Venezuela, Cuba, Greenland, Canada… and now President Trump sets his sights on ‘defending’ America’s influence over the tiny but strategically important Indian Ocean island of Diego Garcia and the Chagos islands.

Early Tuesday the US president on social media blasted the UK government led by Prime Minister Keir Starmer, branding Britain’s prior agreement to hand sovereignty over the Chagos Archipelago to Mauritius as an act of “great stupidity” and “total weakness.” 

Washington had backed the arrangement last year under the Joe Biden administration, which transfers the Indian Ocean territory to Mauritius while allowing the UK to retain access to the Diego Garcia air base under a 99-year lease. He has claimed the deal means the UK is planning to “give away the island of Diego Garcia”.

In his Truth Social post, Trump took aim at the deal under which London would surrender sovereignty while leasing back the strategically critical military base on the islands, including Diego Garcia – where US forces also have a base. He took the opportunity to say the move underscored exactly why he wants the United States to take control of Greenland.

“The UK giving away extremely important land is an act of GREAT STUPIDITY, and is another in a very long line of National Security reasons why Greenland has to be acquired. Denmark and its European Allies have to DO THE RIGHT THING,” Trump wrote as his concluding sentence in the message.

Despite that Diego Garcia lies some 1,000 miles from the nearest continent (that’s how far the southern tip of India is), it hosts a highly secretive UK-US military base – and has since the 1970s.

At this point its inhabitants are all military personnel and contractors, after over 900 Chagossian inhabitants were forcibly removed to make way for the military base in the 1960s.

The remote airbase has at times been used by the United States to attack targets in the Middle East. For example, typically just ahead of any potential or threatened Iran strike, the US begins building up aerial assets and forces at Diego Garcia.

For further background: “The U.K. purchased the islands for the equivalent of around $4 million, CBS News partner BBC News reported, but Mauritius had long argued that it was forced to give the islands away in order to achieve its independence in 1968. The U.K. invited the U.S. to build a military base on the island of Diego Garcia, and it has become a cornerstone of American defense infrastructure in the vast Indian Ocean region.”

Over the weekend, Deutsche Bank’s head of FX George Saravelos laid out one theoretical reason why in his view, Europe has leverage over the US in the latest burst of transatlatnic tensions over Greenland: or rather $8 trillion reasons why the US has leverage.

As  Saravelos wrote, “European countries own $8 trillion of US bonds and equities, almost twice as much as the rest of the world combined” and added that in an environment where the geoeconomic stability of the western alliance is being disrupted existentially, “it is not clear why Europeans would be as willing to play this part. Danish  pension funds were one of the first to repatriate money and reduce their dollar exposure this time last year. With USD exposure still very elevated across Europe, developments over the last few days have potential to further encourage dollar rebalancing.“

Sure enough, just hours later, Europe appears to have taken the Deutsche Bank strategist’s advice and contrary to Scott Bessent’s appeals this morning that European governments aggressively selling American debt to counter Washington’s threats over Greenland, would “defy logic”, Bloomberg has reported that the Danish pension fund AkademikerPension is planning to exit US Treasuries by the end of the month, amid concerns that the policies of President Donald Trump have created credit risks too big to ignore. 

“The US is basically not a good credit and long-term the US government finances are not sustainable,” Anders Schelde, chief investment officer at AkademikerPension, told Bloomberg on Tuesday, which is hilarious because this has been the case for years if not decades. Amusingly, it was another Dane, Hans Christian Andersen, who first pointed out that the Emperor is naked. Two hundred years later, Denmark has done it again. 

AkademikerPension, which manages around $25 billion in savings for teachers and academics, held about $100 million in US Treasuries at the end of 2025, Schelde said. Risk and liquidity management is the only reason to remain in Treasuries, and “we decided that we can find alternative to that,” he said.

Schelde cited Trump’s threats to take over Greenland as part of the reason to sell US Treasuries. But concerns about fiscal discipline and a weaker dollar also justify a retreat from US exposure, he said.

And since Europe has a thing for virtue signaling first – like blowing up all their nuclear power plants without any valid replacement in store – and asking questions much later, expect many others to follow in Denmark’s shoes, only to find out months later that there is no market that is deep or liquid enough to absorb the funds without completely blowing up the bid/ask in the process. 

Authored by Arjun Singh via The Epoch Times,

Secretary of Homeland Security Kristi Noem announced on Jan. 19 that more than 10,000 criminal illegal immigrants had been arrested by federal law enforcement officers during ongoing immigration-related operations in Minneapolis.

“We have arrested over 10,000 criminal illegal aliens who were killing Americans, hurting children and reigning terror in Minneapolis,” Noem wrote on X.

“In the last 6 weeks, our brave DHS law enforcement have arrested 3,000 criminal illegal aliens including vicious murderers, rapists, child pedophiles and incredibly dangerous individuals. A HUGE victory for public safety.”

Many law enforcement officers of U.S. Immigration and Customs Enforcement (ICE), as well as other agencies, have been deployed to the Minnesota cities of Minneapolis and St. Paul since Dec. 1, as part of Operation Metro Surge.

Local Democratic Party officials and progressive groups have voiced their opposition to this effort, with many protesters demonstrating against law enforcement officers while they are conducting arrests, and have sued the administration to enjoin the law enforcement operations.

The tension grew after protester Renee Nicole Good was shot and killed by an ICE officer. Federal officials said Good drove her SUV into the ICE officer, who shot her in self-defense.

Operation Metro Surge is one of many recent actions the Trump administration has undertaken against Minnesota amid allegations of welfare fraud and race-based discrimination.

The state has been sued by the U.S. Department of Justice for alleged violations of the Civil Rights Act for alleged racial discrimination in state hiring, and is under investigation by the Department of Housing and Urban Development for alleged violations of the Fair Housing Act arising from “racial favoritism.”

Furthermore, dozens of members of the Somali community in the state have been indicted or convicted of fraud involving the theft of public funds on a massive scale.

The Department of Homeland Security has also taken other immigration actions that affected the community, such as terminating Temporary Protected Status (TPS) for Somalia’s citizens and reviewing past asylum and naturalization applications for fraud.

In her post, Noem referenced an ongoing scandal involving the fraudulent misuse of COVID-19 pandemic relief funds in Minnesota, which has implicated Gov. Tim Walz and other Democratic Party officials in the state government.

“There is MASSIVE Fraud in Minneapolis, at least $19 billion and that’s just the tip of iceberg,” Noem stated.

“Our Homeland Security Investigators are on the ground in Minneapolis conducting wide scale investigations to get justice for the American people who have been robbed blind.”

After over the weekend warning that he would impose a 10% tariff on imports from several European countries in response to their opposition to his Greenland takeover plan, later threatening the tariff could be raised to 25% within weeks if those governments fail to fall in line – President Trump has once again escalated, this time with an overnight Truth Social post of a map showing not just Greenland as part of the US but Canada too.

The image features President Trump addressing European leaders in the Oval Office. In the background is a map with Canada, Greenland, Venezuela and Cuba shown them as part of the United States, draped over by American flag colors.

The image is actually an edited version of a real photograph from when various leaders including French President Emmanuel Macron, British Prime Minister Keir Starmer and European Commission President Ursula von der Leyen – were in Washington, DC in August 2025, for talks focused on Ukraine peace.

A separate AI-generated image Trump put out overnight depicts the president alongside Vice President JD Vance and Secretary of State Marco Rubio in Greenland. They are driving an American flag into the ground beside a sign reading, “Greenland-US Territory. Est. 2026.”

Trump is now also clearly putting Canada on notice as the next to potentially feel his wrath and repercussions for joining European countries in resisting his Greenland policy.

