Morning Bid: Trump lands, markets wait

• Europe has suspended trade talks and retabled over $100 billion in counter-tariffs on U.S. goods, with French President Macron calling Washington's 'endless accumulation' of tariffs 'fundamentally unacceptable'
• Rising Treasury yields could prove toxic for the Trump administration politically, potentially forcing reconsideration of tariff policies as mid-term elections approach
• Markets may need to price in escalation scenarios including tit-for-tat retaliation and possible investment curbs affecting Europe's massive holdings of U.S. stocks and bonds

Market Summary: Trump Lands, Markets Wait

Key Developments:

Global markets experienced sharp volatility Wednesday as investors awaited President Trump's address at the World Economic Forum in Davos. Stock, bond, and dollar selloffs temporarily abated amid uncertainty over escalating trade tensions.

Main Issues:

Trump's tariff threats against Europe over Greenland have intensified transatlantic tensions. European leaders are standing firm on retaliation if February 1 tariffs take effect. Europe has suspended trade talks from last year's truce and retabled over $100 billion in counter-tariffs on U.S. goods. French President Macron called Washington's "endless accumulation" of tariffs "fundamentally unacceptable."

Market Implications:

Analysts warn that rising Treasury yields could prove especially problematic for the Trump administration in this mid-term election year, potentially more concerning than stock or dollar weakness. Markets may have grown complacent assuming deals eventually materialize, but European unwillingness to capitulate suggests a genuine escalation risk. Potential consequences include tit-for-tat retaliation, investment curbs, or financial embargoes affecting Europe's substantial U.S. stock and bond holdings.

Corporate News:

Netflix switched to an all-cash $82.7 billion offer for Warner Bros Discovery's studio and streaming assets to block competing bids. The company beat Q4 revenue and earnings estimates but stock declined on subscriber outlook concerns.

Other Developments:

• UK Prime Minister Starmer planning Beijing visit to revive business dialogue with China
• Europe's U.S. energy dependence could become Trump's bargaining chip
• U.S. Supreme Court hearing arguments on Fed Governor Lisa Cook's dismissal challenge

The fundamental question remains whether financial market turbulence will compel policy changes or signal a new era of sustained trade conflict.