“The betting markets think there’s a high chance the White House loses its appeal and that could see a raft of tariffs—including so-called ‘reciprocal’ levies on the E.U., China and the rest of the world—struck down,” ING told its clients in an email seen by Fortune. Bettors on Kalshi give only a 29% chance of Trump’s tariffs surviving; it’s just 25% on Polymarket. 

About 1,000 companies are petitioning the court to scrap the tariffs. If they are successful, the White House would have to figure out a mechanism to pay them all back. That would be a non-trivial undertaking. According to data from Bloomberg provided to Fortune via Pantheon Macroeconomics, tariff revenue is being generated at a current rate of $30.4 billion per month, for an annualized rate of $364.5 billion. (Notably, that number is below the extra $500 billion Trump wants to spend on the military.)

Trump has previously warned that it “would be a National Security catastrophe” if he were forced to refund the tariffs. His other option would be to use other presidential powers to essentially reinstate as many tariffs as possible—although Wall Street analysts expect that would leave the effective average tariff rate at a lower level than it is today.

Defense stocks are all over the place

U.S. defense company stocks sold off sharply yesterday for a separate but related reason: Trump signed an executive order that potentially bans military supply chain companies from making stock buybacks or setting senior executive compensation higher than $5 million if the White House thinks they aren’t working fast enough or producing high-quality equipment.

“If Raytheon wants further business with the United States Government, under no circumstances will they be allowed to do any additional Stock Buybacks, where they have spent Tens of Billions of Dollars, until they are able to get their act together. Our Country comes FIRST, and they’re going to have to learn that, the hard way!” Trump said on social media.

S&P 500 futures were down this morning after the index fell yesterday. Markets were broadly down in Asia and Europe. Defence stocks are seeing a high level of volatility in reaction to Trump’s various statements.

“President Trump’s social media posts dragged on shares of homebuilders and defence companies,” Jim Reid and his colleagues at Deutsche Bank told clients this morning. 

“Defence contractors including Northrop Grumman (-5.50%), Lockheed Martin (-4.82%) and RTX (-2.45%) slid on the news. However, there were potentially better news for defence firms after the close, with Trump demanding a boost in the 2027 US defence budget from $1trn to $1.5trn. It is $901bn in the current 2026 fiscal year. The renewed policy risks left the S&P 500 -0.34% lower by the close,” they said.

In overnight trading, those stocks popped upward again following Trump’s $1.5 trillion budget proposal. Northrop Grumman rose 7.28%, Lockheed Martin rose 6.71%, and RTX (owner of Raytheon) rose 5%.

If the court rules against Trump, expect those stocks to take another battering, given that the end of the tariffs threatens such a large proposed chunk of Department of War spending.

Also on the radar:

JPMorgan noted that retail stock buyers started the year bullish. They net bought $10.1 billion in stocks in the first week of the year, above the weekly average of $6.5 billion, according to Arun Jain and his team. Most of that ($7.2 billion) went into ETFs.

More cracks in the private credit market, according to S&P Global’s With Intelligence unit. Selective defaults were up, as was the use of “Payment-in-Kind” provisions—extra payments that companies promise their lenders if they cannot meet the initial terms of their debt. PIKs are generally associated with lower-quality debt.

2026 Bitcoin forecasts are all over the place. CNBC did a roundup of experts’ forecasts for the cryptocurrency’s performance this year and found a wild spread of predictions—perhaps unsurprising given that there is no way to calculate the fundamental value of a piece of code that has no underlying asset behind it.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

• S&P 500 futures were down 0.25% this morning. The last session closed down 0.34% at 6,944.82, a record high.
• STOXX Europe 600 was down 0.38% in early trading. 
• The U.K.’s FTSE 100 was down 0.29% in early trading. 
• Japan’s Nikkei 225 was down 1.63%.
• China’s CSI 300 was down 0.82%. 
• The South Korea KOSPI was flat.
• India’s NIFTY 50 was down 1.01% 
• Bitcoin sank to $90.1K.