"The Arctic Cold in Greenland"

Written by Elwin de Groot, head of macro strategy at Rabobank

You may be stuck, but Arctic coldness may require an extra vest from you today. president Trump and any officials from his administration have intensified the threats to occupy Greenland. Preferably by buying, but if necessary, even by force.

Several government officials tried to soften the focus of the second sentence. A U.S. peculiar Envoy to Greenland, Jeff Landry, told CNBC that Trump was not ready to take over the island, and the president "supports independent Greenland", while the Wall Street diary reported that the Secretary of State Marco Rubio told the legislators at a secret conference on Monday that the fresh threats of administration to Greenland did not signal the upcoming invasion and that the goal was to buy the island from Denmark.

Meanwhile The U.S. legislature Democrats announced they intend to introduce a resolution preventing Trump from invading Greenland. The U.S. presented its actions in Venezuela as support for Maduro's "abuse" which, they say, gave the president greater freedom. But Greenland may not be easy to qualify for this category.

Nevertheless, the threat is now wide open on the table. And it's clear that there's a large gap between the U.S. and their allies. At the beginning of this week, Danish Prime Minister Mette Frederikson had already warned that although she was taking Trump's administration's threats seriously, "everything stops, including NATO, and thus safety established since the end of planet War II," If the U.S. decides to attack another NATO country.

Interestingly, the United States has long neglected their military presence in Greenland. Since 1951, he has had a defence agreement with Denmark, establishing the operation of the Pituffik (Thule) Air Base on the island. During the Cold War, there were up to 6,000 American soldiers in respective camps; Today, this presence has dramatically decreased to about 150 soldiers. In June last year, the Danish parliament expanded US access to the island through the Defence Cooperation Agreement (DCA) of 2023, giving it broad rights to service station personnel, retention equipment, maintenance and exercise, and jurisdiction over US troops.

The mention to these existing agreements was besides a key component (abnormal) joint statement leaders of France, Germany, Italy, Poland, Spain, large Britain and Denmark yesterday. She noticesthat "arctic safety remains a key precedence for Europe and is crucial for global and transatlantic security. NATO has made it clear that the Arctic region is simply a precedence and European allies are taking action. We and many another allies have increased our presence, actions and investments to defend the Arctic and deter opponents. The Kingdom of Denmark – including Greenland – is part of NATO." The message stresses NATO unity and common safety in the Arctic and the importance of respecting the UN principles: sovereignty, territorial integrity and integrity of borders. It has besides been announced that the future of Greenland belongs to the decisions of its people and Denmark.

How the situation and diplomatic actions around Greenland will make in the coming weeks can besides affect this another – and much more urgent – dossier, or Ukraine. There was even affirmative news about this case yesterday. After a gathering in Paris with Zelensky and European leaders from the "voluntary coalition", US peculiar Envoy Steve Witkoff said that "significant progress" was made as part of the safety guarantee.

Thanks to the Paris Declaration – Solid safety Guarantees for Solid and Durable Peace in UkraineEuropean leaders clearly wanted to present the uncommon Euro-Atlantic unity. The message suggests, inter alia, that the US would support a mechanics for monitoring and verifying the US-led ceasefire and that there would be binding commitments to support Ukraine in the event of a future armed attack by Russia. If approved by Washington, this will be a crucial step forward, although many details inactive request to be clarified. It is besides unclear how this will affect Russia and, if Russia rejects the plan, how the allies, especially the US, will react.

To date, markets have remained mostly intact despite geopolitical landslides that have occurred in fresh weeks. S&P 500 reached a fresh evidence level yesterday, as did the Eurostox 600 index. While the yields of government bonds increased by 1 to 2 basis points, European profitability declined as investors drew inspiration from mixed PMI studies and comparatively mild inflation data from the region. The euro has besides weakened against the dollar and the EURUSD has fallen below 1.17.

December PMI studies for Spain and Italy showed contrasting changes, with Spain amazing (complex index increased 0.5 points to 55.6) and Italy negatively (complex index dropped 3.5 points to 50.3). With the tiny revisions of the PMI indexes in France and Germany, the overall message is that the European economy likely entered a soft place at the end of 2025. This confirms our cautious view of the economy for the next fewer months.

Meanwhile, inflation data amazed down. Inflation in France fell by 1 level in December erstwhile tiny growth was expected. The header value softened to 0.8% of 0.9%, while harmonised inflation softened from 0.8% to 0.7%. This print reiterates that France remains in the lower league erstwhile it comes to inflation in Europe. The decline in inflation was attributed mainly to a more pronounced fall in energy prices, especially oil, INSEE noted. Inflation of fresh food products accelerated, while the fall in industrial commodity prices decreased to -0.4% y/y with -0.6%. Inflation of services remained at 2.2% y/y.

In Germany, the fall in inflation was more pronounced. Harmonised inflation for December decreased by at least 0.6 percent points to 2% (consensus: 2.2%). Although the decline in food and energy inflation contributed, the crucial decrease in base inflation — unlike French data — was a key origin affecting inflation in Germany. The national core inflation rate decreased by 0.3 percent points. There have been noticeable decreases in clothing and recreation prices. The second are usually active and are rather delicate to distortions in seasonal patterns (such as holidays, etc.), so not the full decrease in base inflation can persist in the coming 2026.

Overall, however, mild inflation data from Germany and France have directed investors' attention to the anticipation that the ECB may proceed to lower its rates if both the economy and inflation proceed to deteriorate even further in the coming months. The ECB pigeons have late been comparatively quiet, but specified numbers are adequate to sustain any speculation.

Translated by Google Translator

source:https://www.zerohedge.com/