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Slumping Stocks and Surging Yields, the Greenland Case, and Trump's Tariff Threats 1/20/26
00:50:37
Stocks tumble as trade war fears reignite, could that be a buying opportunity? Does America still have bargaining power when it comes to Greenland? Plus, how Europe could respond to Trump's tariff threats
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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts. The new year brings new health goals and wealth goals.
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Visit lifelock.com/special offer terms apply. You're listening to the Exchange. Here's today's show. The Sell America trade is in full swing this afternoon. Will the President double down and will Europe use its own trade bazooka? And what will all of this continue to do to the markets? Welcome to the Exchange. I'm Kelly Evans. Stocks are still sharply lower, but they're off the worst levels of the session when the Dow is down more than 700. We're close to that right now though for what it's worth, the Nasdaq was down more than 2%. Were just below that level right now. The Russell small caps continue to be an outperformer down three quarters of 1%. And this is the story of the day. Take a look at these levels. In the bond market, the 30 year yield 4.9. The 10 year hit as high as 4.31% before backing off to 427. Obviously in Japan, an even bigger story, their 30 year bond jumped 27 basis points today. We'll circle back to that in just a bit. Gold and silver hitting fresh records as gold goes above $4,700 an ounce for the first time. It's also pacing for its biggest daily gain since October SIL over $94 and currencies are on the move. The dollar, no surprise, having its worst day since August. This is what we mean by the Sell America trade today. Back below 99. The euro, the Swiss franc, they're all higher. Different story for Japan though as its currency against the dollar hits the highest level since July of 2024. And some remnant, remnant reminiscence, she said of the carry trade crisis. In any case, all of this comes as President Trump has issued a new tariff threat over Greenland. Of course, it's sparking more fears about a global tit for tat, even a trade war. Eamon Javors has the latest from Washington as the President prepares to speak in the heart of Europe at Davos tomorrow. Eamon?
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Yeah, Kelly. It's this astonishing confrontation between the United States and its own allies over the fate of Greenland. And we see the President now over the weekend making these tariff threats against European nations that put troops in Greenland to defend it against a potential US Invasion over the weekend. Take a live look now at the White House press. We are expecting to see President Trump there in just a couple of moments time. He's scheduled to appear with White House Press Secretary Caroline Levitt to talk about his administration's first year in office. This is the anniversary of his swearing in. And so we expect them to take something of a victory lap from their perspective on their accomplishments of the year. But naturally, the questions in that room to the President will be about Greenland, his confrontation with Europe, and what he might say in Davos tomorrow. Remember, the President is leaving tonight. He's going to be in Davos tomorrow, and we expect him to address the World Economic forum at about 8:30am Eastern time tomorrow. He's also got dinner with CEOs tomorrow in Davos, so we'll watch for that as well. And then the following day, we're going to see the President announcing this Board of Peace and the membership there. All of that about the President sort of recalibrating the global order in, you know, a very, very unexpected way here with this threat to take the landmass of Greenland. We saw the European leadership respond to this, Emmanuel Macron of France in particular, responding aggressively, rallying European leaders to resist what he clearly sees as American aggression. Here's what Macron said in Davos earlier this morning.
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Europe has very strong tools now and.
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We have to use them when we.
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Are not respected and when the rules.
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Of the game are not respected.
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By the way, the anti coercion mechanism.
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Is a powerful instrument and we should.
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Not hesitate to deploy it in today's tough environment.
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Macron speaking there with sunglasses due to what he says is an eye condition, but he's talking about the anti coercion methodology that the Europeans now have. Kelly. And that is a set of responses to a trade war designed to respond to the Chinese side a couple of years ago. Now Macron invoking it as a way to respond to the US side. What could they do? Well, they could respond with tariffs and even on things like intellectual property and other economic retaliations to what the Europeans clearly see as economic coercion by the United States.
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Kelly. And we have, you know, the Danish pension fund that says they're going to sell their. Now this is $100 million. It's very, very small, but directionally significant.
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Symbolic, though.
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Yeah. Selling their investment in U.S. treasuries because of the country's poor government finances. I'm not even sure this was about Greenland. So they can join the ranks of those in this country who are a little worried about that as well.
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Well, Greenland gives them an excuse to. Greenland gives them an excuse to register their complaints about poor government finances. I mean, that's been a long going concern. But Greenland becomes then the straw that breaks the camel's back.
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So we're going to hear from the president at any moment now. Plus, he's giving the speech in Davos. I don't know if he's going to steal his own thunder. Plus, he's talking to Joe in the morning, right?
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That's right. We do expect an interview with Joe Kernan in Davos tomorrow. We should see that roll out on CNBC through the afternoon. I don't want to steal Joe's thunder on that, but that will be a fascinating conversation. This is a president who is trying to remake the global order, unsettling American allies, pleasing traditional American adversaries, threatening the NATO alliance on which the United States has based the bedrock of its military and economic and cultural defense since World War II. All of that. Now the president throwing up in the air and telling European leaders that, you know, because he didn't win the Nobel Prize, he doesn't feel obligated to defend peace anymore and he's going to think about what, in his view is best for the United States.
