Greenland, Gold, and the Great TACO Trade

This past week started like a bad geopolitical spin-off, “Trade War: Greenland Edition,” and ended, as most sequels do on Wall Street, with the same old characters buying the same old dip. Early in the week, Trump’s tariff threats over NATO’s stance on Greenland helped knock the S&P 500 down more than 2% on Tuesday, spiking the 10‑year yield toward 4.3% as investors briefly flirted with the “sell America” trade. By Friday, that panic had been downgraded to “mildly annoying,” with the S&P 500 finishing the week down about 0.4%, the Dow off 0.5%, and the Nasdaq down just 0.1%, a second straight weekly loss, but more paper cut than open wound.

The real fireworks happened in commodities. Gold futures closed near $4,976 per ounce, logging more than an 8% gain on the week, their biggest weekly percentage pop since 2020, while silver futures finally settled above $100 for the first time ever. At the same time, U.S. natural gas futures around $5.2 per MMBtu posted a roughly 60–70% weekly surge as an Arctic blast collided with already-tight energy infrastructure and AI-driven power demand. Copper, not wanting to be left out, ripped back above $13,000 a ton as traders priced in tariff risk, GRID anxiety, and electrification demand, all while the dollar limped through one of its worst weeks since mid‑2025.

All of this played out against a macro backdrop that is annoyingly “fine-ish.” December CPI is running around 2.7% year over year, core closer to 2.6%, while November PCE, the Fed’s favorite, clocked in at about 2.8% year over year, with monthly prints near 0.2%. Cleveland Fed nowcasting has January CPI and PCE still hovering in the mid‑2s to high‑2s, suggesting inflation is easing from the peak but not exactly racing toward 2%. That mix lets stocks stay near highs, gives gold a story, and leaves the Fed in that fun place where everyone demands rate cuts and the data quietly whispers, “Not yet.”

If you just looked at the scoreboard, S&P 500 down ~0.4%, Dow off ~0.5%, Nasdaq down ~0.1% for the week, you’d think nothing much happened. Under the hood, it felt more like one of those weeks where your portfolio gets dragged into a family argument at Thanksgiving: lots of yelling, not much net movement, but a very clear reminder of who actually holds the power. Intel’s earnings miss and grim guidance yanked the Dow 0.6% lower on Friday alone, even as the S&P 500 finished essentially flat and the Nasdaq eked out a 0.3% gain.

The real rotation was psychological. Tuesday’s Greenland panic briefly revived memories of 2018-style trade wars and pushed the VIX higher, but by Wednesday and Thursday, Trump’s “framework for a future deal” and tariff stand-down flipped the script back to the TACO trade “Trump Always Chickens Out.”Dip-buyers poured back into megacap tech and AI plays, helping the Nasdaq claw back losses, even as small caps lost more than 1% on Friday and the Russell 2000 gave up part of its 14‑day hot streak.

Safe havens, meanwhile, behaved like they’d been waiting for this window. Gold is now flirting with the $5,000 line, silver vaulted triple digits, and the 10‑year Treasury yield drifted back toward ~4.25% after spiking mid‑week — classic “I’m not panicking, but I’d like a little insurance” behavior from institutions. And beneath all of that, the consumer remains confused: P&G is seeing trade‑downs to private labels, while housing and jobs data still look more bend‑don’t‑break than outright recession.

The takeaway: Despite all the noise, this was a positioning week. Traders trimmed some equity risk (U.S. stocks saw about $17 billion of outflows), piled into metals and nat gas, but never fully abandoned the AI and dip‑buying narrative that has defined the past three years. That sets up next week’s Fed meeting and mega‑cap earnings as a credibility test: either the “soft‑landing plus AI plus debasement” cocktail holds, or we find out just how tight the risk budget really is.

