on Feb. 27.

On Friday, Costco (COST) and Morgan Stanley (MS) go ex-dividend, with both paying out on Feb. 13.