Hugo Angelo Lucien Manenti @hugomanenti95: "Hi everyone, Unfortunate but not unexpected…..."

Portugal

Hi everyone, Unfortunate but not unexpected… Donald Trump is doing his best to disrupt our otherwise strong start to the year, trying to blackmail the EU into ceding Greenland. Today, I will walk through the implications of this latest spat — what might happen, and what it might mean for your portfolio. In short: we are adequately positioned for trade and geopolitical friction, but we need to watch for more radical outcomes, as crazy becomes the new normal. 𝗜. 𝗪𝗵𝘆 𝗚𝗿𝗲𝗲𝗻𝗹𝗮𝗻𝗱? Greenland holds vast natural resources — petroleum and rare minerals. While this might entice President Trump, most of it is incredibly hard and costly to extract — making it little more than a pipe dream for now. Beyond resources, Greenland sits at a strategic crossroads between Russia and the USA. As polar waters warm and become navigable, Chinese and Russian fleets could reach the North Atlantic much faster than via any other route. Radars and air defence systems there would also be key to the Golden Dome project. This fits the broader framework I've discussed many times — the post-Cold War era of expanding trade and relative peace is over. The US is actively pursuing control over critical supply chains, natural resources, and strategic geography. 𝗜𝗜. 𝗘𝘀𝗰𝗮𝗹𝗮𝘁𝗶𝗼𝗻𝘀 & 𝗘𝘂𝗿𝗼𝗽𝗲𝗮𝗻 𝗥𝗲𝘀𝗽𝗼𝗻𝘀𝗲 Trump announced tariffs on eight European countries — Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden and the UK — starting at 10% on February 1, rising to 25% on June 1, until a deal is reached for the "Complete and Total purchase of Greenland." He stated he does not "need international law" and would take Greenland "the hard way" if necessary. Europe's reaction has been unified. Eight countries issued a joint statement expressing "full solidarity" with Denmark. The bloc is now weighing its options — including the "trade bazooka," the Anti-Coercion Instrument adopted in 2023. This tool goes beyond tariffs: it covers services, investments, public procurement, and could suspend intellectual property protections. 𝗜𝗜𝗜. 𝗜𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 🔹 Trade and geopolitical risks. The US-EU trade agreement was set for European Parliament debate this week — now on hold. If it collapses, we are back to elevated tariffs and uncertainty, impacting both sides. More broadly, this accelerates European efforts toward strategic autonomy — reduced reliance on American arms, tech, and intelligence sharing. 🔹 Anti-coercion and risk to tech. The EU's trade bazooka could target American tech giants. If activated, it could restrict access to the single market, exclude US companies from public tenders, limit foreign investment, and suspend IP protections. While activation remains unlikely, it is now within the realm of possibilities. 🔹 Capital flows. Uncertainty typically drives flows toward the dollar and treasuries — but here the US is the source of instability. A prolonged standoff could see European investors repatriate capital, supporting the euro and hurting US financial markets. If this blows over quickly, risk appetite could snap back. Expect choppy, headline-driven trading. 𝗜𝗩. 𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗘𝘅𝗽𝗼𝘀𝘂𝗿𝗲 We have purposely avoided companies that depend heavily on trade and international cooperation. Instead, we focus on domestic supply chains, natural resources, and services with minimal political or regulatory exposure. Our direct exposure is low: 🟢 Services (low / no exposure): IWG, CNXC, AMTM, CUBI, TOI, CPA, ONIT, XPOF, CQQQ, NGVC, IGIC 🟢 Domestic industrials ( no / low exposure): WCC, HRI, VTY, TIC, POWL, HUN, OUST, TE, PSIX, ASX, CLF 🟢 Natural resources – (no / low exposure): PUMP, TDW, RIG, AR, FANG, MOS 🟠 Businesses with transatlantic operations which could be impacted: CRTO, FOUR, RDW – less than 3% of portfolio. The risk to us is not in single stocks but systemic – capital repatriation, volatility. With higher beta and small-cap focus, we suffer more from headline-driven selloffs in the near term. But medium- term, I sleep better knowing we have no exposure to tech giants, luxury brands, or carmakers. It is unlikely any of our businesses catches a stray bullet here. Given uncertainty and Trump's TACO habits, I am not taking specific action yet. I may hedge market risk in the coming days. 𝗩. 𝗖𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻 This is classic Trump — maximum pressure, theatrical escalation, then potentially a face-saving deal. We have seen this playbook before. The difference this time is the explicit threat to a NATO ally's territorial integrity, which crosses a line that even hardened European pragmatists cannot ignore. Our portfolio is built for a world of trade friction and geopolitical tension, and so far that is what we have. Cold war between the US and its closest allies? That would be a different game entirely. As always, I welcome your thoughts and questions. All the best, Hugo $SPX500 $EUSTX50

Not investment advice. The author may have financial interests in the mentioned instruments.

2 Mentioned

SPX500

SPX500 Index (Non Expiry)

EUSTX50

EUSTX50 Index (Non Expiry)

Strictly Necessary Cookies

Performance Cookies

Functional Cookies

Targeting Cookies