Hold tight and brace for another week that will test investors' nerves as President Donald Trump's drive to acquire Greenland threatens market chaos. But there are several promising factors that could bolster hopes of an orderly resolution.
First and most important is that Trump's tariff threat, designed to push European countries into letting the U.S. acquire the Danish territory, could soon be taken off the table. A Supreme Court decision on the legality of using the International Emergency Economic Powers Act (IEEPA) to impose levies could come as early as this week and the betting is it will go against the White House. While the president hasn't indicated what authority he would invoke to implement Greenland-related tariffs, the IEEPA has been Trump's tool of choice so far.
Second, there is significant domestic political opposition to the acquisition, which pits the U.S. directly against its NATO allies and threatens the future of the alliance -- including from Republican lawmakers and voters. About 70% of U.S. adults are against using federal funds to acquire Greenland and 86% are against using military force, according to a recent poll conducted by CBS News and YouGov. Those figures could become more pronounced amid the pain from a trade war -- a recent study found either American companies or consumers shouldered 96% of tariff costs in 2024 and 2025.
Finally, European leaders appear more determined to resist Trump's threats than before. They have some leverage in the form of a suspension of the previously agreed U.S.-European Union trade deal and the EU is considering a package of $109 billion retaliatory or "anti-coercion" measures on selected American goods and services. While the U.S. has the option of withdrawing military aid for Ukraine, that comes with its own domestic political complications as Trump would have to justify the perception of empowering Russia.
It's tough for the market to price unprecedented political risks such as the breakdown of NATO or a full-on trade war between the U.S. and Europe. But so far the smart money when it comes to Trump's tariff proposals has been betting on some sort of compromise.
-- Adam Clark
***AI has created insatiable demand for power, and energy producers and distributors are racing to respond. Join us on Feb. 12 for discussions with analysts and investors about the changing industry landscape, and the best investment opportunities among traditional and alternative power providers. Sign up here.
Get more of the journalism you love. Choose Barron's as a preferred source in Google.
***
World Leaders Convene in Davos Amid Trump's Greenland Escalation
Global stock markets swooned on Monday in reaction to President Donald Trump's threats to annex Greenland, after lawmakers in the U.S. and in Europe also weighed in. Denmark sent more troops to the Arctic island, which is its territory, and European leaders were considering options as they pushed back at the threats.
-- Over the weekend, Trump said he would put 10% tariffs on imports from
eight European allies and later raise those to 25% unless a deal were
reached for U.S. control of Greenland. European leaders pledged
solidarity with Denmark and Greenland as the world convenes at the World
Economic Forum in Davos.
-- António Costa, the president of the European Council, is calling
together an extraordinary meeting of the group in the coming days after
spending Sunday consulting with member states. The European Council helps
set the European Union's political direction. U.K. Prime Minister Keir
Starmer called the threats "completely wrong."
-- Trump told Norway's Prime Minister Jonas Gahr Støre that part of his
reason for pushing so hard was that he wasn't awarded the Nobel Peace
Prize. Before that text was widely circulated Monday, Trump had
previously insisted the U.S. needed Greenland as a matter of national
security.
-- Italy's Prime Minister Giorgia Meloni said there might have been a
misunderstanding about what European nations were doing in response to
Trump's Greenland rhetoric, as several nations moved troops to the
island. She called the threatened tariffs a "mistake" and said European
moves weren't taken against the U.S.
What's Next: Nearly 3,000 government, business, and civic leaders from 130 countries are at the annual conference in Davos, with this year's theme being "A Spirit of Dialogue." Trump is expected to speak to the gathering on Wednesday.
-- Liz Moyer and Janet H. Cho
***
Netflix Reports Earnings Amid Fight Over Warner Bros. Discovery
Netflix will report its fourth-quarter earnings and its 2026 guidance this afternoon, as it weighs revising its bid for Warner Bros. Discovery to an all-cash offer as a way to fend off a rival, but hostile, offer for all of Warner Bros. Discovery from Paramount Skydance.
-- Goldman Sachs analyst Eric Sheridan says Netflix is expected to report a
solid end to 2025 as management executes on core strategies, including
offering original content to drive user engagement and growth and
building out its live entertainment and gaming businesses.
-- But investors will also be listening for any updates on the deal. Netflix
last month agreed to buy Warner Bros.'s studios and HBO Max streaming
assets for $27.75 a share -- $23.25 in cash, with the balance in Netflix
stock, spinning off Warner's Discovery Global cable business. Paramount
has offered $30 a share in cash.
-- Paramount has made several competing offers, which Warner has told
shareholders to reject. President Trump said last month that Netflix's
buying Warner Bros. "could be a problem," and that he'll "be involved" in
the regulatory approval needed to approve the merger.
-- Trump bought up to $2 million of Netflix and Warner Bros. Discovery bonds
in mid-December, days after Netflix agreed to buy Warner's studios and
streaming business for $72 billion, The Wall Street Journal reported,
citing White House disclosures. The administration didn't say whether the
trades were executed on Trump's behalf.
