Last week markets quickly reacted to a jump in geopolitical volatility but appeared to quickly return to fundamentals. Markets sold off after the Trump administration escalated their push to acquire Greenland and threatened tariffs on several European trading partners, triggering the largest single-day decline in the S&P 500 since “Liberation Day” in 2025. Despite the initial shock, a tentative agreement around U.S. security interests in Greenland helped markets rebound, underscoring how quickly geopolitical narratives can shift. The dollar was a notable underperformer, posting its worst weekly decline since June as investors appeared to diversify internationally. Meanwhile, economic data remained solid, with unemployment claims low, consumer confidence improving, and consumer spending continuing to strengthen. Earnings season also kicked into gear, with roughly 80% of early S&P 500 reporters beating profit estimates. Small-cap equities continued to outperform early in the year, signaling growing investor confidence in broader earnings growth. Overall, improving growth, easing inflation pressures, and resilient earnings reinforced the case for diversification even amid the current turbulence in the geopolitical landscape.