Recap | 21 January 2026
- Edward von der Schmidt
- 3 days ago
- 6 min read
'Framework of a future deal' on Greenland and Arctic security calms NATO fears for now
Supreme Court skepticism likely to keep Fed firings on hold
'Board of Peace' expands beyond Gaza
Risk asset recovery follows Davos détente as stocks rally
Trump narrows list for Powell's replacement
Long-term Japanese bonds stem selling after snap election plans ahead of Bank of Japan meeting
Iran tensions simmer, US bolsters naval presence
US to meet with Russia, Ukraine in search of elusive peace accord
Tenuous ceasefire in Syria highlights regional risks
EU legislators hold up Mercosur trade deal
Redistricting battles continue in New York, California
House panel moves forward with plan to control AI chip sales
EDWARD VON DER SCHMIDT
Headlines
'Framework of a future deal' on Greenland and Arctic security calms NATO fears for now
After stating that he would not seek to use force to annex Greenland, President Trump withdrew his latest tariff threat against European allies. He cited an agreement in principle that would satisfactorily address his Arctic security concerns without requiring possession of the island.
This "framework of a future deal" lacked specifics but comprised regional protection, energy resources, and missile defense according to NATO Secretary General Mark Rutte. He added that Denmark's sovereign claims over Greenland were not discussed. (Bloomberg)
The reversal followed resistance from various EU and NATO members who presented a united front with Denmark and Greenland. European lawmakers tabled an EU-US trade deal and will meet in Brussels to discuss the evolving nature of the transatlantic alliance.
Comment: The White House's ambitions vis-a-vis "hemispheric security" are not going anywhere.
AP:
Trump's Greenland threats spark outrage from EU and test longtime NATO alliance (1/20)
Trump backs down on Greenland and cancels tariff threat after NATO agrees to future Arctic deal
Reuters:
Trump backs down on Greenland tariffs, says deal framework reached
Bloomberg:
EU Freezes US Trade Deal Approval Over Greenland Threats
Trump Abandons Tariff Threat After 'Framework' Greenland Deal
WSJ:
EU Lawmakers Put Trade Deal With U.S. on Ice After Trump's Greenland Threats
Inside Trump's Head-Spinning Greenland U-Turn
Supreme Court skepticism likely to keep Fed firings on hold
With Fed Chair Powell and Governor Cook in attendance, the Supreme Court appeared to challenge the notion that a Federal Reserve Governor could be fired without process for a cause determined unilaterally by the president.
The importance of an independent central bank figured prominently in the hearing and was not challenged by Solicitor General D. John Sauer.
Note that in Trump, President of U.S. v. Cook, the administration is seeking to overturn rulings barring Cook's firing while litigation proceeds in lower courts. The Supreme Court may choose to deny the appeal and leave Governor Cook in her post without necessarily addressing what constitutes suitable cause for dismissal.
A decision is expected by the summer.
Comment: The implications of this case go beyond Fed independence. Allowing a president to fire a Fed governor without process or any available remedy for arbitrary, "non-policy" reasons could effectively undo such "for cause" protections for other branches of government given an arguable link to the executive.
AP:
Supreme Court seems inclined to keep Lisa Cook on Fed board despite Trump attempt to fire her
Reuters:
US Supreme Court appears reluctant to let Trump fire Fed's Lisa Cook
Bloomberg:
Supreme Court Doesn't Rule on Tariffs, With Next Potential Decision in February (1/20)
Supreme Court Appears Wary of Trump Bid to Fire Fed's Cook
WSJ:
Supreme Court Balks at Trump's Push to Control the Fed
See also:
'Board of Peace' expands beyond Gaza
The White House extended invitations to a number of world leaders to join the US-led "Board of Peace" while expanding its remit beyond Gaza to global affairs. Permanent seats would require buy-in.
According to Reuters, the draft structure would essentially make President Trump chairman of the Executive Board for life.
AP:
Trump's Board of Peace poses latest in a series of US challenges to the United Nations
Reuters:
'Who can say no?' Trump's Board of Peace tests doubters' resolve in Davos
What is Trump's 'Board of Peace' and who has joined so far?
Bloomberg:
US Seeks to Play Down Fears Around Trump's Gaza Board of Peace
Markets & Economies
Risk asset recovery follows Davos détente as stocks rally
A post-holiday selloff exacerbated by new tariff threats and NATO tensions reversed course on Wednesday. A Greenland "framework" and chip momentum carried equities with small-cap stocks marking new highs.
Gold highlighted metals' retreat after rallying on heightened geopolitical risk.
