:max_bytes(150000):strip_icc()/GettyImages-2255969940-7a70ee2c738d49b9a7a63498c743d7a7.jpg "Is Greenland the Reason Your Portfolio Is Down Today? Why There’s Fresh Volatility in Markets.")
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Key Takeaways
- President Trump’s renewed calls for the U.S. to take control of Greenland have fired up a fresh round of investor concern about the effect trade and geopolitical affairs could have on their portfolios.
- One measure: The VIX, Wall Street’s “Fear Gauge,” climbed this morning above 20 for the first time since November, a move into a territory suggesting concern but shy of outright panic.
A period of relative calm in markets looks to have ended. What did it? It’s an oversimplification, but Greenland is at its core.
President Donald Trump has stepped up his language—and actions—in pursuit of ownership of the North Atlantic land mass, injecting fresh uncertainty into both geopolitics and trade. Market measures of fear have moved higher, contributing to a sharp decline for major U.S. stock indexes Tuesday on the back of a downbeat finish to last week and ahead of a planned speech by Trump on Wednesday at the World Economic Forum in Davos, Switzerland.
The VIX, Wall Street’s so-called fear gauge, is above 20 for the first time since November, a move into a territory suggesting concern but shy of panic. CNN’s investor Fear & Greed Index was recently around its midpoint, a neutral level; a week ago it tilted toward greed. CoinMarketCap’s crypto-specific Fear & Greed measure, meanwhile has slipped to the low-end of a neutral score.
Why This Matters to Investors
Wall Street worries haven’t reached panic levels, though several measures of sentiment have moved in that direction lately—and trading this week is off to a rocky start. In addition to earnings season and the future of the Fed, investors are now wondering about affairs involving the U.S. and Greenland—and, more broadly, how they might affect trade and geopolitics.
“There are people that are worried about what the president’s gonna say tomorrow, when he comes— vis-a-vis Greenland,” Carlyle Group Co-Chairman David Rubenstein told CNBC today. “A lot of business people are saying ‘Look, we’re happy to negotiate on Greenland, we’re happy to do many things,’ but they’re not sure that’s the best policy.”
The latest action highlights other signals of caution from investors. A Deutsche Bank survey of investor positioning from late last week showed a move away from tech and toward cyclical assets. Google data today showed increased searches for information on widely held market exchange-traded funds such as SPY, which tracks the S&P 500, as well as on defensive assets like gold and silver, which are trading at record highs.
All told, some experts say, it’s a lot for investors to take. Earnings season is picking up, and concerns about Federal Reserve independence had already picked up in recent weeks.
“Items on the agenda this week tied to domestic and foreign policy and an increase in geopolitical risks remain as overhanging items of concern for market participants’ consideration,” Oppenheimer analysts wrote Monday.
This item has been updated since it was first published to reflect the latest market data.