The main character this week was Greenland — or, more accurately, the idea of Greenland as a bargaining chip. Trump’s threat to slap an extra 10% tariffs on NATO allies that blocked his push for the territory jolted markets early in the week, helping drive the S&P 500 down more than 2% on Tuesday and pushing the 10‑year yield to roughly 4.3% as some funds tested a “sell America” trade. By midweek, the script flipped when Trump announced a “framework for a future deal” and backed away from February tariff plans, prompting a synchronized 1.2% rebound in the S&P 500, Dow, and Nasdaq on Wednesday and extending into Thursday. The implication here is less about Greenland and more about market conditioning: every tariff scare that ends in a climbdown further trains investors to buy first and ask questions never.

That same pattern played out in metals and the dollar. As the dollar index slumped roughly 0.6–0.8% on the week, gold and silver took off, with gold futures closing near $4,976 — more than 8% higher on the week — and silver joining the triple‑digit club. Copper climbed back above $13,000 a ton, near record territory, as traders leaned into a story that combines tariff risk, decarbonization, and data‑center wiring in one shiny orange package. The market reaction here is telling: instead of dumping risk across the board, investors rotated into assets that benefit from both fiscal stimulus and geopolitical chaos — a classic late‑cycle “reflation plus hedging” move.

Energy markets took that theme and cranked it to eleven. Henry Hub natural gas futures around $5.2 per MMBtu are up roughly 60–70% this week, with some datasets flagging the largest weekly percentage gain on record since 1990 amid an Arctic blast that threatens both demand and production. Natural gas now sits at the weird intersection of “keep my house warm,” “power the data center,” and “please don’t crash the grid,” and the market is repricing that risk quickly. The consequence is simple: if this kind of volatility persists, Q1 inflation prints could surprise to the upside through energy channels, complicating the Fed’s otherwise patient stance.

On the equity side, Intel’s flop reminded everyone that the AI trade is not a free lunch. The stock plunged around 17% on Friday after guiding to a weaker‑than‑expected first quarter, dragging the Dow 0.6% lower even as the S&P 500 finished essentially flat and the Nasdaq gained ~0.3%. The market’s message was nuanced: Nvidia and the broader AI hardware complex still rallied on the week, but investors are clearly differentiating between balance sheets that can fund “trillions” of AI infrastructure — Jensen Huang’s phrase at Davos and those still promising a turnaround story. In other words, AI is no longer a blanket pass; it’s a stress test for capital allocation.

Meanwhile, Washington managed to add its own subplot. Congress has until January 30 to pass a funding package that includes Homeland Security, Defense, and several other agencies, but Senate Democrats are now threatening to block DHS funding after a high‑profile shooting by immigration officers in Minneapolis. The House has already approved a roughly $1.2 trillion bundle of remaining bills, but if the Senate cannot either strip out DHS or find a compromise, we’re staring at the risk of a partial shutdown just as the Fed meets and mega‑cap earnings hit. Markets are pricing that as an annoyance, not a crisis, but a last‑minute stumble could easily show up as another flight into gold and Treasuries.

This week is the macro “boss fight”: the Fed, a shutdown deadline, and the AI megacaps all step on stage at the same time. On Wednesday, the FOMC delivers its January decision, with futures and prediction markets assigning well north of an 80% probability that the Fed leaves the funds rate unchanged and Polymarket odds putting the chance of a March cut at only about 16%, with roughly 83% implied odds of no change at that meeting as well. With PCE inflation still running near 2.8% year over year and core measures closer to 3% by many estimates, Powell’s main job will be to talk markets out of expecting a 2024‑style cutting cycle while not triggering a tantrum.

Layered on top of the Fed is the January 30 government funding deadline. The current package funds DHS and several other agencies only through Friday; after that, portions of the government start going dark again if the Senate cannot resolve its standoff over immigration enforcement rules. Prediction markets and most Wall Street notes still view an actual shutdown as a low‑probability event; the odds have been whipsawing as headlines hit, but generally signal “tense compromise” rather than “brace for impact.” The key for markets is duration: a short, noisy lapse is an inconvenience; a multi‑week fight in a presidential year starts to bleed into growth and sentiment, especially with consumer confidence only slowly climbing off the mat.

