Market Stories by Fathom 30/01/2026

This month feels like an eternity in the velocity and severity of global developments. The most important in my opinion has been the crisis surrounding Greenland, as it has catalyzed a profound structural realignment of the Western world, shifting the geopolitical center of gravity away from Washington. The U.S. administration’s refusal to dismiss military coercion as a tool for territorial acquisition has shattered the foundational premise of NATO, transforming the United States from a security guarantor into a perceived strategic threat. In response, a coalition of traditional allies—led by France, Germany, and Canada—is moving toward "strategic detachment," prioritizing defense independence and economic insulation. During the 2026 World Economic Forum, Canadian Prime Minister Mark Carney codified this shift, receiving a historic standing ovation for a speech that framed the United States as the primary architect of the system’s collapse. Carney declared: "We knew the story of the international rules-based order was partially false. That the strongest would exempt themselves when convenient. That trade rules were enforced asymmetrically... We are in the midst of a rupture, not a transition."

The economic ramifications of this geopolitical fracture could be manifesting as a systemic "de-merging" of the American economy from global capital flows. As U.S. domestic institutions appear unable or unwilling to restrain the President's volatility, international confidence in the dollar and U.S. Treasury bonds is eroding. Foreign central banks and institutional investors are moving beyond "home bias" to actively diversify currency exposure, fearing that a nation no longer bound by international norms cannot maintain a stable reserve currency. This isolationist trajectory suggests a long-term erosion of U.S. global influence, as power built on intimidation proves incompatible with the trust required for financial leadership. With middle powers and the EU deepening ties with China and India to bypass Washington, the rest of the world slowly constructs a new, multipolar architecture designed specifically to operate with diminishing reliance on the US.

Financially, this erosion of confidence has triggered a violent rotation into hard assets, with precious metals recording exorbitant gains, amplified by a surge in irrational quantitative fund flows. The simultaneous decline of the U.S. dollar reflects a confluence of credibility risk and geopolitical spillover, further exacerbated by an unprecedented Department of Justice investigation into Federal Reserve Chair Jerome Powell following his resistance to administrative pressure for rate cuts. Beyond these domestic tensions, global markets face the re-emergence of a JPY carry trade unwind as Japanese yields reprice and the yen ceases to function as a cheap funding currency, a pillar of the old financial regime is increasingly at risk. US rate cut expectations matter, but they don’t explain the full picture. If this were a simple easing story, risk assets would be celebrating more cleanly. In an era where coordinated currency management has been replaced by managed ambiguity (the Treasury checking spot rates in USD/JPY on a Friday afternoon), we should expect macro volatility to increase further.

The investment verdict at this point is increased diversification in assets, geographies and strategies and underweight US assets. But stay invested.

Alexandros Tavlaridis