A foreign affairs kerfuffle over Greenland set the stage for the annual World Economic Forum in Davos, Switzerland, with heightened global competition helping to define the 2026 outlook. In a push for a Greenland deal, President Donald Trump issued a threat over the weekend to impose new tariffs on some European countries. The news appeared to ratchet up tensions on both sides of the Atlantic while roiling markets, as investors wrestled with renewed tariff threats and other potential dominos to fall. On Wednesday, President Trump said he was calling off the tariff plan after negotiations over a framework agreement.

The Greenland drama sits at the intersection of several forces driving change across the global economy, from national security considerations to a realignment in trade and competition for critical resources. Even as investors await word on the president’s nominee to lead the Federal Reserve, fiscal policy moves and their effects on financial markets have taken a leading role in the investment outlook. An era of fiscal dominance will likely have repercussions for monetary policy, deficits and interest rates in the U.S. and other major economies.

PGIM’s The Year Ahead explores key themes for 2026 and how they are reshaping economies, markets, and the opportunity set for investors.