Trump’s Threats Over Greenland Send Stock Markets Diving

0:28Some of the best lessons don't come from a classroom.

0:33President Trump's threats around Greenland rattle European leaders and U.S. markets. This reintroduces the possibility that the president could levy tariffs against any country, any way, at any time. And I think that has spooked a lot of investors. Plus, a new AI coding tool is making developers excited, but also nervous. And Netflix says that revenue and profit grew in its latest quarter as subscriptions topped 325 million. It's Tuesday, January 20th. I'm Alex Oselev for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:16President Trump's threat of tariffs on European allies as part of his effort to get his way over Greenland is causing strong reactions from European leaders. At the World Economic Forum in Davos, Switzerland, Ursula von der Leyen, the president of the European Commission, said today that Greenland's sovereignty was, quote, non-negotiable. First principle, full solidarity with Greenland and the kingdom of Denmark. the sovereignty and integrity of that territory is non-negotiable. She warned of a, quote, dangerous downward spiral in the transatlantic partnership. Meanwhile, Greenland's prime minister said that the island must be ready for the U.S.

1:54to resort to military force. And one of Germany's highest-ranking military officers warned that the rift between the U.S. and Europe is making NATO vulnerable to a Russian attack. The rift could also come with economic consequences. If President Trump does implement the tariffs, some$100 billion worth of American exports, like Boeing planes and bourbon whiskey, could get caught in the crossfire if the EU retaliates. EU officials say they are prioritizing dialogue with the Trump administration to avoid escalating the situation. Speaking at the White House this afternoon, President Trump didn't back off his desire to acquire Greenland.

2:30He expressed confidence that he could reach a deal, saying that he has a lot of meetings scheduled in Davos on Greenland and, quote, quote, I think things are going to work out pretty well. Also in that press conference? How far are you willing to go to acquire Greenwood? You'll find out. President Trump is expected to head soon to Davos, where he's scheduled to speak tomorrow. Trump's comments roiled U.S. markets. Major indexes fell sharply, with the Nasdaq tumbling 2.4 percent, the S &P dropping 2.1 percent, and the Dow losing 1.8 percent. The S &P is now down 0.7 percent year-to-date, the first time in 2026 that the index is down for the year.

3:07And silver and gold futures hit new records as investors sought safe haven trades. WSJ Marcus reporter Hannah Aaron-Lang says we've seen this before. Basically what we're seeing is a smaller scale version of the dynamic that we saw take place last April when Trump initially unveiled his first round of tariff plans. We're seeing that kind of sell America trade dynamic take shape a little bit again today. It almost feels like tariffs is kind of a trigger word on Wall Street, as one of my sources put it to me today. This recent development with Trump and his rhetoric about Greenland and fresh tariff threats against European trading partners reintroduces the possibility that the president could levy tariffs against any country, any way, at any time.

3:52And this has just sparked some renewed trade war fears on Wall Street and unsettled folks about what could lie ahead in 2026.

4:04In other news, foreign leaders are responding with caution to an invitation to join President Trump's Board of Peace. While the group was established by Trump to support the reconstruction of Gaza, it now has a broader mission to mediate global conflicts. And in remarks at the White House this afternoon, the president cast the Board of Peace as an alternative to the United Nations. It would carry a$1 billion fee for governments with a permanent seat as members. Around 60 governments have received invitations to join the board. And while the leaders of nations including Belarus, Hungary, and Morocco have said they'll join, some, such as the United Kingdom and Russia, are still deliberating.

4:41Others, like France, plan to decline. Coming up, Silicon Valley gets clodpilled. And do supersized CEO pay packages guarantee super results? That's after the break.

5:02There's a new tool taking the AI world by storm. It's called Claude Code, made by the company Anthropic. Developers are using it to complete complex projects much faster. And non-engineers are posting on social media about building their first software program without learning a lick of code. Even in an age with an abundance of powerful AI tools, Claude has got people buzzing. Brad Olson covers technology for the journal and is here to tell us why. Brad, it's not new exactly that tech companies are using code writing AI in their workflows. What's different about what Cloud Code can do? Why are engineers so excited?

5:38So Cloud Code has existed for a while, and it's something that can write software for any software engineer. And people were always impressed with it. And then in November, Anthropic releases the most updated model of Cloud, Opus 4.5. A lot of coders and software engineers are just blown away. Like they just are starting to say, I can't believe that I just told it what to do. And then it produced kind of the workload that I might have done myself in a fairly limited period of time. All these software engineers are talking about it. And then people who aren't coders start to download it. And not only do they try it for coding and making websites and apps and stuff like that, They also just start using it to do data analysis and other kinds of tasks.

