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Good morning, investors. Politics have forced their way into the market narrative with such frequency that news-driven volatility is beginning to eclipse fiscal and trade policy.
On many trading days, it feels like the "political premium" is the primary driver of price action across the board.
Double Dow Jones
Depending who you ask, the last two trading days have been a volatile reminder of either the Art of the Deal or TACO trade.
On Tuesday, markets had braced for the former with the S&P 500 cratering more than 2% after President Trump announced he would impose fresh tariffs on eight European nations if there was no deal for the US to purchase Greenland.
It was a textbook gambit — maximal economic leverage, rattle the opposition, and force a negotiation over something Danish officials repeatedly said was “not for sale.”
Perhaps predictably, by Wednesday afternoon the tone had shifted.
The president and NATO Secretary General Mark Rutte emerged from a productive meeting that ended with a “framework of a future deal,” according to Trump.
As a result, he said new tariffs were no longer necessary.
The S&P 500 recouped most of its losses from the day prior.
Many on Wall Street took this as the latest example of the “Trump Always Chickens Out” (TACO) trade.
Others framed it as a more disciplined version of the “buy the dip” strategy, with markets betting that the White House’s apparent low tolerance for market tumult ultimately produces reversals.
1% drops are historically normal for the S&P 500 (Chart courtesy of Exhibit A)
As Opening Bell Daily has reported time and time again, investors who avoid panic-selling on political headlines consistently outperform those who treat every escalation as a true regime shift.
The Greenland fiasco echoes last April’s “Liberation Day” scare, when tariff announcement briefly sent stocks lower before they staged one of the sharpest relief rallies in history.
Whether you agree with the president’s policy decisions or not, the market’s conclusion is clear: Headline noise does not create lasting damage for asset prices.
It’s worth remembering, too, that President Trump looks to the stock market as a scoreboard for his administration.
How low would he really allow asset prices to fall?
In one of his several commentaries shared Wednesday, he said the recent dip in the stock market was “peanuts.”
“We have an unbelievable future in that stock market, that stock market is going to be doubled,” President Trump said, referring to the Dow Jones Industrial Average.
“We’re going to hit 50,000 and that stock market is going to double in a relatively short period of time.”
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Market snapshot
Elsewhere
🤖 Congress wants to review AI chip sales to China. That will likely get pushback from the White House over plans to let Nvidia sell its H200 processors to Beijing. (Bloomberg)
📊Big Tech earnings highlight the AI memory shortage. Questions remain about how companies will monetize vast investments, and how they intend to navigate the global memory shortage that could dampen sales outlooks. (Yahoo Finance)
🏦 President Trump has a favorite for Fed Chair. He said he’s near the end of his search for Jerome Powell’s successor: “I’d say we’re down to three, but we’re down to two. And I probably can tell you, we’re down to maybe one, in my mind.” (CNBC)
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Rapid-fire
Intel stock surged 11% to its highest level since 2022 (CNBC)
Supreme Court justices expressed skepticism over the potential firing of Fed Governor Lisa Cook (Yahoo Finance)
Jerome Powell won’t be “very happy” if he stays on at the Fed, Trump said (Bloomberg)
President Trump said he has received calls from credit card companies over his interest-rate cap idea (Reuters)
Jamie Dimon said he disagreed with President Trump’s approach to immigration (CNBC)
The VIX index just flashed a buy signal (Opening Bell Daily)
AI stocks won’t be the only winners of 2026, according to a three-decade Wall Street veteran (Full Signal)
South Korea’s economy expanded 1.5% in the fourth quarter, missing forecasts (CNBC)
On this day
🗓 January 22, 1918: The Ukrainian People’s Republic declared independence from Russia as the repercussions of World War 1 unfolded.
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