KEY EVENTS
Greenland, one of the areas with the most extreme climates on the planet, has paradoxically become one of the hottest points in global geopolitics.
On January 3, the United States arrested President N. Maduro in a military operation carried out directly on Venezuelan soil: an action outside the usual framework, which ultimately came to symbolically represent the new international context.
A few days later, U.S. President D. Trump made explicit a vision of international relations based on unilateral criteria, suggesting an intention to redefine the global order according to a logic of prevailing national interest. Within this framework, the hypothesis of annexing Greenland has returned to the forefront, justified precisely in terms of strategic security, even at the cost of calling into question a system of balances built on multilateral treaties and supranational organizations.
At that moment, even the stability of NATO appeared to waver. Anticipation for Trump’s speech in Davos was therefore accompanied by fears that a point of no return might be crossed. This scenario was avoided, while still leaving unmistakable signs of persistent tensions on the table. Europe and Canada reacted firmly, declaring that they were not willing to passively adapt to the new approach. From Washington came threats of new tariffs against those who defended Danish sovereignty, followed by considerations of retaliatory measures.
The Canadian Prime Minister also openly stated that the need is emerging to reassess strategic alliances, favoring groupings based on shared interest.
The year 2026 therefore opens with a profound reshaping of geopolitical balances directly involving Europe, a process that is unlikely to be linear. In this context fall the free trade agreements signed by the European Union with the Mercosur countries (Jan. 17) and with India (Jan. 27), signaling a clear desire for strategic diversification.
“Today I will talk about a rupture in the world order, the end of a pleasant fiction and the beginning of a harsh reality …” M. Carney (Canadian Prime Minister): the opening of the speech delivered in Davos leaves no doubt about its intensity.
Macroeconomics and central banks, by contrast, experienced a decidedly calmer month. On the cyclical front, no significant indications emerged.
The Fed was the only institution to draw attention—not so much for monetary policy decisions but for the political context in which it operates.
The absence of meaningful macroeconomic developments did not generate specific expectations regarding interest rates, while market participants focused on Fed Chair J. Powell’s reaction to the growing level of pressure being exerted on him. News in fact emerged of a criminal complaint related to alleged cost overruns tied to the renovation of the central bank’s headquarters.
The interpretation of this episode was immediate: a further attempt by D. Trump to call the Fed’s autonomy into question. Not surprisingly, former governors and representatives of the world’s major central banks publicly expressed, in writing, their support for Powell and for the principle of monetary authority independence.
PROSPECTS
In the December letter we had emphasized the importance of the succession process at the helm of the Fed; on the penultimate day of January, President D. Trump announced the appointment of Kevin Warsh.
The choice fell on a profile perceived by the markets as “hawkish,” that is, associated with a more orthodox Fed and less tolerant of inflation.
Already a member of the Board between 2006 and 2011, Warsh experienced the 2008 financial crisis firsthand. He has repeatedly highlighted how the long-term costs of unconventional monetary policies are often underestimated. With this appointment, President D. Trump may therefore intend to reinforce the message of independence and credibility of the central bank.
The Supreme Court’s decision on the constitutionality of the tariffs also remains pending—repeatedly announced as imminent but so far postponed. More broadly, investors’ main concerns continue to revolve around the actions of the U.S. administration.
At the same time, after the shocks of Liberation Day (April 2025), the idea has gradually taken hold that President Trump is capable of reducing tensions precisely when they approach levels that are difficult to sustain. As always, too much confidence is a reminder to remain cautious.