Kaitlyn McCabe (2:38)

For more, we're joined by Journal editor Marcus Walker. Marcus, you've been on the Greenland beat for a few Days now. This is a fast developing story. Bring us up to speed on where we are this morning.

Marcus Walker (2:48)

Well, there has been a flurry of diplomacy, both in public and in private, between Trump and other White House officials and the European side. The Europeans are planning an emergency summit of European Union leaders on Thursday in Brussels. Before that, it's likely that Trump will meet some European leaders in Davos. Trump has said he will meet various parties without specifying whom, at the World Economic Forum, after which it remains completely unclear whether Trump will go ahead with his threat to impose tariffs on some European countries from 1 February and whether it will escalate or whether some solution will be found in the meantime. It's clear from the communications in the last few hours or overnight that Trump is not backing down from his demand that the US should own Greenland and should take it over completely. Even though Trump said that he had a good conversation with NATO Secretary General Mark Ritter. He emphasized that he needs to own Greenland, in his view. And at the same time, Trump has said further critical things about other European allies. He criticized the UK for giving away Chagos, even though Trump had previously approved that move. And he threatened France with 200% tariffs on French wine and champagne unless Macron agrees to join Trump's Board of Peace for Gaza. So the tensions and, and the mixed messages are continuing. On the one hand, conversations are happening. On the other hand, he continues to take a very dim view of European allies and maintain his demand about Greenland.

Kaitlyn McCabe (4:14)

Marcus, you've got a great story out along with the Journal's David Luno about the collapse of trust between European leaders and the US and how that's now forcing Europe to reassess its reliance on Washington.

Marcus Walker (4:27)

Yes, indeed. So the Atlantic alliance, NATO, as the military core of that alliance, has always relied as much on trust and on a belief in common commitment, commitment as on its military infrastructure. And that part of it is what is really coming under fire and into increasing doubt. Because Trump has long been a skeptic about NATO and has made no secret about that during the past year, has not only stepped up the rhetoric against European allies in various ways, but in the clash over Greenland, he seems to be communicating that for the US it's more important to control the Western Hemisphere, including owning Greenland, and that if NATO is a casualty of that, then so be it. So the fear on the European side is that the commitment that's needed as the glue is simply no longer there. Even if a compromise is found on the Greenland issue, things will never be the same. A line has been crossed here because of Trump's willingness really to consider all options, including force against the US's own allies.

Kaitlyn McCabe (5:25)

That red line that you mention, Marcus, has serious consequences. Right. We're talking about a dispute with NATO powers over trade, military force, and the norms that underpin transatlantic cooperation.

Marcus Walker (5:37)

Indeed, this Greenland issue has brought together both of the areas where the Trump administration and the Europeans have been in conflict. Security on the one hand, and trade and tariffs on the other, with Trump threatening tariffs from 1 February and later escalating from June unless he is allowed to buy and own Greenland. So we see these two fields of dispute coming together and calling the entire relationship into question. Now, for Europe, this poses a very awkward question of whether there really is a partnership with the US anymore, and if there isn't, whether Europe can actually afford to decouple from the US in both the economic sphere, because the US is an extremely important export market for Europe, and in the sphere of military security, because Europe would have to invest and rearm much, much more than it's currently planning to do if there is no military alliance with the us. So at the moment, Europe is at a point where the relationship is really teetering on the brink. But the prospect of a divorce looks horrendously expensive and costly to the Europeans. Of course, there would be costs for the United States, too, on both the economic front and because the economic ties are deep in both directions. And on the military front, because Europe also offers the US bases that allow it to project power worldwide. And also, of course, NATO has been the foundation of US influence in Europe and the wider region.

Kaitlyn McCabe (6:57)

Yeah, those economic ties run quite deep. Marcus, can you just lay out for us what a potential trade war between the US and Europe would look like?

Marcus Walker (7:06)

Well, if it comes to this, and the Europeans at least hope that it won't, and that Trump will back down from his tariff threat, then this would be an economic break on both sides of the Atlantic. If Trump effectively tears up the trade agreement that he reached with the European Union last year by imposing further tariffs, that will take away the promised tariff reductions that Europe was about to ratify and is now suspended, thereby harming American businesses in Europe, too. For European exporters to the us. But result research does indeed show that tariffs are overwhelmingly paid by Americans. That is what all the evidence shows. That is, tariffs are effectively a tax on American imports, businesses, and consumers. Mostly, they're not money paid by foreign exporters to the United States. Rather, they are a tax on Americans. However, they also harm exporters from other countries because as the price of imported goods go up so sales go down. And the evidence does show that tariffs, while being paid by Americans also depress other countries exports to the United States. But beyond that, the European Union also has this so called bazooka known as the anti coercion mechanism or instrument which would be a whole load of further tariffs and restrictions on American businesses in Europe. That however, would need active support from a majority of European countries which currently is not there because most European governments still want to de escalate this dispute with the US that they don't want to raise the stakes even further.

