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It’s Not Easy Being Green |
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The Greenland saga may be winding down for now, but it’s just the latest chaotic event in a new year that’s already been full of unprecedented actions. Trump’s threats are having less of an impact on markets, but that may be cold comfort given the cumulative effect of the administration’s uncertain policies longer term. |
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“Investors seem very quickly to have moved past the drama, but it’s not just Greenland they seem to be shrugging off,” said Thomas Matthews, head of Asia Pacific markets at Capital Economics. “It’s worth recalling that over the preceding fortnight, the Trump administration has threatened the Fed Chair with criminal charges and captured the Venezuelan president. Both caused even smaller splashes in markets than the Greenland crisis did.” |
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At some point, bedlam just becomes background noise that never stops. So far, filtering out the noise has been an effective way to handle the Trump administration’s more extreme tariff positions, my colleague Adam Clark writes. But there are still risks, he says. |
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Moreover, if the market begins to price in similar reversals on Trump proposals in future it arguably sets up a bigger shock if the administration follows through with its plans. The “sell America” trade and the flight from the dollar and Treasuries toward gold will continue to linger unless there is a more reliable curb on the president’s unpredictable actions. |
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Barron’s Karishma Vanjani writes that overseas investors’ desire to decamp from Treasuries is already a concern. Denmark owned $9.88 billion in U.S. Treasuries as of November, but more worrisome is “the precedent raised by news Tuesday that a Danish pension fund is selling all of its roughly $100 million in Treasury holdings.” |
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If Denmark finds a viable alternative now, it sends a signal to other nations that they can follow suit…if it finds an alternative to its Treasury ownership, that would send a strong signal to other countries with bigger stakes. More widespread selling, by more countries, would send a significant message, at a time when tension between the continent and the U.S. has increased as Trump seeks to pressure Denmark to sell Greenland to the U.S. |
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Belgium, which has $481 billion, and France, with $376 billion, far outpace Denmark’s total. Finland, which owns $10.8 billion in Treasuries, has a more comparable stake. Overall, Europe owns $3.64 trillion in Treasuries. |
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Read the rest of Karishma’s story here. |
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The Calendar |
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Booz Allen Hamilton Holding, Comerica, First Citizens Bancshares, and SLB report quarterly results tomorrow. |
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S&P Global releases both its Manufacturing and Services Purchasing Managers’ Indexes for January. Economists forecast a 51.8 reading for the Manufacturing PMI and a 52.9 for the Services PMI. This compares with readings of 51.8 and 52.5, respectively, in December. |
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What We’re Reading Today |
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Barron’s Live returns on Monday. Barron’s Live features timely and actionable insights for investors. We give you behind-the-scenes conversations with the newsroom, connecting you with our editors and reporters covering the markets, the economy, and more. |
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