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Yeah, that interview with the president, because all the key news happens this hour. So you will get to hear that interview with Joe at 1pm Eastern tomorrow. Looking forward to that. All right, Eamon, for now, thanks. We'll come back to the White House situation, obviously, as soon as the president appears. It's a surprise appearance. At least it was. Stocks are selling off and yields are spiking. And our next guest says the president's tone throughout all of these appearances poses more near term risk for the markets. Let's bring in Julian Emanuel. He's the senior managing director at Evercore. Do you think that's true, Julian, or do you think there are those who look back to April and say that was the buying opportunity of a Lifetime.
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Well, you have to separate the two. Clearly, what happened if you go back to April is that there was a policy pivot. The president, if anything, over the course of this first year visit, administration has proved very sensitive to taking in the concept of the market as a voting machine on his policies. And when you saw stocks down basically 20% in April, that's when the policy pivot began. You look at the setup right now and there's nowhere near that kind of stress. In fact, I would argue, given the fact that you have a second day of losses in Europe, that this decline is reasonably contained and volatility is reasonably contained. So from that perspective, we'll have to wait and see. But it doesn't look like he's moved away yet from escalation mode.
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Right.
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So you know, it also, I mean, by doing this many media appearances, it's obvious he's not trying to. Back then it was tariffs that he was excited to introduce to the world. And ultimately, as you say, when we kind of look through the end of the year, 30 billion a month is the run rate. So they stayed in place, but not to a huge extent. Maybe enough to help on the deficit, but not enough that it derailed the markets. As you said, game out the Greenland situation for us here, what is it that specifically the global markets are responding to today? Is it fragmentation? Is it a sell US trade? What do you think the precise concern is?
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Well, the first thing we have to understand is that the first two weeks of 2026 were unique in that literally every measure of risk and volatility across assets was at or near post pandemic lows, which given the fact that you had already had the incursions into Venezuela, given the fact that the Supreme Court has a ruling ahead of it, a potential government shut down, etcetera, etcetera, was a surprise in the first place. But when you look at the events over the weekend, if you're Europe in particular, you know, there's certainly concern about the deconstruction of the global order vis a vis NATO and then the reality of Europe having a theater of conflict on its eastern flank vis a vis Ukraine and Russia and now all of a sudden prospectively on its western flank in Greenland. And you know, there's plenty of reason.
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For concern, although the last time I checked, let's the euro stocks was down 7, 10 of a percent today. I mean this was up 4% to start the year, you know, so European equities have been a tremendous investment throughout all of this. I'm also curious if we can put the defense stocks on the screen a little bit. There's the ITA etf, there's a few others. There's kind of two schools of thought about this, Julian. You know, one is that obviously anything that causes fragmentation or an arms race would be positive for US defense names, they're down 2%. The other issue and perhaps explaining this decline today is they sell a lot to Europe. We do a lot of business with European buyers. And so if they are going to back off of that, either as a response to what the President is doing or literally because it would no longer make sense and they want to look more internally or for other suppliers. There's the pressure on the defense sector, which has been one of the best performers in this market.
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Well, and what we've seen over the course of the last year is it's less about the imposition of tariffs in the tariff regime itself and more about the threat to the free flow of goods and services that is exchanged every moment of every day. And I think that is why there is concern about this potential for the 2-1-10% deadline and then subsequently the potential for the 6-1-25% deadline and the idea that Europe is poised to retaliate.
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Yeah, here was, you know, Ray Dalio is always good at providing us with kind of frameworks to think about these meta patterns. And here's what he said when asked about this question at Davos earlier today.
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Let's step back from the sensational and be clear about what I mean. The monetary order is breaking down.
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Okay.
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What I mean by the monetary order.
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Is that fiat currencies as an debt, as a storehold of wealth, is not being held by central banks in the same way. And that there was a change. The biggest market to move last year.
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Was the gold market, far better than.
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The tech markets and so on.
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And the US markets underperformed foreign markets because of the fact you could see it in the numbers of the central.
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Banks and so on. You agree with that, Julian?
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I wouldn't quite go to that extreme, but we put out a list of what we thought would be the 10 largest surprises in 2026. And one of them was that US 10 year yields could rise above 5%. And in that respect, that certainly puts pressure on the totality of the global financial ecosystem, currencies, trade, etc. And to your point earlier, to lead the hour, you talked about the pressure that's clearly exerted on global bond markets vis a vis the moves higher in Japanese rates. And that has a spillover effect that's putting strain on the system.
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Right. So, but I think Dalio's correct. I mean it's, I think it's obvious, right, that to some extent, for whatever idiosyncratic reasons, central banks are loading up on gold, like gold is once again the foremost monetary instrument. Do you think that's partly what's going on here?
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Well, I mean, certainly when you think about China in particular, they've been a, you know, quite an aggressive buyer the last several years. At the same time they're reducing their treasury holdings. And when you see the correlation of the Chinese currency, which is essentially appreciated on a straight line over the last six months, it's not a coincidence that, that it's at the same time that gold itself has also appreciated in a near parabolic straight line.
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Yeah. And I don't mean to not discuss what's going on in Japan, but I wonder if over time its effect on the rest of the global bond market is wearing off. You know, at some point. This is a Japan problem, more so. It used to underpin the whole global carry trade and that's fine. And there's still a correlation with global yields. But look, if any, it could be a preview of what's to come here. Don't get me wrong. And for those who haven't been following, I mean our viewers are smart, they know, but like the Prime Minister says they might now, you know, cut taxes on food and investors are worried that that's going to be an unfunded cut, it's going to increase the debt going forward. So their 10 year has gone from like zero to almost 3%. You know, the longer tenders are out at 4%. Is that a Japan specific problem to you or is that, does that deserve to see an unwind of global bond prices?
