Macro Mondays – Europe, Trump & the Limits of Trade Escalation

Host: Andreas Steno Larsen & Mikkel Rosenvold
Date: January 19, 2026

Episode Overview

This week, hosts Andreas and Mikkel provide a candid and analytical look at the latest macro and geopolitical developments affecting Europe and global markets. The spotlight is on escalating tensions between the US and EU, driven by the ongoing situation concerning Greenland and newly proposed US tariffs, as well as the broader implications for markets. The hosts also discuss macroeconomic trends, capital expenditures for 2026, and the ongoing transformation of the AI sector. True to the podcast's style, the episode is rich with actionable trade ideas and pithy, honest assessments.

Key Discussion Points & Insights

1. Market Sentiment: Weekend Developments, Greenland, and Japan

• European Markets Reaction: The episode opens with analysis of why markets opened heavy following the weekend. The hosts highlight moves in metals, a dip in Bitcoin, equities futures down, and significant movement in Japanese long-dated yields ([02:18]).
• Japan's Political Influence: Andreas points out how Japanese election news and a 12 basis point rise in the 30-year yield added volatility across asset classes.
• US-EU Escalation Characterized as 'Tit-for-Tat': Both hosts agree that while the tariff conflict is currently a bureaucratic "semi-escalation," there's concern about the potential for escalation but no panic yet ([02:53]).

2. Greenland & Tariff Situation: Context and Impact

• Tariff Tactics: Mikkel summarizes recent diplomatic moves: Denmark’s attempt to de-escalate via bureaucratic work-groups, contrasted with Trump’s readiness to escalate with tariffs—“he grabbed into his toolbox and grabbed out the tariff weapon” ([04:03]).
• Tariff vs. Conflict: Mikkel notes, “I would rather be hit with a tariff than with a cruise missile. That’s the silver lining here. We’re not talking about war anymore.” ([05:03])
• Trump’s Proposed Tariffs: The US threatens broad 10% tariffs (potentially going to 25%) on EU goods. Concerns hinge more on tit-for-tat escalation rather than the immediate tariffs themselves.

3. Market Response and Tariff Realities

• Lessons from the US-China Trade War: Andreas compares the current situation to the US-China dispute in 2025, emphasizing that the EU’s slow, consensus-driven processes make trade escalation less likely to spiral quickly ([06:45]).
• EU Response Mechanisms: The anti-coercion mechanism ('EU bazooka') is designed to prevent escalation by ensuring responses cannot be as rapid as they were in the US-China context.

“My personal base case is that Trump is not even capable of adding the 10% by 1st of February, at least not a broad 10%." – Andreas ([08:45])

4. Potential EU Responses: A Four-Tier Model

• Tiered Responses Include:

  • Simple Tariff Retaliation (reciprocal, limited investor concern)
  • Digital Services Sales Tax (unlikely, but possible and priced into tech stocks)
  • Microchip Export Bans (improbable as it would not directly target the US)
  • Ban on Owning US Assets (seen as a “nuclear option”—highly unlikely and disruptive) ([09:09])

• Andreas on the nuclear option:

“The Eurozone…I think, including UK but the old EU, holds roughly $8.23 trillion US assets which is more than twice the rest of the world altogether. This is obviously the nuclear bomb…but…I consider it incredibly unlikely.” ([11:45])

5. European Political Unity and Strategic Weak Points

• United European Front: Mikkel emphasizes near-total EU unity on the issue, with minor dissent from Italy ([13:40]).
• Vulnerability – LNG Dependence: A real threat from the US would be cutting Europe off American LNG—a much more potent lever than tariffs alone ([14:30]).
• Greenland and Military Reality: Much recent reporting about European military moves in Greenland is "fake news"; these were advisors, not combat troops, and the future likely holds more investment in surveillance and infrastructure rather than military escalation.

