General Market News

Global markets paused on Wednesday after a sharp selloff in stocks, bonds, and the dollar as investors awaited President Trump's speech at the World Economic Forum in Davos. Trump's escalating tariff threats against Europe over Greenland have prompted European leaders to pledge retaliation if February 1 tariffs take effect, raising concerns about a transatlantic trade war. The standoff could pressure U.S. Treasury yields higher, creating political risks for the Trump administration in a mid-term election year.

• 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

The US Supreme Court is hearing arguments on President Trump's unprecedented attempt to fire Federal Reserve Governor Lisa Cook, which he initiated in August 2025 by citing unproven mortgage fraud allegations. Lower courts have blocked the removal, finding it likely violated Cook's due process rights and that the allegations were not legally sufficient cause under the Federal Reserve Act. The case represents a landmark test of central bank independence, as no president has previously attempted to remove a Fed official.

• Trump seeks to overturn rulings by a district judge and appeals court that blocked Cook's firing, with the judge finding the unproven allegations likely were a pretext to remove her over monetary policy disagreements
• Cook, appointed in 2022 as the first Black woman Fed governor with a term through 2038, helps set US monetary policy as Trump pressures the Fed to cut interest rates more aggressively
• The case threatens Fed independence established since 1913, as the Federal Reserve Act requires governors be removed only 'for cause' without defining the term, while Trump has also opened an ethics probe into Fed Chair Jerome Powell

The Supreme Court is hearing oral arguments on whether President Trump can fire Federal Reserve Governor Lisa Cook over unproven mortgage fraud allegations predating her Fed appointment. The case threatens the Fed's independence in setting interest rates, as removing Cook and Chair Jerome Powell (currently under separate criminal investigation) would allow Trump to appoint a majority of the Fed's board. Cook and Powell both supported maintaining high interest rates in 2024 against Trump's wishes.

• Cook can only be removed 'for cause' under the 1913 Federal Reserve Act; lower courts ruled alleged mortgage fraud before her appointment doesn't meet this standard for in-office misconduct
• All three living former Fed chairs (Greenspan, Bernanke, Yellen) filed a brief opposing Cook's removal, warning it would 'expose the Federal Reserve to political influences' and undermine monetary policy credibility
• The case comes amid Fed Chair Powell's criminal investigation over building renovation oversight, which Powell claims is retaliation for keeping rates steady against Trump's preferences

U.S. Treasury yields declined slightly on Wednesday after a Tuesday sell-off driven by escalating trade tensions. President Trump announced tariffs on eight European allies starting at 10% on Feb. 1 and rising to 25% by June 1, linked to demands over Greenland, sparking fears of a 'sell America' trade as investors reassess U.S. asset risk.

• The benchmark 10-year Treasury yield dropped over 2 basis points to 4.27% after topping 4.3% on Tuesday, while the 30-year yield fell to 4.896%
• Danish pension fund AkademikerPension announced it is divesting $100 million in U.S. Treasurys due to concerns about poor U.S. government finances
• European leaders condemned Trump's tariff threats as 'outrageous' and are considering countermeasures, raising concerns that the U.S. may no longer be seen as a reliable trading partner

President Trump's threat to impose tariffs on six specific EU countries (Denmark, Finland, France, Germany, Netherlands, and Sweden) rather than the entire EU could create significant enforcement challenges for U.S. customs authorities. The complex cross-border supply chains and free movement of goods within the EU make it difficult to determine the true origin of products, potentially allowing companies to obscure production locations.

• EU goods are typically marked only as 'EU origin,' and extensive cross-border supply chains make it hard to trace products to individual member states without customs controls between them
• Larger companies like Volkswagen and Volvo manufacture across multiple EU countries, though shifting production typically takes at least a year to implement in response to tariffs
• French products with 'geographical indications' like champagne and Camembert would be easier to target, as France has the most GI-protected products among the six countries in the tariff threat

U.S. Treasury Secretary Scott Bessent dismissed concerns about a Treasury sell-off after Denmark-based AkademikerPension sold $100 million in U.S. bonds amid escalating tensions over President Trump's push to acquire Greenland and threatened tariffs on European countries. Bessent called Denmark's Treasury holdings and the country itself 'irrelevant' while speaking at the World Economic Forum in Davos.