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Well, again, at the margin that causes more intense competition for global capital. But, but frankly, when you think about the last year or so, it has been remarkably contained to Japan. And the way we know this is that, you know, counterintuitively the yen has weakened against all other major currencies as opposed to strengthening, given the fact that the interest rate differentials are moving as they are. So we'll be watching dollar yen very carefully for any signs of a turn which would likely be, as it was in 2024, a greater source of stress on the system.
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Right. And we're seeing, you know, kind of mini version of that. Our Steve Liesman is standing by, keeping an eye. Julian, if you'll stay with us on, on what's going on in the Fed piece of this because, Steve, you know, Japan is part of the story. All the pressure that's been on the Fed, arguably spooking people a little bit, maybe on the long end of things, but nevertheless, you have to imagine that the Treasury Secretary is pretty frustrated right now as he calls himself the world's U.S. treasury salesman. You know, his job is to make sure that there's an appetite for this debt all over the globe. And here we are at 430from sub 4 a few months back.
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Yeah, Kelly, I'm interested in the comment that Ray Dalio just made and I think Julian was getting at this, but Ray Dalio says the world currency system is breaking down. What I don't know, Kelly, is whether or not that's an endogenous impact or exogenous in the sense that is a single person or administration breaking it down or is it breaking down of its own accord. It seems to me that the President has done sort of his level best to undo the system we had. But I don't know, absent that, if it would be breaking down on its own.
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I think if I.
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And that's, I think, an important question.
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Yeah. And let's have Julian's take on this. I think a lot of this goes back to Russia and the fact that we tried to use severe international sanctions on Russia when they invaded Ukraine. This goes back a couple of years now, arguably. And so if you're Russia and if you're China and you don't want to be subject to international financial sanctions, then the only way to avoid that is to get out of the US dollar system. So that's the de dollarification that, you know, occurring in other situations.
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But I don't think, Kelly, that's where the challenge. I don't think that's where the challenge to the dollar system is coming from. China has still been a major holder of US Treasuries, so has Japan. The question becomes whether or not we are breaking it down or there are some other factors out there that are breaking it down. And I'm not sure it's the latter.
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Perhaps the way to kind of put everything on the screen would is this a sell America trade or is it a sell sovereign, sovereign debt trade? Right. I mean, if it were a sell America trade, you might see European equities going higher, European bond yields coming down, a similar move elsewhere, but you're seeing instead it's right across the board. Here's the major holders of US debt. Let me give you 40% coming from Europe, 42 from Asia.
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Let me give you an example of one of the concerns out there that I've read with this concern over Fed independence, which is can dollar holders overseas in Europe, for example, rely upon the dollar swap lines that have routinely been created in times of crisis? And the concern is if there's a Trump majority on the Fed board, that those countries overseas cannot rely upon these dollar swap lines, which by the way, don't cost us anything. And so that's something that tends to undermine the global dollar system, which I don't think is coming from the system itself. It's something that's the result of a single person acting upon that system for sure.
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The new piece of this, Julian, wouldn't you say, is the whole argument about central banks wanting to diversify away from Treasuries and into gold again goes back a couple of years. The new piece of this is whether Europeans who previously would not have a reason to need to get out of the dollar system might now be saying, you know, if you're going to play hardball, one of the tactics that we would have in our toolkit is to sell our treasury holdings.
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Well, and that was what you saw with that anecdotal announcement this morning by that one Danish fund. And obviously small size but still significant in terms of its signaling power nonetheless. And to your point earlier, we've seen this, you know, in terms of the sanctions being applied to Russia and the difficulty and the capital freezing there. But to us when you think about it, it's the bigger picture of think there a significant dollar peak a year ago at this time when the academics felt that tariffs were going to be dollar bullish and the exact opposite occurred. And from that perspective, it's logical to think about diversifying one's exposure, particularly if you've allowed those imbalances, as many portfolio matters did over, over the years to accumulate. And then the other aspect of it is the Trump administration has, you know, they were okay with the weaker dollar in, in the first and haven't yet said, you know, we have to be pounding the table for a Stronger Dollar in 47 and I don't think we're going to hear that.
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So Steve, there's, there would be the two bullet points to the argument that it is self inflicted would be maybe weak dollar is an unofficial policy in which case people don't want exposure to a declining asset. The other point would be more to the point of what's going on over the weekend, an escalation in a kind of trade spat with Europe.
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Yeah, I think it has to do a lot with reliability. And one of the things America has provided the world is a reliable and stable system. If you go back across administrations and this administration is part of this too, though even though we're issuing a lot of debt, the way we issue debt has been in a reliable and steady and predictable manner. So that's something people could rely upon. We still have the most liquid assets in the world. Which is why I am not overly concerned with the sell off today, because I think that the President could step to the podium and really calm nerves and cause things to go back the way they were. I don't think right now when I look around the world and try to find a challenge or a competitor to US Sovereignty in the global system, it's hard to find one right now. Europe has never come quite gotten its act together. Asia seems even further away than that. So all of that is possible. But it is true, the United States has been not in favor of a stronger dollar. And what happens, Kelly, is the erraticness of the tariff regime creates a volatility around global trade and it is ultimately global trade that underpins the dollar system. Why do we have the dollar system? Because we have a massive global trade and most of that is in dollars. And if that becomes unreliable, that's when you start to get essentially an undermining of the global dollar system.
