Attack the Week (ATW)
Multiplayer Systems / New Tariff Threats / Weekly Calendar / Charts / Allocation Update
Sunday Thoughts
Last week felt less like a sequence of isolated headlines and more like a single, widening shadow. Markets moved, but not decisively. Diplomacy spoke loudly, but said little. And the gap between narrative certainty and real-world uncertainty widened again. When the world feels like this, the temptation is to trade the noise. The better response is to listen for structure.
Geopolitically, pressure points continued to hum rather than explode. The Middle East remains a region where restraint and escalation coexist uncomfortably, and where every actor understands that the next move matters less than the reaction it provokes. Markets, characteristically, tried to reduce this complexity to a handful of prices — oil ticks, volatility nudges, safe-haven bids — yet none of these moves quite resolved the underlying question. That dissonance is the tell. When prices move without conviction, they signal not calm but unfinished business.
What stood out this week was not the magnitude of moves, but their asymmetry. Upside felt capped by disbelief; downside cushioned by policy reflexes and balance-sheet memory just as the earnings season commenced. This is late-cycle behaviour, not in the sense of an imminent crash, but in the sense of crowded positioning and fragile confidence. It is the kind of environment where being early is indistinguishable from being wrong, and patience becomes a position.
There is also a human element that markets keep rediscovering the hard way. Decision-makers are not algorithms; they are bounded by incentives, pride, domestic politics, and fatigue. The longer tensions persist without resolution, the more likely outcomes become path-dependent rather than optimal. For investors, that means scenarios matter more than forecasts. Preparing for a range of outcomes beats arguing for a single truth.
One additional lens that feels essential right now is the shift from a single-player to a multiplayer system. The tariff-driven world of “Liberation Day” economics was, in game-theory terms, closer to a one-agent optimisation problem: shock the system, force adaptation, and let others respond to a dominant move. Markets could dislike it, but they could model it. Today’s environment is different. We are firmly in a multiplayer game, where outcomes depend not just on actions but also on expectations about others’ expectations. In such systems, equilibrium is fragile. Concepts like Nash equilibrium assume rational agents and stable strategies, while refinements such as trembling-hand perfection remind us that even small mistakes or probabilistic deviations can shift outcomes entirely. Add incomplete information, domestic political constraints, and feedback loops through markets, and you get a system that is inherently more volatile and less predictable. Prices don’t move because one player acts; they move because many players hesitate, misjudge, or second-guess each other simultaneously. For investors, this means fewer clean reactions and more phase shifts—longer periods of apparent calm punctuated by sudden repricing when a presumed equilibrium quietly fails.
As the week closes, the sense lingers that we are between chapters. Not enough has happened to resolve anything, but enough has happened to change the stakes. In such moments, the discipline to do less—to observe, to prepare, to refine scenarios—can be the most valuable edge of all.
Just as I was writing the above, the Donald used another weekend to initiate another chessboard move. This time, he threatened a group of European countries with an initial 10% tariff from February 1, rising to 25% from June 1, unless his demands regarding Greenland are met—explicitly framed as a “complete and total purchase of Greenland.” In the eye of a still-hanging question over the legality of tariffs, I am not sure how credible this threat really is, but it will certainly test Europe’s resolve. Monday is a US holiday, so I would take the volatility, if any, with a healthy dose of scepticism.
Macro D has written his Trade Corner for January and presented 12 Macro FX trades he likes. In addition, he has written the popular piece “All Gates, All Barbarians”, which highlights the geopolitical tensions and potential consequences we as investors are facing. The second instalment will be published during the week.
Let’s now read more detailed thoughts on the latest US macro data, thoughts on Fed independence, and preferred Macro FX trade expressions before we analyse the weekly calendar, look at some interesting chart setups, and interpret the output of our weekly asset allocation model.
Let’s go! Have a wonderful week ahead.
