WSJ What’s News PM (Jan 28, 2026): Fed Enters a New Holding Pattern on Interest Rates

Episode Overview

This episode delivers in-depth reporting and expert analysis on three major developments: the Federal Reserve's decision to hold interest rates steady, the rise of billion-dollar AI "Neo Labs" startups with no products or revenue, and significant updates in U.S. immigration enforcement and foreign policy. Hosted by Alex Osola, with contributions from WSJ reporters and columnists.

Key Discussion Points & Insights

1. Federal Reserve Decision: Rate Pause Amid Uncertainty

• Fed Holds Rates Steady: After three consecutive cuts, the Federal Reserve decided to maintain current interest rates, citing a balanced but still uncertain economic environment.
• Official Tone: Chair Jerome Powell’s statements emphasized reliance on incoming data—especially on jobs, inflation, and industrial sectors—before determining next moves.
• Limited Forward Guidance: Powell declined to clarify potential timing for future rate cuts, maintaining the Fed’s standard cautious language.

Notable Quotes & Analysis

• Jerome Powell [01:32]:

  “The economy is growing at a solid pace. The unemployment rate has been broadly stable, and inflation remains somewhat elevated. So we'll be looking to our goal variables and letting the data light the way for us.”

• Spencer Jacob, WSJ Investing Columnist [01:59]:

  “They’d likely have to see something dramatic or see something elsewhere in the economy... But we have not seen signs of that so far this year.”

• Consensus & Dissent: Two Fed officials (Stephen Myron and Christopher Waller—both Trump appointees and one a candidate for Fed chair) dissented, favoring a rate cut, but overall consensus remains strong.

  “It shows us that it's functioning fairly well because there is consensus... It counts as consensus for any normal meeting.” —Spencer Jacob [02:32]

• Fed Independence & Legal Issues: Powell deflected questions about ongoing Justice Department and Supreme Court cases impacting Fed autonomy, remaining “extremely professional” and focused on economic messaging [03:17].
• Market Reaction: Minimal reaction since the decision was anticipated; however, the US dollar rose after Treasury Secretary Scott Besant reaffirmed a strong dollar policy. The S&P 500 briefly crossed a milestone of 7,000 points before settling flat.

2. Corporate & Market Updates

• Amazon: Announced layoffs of 16,000, with CEO Andy Jassy attributing cuts to a desire to “operate like a startup,” not just cost-cutting. Total job cuts since October reach 30,000.
• Starbucks: Recorded 4% increase in same store sales and 6% revenue growth, though profits fell sharply (down 62%) due to store investments, worker pay, and tariffs.
• Tech Earnings:
  • Tesla: Revenue down 3%; lost global EV crown to China’s BYD.
  • Meta: Record sales and plans for major increased spending, signaling optimism in AI investment.
  • Microsoft: Another strong quarter, driven by OpenAI partnership and growth in cloud computing.

3. The Billion-Dollar AI 'Neo Labs': Product-less, Profit-less, but Booming

• Definition/Trend: Neo Labs are AI-focused research organizations valued at up to $30B, with no commercial product or revenue. Modeled after OpenAI, these labs aim to build better foundational AI technologies.

  • [07:03] “You can think of a Neolab as kind of a mini baby OpenAI. These are a new generation of startups that... are getting their start as purely research labs.” —Kate Clark, WSJ Startups Reporter

• Examples of Notable Neo Labs:

  • Safe Superintelligence: Founded by an OpenAI alum, valued over $30B, focused on safer AI.
  • Thinking Machines Labs: Also an OpenAI spin-off.
  • Flapping Airplanes: Raised over $100M to create AI models requiring less data [07:40].

• Investor Logic: Investors see potential for a “trillion dollar opportunity” if a Neo Lab makes a critical AI breakthrough, echoing bets in OpenAI and Anthropic.

• Speculation & Risk: Despite skepticism and bubble talk, investment is rising even in the absence of products or revenue [08:20].

  “If one of these companies really does figure out a more efficient way... they will have a trillion dollar opportunity on their hands.” —Kate Clark [08:20]

• Talent Retention Challenges: These startups struggle to retain top talent, who are often lured back to established tech giants (OpenAI, Meta) by huge compensation deals.

  “If they can’t keep their talent, they don’t have anything.” —Kate Clark [09:12]

4. National & Global Updates

• Minneapolis Shootings & Immigration Enforcement:

  • Two Border Patrol agents involved in the shooting of Alex Preddy and an ICE officer involved in the death of Renee Goode placed on administrative leave ("standard protocol") [09:47].
  • Heightened backlash to immigration enforcement prompts the Trump administration to shift strategy, appointing Tom Homan as border czar in Minneapolis.
  • Calls rise for Homeland Security Secretary Kristi Noem’s resignation.

• US-Iran Tensions:

  • President Trump issues ultimatum on social media: Iran must negotiate an end to its nuclear program or face potential attack [10:35].
  • Iran firm on its right to enrich uranium and maintain missiles.

• Spain Immigration Policy: Spain announces plan to legalize status for up to 500,000 undocumented immigrants, excluding those with criminal records.

Notable Quotes by Timestamps

• On AI Excitement Despite Bubble Talk [00:34]:

  “All of this just points back to how much excitement there still is for AI development. Even though there has been more skepticism in the market, there is more talk of a bubble, that has not stopped investment from climbing even into these extremely risky businesses like the NeoLabs.” —Kate Clark

• On Operating Like a Startup [05:36]:

  “Jassy’s said that surge in hiring led to bloat at the company. He's promised to operate like a startup and that means, quote, removing layers.” —Alex Osola

• On Market Reactions [03:28]:

  “The market reaction has been fairly muted. The decision was very widely expected and there was nothing really unexpected that came out of Powell's mouth.” —Spencer Jacob

Timestamps for Important Segments

• Fed decision analysis: [00:50] – [03:45]
• Corporate/market round-up: [03:45] – [06:04]
• AI Neo Lab overview & analysis: [06:38] – [09:41]
• Immigration, Iran, and Spain policy updates: [09:47] – [11:14]

Episode Tone

The tone is brisk, informative, and analytical, balancing market context with detailed expert commentary. Humorous moments are minimal, with the focus on clarity and insight.

This summary delivers the key stories and expert analysis from the Wall Street Journal’s January 28, 2026 PM edition, equipping listeners with the major business, finance, and policy developments of the day.