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Yeah. Gentlemen, we'll leave it there for the moment. We're going to hear from the President himself, probably making a few more waves or at least ripples in just a moment's time. Steve Leesman, Julian Emanuel, we appreciate it. Again, the President's going to appear at the White House press briefing this hour. All the major averages are down more than 1%. The exchange is back to cover all of this foreign.
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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update Update wherever you get your podcasts.
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At Capella University, we believe accessible education can make a difference. That's why we offer scholarship opportunities to all eligible students. Un futuro diferente esta ma serca de lo que cres con Capella University. Learn more at capella.edu what made you confident that you could do something that hadn't been done before? I have no fear of failure Trailblazing.
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One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday, wherever you get your podcasts. Welcome back. The President's tariff threats over Greenland igniting a global sell off in equities and bonds and everything except gold really. All three major indices down around a percent and a half or more. Big move in yields, big move in the vix. Also the Village Volatility Index, which our next guest says is overdone. Let's bring in KKM Financials, Jeff Kilberg. He's also a CNBC contributor. And Kilberg, how do you read the tea leaves here?
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Well, Kelly, I think we just go back to 2025. Remember the month of April, that volatility that we saw where the Vix flew over 60. Here we are today with the Vix. Yes, it's up 25% but it's still in the teens and it's coming from a depressed level. So we had a lot of tranquility. No one really envisioned additional trade tariff threats. But if we Learned anything from 2025 that this is a tactical negotiation that President Trump is utilizing, at the end of the day, I think this does die down. We're going to revert back to corporate earnings this week which have been pretty sensational by and large. But we have to get through. President Trump's about to be interview the tomorrow interview with Joe Kernan and also his address. So I think there's a lot for us to digest. But the Vix AT19 is telling me that this is going to be short lived.
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What what do you think or see when you look at bond yields?
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I think at bond yields it's fascinating. Everyone is a bond expert today. Ask anyone, Kelly, they're a 10 year expert despite the fact actually spent about a decade trading the 10 year futures in the Chicago pits. But what you see with the 10 year, yes, it's elevated but it's only up 7 or 8 basis points. So it's not time to freak out. We're not seeing people sell. I know Dane, the Danish pension was talking about selling $100 million. I think that's what Indiana football spent on their payroll to win the national championship. So not a big amount of money. But what I am seeing is that the two year, the two year hasn't Moved. And that's where the Fed rate is tied to. So I think we get through this emotion and what do we see? Last year, Kelly, in April, we saw all the emotion. The volatility was sensational and it was obviously very nervous time, but it was an opportunity to buy. And here we are with the s and P542% higher from that 4802 low where every analyst reconfigured their price target for the s and P500. Yes, we're 2% of all time highs in the S and P500. We have to get through this digestion of additional trade tariff threats. But I think it's just a tactic to negotiate. I don't actually understand what the tactic is to own Greenland or not own Greenland, but that's not my business. My business is the markets.
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Right. And you're saying the market to you, you'd be a buyer here of what's going on, you know, volatility of the S and P. I mean, let me ask you about Bitcoin, which is nowhere to be found.
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Yes. And I think that's the correlation that everyone's looking for. The safe haven.
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Safe haven.
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What is the safe haven, Kelly? It's gold, it's silver. And we're seeing just a sensational move, a continued persistent move in both the precious metals. And yes, there's supply issues in silver, but to see silver above 95 and gold at 4750, that is really reverberating around the globe, that people, when they do get nervous, and this has been a nervousness, I would say, ever since President Trump's administration began last January. People want tangible. Nothing feels, smells and touches as good is gold and silver. In times of distress, we talk a.
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Lot about central banks and what they're doing and how that's a driver here. But hedge funds are a huge driver as well. We heard it from Citi's head of commodities on this show last week. He said since last year, it's also been a big financial trade. It gets really cr and the bank of America, America's fund manager survey comes out, Jeff, and has gold is like the most owned. As we always know, you fade. You know, their findings there often tend to be signs of a near term top in sentiment, but it's been a losing bet to bet against this metals trade. So I don't know what you do with that information.
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No, you're absolutely right. But I think we're in a super cycle. And I think what's fascinating is that we're seeing the administration trying to rebalance and reconfigure all those trade deals going back decades and decades on both sides of the aisle. So here precious metals are being utilized and you're seeing allocations go up. It's interesting for the essential 40, my ETF that I manage, we just put in Newmont Mining. New Myers had a sensational year, up over 200%. We still want to hold it here, Kelly. And the reason we own it here is because we see additional hoarding of central banks. We also, also uncertainty. When you talk about what is the next Federal Reserve appointee, there's so many moving parts and inputs and that's why I think you're going to see silver go up to 125 and I think gold is going to knock on $5,000 in two shakes of a lamb's tail.
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So what about your favorite defense trade? Again, a great call there. The last time we spoke a few weeks back. It's taking a breather today. Some think there's more existential issues if the European customers walk away from. Does it make you rethink it?
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No, it does. I mean Lockheed Martin has been the heart and soul. Another essential 40, another essential holding. But I think when you talk about defense in the geopolitical tension that seems to continue to escalate in 2026, I think that's where it makes a ton of sense. Own that. But there's also a big blue chip rotation that you're seeing. Obviously the Mag 7 struggling, the internal Mag 7 rotation. But look at some of the names that we talk about a lot. If it's cvs, you know, it's some of these blue chip boring names. But lastly look at Intel. There is specific highlights inside of technology. It's not being just broad swathed. Sold intel knocking on 50. That was a price target. I think you actually laughed when I talked about owning intel last year when it was trading 20$21. It's going to. It's going to 50. Kelly and I got chuckle out of you but here we are. So I think you have to be very selective. And it's a stock pickers market.
