Trump’s new “Greenland” tariff war

The past week laid bare just how fragile and unreliable the current rally really is. As early as Monday, optimism was in the air everywhere, and the indexes were once again rewriting their all-time highs. By the end of the week, however, that optimism quickly deflated, and all three leading U.S. indexes ultimately finished the week with modest losses. The declines were indeed limited, ranging from 0.29% for the blue-chip Dow Jones (DJIA-30) to 0.66% for the high-tech NASDAQ Composite. The main benchmark of the U.S. stock market, the S&P 500, slipped by 0.38%.

Neither solid demand for chipmakers’ stocks nor the generally stable results posted by major U.S. banks at the start of the new earnings season were enough to shore up sentiment. Banks, in particular, had their wings clipped by President Trump, who quite unexpectedly proposed capping annual credit card interest rates at 10%.

Many analysts believe that the negative impact of such a move would extend far beyond banks, card issuers, and payment networks, whose stocks suffered the most last week. It would directly affect a wide range of industries – from airlines and hotel chains to major retailers. It’s also important to note that around one-third of U.S. consumer spending is carried out using credit cards, and in 2025 their total volume could amount to roughly $7 trillion in overall purchases. According to available data, about 82% of adult Americans have at least one credit card, with the average number of card accounts per person standing at around 3.7.

Against this backdrop, it comes as no surprise that the best performers by the end of the week were primarily stocks of defensive-sector companies, such as those of Consumer Defensive, as well as shares of asset managers operating in the real estate sector. In both sectors, average gains amounted to around 3.5%.

A similar rise was seen in oil and gas stocks. This came despite the fact that crude oil prices were essentially unchanged, with oil gaining only about 0.8% over the week. However, the increase in geopolitical tensions appears to be gradually priced in, and investors seem to prefer positioning themselves in potentially attractive energy assets in advance.

In addition, it’s worth noting that markets are being further destabilized by uncertainty surrounding the future Fed chair, as well as pressure from President Trump on current Federal Reserve Chairman Jerome Powell. At the start of the week, Trump’s economic adviser Kevin Hassett was seen as the leading candidate, but by the end of the week the picture had changed. According to odds on the Polymarket platform, Kevin Warsh is now considered the most likely next Fed chair, with his chances rising from 44% to 57%.

Overall, as we can see, Trump is now shaping the market to a large extent and, unfortunately, exerting the strongest influence on investor sentiment. That said, those sentiments remain fairly optimistic, and the S&P 500 index is still hovering close to the 7,000-point level – a much-coveted mark for many investors that has been drawing the market’s attention for several months. Reaching this level therefore remains a very realistic goal for the near future.

 

 

Market expectations for January 19

The current week will be short (U.S. stock markets will be closed on Monday for Martin Luther King Day), but at the same time very intense. And there are several solid reasons for that.

First, the new corporate earnings season has begun and will quickly gather momentum. Among the most interesting companies, special attention should be paid to one of the superstars of the U.S. stock market – Netflix (NFLX). Investors will also be watching the results of pharmaceutical giant Johnson & Johnson (JNJ) and industrial heavyweight 3M (MMM). In addition, earnings will be released this week by the well-known chipmaker Intel (INTC), as well as two leading oilfield services companies – Halliburton Co. (HAL) and SLB Corp. (SLB). Finally, reports from major airlines and a number of other notable companies are also on the agenda. In short, both investors and analysts will have plenty to follow and analyze.

But the earnings season is only part of the news backdrop that will shape the agenda this week. An equally important event will be the next Davos forum, which will bring together global leaders and economists from nearly 70 countries. The main issue to be discussed there is likely to be the new tariff war between the U.S. and Europe over Greenland, which is unfolding right before our eyes. What this may ultimately lead to is still completely unclear, but the potential consequences of this “tariff conflict” could prove quite painful for the global economy as a whole – and certainly for equity markets in particular. This is already reflected in investor sentiment seen on global markets during the first half of Monday. Markets across the board are deep in the red, with losses in Europe and in futures on the major U.S. indexes (which are trading on Monday) already exceeding 1%.

The only thing that should not cause much concern is macroeconomic data: there won’t be much of it this week, and it is unlikely to move the market in any meaningful way. In all other respects, however, it’s best to stay on high alert. Investors should closely monitor market developments and try not to fall for “provocations,” which may be especially frequent in the near future.