Then there’s earnings. Wednesday and Thursday are loaded: Microsoft, Tesla, and Meta report after the close on Wednesday, followed by Apple on Thursday, all while the S&P 500 sits just a few percent off its highs and trades on rich multiples justified largely by AI and margin stories. A strong earnings trifecta that reaffirms capex plans, AI monetization, and resilient consumer demand could extend the rally and make this week’s wobble look like a pre‑earnings shakeout. But any sign that AI spending is compressing margins faster than it is boosting revenues — or that the consumer is tapping out — would likely hit the leaders first and hardest. In a market this concentrated, that’s not a sideshow; it’s the main plot.

On the prediction markets, the economy board is quietly telling a “slow but not scary” story. The flagship contract “U.S. recession by end of 2026?” has the “Yes” side trading around 24–26¢, implying roughly a one‑in‑four chance of a recession by that deadline. In other words, traders see risk, but not inevitability; this is not a market leaning into doom, it’s a market hedging the possibility that something finally breaks after a long, leveraged cycle.

Right next to it, the “GDP growth in 2026” market has the >2.5% bucket trading around 88%, with 2.0–2.5% at roughly 8%, and lower‑growth buckets barely registering. Taken together, that says the crowd expects a surprisingly sturdy expansion — more “late‑cycle plateau” than “stall speed.” Meanwhile, “Fed decision in March?” shows about an 83% implied chance of no rate change, versus only ~16% for a 25‑basis‑point cut, reinforcing the idea that any easing is more likely a mid‑year story than a March surprise.

Short‑term labor markets are also under the microscope. The “How many jobs added in January?” market currently leans toward a 75k–100k outcome at roughly 29% odds, with 0–25k at about 27% and 50k–75k at 21% — a distribution that screams “cooling but not collapsing.” And zooming back to the Fed, a separate set of Polymarket and derivative contracts implies something like an 80–86% chance that the January meeting ends with rates on hold, even as another market prices about a 90% chance that we eventually see at least a 50‑basis‑point cumulative cut later in 2026. Put differently: traders are betting on “late and light” easing, not emergency cuts.

Gold isn’t just shining; it’s starting to look like the main character. Futures settled near $4,976 per ounce on Friday, up more than 8% for the week — the biggest weekly gain since 2020 as investors sprinted back into hard assets during the Greenland drama and as rate‑cut hopes were quietly pushed further out. That weekly move isn’t coming from central banks alone anymore; flows show more private‑sector participation as institutions diversify away from both equities and long‑duration bonds that can be whipsawed by every new Fed headline.

The kicker is that gold is rallying even with real yields still positive and the Fed not yet in an active cutting cycle. With inflation stuck in the high‑2% to ~3% zone and fiscal policy still expansionary, markets are starting to price gold not just as an inflation hedge, but as a hedge against policy improvisation, tariffs, shutdowns, and political pressure on the Fed all rolled into one uncomfortable stew. For retail investors, that means gold has migrated from “weird uncle in the portfolio” back to a closer approximation of a core diversifier. Just remember: when an asset moves 8% in a week, it is not a savings account; it’s a very shiny, very emotional risk trade.

Housing is still that friend who swears they’re “fine” while juggling three side hustles and a variable‑rate mortgage. December existing‑home sales jumped 5.1% month‑over‑month to a 4.35 million annualized pace, the strongest in nearly three years and up 1.4% year over year. The catch is supply: inventory sits around 1.18 million units, or just 3.3 months of supply at the current sales pace — better than the trough, but still firmly in seller’s‑market territory, which helps explain why the median existing‑home price is holding near $405,400, up about 0.4% from a year earlier.

