On October 23, I predicted that a stock market crash was imminent, but we didn’t even get a bear market. The S&P 500 has risen 3.4 percent since I published that story, and it closed out 2025 up 16 percent for the year. For the record, I still believe a severe correction is likelier than not, but it’s clear that I underestimated the stock market’s capacity for denial.

The latest example is the S&P 500’s amazingly mild reaction to an SOS that Federal Reserve Chair Jerome Powell sent out Sunday night. Powell’s distress signal took the form of a written statement and video emailed to reporters and posted on the Fed’s website, in which Powell said that the Justice Department was threatening to indict him over some testimony he gave before the Senate Banking Committee last June about the cost of renovating the Fed’s headquarters. This, Powell explained, was “not about my testimony,” nor “about the renovation of the Federal Reserve buildings,” nor “about Congress’s oversight role”:

Those are pretexts.… This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.

Translation: Hey markets, if you’ve contemplated freaking out about President Donald Trump’s sustained assault on Fed independence, this would be a good moment to do so.

But the stock market didn’t freak out. The S&P 500 dipped a little Monday and then quickly recovered. “The impact of Chairman Powell being under investigation is likely a long-term impact,” Jim Lebenthal, chief markets strategist........

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