Week Ahead: Trade War Risks Are Back—and Markets Are Pricing Them In

Core Viewpoint - US stock futures declined significantly due to renewed trade tensions between the US and Europe, particularly regarding tariffs related to Greenland, ahead of the earnings season [2][3]. Economic Data and Earnings Calendar - Trump's upcoming speech at Davos is expected to focus on housing affordability, proposing measures such as banning large institutional homebuyers and directing Fannie Mae and Freddie Mac to purchase more mortgage bonds to reduce borrowing costs [5]. - Delayed PCE inflation data for October and November will be released on Thursday, providing the Federal Reserve with crucial insights on price pressures before their policy meeting [5]. - The Supreme Court is set to hear arguments regarding Fed Governor Lisa Cook's challenge against President Trump's attempt to remove her, which could impact the central bank's independence [6]. Market Reactions - Asian stocks fell, and US futures dropped by approximately 1% as trade-war fears affected market sentiment [8]. - The MSCI Asia Pacific Index decreased by 0.5%, with most sectors experiencing losses, while futures indicated further declines for US and European equities [8]. - Citigroup downgraded European equities to neutral due to escalating US-EU tensions and tariff uncertainties affecting earnings, while upgrading Japan to overweight and favoring emerging markets for better risk-reward [8]. Commodity and Currency Movements - The dollar remained under pressure, with 10-year US Treasury yields reaching a four-month high of approximately 4.27% [8]. - Gold prices hit a record high of $4,701.23 per ounce, reflecting a more than 70% increase since the beginning of Trump's second term [8]. - Oil prices remained steady as traders assessed the implications of US efforts to control Greenland and the potential for escalating US-EU trade tensions [8]. Earnings Reports - Netflix is expected to report Q4 results with an EPS of $0.55 (up 28% year-over-year) and revenue of $11.97 billion (up 17%), driven by popular content [10]. - 3M Company is projected to show only single-digit sales and EPS growth for 2026, with JPMorgan maintaining a neutral rating [11]. - United Airlines anticipates a third consecutive earnings decline with around 3% sales growth, while Goldman Sachs has reiterated a buy rating [11]. - Charles Schwab is expected to report a 22% increase in revenue and a 50% increase in earnings for the full year [12].