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Listen, we always like to give credit where credit is due. Amazing call. You need to bring me a bet. Just so I feel journalistically honest, I can say, well that one didn't work out so well but Intel's done, done quite nicely. You're right. All kudos to you. Who wants to bet against the US government? This is the line. They're going to get involved with intel then we all should get involved with Intel.
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Well and right, we're still kind of hashing out do we really love the US government owning 10% of Intel?
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Really?
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It's a bad episode on the Sopranos, right. But here we are with intel at 50. So to your point, don't fight the Fed, don't fight the US Government because I think it's very selective on what you names are going to be winners.
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All right, Jeff, thank you so much for making the time. Jeff Kilberg, KKM Financial intel up 3.6% today, by the way, in a tough market coming up, how will Europe respond to Trump's tariff threats in pursuit of Greenland? We'll ask foreign relations expert Richard Haass for his thoughts on that next. We're also awaiting the president to appear at the White House press briefing any moment now. And as we head to break, check out some of the stocks which are falling to multi year lows today and they include names like like PayPal, Domino's, Intuit, all at their lowest levels since late 2023. Adobe's at a more than three year low. HP Inc. Back to its lowest level in more than five years. More after this. Introducing Fidelity Trader plus, the next generation of advanced trading from Fidelity.
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- [29:19]
C
At Capella University, we believe accessible education can make a difference. That's why we offer scholarship opportunities to all eligible students. Un futuro diferente esta mas cerca de lo que cres con Capella University. Learn more at capella.edu what made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women, changing the game One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to the Exchange. I'm Kate Rogers with your CNBC News update this hour. The Justice Department reportedly plans to subpoena Minnesota Attorney General Keith Ellison related to the probe of alleged obstruction of federal officers during the recent protests. That's according to CNN which says Governor Tim Walls and Minneapolis Mayor Jacob Fry are also expecting subpoenas. Meanwhile, the DOJ appealed a Friday ruling that federal agents in Minneapolis can't arrest or pepper spray peaceful protesters. Prosecutors rested their case today in the trial of a former Uvalde, Texas school police officer accused of failing to do his duty during the 2022 to Rob Elementary School massacre. Adrian Gonzalez faces 29 counts of child endangerment and abandonment with three live NFL games. And part two of the stranger Things finale season debuting on Netflix and Amazon. Christmas Day was an epic day for the streaming services. Nielsen reports that Christmas Day marked an all time high in streaming usage. People logged more than 55 billion minutes watching online. That equates to 54% of all time TV use during the day. Netflix reports earnings after the bell. Back over to you, Kelly. Wow. All right, Kate, thank you very much. Thank you. They don't report users anymore, but whatever. Kay Rogers, we are waiting for the President to appear at the White House press briefing and a series of media appearances over the next 24 hours. Really this one, as Eamon told us, top of the hour would be more to mark the one year anniversary of his inauguration. So we do expect to hear quite a bit about those achievements, perhaps less so about the news that is shaking the markets today, which is his threats of tariffs against Europe if they don't comply with his desire to obtain Greenland. Let's bring in Richard Haass now. He's President Emeritus of the Council on Foreign Relations and senior counselor at Centerview Partners. Richard, thank you so much. How are you thinking about this?
- [31:56]
E
Look there, there's a lot of tough issues out there in the foreign policy inbox. What to do about Ukraine, China. We could go around the world. This is, this ought not to be one of them. The United States could quite simply negotiate an arrangement, agreement with Greenland, with Denmark that would give us the additional security and economic access where we're interested in. That's not the issue. There's a case for a closer relationship. What there's not a case for whatsoever is, is how we're going about this. This mixture of coercion, threat tariffs is truly, truly, truly counterproductive. It might not help us here, but more important, it's going to break the foundation stones of America's most important relationships. Relationships that have served us well economically and strategically now for eight decades. So this has got to be on anybody's short list of really bad ideas.
- [32:51]
C
You know, the only thing I haven't heard much about is, and the President put this in a Post at some point in the past couple of weeks, he said we need Greenland for the Golden Dome. You know, I hear a lot about the sea routes and the shrinking ice caps and, you know, whatever China and Russia's designs may be on these waterways. What is the Golden Dome again?
- [33:13]
E
The idea that we need Greenland for various types of missile defense or other forms of defense. That's not the issue there. Let's just posit there's a good strategic and economic case for a more intimate relationship between the United States and Greenland. That's not the issue. The issue is why are we going about it in a threatening, coercive way. The entire secret sauce of American foreign policy for the last eight decades has been that we get countries to work with us not because they have to, but because they want to out of consent. That was the fundamental difference between us and the Soviet Union. They had satellites, we had partners and allies. So what's wrong here is not the goals. What's wrong here is the means. It's about that simple.
- [33:58]
C
So as I understand it, Nuke, I think that's how you pronounce it, is a four and a half hour flight from New York. Leslie Joseph told me United has a nonstop flight. Four and a half hours from New York is strategically significant. Is it possible that the President feels as though the Europeans or Denmark or whoever is not treating the issue with the seriousness that he thinks it deserves from the American side?
