Are Markets Ready For Geopolitical Madness?
The geopolitical quotient of every investor will be tested
Greenland. Iran. Gaza Peace Board. A personally written letter from the US president to the Norwegian prime minister, warning that peace may be pushed aside after the Nobel was not awarded to the American leader. Ideas in Europe to counter America’s annexation threats, like activating the Anti-Coercion Instrument (ACI), created to battle China, allowing Brussels to bypass bureaucracy and unilaterally impose economic punishment on another country, or even speculation that Europe could leverage its more than $10 trillion of US assets, including debt (bonds), setting the stage for a transatlantic financial war.
The world is ablaze with geopolitics.
Anyone reading my insights frequently will have noticed two recurring warnings.
First, the space separating geopolitical crises is shrinking. Instead of one major disruption taking place every generation, multiple powder kegs are exploding, sometimes over the course of months (just look at the summer of 2025). Second, markets are deeply, deeply miscalculating the geopolitical mess in the world. Whether it is the destabilizing US-China relationship or the volatile Middle Eastern landscape, markets have been shrugging off the global fights, with the eye firmly planted on AI (capex), highly unstable US trade deals, or the performance of the US economy. Without realizing it, many have been investing in options that are under a geopolitical siege. To the point of unstable US trade deals, the US and South Korea unveiled a trade deal in October 2025, yet in the past 48 hours, Washington is threatening 100% tariffs on Korean memory chips, a shock to the recently inked agreement.
All of this could now come to a head. Investors face a reckoning over the coming months. Even the most advanced models may not hold up against the geopolitical madness looming.
Investors may believe they have calculated everything or exercise a degree of control. However, some are overlooking a new rule: geopolitics no longer has limits or parameters. The era when diplomatic friction would not spill over into the economic domain is over. A single event can ricochet in all directions and snowball in the most unpredictable ways.
US and Europe at war?
Take a single flashpoint: Greenland.
By all measures, America is on the annexation path. There will be no vote for secession. There will be no peaceful separation between Greenland and Denmark. Tariffs will not make Europe hand Greenland to America.
With every passing day, the probability is rising that US forces will be given the greenlight to seize the capital Nuuk, remove the elected Danish-backed government from power, and claim Greenland as American territory. What might Greenland under US control be called? More on that later…
An American annexation of Greenland may present a bigger shock to Europe - and the world - than Russia’s invasion of Ukraine or even the Covid-19 pandemic. The EU specifically will face a geopolitical hydra with four heads (questions):
How does Europe break free of the American defense architecture?
How does Europe decouple from America economically, financially, culturally, and technologically?
How does Europe balance its long-term objectives with short-term realities (i.e., without NATO, Europe is naked to Russia)?
How does Europe deal with the internal splits as some members refuse to clash with America?
Notice my wording with those questions. On purpose, I presented these questions from the standpoint of “How?” not “Does?” implying that once America seizes Greenland, Europe will no longer be debating how close it stands with America. It will have made the decision to permanently divorce its post-World War II guardian.
Market meltdown
All of this will ricochet back to markets. The ripples will be endless. In fact, markets may be the first victim. Consider the range of ways an American annexation of Greenland could play out:
Permanent paralysis of US-EU trade flows, resulting in both sides implementing huge tariff walls on each other, particularly Brussels imposing harsh duties on American imports, likely resulting in a US retaliation, crippling European auto, CPG, alcohol, agricultural, machinery, and pharma sectors.
The EU taking out its anger on American companies, particularly those in the technology and financial sectors, severing contracts, banning projects, blocking involvement of American banks in European state-projects.
A defense see-saw, as European defense stocks surge as European capitals scream military sovereignty and the creation of a pan-European army, while American defense stocks dive as US defense firms are locked out of Europe indefinitely. However, a caveat may be that the US government announces huge purchases of defense equipment, beyond the annual budget, to secure Greenland, giving US defense firms a boost.
Currency and bond markets spin as European institutions pause buying American treasuries or begin dumping them, liquidate American assets (i.e., farmland), pause US energy purchases, caution European firms against US projects with high-level of government oversight (i.e., clean energy), decisions of which would disrupt the balance sheet of countries and companies globally (cascade effect)
More market pressure as the US responds to Europe’s punishment in the most nuclear ways.
These are just a few of the scenarios that could play out for markets (for a complete deep-dive on how the US-EU fight could play out, get in touch). While these are huge stakes, and represent a permanent breakup of the West and the global economic architecture, investors face a separate set of dilemmas.
Investor reckoning
For the first time in modern history, global investment may be fractured along geopolitical lines. The world’s largest economy and the world’s largest single market will effectively be at war if America annexes Greenland. The global investment community will be split between those who are betting on America, and those who are betting on Europe. This in itself is not new. But what makes this time around different is that investors will be betting on one to beat the other, not as friendly competitors, but strategic rivals, similar to the US and China.
Equally important, the flow of money may very well be weaponized, putting investors in a dangerous position. For several years, the US has been imposing outbound investment controls. Except, the US controls target a single nation (China). Europe is eyeing similar legislation. However, Europe’s controls are open-ended: they can be applied to anybody (i.e., America). With the ACI, Europe could unilaterally halt European financial flows into the US market across the board.
Surrounding it all, the entire global economy could wobble. A single geopolitical move (i.e., US taking control of Greenland) would cause dozens of economies to bleed, crises that investors must navigate simultaneously. Calls may form in some economies for central bank intervention on the basis of geopolitical volatility (printing more money, buying assets), compounding inflation fears triggered by the US-EU tariff feud. All of this together would occur as the world economy inches towards a major recession (or depression).
And this is only the tip of the iceberg of what is possible and the kind of squeezes and ultimatums investors will face.
Conclusion
The era of certainty and stability is ending. A new age of disorder has begun - a line from my forthcoming book (to be announced soon). What America does with Greenland could set the stage for the rest of the decade and century, a turning point for the world.
Investors must view what is happening through this lens. They must apply this kind of gravitas and holistic thinking. Otherwise, snowballs will become curveballs, which will become avalanches.
As for the future of Greenland under US rule, a big debate left out of the conversation is Greenland’s name. Will it remain as is? Or, will the US redraw the map completely? If the latter, one possibility is that America could apply the same model to the “US Virgin Islands,” labeling Greenland as “US Arctic Territories” (USAT).
So far, investors have pushed aside geopolitics. Somehow, they have found stability in a rapidly destabilizing world. This, however, was never a foolproof strategy. It was a gamble that in the end, the economics would prevail over the geopolitics. The pulse of that tenet is slowing. The pulse of a new tenet is speeding up, where geopolitics, more than any other force in the world, trumps everything.
Are markets ready for the madness that follows?
-Abishur Prakash aka “Mr. Geopolitics”
Mr. Geopolitics is the property of Abishur Prakash/The Geopolitical Business, Inc., and is protected under Canadian Copyright Law. This includes, but is not limited to: ideas, perspectives, expressions, concepts, etc. Any use of the insights, including sharing or interpretation, partly or wholly, requires explicit written permission.