MW How Greenland could turn into a Big Tech problem, according to Morgan Stanley's Mike Wilson
By Barbara Kollmeyer
EU trade 'bazooka' concerns are making the rounds
Could the U.S.-EU Greenland spat put Big Tech stocks on ice. Some see a threat.
The U.S.-Europe spat over Greenland may have not been on many investor bingo cards for this year, but here we are. Wall Street look ready to sell stocks now and ask questions later.
Treasury Secretary Scott Bessent is telling the world not to give into hysteria but cooler heads are not at the moment prevailing. Citing potential earnings fallout, Citigroup downgraded European equities - an outperformer over the U.S. in 2025 - for the first time in a year.
Our call of the day from Morgan Stanley's chief U.S. equity strategist Mike Wilson says investors can expect a "fairly contained direct cost impact on major U.S. indices" from President Donald Trump's fresh tariff threats against the EU. He says smaller index weights, such as pockets of autos/transport equipment, staples, materials and healthcare, are most at risk.
Here's Wilson's biggest worry over the Greenland crisis: "The more notable risk is tied to whether we see the EU activate its 'anti-coercion' tool and focus on services, which would pose more of a headwind to U.S. mega caps."
He's not alone here, as Trump's EU tariff threats sparked plenty of chatter among strategists about the possibility of Europe launching a so-called "trade bazooka." Mainly seen as a deterrent measure, the Anti-Coercion Instrument dates back to 2021, when the EU was looking for a way to deter China from an economic coercion campaign against Lithuania.
"Starting the activation does not mean implementation (which requires several steps) but signals potential EU action and allows time for negotiation. The ACI could involve a range of policy tools broader than tariffs, such as investment restrictions, taxation of U.S. assets and services, like digital services, etc.," Sven Jari Stehn, chief European economist at Goldman Sachs, told clients on Monday.
The concern is that Big Tech would be an obvious heavyweight that would bear the brunt of this. Some see signs of this concern reflected in Nasdaq-100 futures, which have been driving losses for futures markets, a week away from the start of Big Tech earnings.
Christopher Granville, managing director at TS Lombard, had a similar viewpoint to share: "Market slump risk would come into play only if U.S.-Europe tensions escalated beyond tariff hikes to a more radical confrontation - with, for example, Trump weaponizing LNG exports or the EU invoking its Anti-Coercion Instrument to limit market access for Big Tech."
One group of stocks Wilson does like is small caps IWM. Even if Fed rate cut possibilities are looking a little less optimistic, with Kevin Warsh now seen as a lead candidate for Fed chair, Wilson said "fundamentals are improving and driving relative outperformance" for the small caps.
Discretionary goods, regional/mid-cap banks, shorter-cycle industrials and biotechs are Morgan Stanley's favorite small-cap sectors.
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are sinking, long-dated Treasurys BX:TMUBMUSD10Y BX:TMUBMUSD30Y are selling off, not helped by soaring Japan bond yields BX:TMBMKJP-30Y BX:TMBMKJP-40Y over a tax-cut plan. Gold (GC00) and silver (SI00) are charting new highs and the dollar DXY is down.
Key asset performance Last 5d 1m YTD 1y S&P 500 6940.01 -0.38% 1.54% 1.38% 15.73% Nasdaq Composite 23,515.39 -0.66% 0.89% 1.18% 19.79% 10-year Treasury 4.273 9.10 10.90 10.10 -35.70 Gold 4716.5 2.34% 5.26% 8.87% 72.67% Oil 59.27 -0.95% 2.28% 3.24% -22.39% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
Trump threatened a 10% tariff against countries that deployed troops to Greenland, effective on Feb. 1. The European Union was reportedly considering countermeasures.
The U.S. Supreme Court is again planning to issue rulings on Tuesday, which means a decision on the legality of the Trump administration's tariffs could come.
Results from Netflix $(NFLX)$ (read a preview) and United Airlines $(UAL)$ (read a preview) are coming after the close.
Rapt Therapeutics $(RAPT)$ shares are jumping after GSK $(GSK)$ announced a $2.2 billion deal to buy the maker of a food allergy drug.
Construction spending for October and pending home sales for December are expected at 10 a.m.
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The chart
Ben Carlson, director of institutional asset management at Ritholtz Wealth Management, shares this chart on his Wealth of Common Sense blog that offers rationale for an outperformance by international stocks last year. "The falling dollar was a tailwind for foreign stocks last year but earnings growth was good too. Everything went right for foreign stocks last year," he said. The iShares MSCI ACWI ex-U.S. ETF ACWX has gained 4% this year.
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
Ticker Security name NVDA Nvidia TSLA Tesla TSM Taiwan Semiconductor Manufacturing GME GameStop IBRX ImmunityBio MU Micron Technology PLTR Palantir AAPL Apple AMD Advanced Micro Devices AMZN Amazon
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-Barbara Kollmeyer
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January 20, 2026 06:51 ET (11:51 GMT)
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