- [34:21]
E
Well, then treat it with greater seriousness with them. Look, we defended Europe, Europe for the entire Cold War without owning Europe. We've kept China away from Taiwan without owning Taiwan. So the idea that you have to own something to have it be part of your strategic or defense perimeter is simply nonsense. So that's not the issue. And again, if Greenland's more important than it was in part because of climate change, ironically enough, an issue the administration denies, but it has opened up the waterways. Russia and China are either actual or potential adversaries. Then, yes, let's work with the Europeans, let's work with Greenland. In terms of beefing up our response, my guess is they'd be open to it if it were done the right way. You know, at the risk of repeating myself, this is not about ends. This is about means. And the means seem designed to not only not get what we want with Greenland, but to to break the U.S. european relationship, which, as you're seeing today in the markets and beyond, would be one of the most, probably the most costly step we could do against ourselves.
- [35:25]
C
One more on the substance of the issue and then to the points you're making, which is, is it possible that the Europeans are not treating the severity of the issue the way that, in other words, you know, there seems to be this arguing back and forth about, well, were there Chinese ships or Russian ships, and if so, were they technically in the waterways? Were they technically, you know, and is a waterway defined by a three mile wide strip. Can you just shed some clarity for those of us, again, you know, what, what are the events as it relates to the threat surrounding Greenland? I mean, have we, have we seen an uptick in that kind of. I know there's been certain reports of drones flying through. I thought it was Danish airspace, things like that, Russian drones in the European airspace. I don't know if there was any truth to that. I mean, what have we seen in terms of these incursions? And why does it seem like, like the US Is highly concerned, but perhaps Europe is highly concerned? I don't know. What can you tell us about that?
- [36:18]
E
Look, what's changed is the waterways have opened. You have greater Chinese and Russian activity in the larger Arctic.
- [36:28]
H
Area.
- [36:29]
E
So I think those are the big changes and probably a greater emphasis on things like rare earth minerals. It's changed our focus for all these reasons. Places like Greenland have gone up in their economic and strategic importance. There's no, though, immediate Russian or Chinese threat to those areas. A potential one, of course. So the question would be we're not in a crisis other than the one we're generating. So let's work with the Europeans, let's work with Greenland and Denmark and say, okay, what's a smart strategy for building capability, building resilience, deterring any Chinese or Russian threat from emerging, or if it does emerge, potentially defending against it. That's a serious defense conversation. We do that five days a week, seven days a week, 52 weeks a year. There's nothing, if you will, special. What's different here is that the threat has, or rather the situation is evolving again more than anything because of the changing climate which has made the Arctic an area, land areas near it, far somewhat more important than they used to be.
- [37:35]
C
I know this is a, perhaps a useless question to ask, but what's your best guess on how this plays out now at this point? Richard?
- [37:41]
E
Well, what I'm hoping for is the Europeans come up with a pretty strong diplomatic offer that basically tells the President, look, we'll give you 90% of what you want. In terms of the substantive ties. I think it'll be really interesting to see whether the Europeans really go ahead and reinforce Greenland, because that would mean the United States would have to be the one to introduce military force. And I doubt we're going to do that. So what I'm hoping is some combination of diplomacy and a little bit of deterrence on the European side forces us to act. Let me just be blunt more rationally.
- [38:13]
C
Here and do you the one other sort of idea that I've heard that people talk about is that the people of Greenland themselves might end up, I don't know. I don't follow the argument exactly. Being paid or deciding that they want to receive some kind of financial arrangement to perhaps start aligning themselves with the U.S. is that realistic?
- [38:31]
E
It would have been more realistic a few weeks ago before this. I think what we've done is really generate or galvanized anti Americanism. But look, diplomats can be creative and I can imagine at the end of the day there could be some kind of a new sharing arrangement where maybe there's we become co sovereign there, there's all sorts of possibilities. But that's why God invented diplomats. You get them involved and you basically try to meet people halfway and you focus on getting what you want rather than the symbolism. I think if we go about this more intelligently, there's a decent chance we can get what we want and defuse this. But that's really on us.
- [39:07]
C
Yeah, I think it sounds like a job for the board. Is it the Board of Peace to tackle?
- [39:12]
E
I'm not sure they're ready for it, but it might be a job for Marco Rubio.
- [39:15]
C
Richard, thanks very much. Good to have you on today. Richard Haass with the Council on Foreign Relations. The Dow is still down about 745 points, which is close to session lows here as we await to hear from the President himself. With all of this swirling around, he's going to appear at the White House press briefing which was supposed to start 40 minutes ago. So there's definitely a delay. And as we head to break, check out some of the magnificent seven stocks, all of which are in the red today. If all seven closed down more than a percent, it would be the first time that's happened in more than three months. And you can see Nvidia is one of the worst performers with a nearly 4% drop. The major averages are all at session lows. The NASDAQ is down about 2% once again right now, the 10 year at 428. More after this. Welcome back. With markets sliding to session lows as we wait to hear from the President himself. Momentarily doused down 786s and P is down 1.8%. Nasdaq better than 2%. And the Russells are outperforming with a less than 1% drop. Some big moves in the bond market as well as the 10 year yield hit 431, which was the highest level since August before pulling back slightly although we're still almost back up at 429 this hour. Japan, even a bigger move with their 30 year bond jumping more than 27 basis points just today. Gold and silver hitting fresh records. Gold above 4700 an ounce for the first time. This would also be its biggest daily gain since October. Silver above 94 an ounce. And currencies are on the move with the dollar going the other way and on pace for its worst day since August. The euro Swiss franc or higher. As for Japan, we can check there on the yen as the dollar hits the highest level against it since July of 2024. And stocks are on pace for their worst day since mid December. But my next guest says geopolitical crises often present buying opportunities. Ed Yardeni is here. He's president at Yardeni Research. And Ed, lest anyone think you're glossing over this, I think you guys gave a more detailed take on this than almost any ones I've seen so far. So all of that said, why are you still sanguine about how equities should perform here?