What's Next: Netflix will host a live interview with Co-CEOs Ted Sarandos and Greg Peters, CFO Spence Neumann, and VP, Finance/IR and Corporate Development Spencer Wang. Analysts expect Netflix to report earnings of 57 cents a share on $11.97 billion in revenue, and 330.5 million subscribers, according to FactSet.
-- Janet H. Cho and George Glover
***
Fed Independence at Stake in Supreme Court Hearing This Week
The Supreme Court hears arguments Wednesday in a case that could reshape how much control a president has over the Federal Reserve. The case concerns President Trump's attempt to fire Fed governor Lisa Cook, which lower courts have blocked. A president firing a sitting governor hasn't happened in Fed history.
-- Cook's term ends in January 2038 after joining the board in 2022. The law
says governors may be removed only "for cause," a standard partially
intended to prevent presidents from reshaping monetary policy by ousting
officials with whom they disagree. Removing Cook would open a spot for a
Trump appointee.
-- Trump, who has publicly criticized the Fed, argues that allegations tied
to Cook's past mortgage filings justify her removal. Cook denies
wrongdoing and has said the allegations are unfounded. Trump is asking
the Justices to allow her removal now rather than preventing it while the
case plays out.
-- The Justice Department is investigating Fed Chair Jerome Powell for his
disclosures about building renovations at the Fed. Powell has denied any
wrongdoing, and no charges have been filed. A ruling to remove Cook could
raise the possibility that Powell could also be removed based on the
investigation, BofA said.
-- Aditya Bhave, BofA's economist, argues the outcome of the Cook case is
more important for policy trajectory than the identity of the next Fed
chair. Charles Schwab's Kevin Gordon sees it as a test of presidential
authority in shaping the structure of the Fed.
What's Next: The justices will also likely weigh whether the Fed should continue to be treated differently from other independent agencies. In recent months, the Court has weakened removal protections at the Consumer Financial Protection Bureau. But the Fed has long occupied a distinct place in the system.
-- Nicole Goodkind
***
Bank Earnings Delivered. Here's What Comes Next.
Wall Street banks set the table for a better-than-expected fourth-quarter earnings season overall following a series of upbeat outlooks that bode well for the wave of industrial, consumer, healthcare, and tech reports expected over the coming weeks.
-- The six biggest banks generated record revenue of $593 billion, with
profit rising 8% from a year earlier. The blowout numbers lifted LSEG's
forecast for financial-sector earnings growth to 9%, from a previous 6.8%,
and S&P 500 earnings are expected to rise by around 9%.
-- Bank of America is forecasting above-consensus GDP growth of 2.8% for
this year, thanks in part to fiscal tailwinds from Republican tax cuts
and a dovish Federal Reserve. It's a solid backdrop from which to build
on the rotation away from tech and into so-called real economy stocks.
-- Tech will still undoubtedly drive the lion's share of fourth-quarter
earnings gains, and likely dictate the early-year performance of both the
S&P 500 and the Nasdaq, which hit a new high last week. A bullish
near-term outlook by Taiwan Semiconductor injected new life into the
artificial intelligence investment trade.
-- RBC Capital head of U.S. equity strategy Lori Calvasina sees some
vulnerabilities in the sector, including foreign policy and Fed
independence, which could usher in another round of "Sell America"
trading.
What's Next: Calvasina is looking beyond tech stocks to justify what she sees as an investor shift from growth stocks to value names, and her end-2026 price target of 7750 for the S&P 500. But that has to come first from an improving bottom line.
-- Martin Baccardax
***
NYSE Takes Another Step Toward 24/7 Trading
Get ready for nonstop trading. The New York Stock Exchange said on Monday that it is building a platform that uses blockchain to allow investors to trade stocks 24/7. It follows main rival Nasdaq, which said in September it had asked the SEC to allow investors to trade tokenized versions of stocks.
-- The NYSE is developing what it is calling a "tokenized securities
platform" that will enable round-the-clock trading, fractional share
trading, and instant settlements.
-- The NYSE's owner Intercontinental Exchange is working with banks
including Bank of New York Mellon and Citi to support tokenized deposits
across its clearing houses.
-- Tokenization, whereby ownership rights are digitized so they can be
traded nonstop, has become a buzzword for exchanges in recent years. As
well as the Nasdaq, the online trading platform Robinhood Markets and
cryptocurrency exchanges Coinbase, Gemini, and Kraken have also pitched
tokenized assets such as stocks, bonds, and gold.
What's Next: Round-the-clock trading won't happen just yet, as the NYSE is seeking regulatory approval for the platform. The Securities and Exchange Commission didn't immediately respond to a request for comment from Barron's.
-- George Glover
***
-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 20, 2026 06:40 ET (11:40 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments