One year and one day into Donald Trump's second term, markets are no longer just reacting to economic data. They are reacting to geopolitics, personality, and credibility. The immediate trigger was Trump's renewed threat to impose tariffs on European allies unless the United States is allowed to buy Greenland - an autonomous territory of Denmark, and, inconveniently, not a yard sale item. But the deeper issue is that investors are beginning to ask whether the United States still plays the role it once did in the world economy.

The market response has been sharp. After a three-day weekend, Wall Street suffered its worst session since early October. The S&P 500 and Nasdaq 100 both fell by more than 2%. Megacap companies like Nvidia and Apple were hit hard. The losses came alongside a weaker dollar and falling Treasuries, reviving talk of a "Sell America" trade - last heard after Trump's "Liberation Day" tariff announcement in April. Volatility jumped, with the VIX briefly touching a two-month high.

What makes this moment different is that stocks are not falling alone. Bonds, the traditional refuge in times of stress, are also under pressure. The U.S. 10-year yield spiked to 4.30%, a level not seen since September, even though the Federal Reserve has cut rates since then. That is bond-market code for distrust. Investors are demanding a higher premium to hold U.S. debt, suggesting skepticism about fiscal discipline and political stability.

The bond vigilantes, those famously unsentimental investors who enforce discipline when governments do not, are back. And they are not limiting themselves to Washington.

Japan has become the other fault line. Long accustomed to ultra-low yields and near-permanent central-bank support, Japanese bonds sold off sharply this week. Japan is a major creditor of the United States, and the global financial system is laced together by the carry trade - money borrowed cheaply in Japan and invested elsewhere. When Japanese yields rise, that whole structure starts to creak.

Against this backdrop, Trump is arriving, after a minor Air Force One electrical glitch, for the World Economic Forum in Davos. His keynote address now carries unusual weight. Investors are listening not for slogans, but for clues: Is the White House headed for compromise or confrontation? Will tensions with Europe cool, or intensify?

So far, Europe is not backing down. European leaders have hardened their tone, with EU officials openly discussing retaliatory measures if U.S. tariff threats become reality. Germany's Bundesbank has warned that tariffs could spill into monetary policy. Treasury Secretary Scott Bessent, speaking ahead of Trump, tried to play down the bond selloff, linking it to Japan. Markets were not entirely convinced.

Adding to the uncertainty is the Supreme Court, which is hearing arguments over Trump's effort to remove Federal Reserve Governor Lisa Cook. The case is widely seen as a test of central-bank independence. No immediate ruling is expected - the justices are heading into a four-week recess - but the longer the issue lingers, the more it weighs on confidence. Tariffs remain in place, and with them the prospect of messy legal and financial consequences, including potential refunds.

Meanwhile, earnings season continues. Netflix shares fell sharply despite beating expectations, as investors focused on its costly bidding war for Warner Bros. Discovery. United Airlines jumped after issuing an upbeat outlook, citing strong demand from wealthier and corporate travelers. Halliburton beat profit estimates. Of the S&P 500 companies that have reported so far, nearly 85% beat earnings expectations, well above the long-term average. Even so, good results are struggling to overpower bad vibes.

Elsewhere, caution dominates. Asian markets are mixed, with Japan and India down, China and Hong Kong modestly higher, and South Korea rebounding. Europe is in the red and so are futures on Wall Street. Gold, the asset of last resort, has surged past $4,800 an ounce, with some analysts openly talking about $5,000. Bitcoin is weaker. Oil prices are down on fears that trade tensions will weigh on demand. Copper is up, but only cautiously.

Today's economic highlights:

Today's agenda includes: the monthly and yearly inflation rates along with core inflation in the United Kingdom; ECB President Lagarde's speech for the Euro Area; FDI data in China; the IEA Oil Market Report in France; the CBI Business Optimism Index and Industrial Trends Orders in the United Kingdom; in the United States, the MBA 30-Year Mortgage Rate and Pending Home Sales; another speech by President Lagarde for the Euro Area. See the full calendar here.

  • Dollar index: 98,706
  • Gold: $4,863
  • Crude Oil (BRENT): $64.40 (WTI) $59.95
  • United States 10 years: 4.27%
  • BITCOIN: $89,260

In corporate news:

  • Meta's new AI team, Meta Superintelligence Labs, delivered its first internal models this month, signaling early promise from its aggressive AI push.
  • Alibaba formed a $35.9 million electricity generation joint venture with China National Nuclear Power, expanding its footprint in energy infrastructure.
  • Netflix defended its $82.7 billion bid for Warner Bros Discovery, emphasizing strategic content synergies, despite investor concerns dragging shares down nearly 6%.
  • JPMorgan and Allen & Company are set to earn $180 million in fees regardless of who acquires Warner Bros, amid the ongoing bidding war.
  • KKR's plan to sell its 80% stake in Metro Pacific Health in the Philippines has stalled due to valuation disagreements.
  • Chevron aims to finalize the $1 billion sale of its Singapore oil assets, including its stake in a major refinery, to Eneos and Glencore by Q1.
  • Blackstone is considering a $500 million IPO of India's PGP Glass, which could value the company at up to $4 billion.
  • Palantir and Accenture will support Sovereign AI in building AI data centers across EMEA, with future expansion into Asia Pacific.
  • Rockwell Automation is partnering with Lucid to deploy its software and training tools at the EV maker's Saudi Arabian manufacturing facility.
  • A JPMorgan unit is opening a trading branch in India's GIFT City to operate in the country's low-tax financial hub.
  • PDD Holdings was fined $14,365 by Chinese tax authorities for failing to submit employee tax data on time, amid mounting regulatory pressure.
  • Ford is recalling over 119,000 U.S. vehicles due to a fire risk from a faulty engine block heater.
  • Blackstone also joined a $205.5 million funding round for French fintech firm Pennylane, alongside other major investors.
  • NVIDIA CEO Jensen Huang plans to visit China in an attempt to reopen the AI chip market despite ongoing U.S. export restrictions.
  • A U.S. court-appointed special master recommended that expert witnesses be allowed to testify linking Johnson & Johnson talc products to cancer, advancing over 67,000 lawsuits.
  • The U.S. approved a $2.32 billion sale of aircraft and torpedoes to Singapore, with Boeing listed as the main contractor.
  • Apple announces Q4 and full-year 2025 earnings, schedules call to discuss results.
  • Microsoft announces strategic partnership with OpenAI to integrate AI capabilities into its products.
  • Amazon acquires a robotics company to enhance warehouse automation capabilities.
  • Netflix reports $12.1 billion in revenue and 325 million subscribers for the holiday quarter, surpassing expectations.
  • Royalty Pharma reports quarterly earnings, highlighting financial performance and key developments.

Analyst Recommendations:

  • Fedex Corporation: Rothschild & Co Redburn downgrades to neutral from buy with a target price of USD 271.
  • Netflix, Inc.: Fubon Securities downgrades to neutral from buy and reduces the target price from USD 1430 to USD 98. 
  • Saia, Inc.: Stifel upgrades to hold from neutral and raises the target price from USD 343 to USD 371.
  • Watts Water Technologies, Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 340.
  • Willscot Holdings Corporation: Baird downgrades to neutral from outperform with a price target raised from USD 22 to USD 23.
  • Albemarle Corporation: RBC Capital maintains its outperform recommendation and raises the target price from USD 159 to USD 200.
  • Bok Financial Corporation: Raymond James maintains its outperform rating and raises the target price from USD 115 to USD 140.
  • Kla Corporation: Deutsche Bank maintains its hold recommendation and raises the target price from USD 1250 to USD 1560.
  • Lam Research Corporation: Deutsche Bank maintains its buy recommendation and raises the target price from USD 195 to USD 260.
  • Mks Inc.: Cantor Fitzgerald maintains its overweight recommendation and raises the target price from USD 200 to USD 300.
  • Netflix, Inc.: Fubon Securities downgrades to neutral from buy and reduces the target price from USD 1430 to USD 98.