Welcome back to The Breakdown with me, NLW.

It's a daily podcast on macro, Bitcoin, and the big-picture power shifts remaking our world.

What's going on, guys? It is Wednesday, January 21st, and today we are talking about a macro market crash. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the breakers discord. You can find a link in the show notes or go to bit.ly.combeckx breakdown pod. Hey friends, quick notes, I am dealing with a family emergency down in Florida this week, so the shows are a little bit wonky, they might be out at weird times and they might be a little bit shorter than normal. Apologies for that, but we will try to continue getting you this content. Now to this show, markets are crashing as the world order unravels. How about that for a starting line? This week has seen a huge sell-off with the S&P falling 2% on Tuesday, which is its worst day since October. Stocks, bonds, the dollar, are all going down together to find traditional correlations, which could be the start of a major macro event. Now, sometimes drawdowns are difficult to diagnose, with a range of conflicting causes being debated in the headlines. It's rarely

correct to point to a single driver, with many theories being possible all at once. But occasionally

there's a moment where each cause is actually a small part of a much broader shift that's happening

in the world, a regime change in both markets and global systems. This macro event certainly feels like

one of those moments, with the U.S. government deliberately and irrevocably changing the terms of the global order. Commerce Secretary Howard Lutnik said as much during his appearance at the World Economic Forum in Davos on Tuesday. Lutnik declared, the Trump administration and myself are here to make a very clear point. Globalization has failed the West and the United States of America. It's a failed policy. More concretely, the immediate drivers that most are pointing to are Trump's threatened annexation of Greenland and disruption in the Japanese bond market. But both of these seem like symptoms of the global order that govern the post-Cold War era coming apart. And that, of course, didn't happen all in one weekend. The Trump administration has been discussing the concept since the beginning of their campaign. You could even trace this notion back to the Russian invasion of Ukraine, the pandemic, or even earlier. What changed

this week was that the cracks turned into a yawning split. It's no longer possible for markets

to shrug off the fractures that make the state of the world far less certain. Still, many

debated whether to blame the Greenland annexation or troubles in Japan. Even Treasury Secretary

Scott Besson weighed in on the issue, stating in an appearance on Steve Bannon's war room, I believe markets are going down because Japan's bond market just suffered a six standard deviation move and 10-year bonds over the past two days. He noted that it's spilling across all bond markets. German yields are up, French yields are up, U.S. yields are up, and global markets are being rocked to their core. Besson added, it's mostly the Japanese bond market. It has nothing to do with Greenland. But of course, the move has everything to do with Greenland, as these are all symptoms of the same thing. From Japan to Europe to the U.S., the rules that once govern the world are being erased, and markets don't know what comes next. Let's speak about Greenland for a minute. While the president has had

his eyes on the territory for the better part of a year, the latest turning point came exactly a

week ago, when Trump posted, the United States needs Greenland for the purpose of national security.

A lot has happened in the past week, but the Cliff Notes version, German forces have now been

deployed. Trump has announced 15% tariffs on Europe to begin next month, escalating to 25% in June. Speaking from Davos on Tuesday, Besson told the press conference, I would say this is the same kind of hysteria that we heard on the 2nd of April. There was a panic. What I am urging everyone here to do is sit back, take a deep breath, and let things play out. The worst thing countries can do can escalate against the United States.

Now, to say that European leaders are shocked is an understatement. However, the clearest message came from Canadian Prime Minister and former central banker Mark Carney, who said,

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 forced asymmetrically, and we knew

that international law applied with varied rigor, depending on the identity of the accused or the victim. This fiction was

useful, and American hegemony in particular helped provide public goods, open sea lanes, a stable

financial system, collective security, and support for frameworks for resolving disputes.

This bargain no longer works. Let me be direct. We are in the midst of a rupture, not a transition.

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