Trump's letter to Norway pretty much sums it up:
"Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace…”
The US President sent that out along with several ultimatums demanding the US annex Greenland. Europe is reeling in the aftermath and there is no telling which way this will go. Trump has threatened tariffs against seven EU countries and some Europeans are dangling the anti-coercion response.
The latter response gets me to what I believe will be the black swan of the 21st century: The breakdown of the global intellectual property regime.
Under the EU Anti-Coercion Instrument the EU can adopt countermeasures if a non-EU country uses trade, investment, or regulatory pressure to force a policy change. Among the permitted responses are measures affecting intellectual property protections, including the suspension of IP protections, like patents, trademarks, copyrights and designs. They can also restrict royalty payments and freeze licencing income.
This is a massive vulnerability for the United States, whose entire tech ecosystem relies on the global IP system. I always imagined that China would invalidate it and flood the world with patented US goods at rock-bottom prices but maybe the breakdown will start in the EU.
Taking a step back, it's hard to believe that we are even here. Dips in equity markets on Trump insanity have always been temporary as the checks and balances pull him back in. Additionally, he's a person who has always graded himself based on the returns in the stock market so there was a self-disciplining in place.
But a guy who would throw a fit over the Nobel Peace Prize and threaten Greenland is capable of anything and that's a tough paradigm to trade.
S&P 500 futures are down 1.2%.
Canadian markets are open today and the risk aversion should be balanced by a rise in gold stocks after gold hit a record $4689.