Among the latest Greenland Truth Social Posts by President Trump below. He also asserted separately “There can be no going back”…

An unnamed US official told NBC, “Trump is really worried about the U.S. continuing to drift in the Western Hemisphere and is focused on this.” This means America’s longtime northern neighbor is about to feel the pressure to cooperate:

As Trump’s advisers work toward his goal of acquiring Greenland, the president has privately grown more exercised about what he sees as Canada’s similar inability to defend its borders against any encroachment from Russia or China, specifically arguing Canada needs to spend more on defense, the officials said. They said his push has accelerated internal discussions about a broader Arctic strategy and potentially reaching an agreement with Canada this year to fortify its northern border.

NBC observes further, “The current U.S. officials said there is not discussion of stationing American troops on the ground along Canada’s northern border. And unlike with Greenland, Trump is not seeking to purchase Canada or saying he might take it by U.S. military force, the senior administration official and current and former U.S. officials said.”

Canada is actually weighing joining the Europeans with a small troop deployment to Greenland. But as we previewed earlier, while no final decision has been made on a Canadian deployment, such an act would remain largely symbolic in nature – but Canadian leadership under the Carney government is likely very worried about needlessly provoking Trump’s wrath. But too late, it seems.

Prime Minister Mark Carney has said that Canada is “concerned” about what he has called US “escalation” – but again this is a bad moment for Canada to get ‘noticed’ by Trump for joining European ‘defiance’ of this future plans for Greenland. Domestic pressure in Canada is rising for the Carney government to ‘stand up’ to Trump:

As NATO allies send small deployments to Greenland for joint exercises, Prime Minister Mark Carney is mulling sending Canadian troops to join them. Retired Royal Canadian Air Force general and former chief of the defense staff Thomas Lawson says the deployments signal that NATO countries — apart from the U.S. — are unified behind Denmark and Greenland.

—NATO exercises in Greenland a ‘rebuke’ to Trump that Canada should join: retired general

Meanwhile some big, unexpected things are happening between Canada and China, along the lines of a ‘reset’…

Canadian Prime Minister Mark Carney is pitching Canada as a pillar of a reshaped global trade order, leaning into closer ties with China and a patchwork of smaller trade agreements, even as the northern neighbor remains deeply tethered to the US economy – and despite years of bad relations with Beijing triggered largely by the Huawei affair.

This is the perhaps best illustration that Trump’s new “Monroe doctrine” is objectively achieving the exact opposite of what it intends. pic.twitter.com/M5WJBkoj1M

Carney is currently in Beijing describing a “new era of relations between Canada and China” and explicitly talking…

— Arnaud Bertrand (@RnaudBertrand) January 16, 2026

Last week, Carney went further than many of his European counterparts by striking a deal with Beijing, signaling an effort for Canada to get ahead in a post-American-centric trade system after President Donald Trump’s tariffs have deeply strained long-standing commercial relationships nearly to breaking point.

Fresh commentary from Rabobank unpacks this theme further in the following…

* * *

Canada offers an example of an alternative approach? Mark Carney just made the first visit to China by a Canadian Prime Minister in almost a decade. Canada’s name has been mud in Beijing for years after the former Trudeau government complied with a US warrant for the arrest of Huawei executive Meng Wanzhou in 2019. Trudeau then placed substantial tariffs on imports of Chinese steel, aluminium and electric vehicles – where duties were set at 100% for the latter.

Carney has now signed a deal with China to lower EV tariffs to 6.1% up to an annual quota of 49,000 vehicles. In return China will drop tariffs on Canadian canola to 15%. Having previously described China as the greatest threat to Canada’s national security, Carney is now saying that the relations with the Middle Kingdom are more predictable than relations with the United States, and is making a show of cozying up to Beijing. As one observer puts it on X, Carney’s pivot is a “vintage Gaullist move.”

Carney is attempting to leverage Trump by signing deals with Beijing and even flirting with the idea of sending Canadian troops to Greenland. With Chinese influence having been ejected unceremoniously from Venezuela, and under pressure in the Panama Canal, the last thing the Trump administration would want is for Canada to offer China another geopolitical toehold in the Western hemisphere. Carney offering that toehold in the Arctic, directly adjacent to Greenland, must be particularly ‘de-Gaulling’ for Trump, who is so far calling the bluff by shrugging his shoulders. However, this strategy is incredibly high risk.

Not only does Carney’s backdown on Chinese EVs threaten Canada’s own auto industry (see criticism from Ontario Premier Doug Ford here), but there is always the chance that poking the (US) bear might actually elicit a response from the bear. Canada sends ~75% of its goods exports to the United States while the United States is by far the largest supplier of armaments to Canada. Consequently, Carney will be hoping that Trump’s response is to offer him a better deal than Xi Jinping is willing to give. However, with the USMCA trade agreement up for renegotiation and the US back in a Great Power frame of mind, Carney runs the risk that Donald Trump might instead decide that Canada is also very nice..

US equity futures are sharply lower, on pace for their biggest drop of the year, with Beta underperforming. And while geopolitics are the catalyst – as attention remains glued to see what Trump will say next on his Truth Social feed ahead of this week’s Davos meetings – after Trump reignited his trade war with Europe, the moves are exacerbated by a meltdown in JGBs (in a historic move, 30Y JGB are +27bp, a 6-sigma move) which has triggered a global bond selloff. As of 8:00am ET, S&P futures are down 1.4%, but off their worst levels of the morning; Nasdaq futures slide 1.7%. Pre-market, all of Mag7 are lower alongside higher beta plays. Energy, Materials, Staples, and Utils are outperforming on the move lower. In the latest geopolitical news, the EU suggests a proportional response to Trump’s Greenland demands but that the previous trade deal still holds as Trump threatens additional tariffs on France; at the same time, Bessent says that EU is not looking to exit their Treasury holdings after a report from Deutsche suggested Europe – which holds a record $8 trillion in US assets – could do just that. The yield curve is twisting steeper with belly to backend of the yield curve +3 – 9bp as DXY falls the most since late Aug. Commodities are today’s safe haven led by nat gas (ahead of freezing polar blasts in both Europe and the US) and precious metals (gold and silver both at new record highs, gold rising above $4700 and silver fast approaching $100). Today’s macro focus is the weekly ADP print and any updates from Davos as the market wants to see if today will be another TACO Tuesday. 

In premarket trading, Magnificent Seven stocks decline alongside other growth names (Amazon -2.4%, Alphabet -2.3%, Tesla -2.1%, Nvidia -2%, Meta Platforms -2.1%, Microsoft -1.5%, Apple -1.3%) 

• Gold and silver miners, including Newmont (NEM) and Agnico Eagle (AEM), rise as investors to look for safe-haven assets after US President Donald Trump announced a new 10% levy on eight European countries opposed to his plans to seize Greenland. Newmont +3%, Agnico Eagle +3.6%
• And as traders flee risk, decliners include crypto-linked stocks such as Coinbase (COIN), which is down 4%.
• 3M Co. (MMM) declines 4% after providing a 2026 adjusted earnings forecast range with a midpoint that fell slightly short of estimates. Adjusted earnings will be $8.50 to $8.70 a share in 2026, the maker of Post-it notes said. Analysts had expected $8.64 on average, according to the average of estimates compiled by Bloomberg.
• AppLovin (APP) falls 7% after a negative research report by CapitalWatch. The stock was also weighed down by a broader tech selloff amid rising geopolitical tension.
• Ciena Corp. (CIEN) drops 6% after BofA Global Research cut its recommendation to neutral from buy, citing valuation and future backlog.
• ImmunityBio (IBRX) rises 23% after the drug developer said it held a Type B End-of-Phase meeting with the US FDA regarding its supplemental application for its drug to treat bladder cancer.
• Netflix Inc. (NFLX) inches about 1% higher after reaching an amended, all-cash agreement to buy Warner Bros. Discovery Inc.’s studio and streaming business as it battles Paramount Skydance Corp. to acquire one of Hollywood’s most iconic entertainment companies.

In corporate news, Apple retook the top spot in China after iPhone shipments jumped 28% during the holiday quarter, according to Counterpoint Research. Bain Capital is said to be working with Citigroup and JPMorgan on a review of Singapore-based Bridge Data Centres that may lead to a stake sale.

While traders have been able to get past a whirlwind of other unexpected developments this year, the standoff over Greenland is giving even the biggest bulls a jolt, with no off-ramp yet and forcing the biggest overnight selloff in US futures this year. Trump’s push to take control of Greenland, and renewed trade war with Europe, has injected fresh volatility into markets, reviving fears of a trade confrontation between traditional allies with little sign of compromise. Adding to tensions, Trump overnight threatened to impose steep tariffs on champagne after French President Emmanuel Macron ruled out joining a US-led peace initiative.

The VIX broke above 20 points for the first time since November. Trump’s threat to impose tariffs unless a deal is reached for the purchase of Greenland has sparked speculation that European countries could dump US assets (easier said than done), while a spat with France’s Macron left Trump considering a 200% tariff on wine and champagne.

“The only hope really is that Republican senators and congressmen put a stop to this,” said Laurent Lamagnere, deputy chief executive officer at AlphaValue in Paris. “Investors have taken advantage of these volatility moments to buy the dip but for myself, I am not comfortable. There is no guarantee it will work this time.”

Adding to the pain, long-term treasury yields spiked after a meltdown in Japanese bonds, sending the 30-year US rate up nine basis points to 4.93%. Investors balked at Prime Minister Sanae Takaichi’s election pitch to cut taxes on food, pushing Japan’s 40-year rate to a fresh high.

8 hours later, 6-sigma collapse https://t.co/taZruAyYX8 pic.twitter.com/pbUB3QpMh3

— zerohedge (@zerohedge) January 20, 2026

The latest market drama comes in a backdrop of extreme bullishness. Investors are the most bullish in nearly five years, while protection against an equity correction is at the lowest since 2018, according to Bank of America’s latest fund manager survey. With BofA’s indicator showing the market at a “hyper-bull level,” it’s time to increase risk hedges and havens, strategist Michael Hartnett said. Still, investors caught between FOMO and growing geopolitical risks can take a cue from derivatives strategists: Hot trades for 2026 range from vanilla tail hedges to bespoke dispersion baskets.

Adding to the deluge of headlines, the annual World Economic Forum in Davos is on this week. Bessent urged calm over Greenland at a press conference, while Trump said he will use the event to meet with various parties over his ambition to take control of Greenland. Bessent also said in his remarks that the next Fed chair could be announced next week.

Barclays’ strategist Emmanuel Cau said “erratic” US policies may reinforce “sell America” bias among global allocators. Allianz Global Investors sees the risk of an escalating trade war between the world’s largest economies as “significantly higher” compared to the aftermath of Liberation Day, and expects precious metals to benefit.

Stocks in Europe have extended yesterday’s declines, Stoxx 600 is lower by 1.3% with industrial good and construction stocks leading declines, while media and food beverage shares outperformed. Here are the biggest movers Tuesday:

• Wise shares jump as much as 14.3%, marking their best day since mid-2023, after the financial technology company surpassed results expectations and raised its margin goal for the full year
• Renault shares rise as much as 3.2% as the French carmaker’s brand vehicle sales increased 3.2% last year and the firm said it will work with Turgis Gaillard on a drone project
• Inficon shares rise as much as 6.6% to the highest in nearly a year, after Deutsche Bank upgrades the Swiss vacuum instruments maker to buy from hold and raises the price target by almost 50%
• LVMH falls as much as 2.4% in Paris, on track for a seventh straight session of losses, the longest streak since March, after US President Donald Trump signaled he could impose a 200% tariff on French wines and champagne
• BKW shares fall as much as 12%, the most since June 2023, after the Swiss energy firm cut its Ebit guidance for the full year following a value adjustment of its Wilhelmshaven coal power plant
• Acciona Energias Renovables declines as much as 5.5% as RBC double-downgrades to underperform, saying the renewables firm’s weak balance sheet is a key driver of earnings risk. Parent company Acciona SA drops 5%
• Fresenius Medical Care shares slip as much as 3.5% after Goldman Sachs downgraded its recommendation on the stock to neutral from buy, citing several headwinds for 2026
• Carl Zeiss Meditec shares drop as much as 6.3%, to the lowest since February 2017, after Goldman Sachs cut its rating on the German medical optics company to neutral from buy, citing further challenges this fiscal year
• Valneva shares drop as much as 14%, after the French vaccine maker said it had decided to voluntarily withdraw the biologics license application and investigational new drug application for its chikungunya shot, Ixchiq, in the US

Asian stocks fell, as equities in Japan extended their decline amid growing political uncertainty. The MSCI Asia Pacific Index fell 0.5%, and earlier dropped as much as 0.8%, the most in more than a week. Tech names including Samsung Electronics, Tencent and SK Hynix were among the biggest drags on the gauge. Along with Japan’s shares, gauges in China and South Korea fell, and Indian stocks touched a two-month low. Japan’s Topix index fell the most in a month as political uncertainty grew following Prime Minister Sanae Takaichi’s snap election announcement. Simmering geopolitical tensions around US President Donald Trump’s threats to Greenland’s sovereignty also hurt risk appetite. Chinese equities fell following a raft of measures by Beijing to cool a market rally. Regulators have tightened requirements for margin financing and clamped down on high-speed traders to rein in potential froth.

“Asia markets are largely shrugging off the US-Europe drama,” said Derek Tay, head of investments at Kamet Capital Partners. “Trump seems to like to dramatize everything and talk big before walking back his threats.”

As earnings season kicks into gear, the bar is high for companies to deliver. Analysts predict fourth-quarter S&P 500 earnings growth of 8%, according to data compiled by Bloomberg Intelligence. Key themes include AI spending, oil and tariff jitters and the defense boom. Morgan Stanley strategists, meanwhile, expect an above-average EPS beat rate as the bar was low coming into the quarter.

In FX, the dollar is weaker versus all major peers, with the Bloomberg Dollar Index down 0.3%. The Swiss franc remains the haven of choice with CHF/JPY hitting the 200 level for the first time on record. Gains in the yen are limited by fiscal angst in the run-up to the Feb. 8 election.

In rates, an overnight surge in long-dated Japanese yields, which soared by much as 27bps, has set the tone for fixed income markets. US 10- and 30-year yields are up 7bps and 9bps respectively, with the curve bear-steepening. The German 10-year yield is up 5bps and its UK counterpart higher by 7bps.

In commodities, it’s been another day of record highs for spot gold and silver, which are posting respective gains of 1.2% and 1.0%. Crude futures are showing marginal gains with little follow-through from Libya’s oil crescent halting operations amid adverse weather conditions. Bitcoin is down 1.9%. 

The US economic calendar includes weekly ADP employment change (8:15am) and January Philadelphia Fed non-manufacturing activity (8:30am). Fed officials are in a self-imposed communications blackout ahead of the Jan. 28 policy decision, with no action on rates priced into short-term interest-rate products

Market Wrap

• S&P 500 mini -1.7%
• Nasdaq 100 mini -2%
• Russell 2000 mini -2% (*)
• Stoxx Europe 600 -1.2%
• DAX -1.4%
• CAC 40 -1.2%
• 10-year Treasury yield +7 basis points at 4.29%
• VIX +1.4 points at 20.25
• Bloomberg Dollar Index -0.3% at 1204.7
• euro +0.6% at $1.1718
• WTI crude +0.3% at $59.6/barrel

Top Overnight News

• Japan’s bond rout intensified as investors gave a thumbs down to Sanae Takaichi’s election pitch to cut taxes on food. The 40-year yield rocketed past 4%, a first for any maturity of the nation’s sovereign debt in more than three decades. BBG
• Trump’s big Davos speech tomorrow is set to focus on affordability. He’s expected to outline a proposal to allow 401(k) savings to fund home down-payments and elaborate on plans to ban institutional investors from buying single-family homes, cap credit card rates and intervene in the market for MBS. BBG
• Scott Bessent urged calm over Greenland, calling for Europe to honor trade agreements and telling the World Economic Forum in Davos that the idea that Europeans might dump US assets “defies any logic.” BBG
• Federal Reserve Chair Jerome Powell plans to attend Wednesday’s Supreme Court hearing over the attempted dismissal of Fed Governor Lisa Cook by President Donald Trump, according to a person familiar with the situation. BBG
• US Treasury Secretary Scott Bessent said President Donald Trump could announce his pick for the next Federal Reserve chair as soon as next week. BBG
• Trump: “I know who I want to be Fed Chair, will announce sometime”.
• Senior state planners in China are formulating a five-year plan to lift domestic demand, acknowledging that the world’s second-largest economy currently faces an imbalance between “strong supply and weak demand.” WSJ
• China bought about 12 million tons of US soybeans over the past three months, traders said, meeting a key pledge in its trade talks with the US. BBG
• President Donald Trump threatened to hit French wines and champagnes with 200% tariffs in an apparent effort to cajole French President Emmanuel Macron into joining his Board of Peace initiative aimed at resolving global conflicts. RTRS
• Netflix reached an amended, all-cash agreement to buy Warner Bros. Discovery Inc’s studio and streaming business as it battles Paramount Skydance Corp. to acquire one of Hollywood’s most iconic entertainment companies. BBG

Trade/Tariffs

• US President Trump: “I will impose 200% tariff on French wines and champagne, and President Macron will join the Board of Peace”.
• China said they hit its US soy purchase target of 12mln tonnes, Bloomberg reported citing traders.
• Taiwan’s Vice President said we will balance the trade deficit between Taiwan and the US.
• South Korea is reportedly to hold off on USD 20bln worth of US trade investment, due to KRW impact.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly in the red, except the KOSPI, as the tech sector led the declines. ASX 200 continued to fall away from its 2026 peak of 8915, despite the positivity seen in the metals space as BHP upgraded its FY26 copper production guidance. Nikkei 225 neared 53,000, falling from its ATH of 54,522, as traders assess the policies put forward by the LDP and Centrist Reform Alliance going into the February 8th elections. KOSPI was set to snap its 5-day winning streak, falling from its ATH at 4924, as the tech sector weighs on sentiment. Samsung Electronics and SK Hynix briefly led losses, with shares down as much as 3% each before price gradually rebounded but remained in the red. Hang Seng and Shanghai Comp traded with modest losses, and little follow-through from the PBoC unsurprisingly holding LPRs steady. Global equities continue to price in the re-escalation of tariffs between the US and EU.

Top Asian News

• Citi sees the potential of 3 rate hikes in 2026 by the BoJ if JPY weakness continues.

European equities (STOXX 600 -1.3%) are trading on the back foot, with sentiment remaining under pressure as trade tensions between the US and Europe continue to escalate. The latest development came overnight, when US President Trump threatened to impose a 200% tariff on French wine and champagne. However, Treasury Secretary Bessent spoke on EU-US relations, saying that he is confident that leaders will not escalate and things will work out. European sectors are largely trading in the red; Media leads whilst Industrials and Utilities underperform.

Top European News

• US Treasury Secretary Bessent said the US is experiencing a capex boom, which always leads to an employment boom. The narrative of EU nations discussing selling USTs is false; there is no talk of this, it is mis-reporting. On trade:. said the worst thing countries can do is heighten trade tension with the US. The narrative of EU nations discussing selling USTs is false. There is no talk of this, it is mis-reporting. Swiss-US agreement is well along the road. On EU-US relations, said there is no need to jump to the worst case scenario at this point. Reminds that trade ties have been strained before, and it worked out. Is confident that leaders will not escalate and that it will work out. On Economy:. Expects economic growth to be strong this year, at around 4-5% real GDP growth. They will see substantial refunds of up to USD 1000 per worker in Q1.
• Citi downgrades Continental Europe to Neutral from Overweight; rising tensions and tariff uncertainties undermine the short-term outlook for European equities.

FX

• DXY is on a weak footing this morning, and currently trades at the bottom end of a 98.46-99.13 range. To recap, overnight, President Trump threatened a 200% tariff on French wines/champagne after French President Macron rejected his invitation to join his latest peace initiative. Thereafter, Trump said the UK is acting with “great stupidity”, following the Chagos deal.
• The largest bout of pressure for the Dollar was after Treasury Secretary Bessent called for calm and reminded markets that US-EU relations have been strained before, but eventually worked out. This seemingly poured some cooler water on the situation, and the index fell from around 98.85 to a current session low of 98.46.
• The recent pressure in the USD has helped to push G10s higher across the board; CHF tops the leaderboard, the EUR resides near highs beyond the 1.1700 mark, whilst USD/JPY has slipped below the 158.00 mark to make a trough at 157.58. Overnight, the JPY was shunned, alongside aggressive selling in JGBs, spurred by increased bets of unsustainable fiscal policy after PM Takaichi called snap elections and the fiscal commentary from parties since.
• Elsewhere, Cable sits towards session highs and within a 1.3410-1.3491 range. Earlier, the November jobs report showed a tick higher in the unemployment rate, whilst the wage components remained elevated. A knee-jerk lower was seen in the Pound, but this pared almost immediately, given the narrative around a summer-cut has not really shifted for the BoE.

Fixed Income

• Fixed on the backfoot as yields climb in catch-up to Monday’s US holiday and with Japan at record levels.
• JGBs down to a 130.66 base, c. 80 ticks below the close on Monday. Pressure driven by the Takaichi trade being in force into the formal election announcement on Friday, and then the polls on 8th February. Pressure that appears to be driven by scrutiny of the fiscal plans of both the government and the combined opposition, as they outline plans to postpone/remove various tax measures.
• Action that has driven Japanese yields to highs. The 40yr above 4.23% (+40bps), the 30yr above 3.90% (+41bps), 20y to 3.48% (+32bps), 10yr to 2.38% (+20bps). With the curve markedly steeper.
• Macquarie’s Berry wrote, “if the selloff continues, and especially if it spreads globally, then we should see the BoJ dust it [bond buying tool] off and put it to work – maybe as early as tomorrow morning’s daily operations”.
• Evidently, we have seen the selloff spread globally. USTs are pressured down by around 9 ticks, and currently resides at the bottom end of the day’s range; Gilts (-70 ticks) and Bunds (-45 ticks) also follow suit. The latter took a leg lower on the region’s ZEW metrics, whereby the Expectations figure topped expectations and improved from the prior.
• Japan sold JPY 800bln 20-year JGBs; b/c 3.19x (prev. 4.10x, 12-month avg. 3.44x), average yield 3.2510% (prev. 2.916%). Tail 25bps (prev. 3bps).

Commodities

• Crude on the backfoot but only marginally so. Spent the APAC session in a narrow range with complex-specific newsflow somewhat light as the market focus remains on Greenland and the tariffs stemming from it. Early morning trade saw some mild selling in the complex, but this has since reversed to trade towards highs of USD 59.59/bbl and USD 64.27/bbl.
• Spot gold at highs, printed another ATH of USD 4737/oz given the risk tone and despite the morning’s significant yield strength.
• Base peers in the red. 3M LME Copper down to USD 12.8k/T, within reach of Friday’s USD 12.7k/T base and back towards opening levels from early-January.
• China announces plans to expand high-level opening of nonferrous metals future markets by steadily including eligible futures and options in foreign access.
• China raises both gas and diesel prices by CNY 85 per tonne from the 21st January.
• Venezuela’s Acting President said plans to boost gold and iron output in 2026, and attract metals investment for FX.
• China’s Shanghai Futures Exchange to adjust margin requirements and daily price limits for selected copper, aluminium, gold and silver futures contracts from the 22nd of January settlements.

Geopolitics: Ukraine

• Ukrainian President Zelensky might go to Davos if he has a bilateral meeting with Trump to sign “prosperity deal”.
• Russia’s Lavrov said they yet to receive documents following recent US and European talks on Ukraine.
• Russia’s Lavrov said they are ready for contact with the US on Balkans.

Geopolitics: Others

• European Commission President von der Leyen says the bloc’s response will be united, proportional and unflinching. The territorial integrity of Greenland is non-negotiable and they will be working on wider Arctic security measures.
• UK Government, in response to Trump’s remarks on Diegeo Garcia, said “the deal secures the operations of the joint US-UK base on Diego Garcia…” and “It has been publicly welcomed by the US…”.
• US President Trump posted “Thank you to Mark Rutte, the Secretary General of NATO!”.
• US President Trump posted “the United Kingdom, is currently planning to give away the Island of Diego Garcia…” adds that this “is another in a very long line of National Security reasons why Greenland has to be acquired.”.
• US President Trump, on Truth Social, said he had a good phone call with NATO Secretary General Rutte about Greenland, and have agreed to meet various parties in Davos.
• US President Trump said he will talk about Greenland in Davos, does not think the EU will push back too much on Greenland.
• US President Trump conceded in a weekend phone call with UK PM Starmer that he was given bad information regarding troop deployments from European countries to Greenland, CNN reported citing senior UK official.

US Event Calendar

• 8:15am ADP Weekly Employment Change
• 8:30am Philadelphiaa Fed Non-mfg Survey

DB’s Jim Reid concludes the overnight wrap

I watched the new Game of Thrones prequel last night. When I first watched the original series 15 years ago the geopolitics of Westeros and beyond were that of pure fantasy. A decade and a half on and it sometimes feel like we’re now in our own episode with all that’s going on in the world.

With the US off yesterday the implications of the tariff threats over Greenland had yet to fully percolate through financial markets. This morning US cash bond trading have reopened in Asia and 10yr USTs are +3.8bps higher trading at 4.26% and 30yrs +4.8bps at 4.885%. 2yr yields are flat. The sharp sell-off in long-end bonds ultimately reversed the full effects of Liberation Day so it’s worth keeping an eye on the demand for US assets as a barometer for how aggressive the US might be on this policy.

S&P 500 (-1.01%) and NASDAQ 100 (-1.14%) futures are at similar levels to where they were when Europe went home last night with European equity futures flat to slightly lower. Asia equity markets are selling off a touch more with the Nikkei (-0.98%) being the largest underperformer, followed by the ASX (-0.66%). All other main Asian markets are within a tenth or two of being flat on both sides of zero. JGBs continue to see a very large sell-off, ahead of the upcoming election on February 8th, this time not helped by a soft 20yr auction. 10 and 30yr yields are +8.1bps and +21.7bps higher this morning with 40yr yields crossing 4%. Pretty dramatic moves especially as 10yr yields had already moved +7.7bps yesterday.

This morning the Euro has edged up another tenth of a percent and is now +0.55% above the pre-weekend levels with the Dollar yesterday weakening against every other G10 currency, just as long-end Treasury futures were also losing ground. Interestingly Polymarket suggest the probability of all Trump’s Greenland tariffs going into effect by February 1st is currently 18%, rising to 39% for some of these being imposed. Denmark and Norway are those seen with the highest likelihood of sticking. So Polymarket participants expect compromise but not with high certainty.

So markets have reacted but there’s clearly room for bigger moves if the rhetoric increases further. Trump will likely continue to be active beforehand but remember he speaks at Davos tomorrow and this would be an ideal location for him to get his full views of the world across. Yesterday he declined to rule out the use of force to take Greenland, saying “No comment” when asked by NBC News in an interview. That’s driven growing fears about some kind of retaliatory trade escalation from Europe, with increasingly strong comments from several officials. For instance, German finance minister Lars Klingbeil said that “We are constantly experiencing new provocations, we are constantly experiencing new antagonism, which President Trump is seeking, and here we Europeans must make it clear that the limit has been reached”. Nevertheless, US Treasury Secretary Bessent warned the EU against retaliatory tariffs, saying they’d be “very unwise”.

At around 530am London time just before we go to print Trump posted on social media that “I had a very good telephone call with Mark Rutte, the Secretary General of NATO, concerning Greenland. I agreed to a meeting of the various parties in Davos, Switzerland. As I expressed to everyone, very plainly, Greenland is imperative for National and World Security. There can be no going back — On that, everyone agrees.”  So some elements of conciliation but without changing his demands.

In terms of what it meant for equities yesterday, trade-exposed sectors were particularly affected. So the STOXX 600 (-1.19%) posted its worst performance in two months, with auto companies like BMW (-3.43%) and Porsche (-3.73%) falling back, whilst a decline in luxury stocks pushed France’s CAC 40 (-1.78%) back into negative territory for 2026. Defence stocks were the main exception however, with Rheinmetall (+0.95%) one of the few to advance on expectations this could galvanise a fresh push towards higher European defence spending. S&P 500 futures were down around -1% at the time of the European close, whilst the VIX index of volatility (+2.98pts) has jumped to 18.8pts as I type, its highest level in nearly 2 months.  Elsewhere, Gold prices have risen +1.84% since the weekend.

The situation is complicated by the upcoming Supreme Court ruling on the IEEPA tariffs, which might end up further constraining Trump’s room for manoeuvre on tariffs. However, no-one knows when this will come through (apart from maybe the judges). The bid offer is somewhere between today and June. The market has been burnt before by overreacting to tariff threats. Obviously, there was Liberation Day but more recently Trump’s escalation with China in October prompted a -2.71% decline for the S&P 500 on that day, before he then met with Xi and the trade truce was extended by a year.

For sovereign bonds, the latest developments brought about a clear curve steepening, echoing what happened in previous moments of trade escalations. At the front end, the rally was driven by more dovish central bank pricing, as investors grappled with the prospect of more rate cuts to soften any trade war. So 2yr German yields (-3.1bps) saw a clear decline yesterday, but with 10yr bund yields up +0.5bps.

Otherwise yesterday, there was little data of note, although the Euro Area CPI reading for December was revised down very slightly to +1.9%, having been at +2.0% on the flash print. Elsewhere, Canada’s CPI print was higher than expected yesterday, with headline inflation picking up to +2.4% (vs. +2.2% expected). However, the two measures of core inflation tracked by the Bank of Canada both fell back, with the median core measure down to +2.5% (vs. +2.7% expected), whilst the trim core measure fell to +2.7% as expected. Finally, the IMF also released their latest growth forecasts, upgrading global growth in 2026 by two-tenths to +3.3%, with 2027 unchanged at +3.2%.

Looking at the day ahead, data releases include UK unemployment for November, along with the German ZEW survey for January. Central bank speakers include the ECB’s Nagel, along with BoE Governor Bailey and Deputy Governor Ramsden. Finally, earnings releases include Netflix and United Airlines.

President Trump told reporters that French leader Emmanuel Macron’s refusal to back the proposed “Board of Peace” for the Gaza Strip could result in a 200% tariff on French champagne and wine. Trump mocked Macron’s political future and suggested the tariff threat would force France to join.

Earlier, a reporter asked President Trump about Macron’s refusal to back the proposed Board of Peace.

Trump responded:

Oh, did he say that? Well, nobody wants him because he’s going to be out of office very soon. So you know, that’s alright. What I’ll do is if they feel hostile, I’ll put a 200% tariff on his wines and champagnes and he’ll join. But he doesn’t have to join. If he said that, you’re probably giving it to me a little bit differently. But if he actually did say that, but as you know, he’s gonna be out of office in a few months.

🇺🇸🇫🇷TRUMP: IF FRANCE WON’T JOIN BOARD OF PEACE, I’LL PUT A 200% TARIFF ON THEIR WINE

“Well, nobody wants him because he’s going to be out of office very soon.

That’s all right.

What I’ll do is if they feel hostile, I’ll put a 200% tariff on his wines and champagnes and he’ll… pic.twitter.com/07wQZoeoNs

— Mario Nawfal (@MarioNawfal) January 20, 2026

Details about the proposed Board of Peace surfaced over the weekend, with a Bloomberg report describing it as a concept that U.S. allies and regional partners have already been briefed on as part of broader diplomatic efforts to influence and reshape Gaza’s future after the Israel-Hamas conflict.

Trump’s comments about Macron came as he heads to the World Economic Forum in Davos to discuss Greenland.

Trump posted what appears to be a private message from Macron on Truth Social, in which the French president wrote, “We are totally in line on Syria. We can do great things on Iran. I do not understand what you are doing on Greenland.”

Europeans talk a big game but will likely bend the knee in the Trump era, as the U.S. is highly motivated to secure the Western Hemisphere, and in doing so, will acquire Greenland.

Submitted by Thomas Kolbe

Schleswig‑Holstein’s Minister‑President Daniel Günther has, in what felt like a genteel salon, pulled back the curtain on the true censorship ambitions of politics. In the safe biotope of public broadcasting, he simply babbled and hit the spotlight on the repressive tendencies within the party system. We now find ourselves in a critical defensive struggle against the enemies of liberty.

Some achieve notoriety and fame by chance. Fortune may fall into one person’s lap, another may experience his ten minutes of public shine through a fluke rhetorical spark. In the case of the Minister‑President of Schleswig‑Holstein in Germany, however, this is a dubious honor.

In his appearance on Markus Lanz’s show on Germany’s state TV “ZDF”, CDU politician Daniel Günther slid into that revealing tone of small talk to which people are prone precisely when they believe themselves in a supposedly safe social environment – a place where no criticism is expected, no matter what leaves their lips.

What emerged during his guest spot on Lanz was a condemnable attitude toward the principle of free speech and toward critical media: the threat of censorship up to and including the blocking of individual platforms, including the portal Nius, reveals a profound ethical collapse. A growing, subtly operating apparatus of repression is now reaching us – a warning we should take seriously.

It was almost comical how Lanz, styled by public‑broadcasting elites as a star moderator, in tandem with the state‑aligned media sector repeatedly sought in the aftermath to rhetorically downplay Günther’s clearly articulated desire for censorship. Decontextualize, diffuse, and smother the real scandal with new waves of outrage like the Greenland debate – that’s how the media repair operation works.

Imposing Order in the Digital Sphere

What is forming before our eyes is unmistakable. A surveillance apparatus coordinated by the EU Commission in Brussels is emerging, built on the Digital Services Act and extending like a kraken over national intelligence agencies such as the Federal Intelligence Service (BND).

In an echo chamber, Daniel Günther now operates in the mode of a censor‑in‑waiting, confident that he is secured by the party apparatus. As early as June of last year, the CDU of Schleswig‑Holstein unveiled a policy paper titled “Protecting Democracy – Effectively Combating Disinformation as Well as Hate and Incitement Online.” In fifteen pages, its authors sketched a concrete strategy to regulate content on platforms such as Telegram, Meta, and X. Totalitarian thinking and the prospect of fulfilling a secretly cherished control fetish seem to exert a peculiar fascination even on the second tier of party functionaries.

Followed over the past months — culminating in a real dispute with the U.S. government — one thing becomes clear: Europe’s political leadership seems to fear nothing more than losing its dominance over the public discourse.

Yet that is the very nature of social media: it allows individual opinions to float freely, to form clusters and to be cast loudly into the public sphere. That is their explosive power — and apparently the genuine problem from the perspective of those who would rather order, canalize, and control discourse. Günther is not alone in his crusade against a defiant opposition that raises its voice now against COVID lockdowns, now against overheated climate apocalypticism, and otherwise positions itself as broadly skeptical of the state.

German Roots

Strategically, the politics of initially gentle censorship followed a seemingly intelligent, media‑political path. Two strands define the rhetorical front:

On the one hand, so‑called youth protection is invoked whenever politicians attempt to justify instruments of surveillance into private communication. On the other, the fuzzy concept of combating “hate and incitement” online is used as a vector against our privacy. The state proclaims itself a moral warrior against evil, leaves definitions of what may be said in political discourse largely open, and operates alongside a network of so‑called Trusted Flaggers — digital informants who diligently report rhetorical borderline cases to public institutions. Then things can get tricky: house visits by the state or account suspensions have emerged as effective tools in the fight against dissent. State and banks — here, too, they pull in the same direction.

Such an apparatus creates a space of silent threat in which unspoken prejudgments loom. Participants in public debates — commentators, podcasters, and media makers — already apply the mental censorship scissors in advance, reducing the critical sound against government institutions, parties, and political personalities.

As the politics of gentle censorship increasingly proves ineffective, sharper swords are drawn. The atmosphere on digital platforms is growing harsher. Even memes, sharp comments, or legally unproblematic insults become casus belli for the surveillance apparatus — a fine but increasingly overt network that perceptibly constricts the free field of opinion.

History will not look kindly upon our country. Germany was, in a way, the starting point — the sick root — of this system. In 2017, with the Network Enforcement Act (NetzDG), the first institutionalized attack on freedom of speech occurred, and Germany was its impetus. This censorship contraption was championed by SPD politician and then‑Justice Minister Heiko Maas. He seized the opportunity to indulge his resentment toward the civic sphere of freedom. He was backed by his coalition partner, Interior Minister Thomas de Maizière of the CDU, who appears equally devoted to the spirit of unfreedom. A fateful duo, carrying this grim work forward in an ethically sclerotic coalition.

It is striking how this push, born of German intent, first took tangible form in the Digital Services Act in Brussels, how eagerly the Brussels apparatus adopted this initiative, and how it later took hold in the political programs of German parties. Everything now follows a hierarchical command cascade. The CDU Schleswig‑Holstein’s digital control guidelines fit seamlessly into the prescribed strategy.

There is unanimity within the party apparatus; dissent comes only from the much‑maligned AfD, which staunchly opposes citizen surveillance in the digital space. In front of the firewall, it is getting uncomfortable.

The progress achieved in building the EU’s censorship apparatus, and the frantic national efforts to bring it into practical operation, show unmistakably how poorly our freedom is faring. Just as grim is the future of civilizational fundamental values — personal liberty before the repressive apparatus as well as freedom of expression itself.

What we are witnessing now is an anti‑civilizational blow, a form of cultural degeneration presented in the guise of a climate‑socialist restructuring of our society. The rhetoric is morally charged, the scope sweeping, the consequences deeply authoritarian. Where are the voices of elite representatives in this land who would speak out against the growing apparatus of repression? They have fallen silent and thereby been discredited.

The Price of Crisis

It is foreseeable what we must expect. The more severe the economic crisis becomes, impacting the prosperity of the broad masses, the more relentlessly the constructed apparatus will hunt dissidents and free media. Repression follows crisis like a shadow follows the body, ever deeper into the desert of totalitarianism.

And who knows — perhaps one day we will thank Daniel Günther for his naive, short‑sighted honesty. Perhaps he was the one who inadvertently stimulated our society’s immune system, sharpening the awareness of many for the real underlying problem of our time.

If so, Günther would have succeeded — albeit as antagonist and accidentally, yet ultimately in the service of freedom, seizing his moment of fame. He would have done a good deed by helping to save our society from drifting into the swamp of socialist planned economy — a system that always produces a repressive, presumptuous, and stupefying control apparatus.

* * * 

About the author: Thomas Kolbe is a German graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

UBS analyst Joseph Spak asked clients on Sunday: Will there be Chinese cars in the US?

Spak pointed to comments from President Trump last week at the Detroit Economic Club, in which he said, “If they want to come in and build a plant and hire you and hire your friends and your neighbors, that’s great. I love that. Let China come in, let Japan come in. They are. And they’ll be building plants, but they’re using our labor.”

Trump’s comments come after Chinese automaker Geely stated at CES in Las Vegas that it could make a major announcement about a U.S. expansion within the next 24 to 36 months.

“The big question for us is when and where we will go to the U.S.A.,” Ash Sutcliffe, Geely’s global communications chief, said in an interview last week at the Autoline Network at CES.

This also follows Canada’s decision last week to allow up to 49,000 Chinese EVs per year at a low tariff rate. U.S. Trade Representative Jamieson Greer said the decision is “problematic for Canada.”

“There’s a reason why we don’t sell a lot of Chinese cars in the ‌United States. It’s because we have tariffs ‌to protect American auto workers and Americans from those vehicles,” Greer told CNBC on Friday.

But Trump’s comments suggest that if Geely or BYD Motors were to announce new manufacturing plants in the US, their products would avoid tariffs and be competitively priced with domestic car brands.

UBS analyst Spak offered his team’s thoughts on Chinese EVs in the US market:

• Currently, there is a 100% tariff on Chinese EV imports. But of course, this wouldn’t be an issue if vehicles are built here. The bigger issue, in our view, is that the US bans Chinese software in vehicles starting in 2027, and then hardware in 2029. We believe that even for Chinese vehicles built in the US, they would want to leverage their software and hardware development.

• Investors point to the recent rapid rise of Chinese vehicles in Europe, with their December share hitting 18% in the UK and 12% in Spain. For the year, Chinese share in the UK was up to 9.7% (aided by China owned MG brand which has UK heritage) from 4.8% in 2024, Italy 8.1% from 4.7%, Germany remains lower at 2.5%. But of course, this large inflection was aided by imports. And China exports grew meaningfully in 2025, to >1mm units, as they looked for global growth especially as domestic demand slowed and amid high domestic competition. In the US, the Chinese don’t have the ability to test the waters or see early gains given exports to the US are tougher.

• Building factories, supplier parks, dealerships, distribution networks, and service would take some time (though many dealers we have spoken to have indicated they would welcome selling them). Rental/fleet seems like a way the Chinese OEMs could first start to get a foothold in the US and test out the market.

• So, as has been our belief for a while (we wrote this in 2023), it is likely only a matter of time before the Chinese automakers are in the US, a sentiment others such as Ford CEO Jim Farley have echoed. From Ford’s 2Q25 earnings call: “We really see not the global OEMs as a competitive set for our next generation of EVs. We see the Chinese, companies like Geely and BYD.”

• However, because of policy, the US OEMs likely still have a protected window for a number of years. Moreover, in our view, if/when the Chinese come, they are less likely to compete with the D3 bread and butter (and major profit driver) of large pickup trucks and SUVs. These segments have very brand loyal customers and also, for now, are less likely to be electric. Thus, smaller cars and small/midsize CUVs are more likely at risk. These are already competitive segments but also areas where Japanese/Korean brands tend to be more successful as F/GM have pulled out of many of these areas. Chinese autos in the US would also be a headwind for TSLA, RIVN. Further, China seems to be a topic US voters are more aligned on than not, so we wouldn’t expect the administration to move much on China auto investment before the mid-term elections.

• And of course, there are still the political considerations as China remains a hot button topic. For instance, in response to a WSJ article which said Ford could buy batteries from BYD for hybrids for Ford factories outside the US, White House trade adviser Peter Navarro posted on X, “So @ford wants to simultaneously prop up a Chinese competitor’s supply chain and make it more vulnerable…?” Recall, Waymo recently changed the branding of their Zeekr based robo-taxi to Ojai (“ohhi”).

• What about the US “back doors”? Canada just struck a deal with China to allow up to 49k Chinese EVs at a 6.1% tariff (had been a 100% tariff), and Canadian PM Carney indicated he expected the agreement would drive considerable Chinese investment into Canada’s auto sector. This is likely to draw scrutiny from the US as they review/renegotiate USMCA, where rhetoric has become more adversarial. During President Trump’s recent visit to Detroit, he called USMCA “irrelevant” and that Canada wants it but the US doesn’t need it. However, given the complexity of current supply chains, this would cause challenges for the US auto industry. We also believe that as part of the US discussions with Mexico, the US is seeking ways to limit Chinese auto investment in Mexico. That said, we believe this administration may be thinking one way to close the back doors is to eventually open the front door.

• Also, we found this article that the first “dark” factory could open by 2030 (our understanding is that the Xiaomi factory is already very highly automated) interesting, since if the Chinese do come to the US, it may also be a headwind to President Trump’s stance that they will use “our labor” (though we believe US OEMs are also highly likely to continue to automate their facilities).

• Key to the future of GM and F is what they do with strong profits during this period. We highlight F is still investing in their UEV platform, and GM CEO Mary Barra recently said EVs are still the end game.

• Finally for suppliers, while they may claim this is an opportunity for new business, at a steady state, we believe this is at best case a neutral outcome (win with Chinese OEM replaces win with existing customer) with risk skewed to the downside as it could be a share loss, the win with the Chinese OEM could be lower content, and Chinese suppliers could also invest in the US (again political issues, but we are assuming a case where the Chinese OEMs come). That said, they may also have more time if we are right that initial Chinese vehicles in the US take share from Asian OEMs where the NA supply base tends to have less exposure.

To sum up, with Chinese EVs rapidly gaining market share in Europe and beginning to appear on roads in Canada and Mexico, it is likely only a matter of time before they reach the US. Trump suggested that building factories in the US could be their pathway to US consumers, a development that would pressure Tesla, Rivian, Lucid, and other domestic EV companies. It is likely Elon Musk would talk with Trump if there were any threat of a flood of Chinese EV imports.

Russia has throughout nearly four years of its ‘special military operation’ in Ukraine been largely successful in weathering constantly expanding US and EU sanctions. While isolated, its economy has stayed afloat, but it has been forced into desperate measures as sanctions take a toll on some key sectors.

