Bianchi: There certainly are offramps here for the U.S. and EU to defuse this latest situation
Speakers
Ben Emons
— Chief Investment Officer and Founder, FedWatch Advisors
Sarah Bianchi
— Senior Managing Director, Evercore ISI; Former Deputy US Trade Representative
Summary
CNBC hosts discuss the market and policy implications of President Trump's calls to take over Greenland and the EU's potential anti-coercion response. Sarah Bianchi says European escalation is possible but off-ramps exist and expects Trump to seek NATO cooperation and more defense spending. Ben Emons sees near-term pressure on Treasuries, base metals reacting to defense spending and tension, and tech weakness as a potential reengagement opportunity. They also discuss the Supreme Court tariff case, USMCA complications from a Canada-China EV deal, and China's positioning.
- Trump's Greenland push raises EU-US trade and military tensions.
- EU anti-coercion instrument is possible but not Sarah Bianchi's base case.
- Ben Emons expects bond market pressure from issuance, Japan yields, and tariffs.
- Base metals are moving on defense spending and geopolitical tension.
- Tech is under pressure but Emons sees a reengagement opportunity.
- Sarah Bianchi sees Trump seeking NATO cooperation and more defense spending.
- Supreme Court IEEPA ruling may not change Trump's tariff tactics.
- Canada-China EV deal complicates USMCA talks and China plays its cards well.
Ideas
Treasury bonds face near-term selling pressure.
Ben Emons expects near-term pressure on the bond market because a potential Greenland acquisition could cost $200-$700 billion and require more bond issuance, Japanese yields are rising after a snap election and dragging US Treasury yields, and step-by-step tariffs are creating illiquidity and winners/losers. He says this should put some pressure on the bond market until it settles out.
More defense spending supports defense sector.
Sarah Bianchi thinks President Trump is using the Greenland threat to seek a broader deal that includes NATO cooperation, more investment, and more defense spending, even though the situation carries spillover risk. That policy path would support the defense sector.
Base metals react to defense spending tension.
Ben Emons says base metals are reacting to the prospect of more defense spending and geopolitical tension, producing parabolic moves that spill into equity and bond markets because liquidity is low. He frames this as a market dynamic worth monitoring rather than a clean directional call.
Tech dip is a reengagement opportunity.
Ben Emons says technology is under pressure from tariff threats and the EU anti-coercion tool that can target digital services, but he views the move as posturing and a temporary drawdown. As negotiations continue and tech earnings arrive, investors may reengage and treat the weakness as an opportunity.
