I’ve said it a few dozen times before and I’m sure I’ll say it at least as many times again going forward: There has to be a discernible connection between a given bout of geo-strategic turmoil and corporate bottom lines, otherwise stocks can’t be blamed for dismissing global politics as an irrelevant soap opera.

Such was the case this week, when risk sentiment was briefly rattled by the prospect of US tariffs on Europe as a way of extracting concessions around Donald Trump’s bid to acquire Greenland. The proposed levies shook markets for all of a day before Trump backtracked, triggering a relief rally.

Even if he hadn’t — backtracked — it’s not obvious why the Greenland charade should be “good” for anything more than the token 2% discount US equities priced on January 20. Yes, an unreliable America no longer committed to NATO’s mutual defense clause could compel European investors to accelerate the de-dollarization of fixed income portfolios (i.e., trim Treasury exposure), but that doesn’t necessarily translate into less appetite for US stocks.

And besides, there’s no way to “hedge” the dissolution of NATO, nor the demise of dollar hegemony. Those are epochal, and in some ways existential, shifts. If you believe they’re afoot, buy gold or better yet, guns, freeze-dried food and maybe some indulgences, if you can find an unscrupulous priest.

Index puts won’t be much use in a nuclear exchange, nor VIX calls. And Trump’s experience as a developer notwithstanding, my guess is the “Golden Dome” will never be completed, Greenland building permits or not.

Headed into the close on Friday, the S&P was on track for a second weekly loss. It’d be the first time the index posted back-to-back weekly declines since June. But given the hyperbolic nature of the headlines and, let’s not forget, the most harrowing week for Japanese government bonds in recent memory, I’d say a marginal decline counts a good outcome.

We’re still looking at SPX 6900. Hard as this is to believe, Trump had us sub-SPX 5000 in early April of last year. And hell, even after two “bad” weeks, the S&P’s still up for 2026, albeit just barely.

In the near-term, what matters for stocks isn’t Trump’s imperial fantasies. Nor any “do not go gentle,” deathbed entreaties from an establishment well on its way into that good night. Nor the machinations of any IRGC coup plotters in Tehran. Nor whatever’s going on in Caracas. (By the way, Delcy was kinda/sorta in on it, according to The Guardian, just as I suggested in the hours after Nicolas Maduro was abducted earlier this month.)

Rather, what counts right now is consumer spending in the US, the onset of Mag7 quarterly results next week and the fact that market-based (note the emphasis) measures of financial conditions are loose and liquidity conditions are viewed as the most favorable in nearly two decades.

The chart below’s from the January installment of BofA’s Global Fund Manager survey which found a net 66% of pros describing liquidity conditions as positive.

That, the bank’s Michael Hartnett remarked, is “a direct result of massive global rate cuts over the past two years.” For all the presidential criticism, Jerome Powell contributed 175bps to that “massive” rate-cutting impulse.

None of the above’s to say there aren’t risks aplenty. Nor that geopolitics is irrelevant to markets, something I’d never say even if I thought it true because that’d undermine my raison d’être.

Rather, the point is the same as it always is during weeks when markets “should’ve” reacted more violently to geopolitical events. Rabobank’s Jane Foley put it best more than two years ago. “The markets, of course, have no heart,” she said, in the wake of the October 7, 2023, attacks on Israel. “The market takes out the human factor and the horror and looks at [things] in a much plainer, coldhearted light.”

The wild card for markets is still the Fed and, more to the point, how far Trump’s willing to go to secure leverage over monetary policy. The Supreme Court appeared to balk this week at allowing Lisa Cook’s ouster to go forward, but as we saw with the grand jury subpoenas served to Powell, it’s a fool who puts anything beyond this White House.

“[T]he loss of Fed credibility during the Burns–Nixon era required destabilizing rate hikes to re-anchor inflation expectations [and] large policy moves introduce second-order risks that are difficult to anticipate, a concern that’s especially acute given today’s highly-indebted US economy,” Citadel’s Nohshad Shah wrote this week. “While [the] challenge to Fed independence may ultimately prove overblown in terms of immediate outcomes, investors should not be complacent — even absent near-term consequences, it has materially complicated the task of the next Fed Chair.”