The Aquinas Market Briefing

The Clash of Wills: Executive Force Meets Economic Reality

The illusion of the “neutral market” has been shattered. As we close the second week of 2026, we are witnessing a structural collision between the Efficient Cause (the Executive Will) and the Material Cause (Economic Reality). The result is not merely volatility; it is a violent rotation of the global order.

While the S&P 500 hovers deceptively near 6,944, the tectonic plates beneath are grinding. The headline is no longer about earnings; it is about Authority.

1. The Macro Narrative: The War on the Fed & The Usury Cap

The “soft landing” narrative died on Tuesday. The market is now pricing in two distinct shocks that have paralyzed the institutional consensus:

• The Institutional Crisis (The Fed): The criminal probe into Chair Powell is not a legal anomaly; it is a regime change. The Executive Branch is asserting direct dominance over monetary policy. Gold has responded as the ultimate arbiter, surging as capital seeks shelter from the politicization of the Dollar.
• The “Populist Shock” (The Usury Cap): President Trump’s proposal to cap credit card interest rates at 10% has decimated the Financials sector. While the 10-Year Treasury yields spike to 4.19% on inflation fears, bank equities are collapsing on fears of a commanded destruction of Net Interest Margins.
• Geopolitical Realism: From the capture of Maduro to the renewed “Greenland Thesis” (a strategic play for Rare Earths), the U.S. has abandoned the subtle art of soft power for the blunt instrument of kinetic action.

2. The Aquinas View: Justice vs. Order

How should the prudent investor navigate this storm? We turn to the Angelic Doctor.

St. Thomas Aquinas teaches that justice is a certain rectitude of mind whereby a man does what he ought to do. The proposed “Usury Cap,” while perhaps well-intentioned to protect the debtor, risks violating the Natural Law of prudent risk assessment. To force a lender to lend at a loss is not justice; it is a distortion of reality that leads inevitably to a cessation of credit—a “starvation” of the economy.

Furthermore, the conflict between the President and the Fed is a crisis of Authority. When two sovereign wills clash within the same polity, the result is disorder. The market hates disorder more than it hates bad news. We are currently in the gap between the collapse of the old order (Central Bank Independence) and the establishment of the new (Fiscal Dominance).

3. The Signal in the Noise

In this cacophony of subpoenas, tariffs, and executive orders, the temptation is to react emotionally—to sell on the fear of the “Cap” or buy on the euphoria of the “Greenland Play.”

Aquinas Intelligence provides the signal. We do not trade the news; we trade the causal chains behind the news. Our models indicate that while the “Political Economy” is turbulent, the “Real Economy” remains robust, albeit inflationary. The prudent move is not to exit, but to rotate: away from sectors dependent on regulatory stability (Financials) and toward assets rooted in physical reality (Energy, Defense, Commodities).