• Trump announced 20% tariffs on eight European countries effective Feb. 1, later rising to 25%, as part of his campaign to take over Greenland, which the U.S. considers a national security concern due to emerging Arctic trade routes
• Danish pension operator AkademikerPension sold $100 million in U.S. Treasurys citing 'poor U.S. government finances,' though Bessent stated the U.S. has had 'record foreign investment' in Treasurys
• Bessent claimed the sell-off narrative originated from a single Deutsche Bank analyst report that the bank's CEO later disavowed, calling media coverage 'fake news'

Spain's Foreign Minister José Manuel Albares announced that an India-EU free trade agreement is expected to be concluded within days, following meetings in New Delhi. European Commission President Ursula von der Leyen is scheduled to arrive in India next week to finalize the historic deal, which would create a market of 2 billion consumers and become the world's largest free trade zone.

• The India-EU trade deal would surpass the EU-Mercosur agreement to become the world's largest free trade zone, covering approximately 2 billion consumers
• Spain's foreign minister stated there are no expected obstacles to completing the agreement, emphasizing the EU's commitment to free trade and economic security
• EU Commission President von der Leyen is expected in India early next week to finalize negotiations for the historic trade agreement

U.S. markets experienced their worst session since October on Tuesday as investors reacted to escalating tensions over President Trump's aggressive push to annex Greenland. The S&P 500 and Dow turned negative for 2026, while safe-haven assets surged and Denmark's PFA pension fund announced plans to reduce U.S. Treasury holdings. The turmoil reflects growing concerns about geopolitical risks spilling into capital markets.

• Major U.S. indexes plunged with the S&P 500 down 2.56%, Dow down 1.76%, and Nasdaq down 2.39%, while the VIX 'fear gauge' spiked to 20.99
• Denmark's PFA pension fund announced it will reduce U.S. Treasury investments, citing concerns over poor government finances, marking an early signal of foreign capital flight
• Gold prices hit new records as investors fled to safe-haven assets, while the dollar weakened nearly 1% against major currencies and bond yields jumped

President Trump signed an executive order Tuesday aimed at blocking Wall Street-backed institutional investors from purchasing single-family homes, arguing these purchases have priced out American families and turned neighborhoods into corporate assets. The order directs federal agencies to limit support for such purchases and instructs the DOJ and FTC to increase antitrust scrutiny of large institutional investors in housing.

• Federal agencies have 60 days to issue guidance preventing government support for institutional purchases of single-family homes that could be bought by families
• The order includes an exception for build-to-rent communities that are 'planned, permitted, financed, and constructed as rental communities' from the start
• HUD must require landlords in federal housing assistance programs to disclose ownership information to identify large institutional investor involvement, while White House staff will prepare legislation to codify the policy

Consumer spending showed resilience in December 2025 with a median 4.9% year-over-year increase, according to the Federal Reserve Bank of New York's Survey of Consumer Expectations. However, the data reveals a divided landscape where income increasingly determines spending behavior, with lower-income households focusing on necessities while remaining vulnerable to financial shocks. Only 48% of consumers are confident they could cover a $2,000 emergency within 30 days.

• Spending growth is concentrated in necessities: food expectations reached a series high at 5.4%, medical care at 5.3%, and housing at 4.1%, while discretionary spending on transportation and recreation declined
• Income inequality drives behavior: 77% of households earning $100,000+ reported large purchases versus sharply lower rates for those earning under $50,000, with confidence in covering emergencies jumping to 80% for non-paycheck-to-paycheck households but falling to just 15% for struggling households
• Expected future spending growth moderated to 3.4% over the next 12 months, and despite 52% of consumers expecting to save more in 2026, only 24% actually increased savings in the prior six months

President Donald Trump signed an executive order on Tuesday aimed at restricting large institutional investors from purchasing single-family homes to preserve housing supply for American families and address voter affordability concerns. The order directs federal agencies to develop guidance within 60 days and review antitrust enforcement against coordinated pricing strategies by Wall Street landlords.

