Markets Brace! Fed Under DOJ Cloud As AI Bubble Fears Mount & UK Freezes Face Soaring Bills!

Washington D.C. / London / Ottawa – January 26, 2026 – A cascade of alarming economic news is sending shockwaves across the globe today. Markets are bracing for a tumultuous week as central banks convene and tech giants announce massive layoffs.

The US Federal Reserve finds itself embroiled in controversy. Chair Jerome Powell is reportedly under a Department of Justice investigation. This bombshell drops just days before the critical Fed meeting on Wednesday.

President Trump has also ramped up pressure on the central bank regarding interest rates. Despite this, markets widely expect the Fed to keep rates steady. The federal funds rate remains at 3.5% to 3.75%. This follows a series of rate cuts in late 2025. Officials aim to assess the economy's response to previous cuts.

AI Bubble Warning Sparks Tech Meltdown Fears

A stark warning from Bill Gates sent shivers through the tech world. He cautioned against "hypercompetitive" AI investments. Gates states many pricey AI stocks cannot justify their current valuations. This comes as "hyperscalers" committed $400 billion to AI infrastructure in 2025. They plan to spend a third more in 2026.

Tech companies are slashing jobs at an unprecedented pace. The US job market is experiencing a "massive structural shift". Over 1.17 million jobs were cut in 2025-2026. This marks the highest annual cuts in five years.

• Amazon is cutting thousands of corporate roles. These cuts span AWS, HR, Prime Video, and retail divisions.

• Intel shares plummeted 17% after a weak revenue forecast. They are slashing 24,000 roles, 20% of their workforce. Supply constraints for AI data centers were cited.

• Microsoft is reportedly funding data centers through layoffs.

• Meta Platforms leads 2026 layoffs, cutting 1,500 employees. This impacts its Reality Labs division.

• Tyson Foods closed a Nebraska plant, eliminating 3,200 jobs. Another 1,700 jobs were cut at an Amarillo plant.

• General Motors laid off 1,140 workers at its Detroit EV plant. Slow electric vehicle adoption was a key reason.

• Logistics firms like UPS plan 48,000 cuts through 2026. FedEx is ending 856 jobs in Texas.

Many layoffs are driven by AI adoption and automation. Companies are "trading human payroll for AI infrastructure". Analysts warn market indicators suggest a potential pullback. The Shiller CAPE ratio and Buffett indicator show overvaluation. These levels are comparable to the dot-com bubble era.

UK Households Face Arctic Freeze and Soaring Bills

Brits woke up to a chilling reality on January 1st: rising energy bills amidst a severe arctic freeze. The energy price cap increased by 0.2%. This translates to an average annual rise of £3 for households. Daily standing charges also rose for gas and electricity.

This hike coincides with a worrying inflation surge. UK inflation rose to 3.4% in December. This marks the first increase in five months. Food costs and airfares were major contributors.

The Bank of England expressed concern. Rapid Fed rate cuts could put "upward pressure" on UK inflation.

The UK government is attempting to cushion the blow. They announced measures to help with the cost of living.

• 2.7 million workers will receive a 4% pay rise from April.

• The New State Pension will increase by 4.8%.

• The two-child limit on Universal Credit will be removed. This aims to lift 450,000 children out of poverty.

Canada Navigates Trade Tensions and Rate Holds

The Bank of Canada is set to make its first interest rate decision of 2026 on Wednesday. Economists widely expect the central bank to keep rates steady at 2.25%. This follows two quarter-point cuts in late 2025. Governor Tiff Macklem stated monetary policy is "about the right level".

Canada faces renewed trade pressure from the US. President Trump threatened 100% tariffs over Canada's China trade ties. Canadian Prime Minister Mark Carney insisted Canada has "no intention" of a free trade deal with China. Carney emphasized building strategic autonomy.

Meanwhile, Canada's public sector is seeing significant job losses. Nearly 10,000 federal employees received layoff notices this week. The Public Service Alliance of Canada reported over 5,000 members affected.

What's Next

The week ahead promises more economic drama. The US Federal Reserve meeting on Wednesday will be closely watched. Investors await clues on future monetary policy amid political and legal pressures. Major tech earnings reports will further shape market sentiment. In Canada, the Bank of Canada's rate decision is also due Wednesday. All eyes are on how these decisions impact global stability and everyday financial lives.