AP:
US stocks recover half of the prior day's plunge after Trump calls off Greenland-related tariffs
Reuters:
Gold dips, stocks lift as Trump walks back Greenland threats
Wall Street ends higher as investors cheer Greenland framework deal, averted tariffs
US dollar buoyed by Trump's Greenland about-face; Aussie jumps after jobs data
Bloomberg:
Global Chip Stocks Soar as Huang Helps Fuel AI Euphoria at Davos
Europe Stocks to Gain After Trump Pivot, AI Rally: Markets Wrap
Gold Falls After Trump Backs Away From Tariffs Over Greenland
WSJ:
Stocks Jump After Trump Calls Off New Tariffs on Europe
Trump narrows list for Powell's replacement
President Trump appeared to rule out NEC Director Kevin Hassett's candidacy to succeed Powell as Fed Chair, suggesting that he had narrowed his search to a single candidate.
Former Fed Governor Kevin Warsh is the presumptive favorite, though Governor Christopher Waller and BlackRock's Rick Reider are also rumored to be in contention.
Separately, the president appeared to discourage Powell from staying on at the Fed as a Governor once his tenure as Chair ends.
CNBC:
Trump signals he has a favorite for Fed chair: 'Down to maybe one, in my mind'
Reuters:
Trump says he may be down to one candidate to head the Fed
Bloomberg:
Trump Warns Powell Won't Be 'Very Happy' If He Stays on at Fed
Fed's Balance Sheet Is Point of Tension as Trump Weighs Chair
Long-term Japanese bonds stem selling after snap election plans ahead of Bank of Japan meeting
JGB weakness abated after a call for a snap election and plans for fiscal expansion had pushed longer-dated government bond yields to record highs in Japan.
Bloomberg:
Japan's Super-Long Bonds Extend Gains to Second Day After Rout
Around the World
Iran tensions simmer, US bolsters naval presence
In the wake of brutally repressing protests, Iranian leaders publicly warned against military intervention and threatened retaliation in kind. Meanwhile, the US moved naval assets toward the region.
AP:
Iranian state TV issues first official death toll from recent protests, saying 3,117 were killed
Analysts warn that Iran crisis carries potential nuclear risks
WSJ:
Trump Seeks 'Decisive' Options for Iran as Assets Move Into Middle East (1/20)
US to meet with Russia, Ukraine in search of elusive peace accord
President Trump plans to meet with Ukrainian President Zelenskyy on Thursday, when US envoys Witkoff and Kushner will travel to Moscow for talks with President Putin and Russian officials.
Russia has relentlessly targeted Ukraine's power infrastructure while peace negotiations tread water.
AP:
Russia batters Ukraine's power grid again as officials seek momentum in US-led peace talks (1/20)
Trump to meet with Zelenskyy as Ukraine endures a bitter winter after Russian attacks
Reuters:
Ukraine endures its bitterest winter as Russia targets heating and power
Trump says he will meet with Ukraine's Zelenskiy, deal 'reasonably close'
Tenuous ceasefire in Syria highlights regional risks
Concerns about the durablity of a ceasefire between Syria's new government and Kurdish forces in the north prompted the US to begin moving captured combatants out of the country.
The US supported the Syrian Democratic Forces (SDF) and their efforts to combat IS during Bashar al-Assad's regime but has since thrown its weight behind Ahmed al-Sharaa in Damascus.
AP:
A US shift marked Kurdish-led forces' fall from power in Syria
Reuters:
How Syria's government has redrawn map with advances against the Kurds
WSJ:
U.S. Moves ISIS Prisoners in Syria to Jails in Iraq Amid Security Concerns
EU legislators hold up Mercosur trade deal
The European Parliament narrowly voted to refer a recent trade deal with major South American counterparties to the European Court of Justice to weigh its legality, delaying ratification and frustrating Council leaders.
AP:
EU lawmakers vote to uphold Mercosur trade agreement over legal concerns
Odds & Ends
Redistricting battles continue in New York, California
A court ruling imperiling a Republican-held district in New York City threw another congressional seat into the national redistricting foray.
Republicans appealed to the Supreme Court to block a referendum approving partisan gerrymandering in California.
AP:
Judge tosses lines of NYC's only Republican House seat, as state enters redistricting wars
Reuters:
Republicans ask US Supreme Court to block California voting map (1/20)
New York City's only Republican-held congressional district must be redrawn, judge orders
House panel moves forward with plan to control AI chip sales
Over the administration's objections, a House panel voted overwhelmingly to advance legislation that would require the approval of the House Foreign Affairs and Senate Banking committees an opportunity to review export licenses for sensitive AI technologies.
Reuters:
US House panel advances bill to give Congress authority over AI chip exports
Bloomberg:
House Seeks Say Over AI Chip Sales After Nvidia's China Win