6. The Real Sticking Point: Greenland’s Political Status

• Greenlandic Deciders: The key disconnect is the US expectation to negotiate with Denmark versus the reality that "the Greenlandic people decide this issue and they don't want to join the US" ([17:14]). Trump has not made his case to the Greenlanders themselves.
• Limits of Self-Determination: Andreas’ sharp take—"It is incredibly gullible to think that these 50,000 people can decide for themselves some of the biggest island on earth." ([17:54])

7. Macro Outlook: Super CapEx Cycle for 2026

• Immediate Market Outlook: Andreas is optimistic for the coming months, citing:
  • Strong regional PMIs for CapEx
  • Tax depreciation rules frontloading investment incentive
  • Ongoing rotation (small caps outperforming large) ([19:18])

“Unless we get another tariff-space roadblock, I’m fairly confident that the cycle will do well the next three, four months.” – Andreas ([21:50])

• But…Shock Risks Remain: Prior trade standstills (Xi standoff, Liberation Day) took months to recover, so vigilance is still needed.

8. AI Investing: Hardware, Software & Exponential Curves

• AI Software Under Pressure: With the rise of advanced LLMs (like Claude Code), Andreas thinks most low/medium complexity software subscriptions “will be worth zero in a year from now” ([23:09]).
• Physical Constraints Outperform: Given the exponential improvement in AI, focus remains on hardware and power exposure rather than software equities.
• When Does the S-Curve Flatten? Unsure, but “as long as we’re in this part of the journey, I would stay mostly off software as a basket” ([25:03]).

9. Portfolio Implications: Hedging Geopolitical Risk

• Hedging Strategy:
  • For geopolitical instability, “you’d rather want gold than Bitcoin in your portfolio.”
  • For US dollar or Fed-driven crises, “you probably rather want Bitcoin than gold.” ([27:14])

Notable Quotes & Memorable Moments

• On actionable content:

  "Sometimes may be good, sometimes may be shit." – Andreas ([01:53])

• On the tariff threat:

  “The positive reading here is, I would rather be hit with a tariff than with a cruise missile.” – Mikkel ([05:03])

• On the limits of escalation:

  “I think it would take a lot, let me emphasize, a lot for us to go below step one (simple tariff retaliation)." – Andreas ([10:37])

• On Greenland as a bargaining chip:

  “If the Greenlandic people wanted to join the US, a deal could absolutely be made.” – Mikkel ([17:34])
  “It is incredibly gullible to think that these 50,000 people can decide for themselves some of the biggest island on earth.” – Andreas ([17:54])

• On CapEx optimism for 2026:

  “Everything started to line up and the stars were aligning for this super capic cycle this year.” – Andreas ([19:18])

• On the current state of AI software:

  “Most of those software subscriptions will be worth zero in a year from now.” – Andreas ([23:09])

• On hedging for geopolitical risks:

  “If we talk about a geopolitical shit show, you’d rather want gold than bitcoin in your portfolio.” – Andreas ([27:14])

Timestamps for Important Segments

• [02:18] – Market open discussion: Japanese election and Greenland story
• [04:03] – Danish/EU diplomatic efforts vs Trump’s tariffs
• [06:02] – Seriousness of the US tariff threat for global markets
• [09:09] – Four potential EU responses to tariffs
• [13:40] – European unity and the real Achilles heel: LNG
• [17:14] – Greenlandic self-determination and the US approach
• [19:18] – Outlook for CapEx in 2026
• [23:09] – The future of AI software and hardware
• [27:14] – Portfolio hedging: gold vs bitcoin in geopolitical vs USD crisis scenarios

Summary & Takeaway

This episode offers a clear, pragmatic breakdown of U.S.-EU tensions, the intricacies of the Greenland issue in macro and geopolitical terms, and the practical implications for markets and portfolios. The hosts outline likely market reactions, the limited scope for immediate EU action, and new investment ideas—while sharply distinguishing between trade risk and true conflict. The forward-looking optimism for capex and the clear-eyed analysis of the AI landscape provide actionable, timely insight for macro-inclined investors.

For more, subscribe and participate in the discussion on the Real Vision platform. Next week’s show promises a Miami setting and (hopefully) brighter macro skies.