Moneycontrol Pro Weekender | The Wacko Trade

-

Dear Reader,

This week, the shadow of Donald Trump loomed large over the gathering of the rich and powerful at Davos. Business leaders as well as politicians pushed and shoved to hear the great man’s utterances.

The person who received a standing ovation, though, was Canada’s Prime Minister Mark Carney, who spelt out, in a remarkable address, the perilous path that most nations will have to navigate in Trump’s Brave New World, and how to travel that road.

It’s best to let the two great leaders speak for themselves—here are some extracts from their speeches.

Donald Trump

“And I know so many people from Switzerland, incredible place, incredible, brilliant place, but I didn't realize that they're only good because of us.”

“Everybody took advantage of the United States.”

“Can you believe that Somalia… they turned out to be higher IQ than we thought.”

“I said, ‘Here's a story, Emmanuel, the answer is, you're going to do it. You're going to do it fast. Then if you don't, I'm putting a 25% tariff on everything that you sell into the United States, and a 100% tariff on your wines and champagnes’.”

“So, we want a piece of ice for world protection. And they won't give it. We've never asked for anything else, and we could have kept that piece of land, and we didn't. So, they have a choice. You can say ‘yes ‘and we will be very appreciative, or you can say ‘no’ and we will remember.”

Mark Carney

“It seems that every day we're reminded that we live in an era of great power rivalry, that the rules based order is fading, that the strong can do what they can, and the weak must suffer what they must... faced with this logic, there is a strong tendency for countries to go along to get along, to accommodate, to avoid trouble, to hope that compliance will buy safety. Well, it won't.”

"We’re pursuing variable geometry. In other words, different coalitions for different issues based on common values and interests... creating a dense web of connections across trade, investment, culture on which we can draw for future challenges and opportunities.”

"In a world of great power rivalry, the countries in between have a choice: compete with each other for favour, or combine to create a third path with impact."

And here’s Trump’s reaction to Carney’s speech: ‘I watched your Prime Minister yesterday, he wasn't so grateful... Canada lives because of the United States. Remember that Mark, the next time you make your statements.” Carney has been walking his talk, by signing a new trade agreement with Beijing, a move that threw a wrench in Trump’s wanting to keep the hemisphere as a US backyard.

If you’re puzzled about the nature of the game at Davos, we tried to answer that question in ‘The Metamorphosis of Davos Man’. Of course, The Rolling Stones had a darker answer in their song, ‘Sympathy for the Devil’ decades ago.

The takeaway for the markets from Trump’s speech was his backing down from using force to acquire Greenland. The markets rejoiced but, as this FT story, free to read for Moneycontrol Pro subscribers, said: “Europeans, Canadians and other American allies will not forget the Greenland episode. It has crystallised many of their fears and resentments about the US.” My colleague Shishir Asthana wrote about the India’s climate report card. As this FT article said, “The US has squandered its most valuable financial asset: trust.”

There has been much talk about the TACO (Trump Always Chickens Out) trade. But maybe a better trade would be to buy when Trump makes a new threat, sell when he backs down and repeat. Instead of TACO trade, this could, given Trump’s personality, be named the Wacko trade.

On a more serious note, my colleague Anubhav Sahu wrote about how to navigate financial markets in the year of the ‘Donroe Doctrine’. His key point — investment hurdle rates for Return on Equity need to be much higher. We also curated a basket of defence stocks that would be a strategic bet for long-term investors in these turbulent times. For individual stock recommendations, do look at our ‘Stocks’ links below.

Indian markets have started the year on a sour note, underperforming the MSCI Emerging Markets Index, thanks to relentless selling by foreign portfolio investors. We wrote about how the INR has been ‘Tariffed and Tokyoed’.

However, the State of the Economy report in this month’s RBI Bulletin says, “The current state of the economy provides ground for optimism.” This is borne out by the Flash or Advance Purchasing Manager’s Index (PMI) for India for January 2026, which shows a recovery in private sector growth momentum.

As for the external sector, the State of the Economy report points out, “India has made significant efforts to diversify and strengthen its exports, aiming to mitigate external sector risks. The country is currently engaged in trade negotiations with 14 countries or groups, representing nearly 50 nations.” Great hopes are placed on an EU-India deal being signed next week.

Perhaps, in sketching the “third path” for middle powers at Davos, Carney has quietly taken a leaf out of the Indian playbook — diversified partnerships to secure strategic autonomy.

Cheers,

Manas Chakravarty

In case you missed them, here are some of the other stories and insights we published this week, apart from our technical picks in the equity, commodity, and forex markets:

Stocks

Weekly Tactical Pick: Why this defence shipyard play looks interesting after correction, Eternal, Ixigo, PNB Housing Finance, E2E Networks, Why ICICI Prudential AMC trades at a valuation premium to HDFC AMC, Indigo, Dalmia Bharat, Persistent Systems, ITC Hotels, HDB Financial, SRF, HEG demerger, Shadowfax Technologies IPO, LTIMindtree, Havell’s, Tata Capital, RIL, HDFC Bank, ICICI Bank, Tech Mahindra, Federal Bank, Wipro, Polycab

Markets

Q3 FY26 scorecard so far – Opportunity or value trap?

Gold, silver ETFs tumble up to 21% after record rally amid easing Trump tariff concerns: What lies ahead?

As mid & smallcaps kick off 2026 on a rough note, is this the time to spot multi-bagger jewels?

Is the Nifty at a double top?

P/E above 1,000? How Shadowfax stacks up against Delhivery and Blue Dart

One-fifth of Nifty 50 stocks see flat to negative returns over three years

Fund managers flag short-term pain but remain confident on Indian equities despite market rout

Financial Times

Lessons for business in Trumpian uncertainty

Emerging markets are a better gauge of investors’ mood than gold

Tariffs and the US Supreme Court: Watch what happens next

The dangerous triumph of neo-mercantilism

Budget Snapshot

What should taxpayers, investors expect from the Union Budget?

Are divestment targets set only to be missed?

Can the Budget extend India’s consumption upcycle?

Will the Budget continue to have a strong push for capex?

Tariff reset must ensure smarter shield, not higher walls

For defence, execution matches allocation

Can India build the financial backbone for its climate ambitions?

Optimism masks the struggling affordable housing story

The wide gap between India’s healthcare needs and delivery capacity

What bank credit data for small firms tell us

How a Sunday Budget stiffens our collective spine

Companies & Sectors

With no tariff break, textile mills grapple with falling fortunes

India is making its mark in clinical trials amid changing global landscape

RBL Bank

Acquisition moves of Sun, Zydus point to Indian pharma’s shift from generics to biopharma

What the latest banking results tell us

Affordable urban housing holds key to continued rapid economic growth

Economy & Policy

Substance over Form: Supreme Court redefines treaty benefits for foreign investors

India’s climate report card signals structural policy challenges

Pro Economic Tracker

Geopolitics & Geoeconomics

India’s presidency of BRICS offers both threats and opportunities

Beyond the Headlines: IMF report reveals stark divergence between gloom narrative and steady growth

Tech & Startups

Startup Street | Will SC’s Tiger Global judgment curb Indian startups' animal spirits?

Groww trims derivatives reliance to 53% of revenue in Q3 amid diversification push

LTIMindtree to close FY26 with 8,000 freshers onboard; CEO Venu Lambu says ‘future of IT hiring is skill-based’

Others

Personal Finance | The pros and cons of risk-adjusted returns in SIFs