Greenland, Tariffs, Context, Questions
By Tim Pierotti
Chief Investment Strategist WealthVest
The news upsetting markets this morning is the President’s announcement that he will impose punitive tariffs on European countries standing in opposition to the US acquisition of Greenland. S&P futures are looking down by about 1.5%. The dollar is weak as are Treasuries and the crypto complex. Risk off and sell US based assets is the trend of the morning. Gold is up and silver is parabolic. The world has come to take the President’s tariff threats seriously and seem to be anticipating that the Europeans are finally willing to take aggressive measures specifically against globally dominant US technology companies.
Context
Global bond yields have been steepening (longer maturity debt weaker than short maturity debt) especially in Japan where yields on long-term bonds have gone vertical. We wrote in our 2026 Outlook that one of the five main risks to strong US assets is that global long-term yields rise thereby pressuring US Treasuries. Volatility in US bonds has been dormant in recent months but this morning, we are seeing a significant move with the 10-year yield at the highest level since early September.
The Supreme Court is expected to invalidate IEEPA tariffs this week and potentially as soon as 10am today. The administration has already signaled that they will use other justifications to maintain the overall realized tariff rate.
Earnings season has begun and I have no reason to believe that we won’t see companies beat expectations as usual.
Questions
Buy the dip? In a bull market, and we are in a bull market, that is usually the right thing to do. That said, the President has been resolute on the issue of Greenland while the European members of NATO are no less resolute. The risk of more tariffs and threats followed by the response of tariffs and threats has not been higher since “Liberation Day” in the spring of last year.
Mag7 has begun to lag the rest of the market. Is that a sign that AI optimism has peaked and the market has come to believe that we are overdue for the “digestion phase” of all the hype and capital spending that has occurred?
Could geopolitical headlines begin to matter? Markets seem to have become inured to major geopolitical risk headlines whether they concern Iran, Russia or Venezuela, but this morning may signal a shift that there is upside risk to equity and fixed income volatility.
Is the President becoming desperate? The midterms are coming, consumer confidence and the President’s favorability polls are at a level that make it highly likely, the Democrats will at least take back the House.
Today is a day for financial advisors to check-in with clients and talk about risk. How much risk do you want to take? Markets that rise 20% or more in a year can fall 20% or more in a year. We are just off all-time highs following a historic 15-year run. No predictions, but it is hard for me to see why someone would make the decision to incur more risk today.
About WealthVest:
WealthVest was founded in 2009 and is one of the leading distributors of fixed, indexed, and registered index-linked annuities to banks and broker-dealers. Financial institutions value WealthVest's insightful thought leadership, product design expertise, marketing strategies, technology, and specialization in field and hybrid-based sales and advisor marketing training.
Tim Pierotti is WealthVest’s Chief Investment Strategist.
Tim has over 25 years of experience in various aspects of the equities business. Prior to joining WealthVest, Mr. Pierotti spent seven years in Equity Research management roles at Deutsche Bank and most recently at BMO where he was a Managing Director and Head of US Product Management. Tim has 11 years of investment experience most notably as Head of Consumer Research and Portfolio Manager at The Galleon Group, a former NY based $8Bln Long/Short hedge fund. Tim is a graduate of Boston College and lives in Summit NJ.
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