Mortgage rates have eased from the peak, with many forecasts calling for average 30‑year rates in the low‑6% range this year, down from roughly 6.7% on average in 2025 — a move that can shave on the order of $100 a month off payments on a $380,000 mortgage. Realtor.com’s early‑2026 data shows active listings up versus a year ago but growth stalling, asking prices roughly flat, and days‑on‑market a bit longer — subtle but real shifts toward buyers without flipping the script entirely. And forward‑looking models like Zillow’s are now penciling in roughly 4.26 million existing‑home sales in 2026, about 4.3% higher than 2025, as lower rates and pent‑up demand gradually unfreeze the market.

Put it together, and you get a housing market that’s still expensive, but less hostile. Prices are inching, not ripping; volumes are improving from depressed levels; and the main macro risk is less “crash” and more “what happens if rates stay ~4.25% on the 10‑year and above 6% on mortgages longer than everyone hopes.”

On social and in trading rooms, sentiment feels like cautious bravado. The TACO trade “Trump Always Chickens Out” — is alive and well, with many retail traders now treating every tariff headline as a coupon code for tech, even as pros quietly note that the S&P 500 has now logged two straight weekly losses and is bleeding breadth. At the same time, phrases like “debasement trade” and “Greenland risk” are all over macro Twitter as gold’s run toward $5,000 and silver’s break above $100 spark a lot of “maybe I should own some hard stuff” FOMO among younger investors who’ve never traded a true commodity cycle before.

Prediction markets and positioning data round this out: odds of a 2026 recession hover in the mid‑20s, Fed‑cut contracts mostly price “no move” for March, and yet AI‑adjacent equities still command premium multiples — a combination that says the crowd believes in a soft landing, but is quietly buying insurance in gold, gas, and copper just in case.

If last week’s market were a restaurant, it’d be the kind of place that hands you a tasting menu where every course is labeled “market volatility, served three ways.” The appetizer was Greenland tariffs loud, spicy, and ultimately walked back; the main course was a rich AI-and-earnings stew built around Microsoft, Tesla, Meta, and Apple; and dessert was gold flambé, rolled out tableside at nearly $5,000 an ounce while the dollar sulked at the bar. You don’t walk out of that meal starving, but you do leave wondering how many of your calories came from central‑bank sugar versus real economic protein.

For everyday investors, the tone right now is like splitting a bottle of mid‑priced red with friends and debating whether to order another round: valuations are high, earnings look okay, and the Fed hasn’t taken away the punch bowl — but everyone knows this isn’t the cheapest vintage we’ve ever seen. The trick is to enjoy the meal without convincing yourself it will last forever at this price.

In a week when the S&P 500 slipped about 0.4%, the Dow lost 0.5%, and the Nasdaq gave up only 0.1%, the market somehow felt both fragile and overconfident at the same time. Fragile, because a single Greenland headline was enough to hammer stocks and yank Treasury yields higher; overconfident, because within 48 hours, traders were back to buying the same megacap tech names and levering up the AI trade as if nothing happened. Meanwhile, the “debasement trade” in gold, silver, copper, and natural gas sent a very different message: investors believe growth can muddle through, but they’re a lot less sure about the value of fiat and the resilience of the grid.

Looking ahead to next week, the narrative tightens. The Fed is likely to hold rates steady even as PCE lingers near 2.8–3%, prediction markets price a soft landing with GDP above 2.5%, and Congress flirts with another partial shutdown right as the Big Four tech names report earnings. If those earnings validate the AI‑driven capex boom and the Fed threads the needle between “too tight” and “too easy,” this week’s wobble will look like a healthy reset. If not, we may finally discover where the line is between “buy the dip” and “stop touching the stove.”

For now, the practical playbook is simple: respect the uptrend, don’t ignore the message from metals and energy, and remember that “soft landing” is not a law of nature — it’s a probability estimate that can and will move as next week’s numbers hit the tape.