Kaitlyn McCabe (8:36)

Certainly lots to watch in the coming days. Marcus, thanks for the update.

Marcus Walker (8:39)

Thank you.

Kaitlyn McCabe (8:40)

Coming up, what does all this mean for financial markets? We dive into that. Plus, what time should you be waking up? We look at the latest sleep science after the break. Hi, this is Gunjan Banerjee and this is Telus Demos.

James McIntosh (8:57)

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Kaitlyn McCabe (9:01)

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James McIntosh (9:06)

From the Fed's moves to market bubbles, we dive into the biggest deals, key players and business news ahead.

Kaitlyn McCabe (9:12)

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James McIntosh (9:18)

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Kaitlyn McCabe (9:27)

The restart of the trade war with Europe would present a renewed test of whether the global economy and markets can handle more disruption. This morning, stocks in Europe and Asia have sold off and the prices for gold and silver have reached new highs. And we'll get even more direction when U.S. markets reopen after the holiday weekend.

James McIntosh (9:46)

So we saw a chunky but not outrageous fall in stock futures yesterday, and we saw another chunky but not outrageous fall in stock futures overnight. But when, when you put those together, we're probably going to see a very large drop in US Stocks this morning because the market was closed yesterday.

Kaitlyn McCabe (10:07)

That's Journal senior Markets columnist James McIntosh, who says so far there could be a few reasons why investors are not putting a high probability on an extreme outcome between the US And Europe.

James McIntosh (10:19)

One is that last year we had this major trade war. Stocks did really well. Volatility didn't really go up. The economy was fine. Corporate investment actually went up. These are things that are not what you'd expect from a major trade war. Of course, it's also possible that investors just think there's a decent chance that Trump is bluffing, or that even if he's not bluffing, he doesn't have the power to push through with this. Quite a lot of Congress is not supportive of the idea of taking Greenland and his tariffs might end up being ruled illegal. And of course, if they are, then all of this goes away, at least temporarily. And then of course, one of the reasons that stocks did well last year is that Europe is planning to spend vast amounts of money on its military, which is very, very good for European defence stocks. I guess the worst case is that the US Actually invades.

Kaitlyn McCabe (11:14)

Now.

James McIntosh (11:14)

At the moment that's not on the cards. President Trump says he wants to buy it, but if the US Started sending troops there, that would be an absolute sort of end of NATO moment and investors would suddenly have to wake up and say, this is what we need to address, this is what we need to be thinking about.

Kaitlyn McCabe (11:32)

As James mentioned, investors will also be watching the U.S. supreme Court today, which is expected to hand down opinions around 10am Eastern, including possibly on whether Trump's sweeping tariffs are in fact legal. An hour later, Anthropic CEO Dario Amadei speaks to Journal Editor in Chief Emma Tucker at Davos. And after the US Closing bell today, Netflix earnings, where the streamer may comment on reports that it plans to make its bid for Warner Bros. Discovery, all cash. And finally, what is the optimal wake up time to get the most out of your day? If you listen to social media, that would be 5am to keep up with all the high flying CEOs and elite athletes. But if you want to boost productivity, waking up before sunrise might not be for you. A recent Gallup poll showed that more than half of Americans said they're sleep deprived, an increase from previous years. Journal, Family and Tech Columns columnist Julie Jargan says the ideal time to wake up really comes down to our genetic predisposition.

Julie Jargan (12:38)

In my research I came across that people fit into typically three lark, bear or owl. And so those who wake up naturally early in the morning between, you know, 6 and 6:30am are considered the early birds or larks. That represents about 15 to 20% of the population. And then a small subset of those early birds are those who do naturally wake up at 5am the other 15 to 20% are night owls, people who, you know, like to sleep in. But the largest percentage comprise 55 to 65% of the population. Some sleep experts call them bears. We wake up sort of when the sun rises and go to bed earlier in the evening and we feel that we're at our peak productivity wise between the hours of 10am and 2pm Julie.

Kaitlyn McCabe (13:25)

Writes that morning sunlight, avoiding evening workouts and limiting caffeine and alcohol before bed will also help you feel rested and ready to take on the day. But most importantly, stick to a regular wake up time.

Julie Jargan (13:37)

So one of the key things is no matter what time you need to wake up in the morning, the goal is to be consistent about it. So for example, if you do want to be on the 5am bandwagon, it's only going to work if you wake up at 5am on weekdays and weekends because if you sleep in on the weekends, you end up feeling jet lagged.

Kaitlyn McCabe (13:56)

Follow the link in our show Notes to Julie's story where you can find a quiz which will help you determine if you're a lark, bear and or al. And that's it for what's news for this Tuesday morning. Today's show is produced by Daniel Bach and Hattie Moyer. Our supervising producer was Sandra Kilhoff. And I'm Caitlin McCabe for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.