6:25And so it's like an awakening of capability that some people are comparing to the moment when ChatGPT was released. In your story, you write that developers and other users are, yes, very excited about CloudCode, but they're also kind of freaked out. Why is that? One startup executive said, I've been doing this since middle school, and it just completely shocks me. You know, the person went to Brown Ivy League education and has an expertise that he's built up over his entire life. To see a software program kind of fully automate that or come very close to automating that was just deeply shocking to him.

7:03And are people worried about how this might affect companies hiring decisions? Obviously, these capabilities are extraordinary, but it's hard to know exactly how companies will respond. You know, do they lay off developers or do they try to get their developers to be 10 times more productive with these tools? We don't know. And every individual company is making its own decisions. Anthropic, which makes cloud code, is expected to go public this year. What does the tool's success mean for Anthropic's future? They have focused on enterprise and business. And so they have what they believe is a path to profitability, success among enterprise users, and then having people talking about how they're using this stuff is part of that.

7:48And I think will help offer some momentum. That was WSJ Deputy Tech Bureau Chief Bradley Olson. Thanks, Brad. Thank you.

8:00The latest on the possible sale of Warner Brothers Discovery? Netflix has struck a new all-cash deal to buy Warner's studios and HBO Max streaming business. This replaces its previous cash and stock deal and is still valued at$72 billion. That could convince some shareholders to choose the Netflix bid over Paramount's all-cash hostile offer of$77.9 billion for all of Warner. Warner and Netflix say they expect Warner shareholders should be able to vote on the deal by April. Meanwhile, Netflix reported increased revenue and profit in its fourth quarter compared with the year before. Its results topped analyst expectations.

8:38Popular series such as the final season of Stranger Things boosted viewership of the company's originals and subscriptions topped$325 million. For more on Netflix's earnings, check out WSJ.com.

8:53Does big pay for CEOs mean big returns for their employers? Dozens of companies, such as KKR, Rivian, Roblox, and Robinhood, have bet on it, hammering out$100 million-plus moonshot pay packages with their chiefs in recent years. But it's looking like promising CEOs the moon hasn't always been a great way to get out-of-this-world results. Tao Francis covers corporate news and executive compensation at the Journal. So, Teo, it seems like all this kind of stems back to that Elon Musk pay package from 2018, the billions of dollars in stock options that Tesla offered him. What kind of precedent did that set for some of these other companies?

9:29I think that really sparked this trend. I mean, it was after that that a number of other companies came in with really similar structures. What really distinguishes these is that they're valued really highly to begin with, but they have the potential to really balloon. And that's because they're tied to performance targets for the company. Often these are stock price or market capitalization targets. So it's a combination of a big award, a longer time period. Often these are five to ten years in duration. And then also this potential for these performance targets to really get a lot bigger. So the companies that I rattled off in the intro, KKR, Rivian, Roblox, Robinhood, these are not the biggest of the big companies, like maybe not the ones I would have expected to be offering these$100 million pay packages to their CEOs.

10:23What do these companies have in common? Some of these are startups. And one of the things that startups have is a lot of leeway from investors in setting pay packages. And founders also often have bigger or more unusual pay packages. We're talking about a relatively small number of companies. Over this two-year period, there were about 20 companies that adopted this kind of nine-figure swing-for-the-fences pay package. Fair enough. And this new analysis by the compensation data firm Equilar looked at just two years, 2020 and 2021. How many of the CEOs of those 20 companies actually hit the goals that were laid out for them, and how many just gave up on those goals completely?

11:04It's a mixed bag because you can't just point to one set of results, right? You have about 10 of these companies where we don't really get an answer. That is, the executive either stepped down from the CEO role or the company was acquired or in one case the company went bankrupt. So there's four CEOs at three companies, KKR has co-CEOs, that have completed their contracts. Those four CEOs hit all the targets. The contracts have paid out, essentially. So for the companies that did have these big pay packages for their CEOs, how did the companies actually do? Only about a quarter of them outperformed the S &P 500, if you look from the point at which the equity awards were made through December 5th, or in the case of companies that were acquired through the acquisition.

11:53So if these moonshot pay packages are supposed to spur CEOs to drive their companies to greater heights, it's not clear that that worked in most of these cases. That was WSJ Special Writer. Teo Francis. Thanks, Teo. Thank you. And that's what's news for this Tuesday afternoon. Today's show is produced by Pierre Bien-Aimé with supervising producer Tali Arbel. I'm Alex Ossola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.