- [41:26]
H
Well, we had a example of this kind of situation last year and in April with the tariffs that were apparently imposed. And then there was a walking back of it. All of this is negotiating, Kelly, if, if, if you were active in New York City real estate, you would see kind of the background that Trump came from where there's a lot of shouting and screaming going on and bullying between developers and people who do zoning and contractors in the labor unions. And then after that they walk out of the room and smiling and holding hands. So this certainly has the potential to be negotiated in a fashion that will calm everybody. We're about to get into any sort of confrontation with Naito other than a negotiating one.
- [42:26]
C
Then if I were to say what about the larger concern which is expressed in the market from time to time here and with more frequency than we'd probably like to see. The idea of this, I don't know if you call it a sell America trade, but certainly this kind of the idea that treasuries are no longer a flight to safety. And this really goes back to Covid. And we've been seeing this play out over five years now. I mean, in the Middle of COVID at the worst moments, people were selling us Treasuries and not buying them. And I remember Stan Druckenmiller talking about that and what a, what a sea change that was. What does that tell you?
- [42:57]
H
Well, I was not in the camp that thought that the bond yields are going to go below 4%. As a matter of fact, in fact, when the Fed eased in way back in 2024 by 100 basis points, I said that the bondage wouldn't be too pleased because the economy was resilient and inflation was really down to 2%, it was still 3%. And sure enough, bond yields went up 100 basis points. And the same thing happened last year when the fed cut by 75 basis points and the bond yield held above 4%. I think the bond yield the 10 year should be between around 4 and a quarter percent and 4 and 3 quarters percent. To me, that's normal. That's where we were before the great financial crisis. So I'm not particularly upset about what's going on here. You know, I do watch out for the bond vigilantes since I first coined that phrase back in 1983. And right now the bondage of these are pretty busy over in Japan.
- [43:48]
C
Right.
- [43:49]
H
And I think that's another reason that the market's kind of acting nervous here. It's, it's not just Greenland. It's also a recognition suddenly that something's not right in Japan.
- [43:59]
C
Do you care to put it bluntly? In other words, if this is a Japan problem. Before I can ask. Actually, Ed, if you, if you don't mind, the President is finally appearing at the White House press briefing. Let's listen in.
- [44:12]
D
These are accomplishments. We have a lot of accomplishments. And as you know, this is the anniversary, first anniversary, January 20th, and it's been an amazing period of time. We have a book that I'm not going to read to you, but these are the accomplishments of what we've produced all page after page after page, individual things. I could stand here and read it for a week and we wouldn't be finished. But we've done more than any other administration has done by far, in terms of military, in terms of ending wars, in terms of completing wars. Nobody's really seen very much like it. I think it's appropriate that because Minnesota is so much in the, in the fray. And I say to my people all the time and they're so busy doing other things, they don't say it like they should. They're apprehending murderers and drug dealers And a lot of bad people. And these are just some of the more recent ones that we have. And I can show you some of the people vicious, many of them murderers. These are all out of Minnesota, just Minnesota. I say why don't you talk about that more? Because people don't know. Do you want to live with these people? International murder, These are people that are living were they're apprehended and either put in jails in their country from where they came or the countries respect us. And so they actually put them there in the old days, they didn't respect our country. Biden wouldn't do this because he let them all in. And you know, if you didn't have open border policies of Biden, none of this, all of the things that we, all of the time that we spent talking about Minnesota and everything else, most of them are coming from out of the country and it's been caused by a previous administrator. Look at this one. After one, boy, these are rough characters. These are all criminal illegal aliens that in many cases they're murderers. They're drug lords, drug dealers. They're the mentally insane. There's some of them who are brutal killers. They're mentally insane. They're killers, but they're insane. These are just in Minnesota and California it's worse. In other states, states it's worse. No, Minnesota, the crime is incredible. The financial crimes are incredible. And the problem is because of the agitators and insurrectionists, whatever you want, troublemakers, but they're, they're paid agitators and insurrectionists. Nobody talks about the fact that $19 billion at a minimum is missing in Minnesota, given to a large degree, but by Somalians, they've taken it. Somalians again.
- [47:24]
C
That's President Trump speaking to kind of honor his one year anniversary since inauguration. At the White House press briefing. The moment it veers back into anything having to do with tariffs, Greenland or anything else, we'll definitely bring that to you. I interrupted Ed Yardeni who is still standing by. Ed and I just wanted to give it a quick chance to finish the conversation because this is one big question for the markets today. To what extent do US investors have to care about the fiscal problems in Japan and the unwind? Can they ignore it? Is it a buying opportunity? Is it a preview of what's to come here?
