When Geopolitics Is Just Window Dressing

The way this week has unfolded—whipsaw collapse on Monday, euphoria on Wednesday, cautious strength on Thursday—tells you something crucial that nobody's actually saying out loud: nobody cares what happens to Greenland. They care about whether the Fed will cut rates.

Let me walk you through the theatre that passed for market-moving news.

Tuesday morning, Trump's "You'll find out" comment about acquiring Greenland sent stocks into a legitimate swoon. The Dow dropped 1.8%, the S&P 500 fell 2%, the Nasdaq cratered 2.4%. People genuinely sold. Asset managers rotated out of risk. Bitcoin screamed lower. This wasn't algorithmic noise—this was actual conviction that tariff war was back on the menu, and maybe this time it'd be over Arctic real estate.

By Wednesday, Trump showed up in Davos and made it clear: no military action, actually we have a "framework" agreement, and regarding those tariffs on NATO? Nah. The framework angle is almost laughably vague—what it actually means will remain unknowable until it isn't—but the message was clear enough. Bonds rallied, equities surged, the S&P 500 gained 1.2%, and every single sector went green. The energy sector popped 2.4%. Materials rose 1.9%. Even the VIX collapsed 15.9% to 16.9.

This is where you should pause and notice something about yourself.

Did you genuinely believe for 24 hours that the US was going to go to war over Greenland? Did you really think the geopolitical architecture of NATO would crumble because of a tactical retreat? Or did the headline just feel scary, so your portfolio followed the script?

The actual market-moving event is happening next week: the Fed decision.

Annual PCE remains stubbornly above the Federal Reserve's 2% goal and could reinforce ideas that a rate cut isn't in the cards at the Fed's meeting next week. This is the number that matters. Chances were 5% heading into PCE, according to the CME FedWatch Tool. Five percent. A coin flip wouldn't give you worse odds.

Thursday morning brought what on paper should have been a relief: the government's final third quarter gross domestic product (GDP) estimate rose to 4.4% from 4.3% on a seasonally adjusted annual basis. Real growth. Broadbased. The economy isn't sputtering. And yet what happened? Annual PCE remains stubbornly above the Federal Reserve's 2% goal—it's still sticky. You can't have both: strong growth and the excuse to cut. The Fed's in a bind, and the market knows it.

So here's where we actually are: Equities are priced for cuts that may never come. Every relief rally has rested on the narrative that geopolitical noise would eventually resolve, freeing the Fed to pivot dovish. The Greenland theatre was helpful for a 24-hour bid, but it was never the real story. When PCE stays elevated, when GDP keeps printing north of 4%, when jobless claims sit at 200,000 and industrial production ticks up—the Fed doesn't move. They sit. They wait. They watch the market price in expectations it will fail to meet.

Intel's earnings are due today. Microsoft, Meta, Tesla, and half the megacap universe comes next week. Earnings haven't disappointed yet, but there's a whisper of concern that they're being priced for perfection in a world where the easy Fed put is off the table.

The Greenland story was never about Greenland. It was about whether markets could find any geopolitical hook to justify rally-on-dips behavior after years of AI enthusiasm. When that hook crumbled, we got a 24-hour reprieve built on vagueness and "frameworks."

The real story resumes next week. And it's going to be boring and difficult and dependent on the one variable nobody controls: what the Fed actually does versus what markets hope it'll do.

The VIX is back to 16.9. That's not complacency. That's just the market holding its breath.