• Institutional investors own approximately 450,000 single-family homes, representing about 3% of all single-family rental homes nationally as of June 2022, according to a 2024 Government Accountability Office study
• The order directs the Treasury Department to review rules on institutional investors holding single-family homes and instructs the Justice Department and FTC to prioritize antitrust enforcement against coordinated vacancy and pricing strategies
• Major Wall Street firms including Blackstone, American Homes 4 Rent, and Progress Residential have acquired thousands of single-family homes since the 2008 financial crisis, a trend Democrats have long criticized for driving up housing costs

Wall Street strategist Chris Verrone predicts the S&P 500 will pull back no more than 4-5% despite Tuesday's 2.1% drop triggered by President Trump's tariff threats over Greenland acquisition demands. Markets experienced their worst day in months as Trump threatened tariffs on European countries to pressure Denmark into ceding Greenland, a semiautonomous NATO member territory.

• Verrone of Strategas sees a buying opportunity with S&P 500 potentially bottoming around 6,500 (from current ~6,800), citing pro-cyclical recovery signals across bonds, commodities, and banking sectors
• Wedbush analyst Dan Ives invokes the 'TACO' theory ('Trump Always Chickens Out'), noting investors who held through similar 2024 volatility saw S&P 500 gains of nearly 40% through year-end
• U.S. economic fundamentals remain strong with Q3 GDP growth at 4.3% annualized and S&P 500 expected to report 14% earnings growth in Q4, supporting bullish outlooks despite trade war concerns

Wall Street experienced its largest single-day decline in three months on January 20, with the S&P 500 falling 2.06%, the Nasdaq dropping 2.39%, and the Dow losing 1.76%. The selloff was triggered by President Trump's threat to impose escalating tariffs on European nations unless Denmark agrees to sell Greenland, raising concerns about renewed market volatility similar to last April's 'Liberation Day' tariff announcements.

• Both the S&P 500 and Nasdaq fell below their 50-day moving averages, while the CBOE Volatility Index spiked to 20.09, its highest close since November 24
• Trump threatened 10% tariffs on eight European nations starting February 1, escalating to 25% by June 1 unless the U.S. can purchase Greenland, which Denmark insists is not for sale
• Market stress was compounded by turmoil in Japanese government bonds, which plunged to record-low prices following Prime Minister Takaichi's snap election call, creating spillover effects in European and U.S. debt markets

SkyBridge Capital is increasing its focus on macro strategies due to market volatility driven by policy uncertainty under the Trump administration, according to founder Anthony Scaramucci speaking at the World Economic Forum in Davos. The firm shifted its portfolio weighting from 65% cryptocurrency in March 2025 to 69% macro strategies by September 2025, though Scaramucci remains cautiously optimistic on bitcoin's long-term prospects despite its sharp decline from record highs.

• Bitcoin has fallen approximately 28% from its October 2025 all-time high of over $126,000 to below $90,000, with the crash triggering over $19 billion in leveraged position liquidations—the largest in crypto history
• SkyBridge's Opportunity Fund shifted allocation from 65% crypto/digital assets in March 2025 to 69% macro strategies by September 2025 as volatility increased under Trump administration policy uncertainty
• Scaramucci acknowledged the bitcoin community's excessive optimism regarding regulatory relief, noting that anticipated stablecoin and crypto market structure legislation (the Genius Act and Clarity Act) has stalled in Congress

U.S. Treasury yields surged to multi-month highs on Tuesday, driven by renewed trade tensions including Trump's demands on Greenland and threats of tariffs on French goods. The 10-year Treasury yield climbed to around 4.29%, its highest since August, raising concerns about increased borrowing costs for mortgages, loans, and business financing across the economy.

• Rising yields reflect investor concerns about inflation, budget deficits, and policy uncertainty, with analysts forecasting the 10-year yield could reach 4.5% in 2026
• Global bond market turbulence includes a 'sell America' dynamic, with Denmark's AkademikerPension dumping U.S. Treasurys citing debt concerns and political pressure over Greenland
• European investors hold approximately $8 trillion in U.S. bonds and equities, making them 'America's largest lender' with potential leverage in trade disputes

US and European stock markets fell sharply on Tuesday following President Trump's threats to impose tariffs on eight countries, including the UK, France, and Germany, unless they agree to the 'Complete and Total purchase of Greenland'. The S&P 500 dropped 1.5% and the Nasdaq fell 1.8% in Wall Street's worst day since October, with tech giants like Amazon, Tesla, and Nvidia losing billions in market value.

