Greenland, Fires and Dollar: New Challenges

In the second week of the year, President-elect Donald Trump’s argumentative remarks on Greenland hit the political agenda and he offered to buy the largest island. The Los Angeles fires could be the costliest natural disaster and the Dollar Index valued more than 6% in 3 months.

As the biggest island on the Earth, Greenland has gained popularity since Trump first took office. As strategically located at a possible trade route, “Buying Greenland” is not just Trump-like rhetoric but also could bear significance for future administrations. Perhaps, Greenland will remain part of Denmark, but it will never remain remote again.

“We need Greenland for national security purposes.”Donald Trump said last Tuesday.

Los Angeles fires are likely to be the costliest natural disaster in modern US history. Damage estimates reach up to $300 billion which is higher than most of the countries’ GDPs. It also adversely affects insurance companies and California’s $10 trillion residential property market.

The Dollar Index spiked to 110, which is the highest since September 2022. Fed’s cautious outlook for the new era and hot job reports caused a strong dollar. Some even discuss a rate hike this year. EUR/USD parity goes down to 1 as the weak Euro and strong US dollar collide. Likewise, the 10-year treasury yield hikes to %4.80 and it has been increasing since the first Trump trades began.

Gold and oil keep increasing but each has different causes for now. Gold surprisingly has a negative correlation with stock indices. Anyhow, it holds its haven characteristics. Stocks have not performed yet well since a hawkish Fed hovers around the market. Oil has been rising since the new sanction packages against Russia have been rolled out.

China’s yearly trade surplus neared 1 billion dollars in 2024. Its yearly GDP is forecasted to rise by %4,8, close to Beijing’s target of %5.

This week CPIs from the US and UK, retail sales, and China’s annual GDP numbers are to watch. As well markets are getting ready for Donald Trump’s inauguration on Jan 20.