Investors face a shortened trading week, with U.S. equity markets closed on Monday for Martin Luther King Jr. Day. Attention is expected to intensify as the week unfolds, driven by fresh tariff threats from President Donald Trump, pivotal rulings pending at the U.S. Supreme Court, and earnings updates from major corporations including Netflix (NASDAQ:NFLX) and Intel (NASDAQ:INTC). Markets may also gain more clarity on Trump’s housing affordability agenda as November’s midterm elections draw closer.
1. Europe braces for a response to Trump’s Greenland tariff threat
European officials are expected to hold talks later this week on how to respond to Trump’s proposed tariffs, with reports indicating that EU policymakers are weighing forceful countermeasures if the duties are implemented.
Over the weekend, Trump said the United States would impose 10% tariffs on imports from eight European countries — Denmark, Sweden, France, Germany, the Netherlands, Finland, Norway and the United Kingdom — unless Washington is allowed to purchase Greenland. He warned that the tariffs would increase to 25% in June should no agreement be reached over the semi-autonomous Danish territory.
Trump has justified the proposal on national security grounds, but European governments have pushed back strongly, describing the move as an act of coercion.
Ahead of an emergency EU summit scheduled for Thursday in Brussels, officials are reportedly preparing to discuss options including tariffs on €93 billion worth of U.S. goods. Another potential tool under consideration is the EU’s “Anti-Coercion Tool,” which could restrict U.S. access to investment, financial services and parts of the services trade.
Analysts say the situation underscores how uncertainty around Trump’s trade agenda — a recurring theme throughout 2025 — may worsen.
“If the past year has shown anything, it is that the macroeconomic effects of tariffs are both uncertain and non-linear,” said Neil Shearing, Group Chief Economist at Capital Economics.
Shearing expects the economic impact to be “modest,” trimming “a few tenths of a percentage point” from growth in the affected economies while adding a similar amount to U.S. inflation. However, he cautioned that the political fallout could be “far greater,” warning that any attempt by the U.S. to seize Greenland through force or pressure would cause “potentially irreparable damage” to NATO.
2. Supreme Court rulings loom large for markets
Trump’s latest tariff threat coincides with heightened focus on the U.S. Supreme Court, which is widely expected to rule soon on the legality of the president’s broad use of tariffs.
Investors largely anticipate that the court will strike down Trump’s reliance on a 1970s-era international emergency economic powers law to impose the levies. Data from betting platform Polymarket currently implies only a 31% chance that the justices will side with Trump.
Although the administration has signaled it may explore alternative legal avenues to impose tariffs, analysts warn that such moves would only deepen uncertainty around U.S. trade policy, including the newly proposed Greenland-related duties.
Separately, the Supreme Court is set to hear arguments on Wednesday in a case stemming from Trump’s attempt to remove Federal Reserve Governor Lisa Cook. Cook filed a lawsuit in August after Trump sought to dismiss her over alleged mortgage fraud, a move widely seen as an effort to undermine the Fed’s independence.
“[The Supreme Court] has been a relative friend of the Fed in terms of defending it from White House interference, and investors are hoping that remains the case during the Cook hearing,” analysts at Vital Knowledge said.
3. Netflix earnings take center stage
On the earnings front, Netflix is scheduled to report quarterly results after the U.S. market close on Tuesday.
Bloomberg consensus forecasts point to earnings per share of $0.55 on revenue of $11.96 billion. Still, investor focus may shift quickly to any commentary on Netflix’s reported interest in acquiring Warner Bros. Discovery — a bid that faces competition from Paramount Skydance.
The contest for Warner Bros. is expected to drag on for months and could face regulatory scrutiny in both the U.S. and Europe. Netflix has targeted the studio, which owns HBO Max and franchises such as “Harry Potter” and “Friends”, as a way to accelerate revenue growth. Despite successes like “Stranger Things” and recent moves into live sports, the company continues to face pressure to deliver returns on its heavy investments in advertising and gaming.
4. Intel reports as turnaround efforts continue
Intel is set to release its results after Wall Street closes on Thursday.
Under CEO Lip-Bu Tan, the chipmaker has focused on cost reductions and balance sheet repair as competition intensifies in the PC and server processor markets. Efforts to gain traction in the artificial intelligence chip space have so far yielded limited success.
Intel received a significant boost last year when Nvidia (NASDAQ:NVDA), SoftBank (USOTC:SFTBY) and the U.S. government invested in the company. Nvidia, notably, acquired $5 billion worth of Intel shares in December.
Earlier this month, Intel also introduced a new AI chip designed for laptops, aiming to reassure investors about products built using its next-generation manufacturing technology.
5. More details expected on Trump’s housing strategy
The Trump administration is expected to provide additional information on its plans to improve housing affordability, a key voter issue ahead of the midterm elections later this year.
High mortgage rates and elevated home prices have discouraged many Americans from entering the housing market. Last week, White House economic adviser Kevin Hassett said the administration plans to allow the use of retirement savings for down payments on homes. He added that Trump “will put the final plan out” during his appearance at the World Economic Forum in Davos this week.
Trump has also floated other cost-cutting measures, including restricting institutional investors from purchasing single-family homes, directing Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, and imposing a cap on credit-card interest rates.
Leave a Reply