Russian newspaper Izvestia reports that Russia’s commercial airline industry is having to call back aging, decommissioned planes in an effort to sustain passenger traffic. Soviet-made planes which are several decades old are being restored to service.

“The plan involves nine Tupolev Tu-204/214 jets, one Antonov An-148 and two Ilyushin Il-96 widebody planes delivered to carriers including Red Wings,” The Moscow Times says of the Russian media reports.

“Ten of the 12 aircraft, which are reportedly up to 30 years old, have already been returned to service, Rostec told Izvestia,” the report continues.

Out of a national fleet of over 1,100 airliners, nearly 70% are foreign-made aircraft. In 2022 soon after the Ukraine war kicked off, authorities launched a program to begin replacing foreign planes with domestically produced models.

But regional media says that the plan has failed over the past years in meeting its ambitious goals, which called for over 120 aircraft of different types to be produced between 2023 and 2025. Instead a little over a dozen have been produced.

Western sanctions have not only impacted the ability to replace parts and keep maintenance up to date, but entire factories and machines have had to retool and be revived to make up for the lack in foreign parts.

But the industry is about to find itself under even more pressure and strain, as Moscow takes drastic action in the face of isolation from the West:

In 2026, Moscow plans to slash federal aircraft and helicopter production spending by 1.6 times, from 139.6 billion rubles ($1.7 billion) to 85.7 billion rubles ($1 billion), according to Russian media citing the draft federal budget for 2026-28.

Subsidies for airlines to renew their domestic fleets will be eliminated entirely, down from 1.3 billion rubles ($16 million) in 2025. Support for aircraft maintenance is set to drop from 6.1 billion rubles ($75 million) to 3.6 billion ($44 million). Only the MC-21 medium-haul jet will see increased funding, with subsidies rising 25% in 2026.

In the meantime aviation accidents have been growing increasingly common in Russia, particularly in the recent years of the Ukraine war. While not every incident can necessarily be linked directly to sanctions, it is the case that these increasingly involve very old planes with subpar maintenance and mechanics upgrades.

Ukrainian officials have of late also pointed to cross-border drone attacks as successfully disrupting Russian oil and fuel…

⚡️⚡️⚡️BREAKING: 🇷🇺Russia’s largest private fuel supplier warns of a new aviation fuel CRISIS.
After Ukrainian drone strikes damaged over 20 oil refineries, Moscow relaxed fuel standards — allowing “winter diesel” to be made by mixing summer diesel with kerosene. That quick fix… pic.twitter.com/bm63W45a6A

— Kyrylo Shevchenko (@KShevchenkoReal) November 4, 2025

Like with most Western sanctions on ‘rogue’ states abroad, it is the common people who suffer most. 

The same trend has been seen in Iran, which over the last decade has witnessed horrific aviation accidents, including the loss of a sitting president when his military helicopter crashed near Azerbaijan. 

Submitted By Thomas Kolbe

Party politics today is essentially a mélange of media strategy, personality cult, and the constant struggle to expand one’s own sphere of power. At the Willy Brandt House, the Social Democrats’ command center, a two-track media strategy appears to have been agreed upon for this year: taking and giving.

From the wealthy, the party intends to take—by expanding inheritance taxes on corporate assets—what, according to the Social Democrats’ moral code, never truly belonged to them. To the citizen, meanwhile, they want to give a basket of cheap groceries. After years of steadily rising food prices, SPD strategists believe they have discovered the perfect marketing instrument—and behold: suddenly it’s about the purchasing power of “ordinary people.”

Of “Ordinary People” and the Emotionally Unstable

Yes, you heard that correctly. The ordinary man—that obscene phrase of left-wing salon arrogance, barely concealing its deep-seated contempt for real lives—is once again being invoked in a fight for survival. Lars Klingbeil and the self-appointed champions of social justice signal a return to their roots. After years spent cultivating the woke, emotionally unstable segment of society, attention now shifts back to the core voter: the worker.

Have the Social Democrats finally struck bedrock in their deep search for a solution to inflation and the impoverishment of the lower classes? Their idea: persuade major discount chains and food retailers, on a “voluntary” basis, to include a predefined basket of basic groceries at low and stable prices. It sounds childish—and it is.

Adding patriotic undertones to this piece of neo-feudal arrogance only makes the “Germany Basket” smell unmistakably like a product pulled straight from the SPD marketing kitchen.

Imagine its creation in practice: Lars Klingbeil, himself no stranger to calorie-dense cuisine, sits one weekend with his working group—“Germany Basket: The Ordinary Man Eats Healthy”—in front of the party’s position paper. With a mid-range Chianti and a juicy Pizza Tricolore (three-pack, Mediterranean Week) from the premium section of a well-stocked discounter, young socialists, union officials, and party grandees work their way, bite by bite, toward defining the basic provisions of the archetypal precarious household.

They are informed. They listen to the people. They are always close to the pulse of the times. Why not also at the breakfast table? Didn’t Germany’s minister of the heart, Robert Habeck, run his last campaign exactly this way—approachable, in a hemp sweater, sipping mate tea at kitchen tables across the republic? Perhaps the finance minister senses that elections are won as long as the pan is hot, the pizza is in the oven, and a cold beer doesn’t cut too deeply into the weekly budget.

One kilo of floury potatoes, gluten-free pasta for allergy sufferers, of course a non-alcoholic beer—sugary drinks excluded—a bit of greenery on top, maybe some long-life milk, plain yogurt, and a nostalgic nod to good old junk food, naturally soy-based. Thus it may soon take shape: the socially just, functionary-approved food basket, complete with the finance minister’s seal of approval.

Attention to Detail Required

Fine-tuning the Germany Basket forces the working group into excursions—reenacting life at the front lines of daily economic struggle, venturing into that terra incognita of the ordinary consumer’s harsh reality. They will advance to the places where elections are decided: the meat counters, the vegetable aisles with their astonishing variety, the endless freezer sections filled with goods from all corners of the world.

It would be instructive to attach to every product its pre-COVID price. Such an existential shock might spoil the soup for one or two party officials.

Everyone can participate in the Germany Basket—from the finance minister and the labor minister to union secretaries and representatives of food NGOs. After years of disagreement, a common denominator is quickly found—and lies just a few steps away, possibly already in the freezer of the SPD canteen.

Inflation and the World of Fables

How bewildering rising prices must seem in these circles, where inflation is imagined to be nothing more than the result of entrepreneurial greed and excessive profit-seeking.

That inflation might stem from an ever-growing state apparatus financing itself to a significant extent through the printing press would never occur to them. And that Germany’s energy crisis—the ban on importing cheap Russian gas, the nuclear phase-out, and the entire climate-regulation catalogue—might negatively affect agriculture and generate immense price pressure is likewise relegated to the realm of fairy tales.

Yet the surge in prices has been massive. Since before the lockdowns, food prices in Germany have risen by nearly 40 percent. Few households have been able to offset this increase through income gains. The problems cut deeply into household budgets. At the same time, open-border policies clog the housing market while regulation and rent controls systematically prevent new construction—creating an economic situation from which fewer and fewer households can escape.

In economics, one principle is well known: the cure for high prices is high prices. They signal investors to deploy capital and eliminate scarcity. That this does not happen is also the work of these culinary-minded Social Democrats. They cling desperately to price controls like rent caps and to the regulatory machinery of the climate complex. In the bureaucracy thus created—in a dictated framework that now extends even to the refrigerator—they find their power base.

Within SPD circles, they believe they have discovered yet another trump card in the attention economy. The Germany Basket is merely another media-political low point: tasteless, undignified, ineffective. The SPD is finished.

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About the author: Thomas Kolbe is a German graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.