Wall Street's playbook for 2026 already needs to be rewritten

"What they're saying: It's hard to parse the market's response to the firehose of news, as any selloff could be "a routine wave or a tidal shift, or worse, a tsunami," Steve Sosnick, chief strategist at Interactive Brokers, tells Axios. State of play: Since the beginning of the year, investors have been met with: Venezuela: The capture of Nicolás Maduro led to a spike in volatility and a drop in energy prices. Greenland: President Trump threatened to take control of Greenland and then proposed additional tariffs on European nations that did not support the effort, which triggered in part the broadest U.S. asset selloff since 2020. He then walked back the threats on Greenland and the tariffs."

"The carry trade: Japanese bond yields spiked, hurting one of the most lucrative trades used by Wall Street to turn profits. Trump vs. Powell: The Department of Justice launched an investigation into Federal Reserve chair Jerome Powell, sparking concerns about Fed independence. The market, meanwhile, is still waiting to hear who the next Fed chair might be. Canada vs. the U.S.: Canadian Prime Minister Mark Carney dropped tariffs on Chinese EVs and said that "not every partner will share all our values" in a speech at Davos, in a recognition that China may not be the country that Canada needs to worry most about. Trump vs. corporate America: The president is suingthe nation's largest bank, JPMorgan Chase, and its CEO, Jamie Dimon, for $5 billion."

Investors face a rapid sequence of geopolitical and policy shocks that have repeatedly shifted market sentiment and triggered volatility. Key events include the capture of Nicolás Maduro and falling energy prices, a Greenland tariff threat and subsequent rollback that helped spark a broad U.S. asset selloff, a spike in Japanese yields that hurt the carry trade, a DOJ probe into Federal Reserve chair Jerome Powell and uncertainty over Fed leadership, Canadian tariff adjustments on Chinese EVs, a presidential lawsuit against a major bank, and signs of renewed corporate activism. These developments have left markets hesitant, with modest year-to-date gains and unclear long-term direction. The market struggles to distinguish routine corrections from structural shifts or systemic shocks, complicating investor positioning.

Read at Axios