- [47:52]
H
I think we've seen for the past year that this has been going on and global investors basically ignored it. There was some concern about an unwinding of the yen carry trade about a year ago. We had a day or two where that was an issue and it didn't seem to be a situation that went global. So I don't think this is a Lehman moment. I don't think that what's going on in Japan is going to become a major global problem. However, Japan has been a leading indicator for developed economies and countries with regards to financing. And we saw that back in the 80s they had a big stock market melt up and then in the 90s they went into a recession and they had to lower rates to zero. So the rest of the world followed that. They had qe. And now I think what we're seeing is the consequences are that the government is trying to stimulate their economy when inflation is still 3% and the bond yield is absolutely soaring because there's way too much debt over there. So I think this is a warning to the United States and to other countries that have high, high debt to GDP ratios that there needs to be something done about the wrong direction that these countries are on with regards to the finances.
- [49:10]
C
So what do you do? And for the, a lot of investors have taken that concern all the way into a Bitcoin or all the way into gold or away from stocks, you know, and they've almost made the, the practical implications so immediate and so near term. But it sounds like you're sort of saying, you know, yeah, it's a longer term issue, hope they, hope they solve it.
- [49:28]
H
Well, I think it has been a long term issue. I've been doing this for over 45 years and I've got books on my shelf back there going back to the 80s about the debt problem and how it's going to create all sorts of debacles. One of these days it may do that. We came kind of close to a debt problem in the United States in 2023 when the bond yield soared from 4 to 5% in just three months. But the treasury came up with a clever idea and that is they were decided to issue more bills and fewer bonds and that calmed the bond market down. I don't think we're looking at a debt crisis in the US up ahead here with regards to gold. Kelly. I think what we're seeing here is just a much more unsettled and unsettling geopolitical environment. And in that situation there is sort of a knee jerk reaction to go into gold. But I think it's more than that because it's clearly the precious metals, it's the base metals, it's rare earth minerals. And that all means that the geopolitical uncertainty definitely means more defense spending and more to produce defense equipment. We need more of these kind of metals.
- [50:32]
C
Right. And so that's. Where would you then to put a point on it, Ed, look at those trades and say, yeah, you can stay in gold, you can stay in. So you can stay in any of this versus I would expect someone like you at some point to say, look, you know, when things start to go parabolic, we know what the other side of that looks like.
- [50:49]
H
Yeah. I do feel uncomfortable when I see markets going straight up because very often the next thing they do is they go straight down. To continue to own them and to get in at this point, you really have to believe that peace is not at hand, that we're not going to see things get much better on a geopolitical front. And we don't really know what the repercussions are of Trump's reinstituting the Monroe Doctrine in terms of the Putin Doctrine, that Ukraine belongs to Russia, Russia and maybe other parts of Europe and it belonged to Russia. And then of course, these view that the China Sea belongs to China and so does Taiwan.
- [51:31]
C
Yeah, Ed, we'll leave it there. I appreciate your time this hour, especially on a day in a moment like this. Ed Yardeni of Yardeni Research. Global markets, not just us, are all getting hit on this today, although actually not quite as hard as US Equity. Seema Modi has more on that and we're trying to figure out what, what this is telling us to the conversation we were just having.
- [51:49]
G
Right.
- [51:49]
I
Actually just got off the phone with a pretty large investor who was saying that, as you can imagine, the global market really is fixated on treasury yields. I mean, 4.3% is a psychological level. It not only has repercussions for the homebuyer here in the US But a number of emerging markets that sit on a lot of dollar denominated debt. When the yields go higher, that means the cost of capital goes up as well. But at the same time, you have this whole sell the America trade that that worked out really well in 2025. If you look at markets across Europe and even China did exceptionally well in comparison to the s and P500. And even here in 2026, that trade has worked out, I think, a lot of focus on whether President Trump's threat to instill tariffs on Europe around Greenland will go into effect. Perhaps we get some clarity when he sits down with our colleague Joe Kernan tomorrow in Davos. But if that does go into effect, there are multinationals that are already joining the conversation like 3M reported fine results.
- [52:43]
C
But stocks down 7, 8%.
- [52:45]
I
7%. And they said that if the Greenland tariffs go into effect, that's a $40 million hit. Just the fact that they're already starting to calculate what these tariffs could mean, that means that Fortune 500 companies are taking it very seriously. Not just looking at it, looking at it as a threat, but already trying to see what does it mean for their balance sheet and their bottom line.
- [53:04]
C
Line, you know, because I was thinking it didn't work to sell American equities last year. But you're right. I mean, Europe, all these markets outperformed.
- [53:09]
G
Right?
- [53:10]
I
And then you think about the Mag 7 which plays such a dominant role for the S&P 500. Listen, the whole AI boom, it's affected a number of markets overseas too. In South Korea, you have two major memory chip players that are dealing with a shortage. But that when you have, when supply goes down, I mean, these stocks have really outperformed. Japan too, you have a similar story. So again, when yields go up, the cost, cost of capital to build out that data center expansion, not just in the U.S. but in these other markets, expenses go up too as well. So that's something to take into.
- [53:37]
C
Yeah, but you're right. Korea up 75% last year. Japan, all time highs despite what's taking place, seem appreciated for now. Thanks, Sima Modi again. The President will be sitting down with our Joe Kernan at Davos tomorrow. And you can watch the full interview right here on the exchange at 1pm Eastern time. We're really looking forward to that. Let's bring in Brian Sullivan now to pick up up our coverage on Power Lunch. Brian, busy day here. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
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B
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C
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