"In moments of global instability, traders usually start selling. President Obama's threats to Syria during his second term gave traders " jitters." Trump's escalating trade war with China during his first term deflated the stock market. And last spring, when Trump unveiled " Liberation Day"-a plan to impose punitive tariffs on dozens of foreign nations-the S&P 500 shed a record $5 trillion over two days. It remains the biggest market shock of the president's second term so far."
"But the reactions to three headlines from this past month tell a different story. When U.S. forces captured Venezuelan President Nicolás Maduro on January 3, reviving an old protocol for dominance in the Western Hemisphere, the markets held strong. When Federal Reserve Chair Jerome Powell revealed on January 11 that he was under criminal investigation by the Justice Department, and that the central bank's independence was potentially under threat, markets responded with startling calm. And when Trump proposed a raft of European tariffs on January 17, as part of an effort to seize Greenland from our Danish allies, the market reaction, although noticeable, was far from catastrophic."
Investors displayed muted responses to several major events in January 2026: the capture of Venezuelan President Nicolás Maduro, a Justice Department criminal investigation into Federal Reserve Chair Jerome Powell, and proposed European tariffs tied to Greenland. Historically, geopolitical instability and aggressive trade actions have prompted steep market sell-offs, including a $5 trillion S&P 500 decline during a previous tariff episode. The subdued market movements in early 2026 align with stronger-than-expected U.S. economic performance in 2025, including a 16.39 percent S&P 500 gain and relatively low unemployment despite persistent high consumer prices and slow job growth. Traders appear to view these shocks as manageable.
Read at The Atlantic
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