Europe, Trump & the Limits of Trade Escalation | Macro Mondays: January 19, 2026

Summary

Andreas Steno and Mikkel Rosenvold discuss a heavy market open driven by Greenland-related US-EU trade tensions, a Japanese election surprise that lifted long-end JGB yields, and the risk of further tariff escalation. They argue the US-EU tit-for-tat is likely to stay bureaucratic and slow, but cannot be fully ruled out, with LNG, digital services taxes, ASML export bans, and EU ownership bans as potential escalation steps. The macro discussion then turns upbeat on a 2026 capex/PMI rebound, while favoring AI hardware and electricity over software and framing gold vs Bitcoin as different hedges for geopolitical versus dollar shocks.

• Markets opened heavy as Greenland tensions, Japan's election-driven yield spike, and US-EU tariff threats hit risk assets.
• Andreas sees the US-EU tariff conflict as likely slow and bureaucratic, not an immediate violent tit-for-tat, though escalation risks remain.
• Potential EU retaliation steps include classic tariffs, digital services taxes, ASML export restrictions, or a ban on holding US assets.
• Europe's lack of domestic energy and reliance on LNG is framed as a key vulnerability if the US weaponizes energy trade.
• Greenland tensions may lead to increased defense spending on ships, drones, and radar networks such as Golden Dome.
• Andreas is upbeat on a 2026 capex supercycle and cyclical assets like Russell 2000 and Bitcoin, unless trade shocks interrupt the cycle.
• AI disruption is seen as bearish for simpler software but supportive of hardware and electricity constraints.
• Gold is preferred over Bitcoin for geopolitical/NATO meltdown hedging, while Bitcoin is preferred over gold for US dollar/Fed shocks.