16.01.26 - Geopolitics - new dimensions
The year starts with a sharp rise in geopolitical uncertainty.
Multiple new flashpoints are in focus: Venezuela, Iran, Greenland, the Middle East (Gaza), the ongoing Russia–Ukraine war, and China’s stance toward Taiwan.
Today, US President Donald Trump hinted at imposing tariffs on countries that “don’t go along with Greenland,” reiterating that Greenland is “needed for national security.”
At the same time, the US Supreme Court is expected to rule on the legality of Trump’s reciprocal and fentanyl-related tariffs — a decision already postponed twice.
Meanwhile, Canada’s Prime Minister Mark Carney has reset relations with China, calling it a “strategic partnership,” marking a clear break from the diplomatic chill of recent years, turning away from the close partnership with the US.
Markets: Despite rising geopolitical stress, markets remain strikingly calm. Equities are supported as the AI trade received fresh fuel from strong earnings reported by TSMC (Taiwan Semiconductor Manufacturing Company). Volatility remains compressed, and risk premia for any potential geopolitical escalation are largely absent.
My View: We are seeing real actions, not just words. Geopolitics in early 2026 is no longer background noise — it is actively shaping the framework for trade, security, and economic decision-making.
The US move against Venezuela in the first days of the year, combined with renewed and very real pressure around Greenland, highlights a more assertive and unpredictable geopolitical environment. Venezuela alone could be dismissed as an isolated event. But taken together, global tensions are mounting and intensifying. And Europe? Largely sidelined, reactive, and without strategic weight.
Meanwhile, markets are trading at or near all-time highs across Europe, the US, and Asia. Markets appear increasingly decoupled from reality. First, the AI narrative pushed valuations to clearly stretched levels. Now, geopolitical escalation risk is being almost entirely ignored. Volatility remains low, even as economic momentum shows early signs of fatigue.
This uncertainty is already weighing on the real economy. Companies delay investment decisions, capex plans are postponed, and confidence erodes quietly beneath the surface.
And to remember, the key court ruling on tariffs is still pending — and already postponed twice.
While markets are currently calm, the growing disconnect between risk fundamentals and asset pricing is turning into a certain red flag for investors. Navigating this environment requires readiness for action, scenario planning, and disciplined portfolio protection.
The ETFMandate portfolio therefore maintains an elevated cash position. I am waiting for better entry points, with a meaningful dip that could arrive sooner than many expect.
Lately, major announcements have increasingly been released after Friday’s market close or over the weekend. Headline risk remains elevated.
Let’s see what this weekend brings. At these elevated market levels, headlines can trigger outsized moves.
Become a member to access more valuable market updates like this
