Much Ado About Nothing

‘There are decades where nothing happens; and there are weeks where decades happen.’

— Vladimir Lenin

Excuse yet another article focused outside of our (relatively) calm shores.

As Australian analysts, we’d love nothing more than to have our heads stuck in the depths of the ASX.

But it’s the reality of the world that our market’s causa prima currently sits in the White House.

Well, he’s actually in Switzerland as I write this, along with the rest of the world leaders at the World Economic Forum in Davos.

Where it happened again.

President Trump threatened to upend the global order. Markets panicked. And then… he backed down.

Yesterday at Davos, Trump ruled out military force to take Greenland, scrapped his threatened 10% tariffs on European nations, and announced a ‘framework deal’ with NATO.

‘Art of the deal’ to some, TACO Trade to others. Trump Always Chickens Out.

It doesn’t matter which one fits your worldview — the result’s the same.

Wall Street coined the term TACO after Liberation Day last April. Below, in blue, you can see the market selloff triggered by Trump’s sweeping global tariffs, which were later walked back. Also in blue is the most recent panic.

Source: Bloomberg

With each upheaval, the savvy are learning to ignore the noise and trade aggressively into the political tempest.

The pattern has repeated so often that some even bet against his threats. On Polymarket, 83% believed his European tariffs wouldn’t actually hit on February 1.

They were right.

Greenland Backdown or
Win? Doesn’t Matter

For markets, the optics matter far less than the outcome

After weeks of rhetoric that risked the deepest rupture in transatlantic relations in decades, Trump emerged from a meeting with NATO’s Secretary General claiming victory.

‘It’s a deal that everybody’s very happy with,’ Trump told reporters.

‘It’s the ultimate long-term deal. It puts everybody in a really good position, especially as it pertains to security and to minerals.’

Trump claims victory on access to critical minerals, missile defence plans and blocking Russian and Chinese ambitions in the Arctic.

Greenland isn’t becoming American territory, and everyone can move on. I hope you’re seeing the pattern here.

Much ado about nothing.

The S&P 500 rallied 1.2% on the news, recovering from its sharpest selloff in three months.

Source: Reuters

Two Very Different Speeches

Trump’s Davos address was vintage Trump. He called himself the most successful president in history. He mocked Macron’s sunglasses and referred to Greenland as Iceland four times.

But beneath the bluster came the key concession: ‘People thought I would use force, but I don’t have to use force. I don’t want to use force. I won’t use force.’

Canadian Prime Minister Mark Carney delivered a very different speech a day earlier.

‘The old order is not coming back,’ he declared. ‘Nostalgia is not a strategy.’

Carney described a world where great powers now weaponise economic integration.

Tariffs as leverage. Financial institutions as coercion. Supply chains as vulnerabilities.

His message to middle powers was clear. Stop pretending the rules-based order still works.

‘The middle powers must act together, because if we’re not at the table, we’re on the menu.’

For investors, this frames the decade ahead as one of structural, not cyclical risk.

Trump’s response? ‘Canada lives because of the United States. Remember that, Mark.’

Subtle diplomacy, this is not.

What It Means for Your Investments

The ASX has outperformed US indices so far this year — largely thanks to the resources sector. Gold also hit fresh highs as investors fled to safety.

That may change in the coming weeks as skies clear, but this moment is a good lesson for us all.

The TACO playbook should be front of mind for investors in 2026. Volatility spikes on threats, then fades when reality intervenes.

For long-term investors, that might mean putting on blinders and tuning out the fear, uncertainty, and doubt.

Don’t panic-sell on his threats. History suggests most will be walked back.

For short-term investors, this is the season of the counter-puncher.

Muhammad Ali and Mayweather are often cited as the best counter-punchers that boxing ever saw.

They’d wait for opponents to overextend, then push out with targeted, aggressive moves. That should be your strategy here.

Our local tech sector and big banks have borne the brunt of the pain in the past few months. It’s little surprise that we’re seeing those fortunes reverse today.

Source: TradingView

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Next time Trump gets on the horn and upsets markets. It’s time for bargain hunting.

But it’s also a good time to diversify. As we’ve argued, this year looks to be a resource-themed one. But that too could become overplayed.

Australia sits in an interesting position. We’re not directly in Trump’s crosshairs. Our 10% tariff from Liberation Day is among the lowest globally.

If trade wars accelerate, our commodities could become more competitive. But who knows where this year could go.

Despite an incredible run, I still believe gold needs to be part of your portfolio in the year ahead.

Our gold expert, Brian Chu, has recently finished a book on the subject and has made a video explaining gold’s true message to markets in this moment.

It’s a message you shouldn’t ignore.