US-Europe Tensions Over Greenland
President Trump announced 10% tariffs on eight European countries (Denmark, Norway, Sweden, France, Germany, UK, Netherlands, Finland) effective February 1, escalating to 25% on June 1 unless a deal is reached on Greenland. This represents a significant escalation in transatlantic tensions.
Leaders from Europe issued a joint statement, saying they stand united with Denmark and Greenland. They started discussing retaliatory strategies but given how fractious the bloc is, the response is likely to be delayed and watered down.
The key point is that Trump is forcing Europe to move faster on the new security and economic arrangements, as the US focuses on the Americas.
Broadening of Equity Market Leadership: The Great Rotation is underway
The Russell 2000 has surged 5.8% year-to-date through mid-January, significantly outperforming the S&P 500’s 1.9% gain, marking a decisive regime shift. The S&P 500’s forward P/E has surged to 22.4x versus Equal Weight at 17.0x, a valuation gap that looks to be closing. After three years of mega-cap dominance, mid-caps and equal-weight strategies are breaking to record highs, signaling healthy market breadth.
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