• Trump threatened 10% tariffs starting February 1 on eight European nations (UK, France, Germany, Denmark, Sweden, Netherlands, Norway, Finland), rising to 25% by June 1, and separately threatened 200% tariffs on French wines
• Major tech stocks suffered significant losses: Amazon down 2.9%, Tesla and Nvidia each down over 3%, while gold hit a record high above $4,700 per ounce and silver reached $95.52 as investors sought safe havens
• Commerce Secretary Howard Lutnick downplayed trade war risks at Davos, calling the situation a 'kerfuffle' likely to end in diplomacy, while UK Chancellor Rachel Reeves urged de-escalation and called on the US to remember its allies

Federal Reserve Chair Jerome Powell's term as chair ends May 15, but his governor term extends until January 2028, raising speculation he may stay on the Board despite Trump's efforts to reshape the Fed. Historical precedent suggests outgoing chairs leave entirely, but Powell could remain if he views threats to Fed independence as severe enough, similar to Marriner Eccles in the 1940s. The situation has intensified amid DOJ probes and Trump's increasingly vocal criticism of Powell and calls for presidential input on rate decisions.

• Treasury Secretary Scott Bessent indicated Trump could nominate Powell's successor as chair as soon as next week, with prediction markets giving Powell a 70% chance of leaving his governor seat before August 2026
• Powell's potential decision to stay is influenced by Trump's threats to Fed independence, including public criticism, a DOJ subpoena Powell called 'pretext,' and Trump's statements that presidents should be consulted on interest rate decisions
• Other Fed governors including Michael Barr (term until 2032) and Philip Jefferson (term until 2036) may also choose to remain on the Board to counter political pressure, potentially giving Trump less control over Fed actions than anticipated

E-mini S&P 500 and Nasdaq 100 futures turned negative year-to-date on January 20, 2026, driven by long liquidation triggered by Trump's tariff threats against NATO and EU members. The S&P 500 broke key support at 6,891.36, reaching its lowest level since December 19, while the Nasdaq 100 showed greater weakness, breaking below its 50-day moving average at 25,574.74.

• The VIX volatility index surged to a two-month high of 19.02 points, signaling increased fear and expected market volatility ahead of Netflix earnings.
• S&P 500 futures broke through the critical 6,892.50 level and 50-day MA at 6,891.36, with potential downside targets at 6,809.50 and 6,771.50 if selling continues.
• The selloff was driven primarily by long liquidation rather than fresh short-selling, as traders reacted to new Trump tariff threats, with Nasdaq 100 targeting the 24,887.75 swing bottom.

U.S. stock market valuations have reached elevated levels, with the S&P 500's 'growth premium' increasing from 59 cents per dollar in Q4 2022 to 72 cents per dollar in Q3 2025, representing an annualized inflation rate of 7.71%. This affordability crisis mirrors consumer inflation concerns, as investors are paying significantly more for future growth expectations despite unchanged GDP forecasts remaining at 1.8%.

• Technology sector shows the highest growth premium at 86 cents per dollar, requiring an estimated 36.8 additional years of current earnings to justify valuations beyond the initial 3-year assumption
• Financials experienced the highest valuation inflation at 50.63% annualized over the period, while Utilities saw a 20.98% increase in the most recent year, correlating with AI-related infrastructure demand
• Market valuations appear heavily leveraged to AI growth expectations, with the FOMC maintaining the same 1.8% three-year GDP growth forecast from 2022 to 2025, suggesting investors are 'paying more for the same' fundamentals

The article argues that U.S. stock markets are experiencing an 'affordability crisis' with companies priced for high growth expectations. The S&P 500's 'growth premium' (the portion of stock price beyond book value and three years of earnings) has increased from 59 cents per dollar in Q4 2022 to 72 cents per dollar in Q3 2025, representing an annualized inflation rate of 7.71%. This trend suggests investors are paying more for the same growth expectations, as GDP forecasts have remained flat at 1.8%.

• Technology sector has the highest growth premium at 86 cents per dollar, requiring 36.8 additional years of earnings to break even, while Energy remains the most 'affordable' at 32 cents per dollar
• Financials experienced the highest annualized growth premium inflation at 50.63%, while Utilities saw the largest recent increase at 20.98% annually, both linked to AI-related investment trends
• Market wealth is heavily leveraged to AI revenue expectations; failure to meet these growth expectations could cause significant pain for stockholders even as valuations become more attractive to new buyers