20.01.26 - All eyes on Davos

Davos, the Swiss Alpine town, is once again at the center of global attention. This week, political leaders, central bankers, and business executives gather for the World Economic Forum (WEF). But this year’s meeting takes place against a notably more fragile geopolitical backdrop.

The dominant theme is rising geopolitical tension, triggered by renewed rhetoric around Greenland and the re-escalation of tariff threats over the weekend. Markets entered the week on the defensive, with investors reacting swiftly to headline risk.

Today, French President Emmanuel Macron delivered a closely watched speech, calling for cooperation, multilateral dialogue, and economic stability. His remarks come at a sensitive moment, as trade tensions between Europe and the United States have intensified following the Greenland-related dispute.

Later this week, US President Donald Trump is expected to join the WEF on Wednesday, a moment markets will watch closely for any signals on trade, tariffs, and geopolitical direction.

Markets:

• US equities declined sharply led by Nasdaq ~2% lower

• Europe: broad-based selling continued, down another 1%

• Asia: - however Japan 10-year yield continues to rise, now already above 2.34%

• Commodities: rally in metals remains intact

  • Gold up, above USD 4’750/oz

  • Silver up, around USD 95/oz

• Cryptos: Risk appetite fading further, Bitcoin below USD 90k

• Volatility: VIX Future jumps towards 21

• Currencies: strong safe-haven demand

  • CHF and JPY clearly strengthened

  • USD sharply weaker

My View: I do observe, that markets are increasingly flirting with a “sell America” narrative, driven by policy uncertainty, trade friction, and rising geopolitical risk premia.

The environment remains headline-driven, volatile, and fragile. At current levels, I continue to see more downside risk than upside opportunity, particularly as valuations remain elevated while macro and geopolitical risks rise.

Only a clear and constructive statement between Europe and the United States, signaling cooperation rather than confrontation, could provide markets with a temporary breather.
Until then, caution remains warranted.

However, Netflix reports earnings after today’s market close. The stock is also in focus following reports around a potential takeover bid involving Warner Bros, adding another layer.

Disclosure: short position in Netflix

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