The Hidden Order Behind This Age of Chaos

By Michael Salvatore, Editor, TradeSmith Daily

In This Digest:

A financial “world war” is brewing
The reality of Europe’s $9 trillion “kill switch”
How our top seasonality trader is already crushing 2026
What you missed from our CEO's morning webinar

An all-out trade war with Europe is in the cards…

The first shots rang out on Saturday, when President Trump threatened new 10% tariffs on imports from Denmark, Norway, Sweden, Britain, France, Germany, the Netherlands, and Finland, starting Feb. 1.

And he followed up with a threat to raise tariffs to 25% if there’s no deal for “complete and total purchase” of Greenland by June 1.

In response, French president Emannuel Macron proposed firing the EU’s so-called trade bazooka – its Anti-Coercion Instrument.

It gives the bloc the ability to respond to economic threats – with tariffs, but also with investment limits and export controls.

That could include restricting access to advanced technologies – only made in the EU – that the U.S. relies on. Chief among these would be certain semiconductor manufacturing tools, made by the likes of Dutch semi giant Advanced Semiconductor Materials Lithography (ASML).

In an extreme scenario, it could even bar U.S. companies from operating in the European market.

And that could be just the opening salvo in what becomes a financial “world war.”

Europe has significant financial leverage over the U.S.…

European governments, institutions, and investors hold an estimated $7–9 trillion in U.S. stocks and bonds.

These holdings are spread across official government reserves, sovereign wealth funds, public and private pensions, insurance companies, asset managers, and individual investors.

That includes a large chunk of the U.S. Treasury market. Foreign investors hold about $7.5 to $8 trillion in U.S. Treasurys overall, with European holders accounting for roughly $2.5 to $3 trillion of that total. About 40% of all foreign-held Treasurys is concentrated in Europe.

Now, despite what the past weekend’s headlines suggested, no serious analyst expects Europeans to suddenly dump U.S. stocks as a way to flip Trump the bird. That has great potential for harm not just to the U.S., but to European investors as well. Not to mention the next retaliation from the White House.

But these institutions could slow down new investment to U.S. assets, rebalancing portfolios toward domestic or strategic European priorities. That could apply in specific sectors and stocks.

The most likely pressure point would be Europe’s sovereign wealth funds – because, unlike private investors, they’re run by governments.

Thanks to its large undersea oil reserves, Norway’s sovereign wealth fund alone manages about $1.6 to $1.8 trillion in assets. And other European sovereign and strategic investment funds add another $700 billion to $1 trillion.

Taken together, that’s still a small fraction of $110 trillion value of U.S. stock and bond markets.

But if these funds targeted particular industries, companies, or technologies – especially in politically sensitive areas like defense, energy, or big tech – they could have a meaningful impact.

We don't pretend to know what's on the minds of Europe's financial elites…

But we do know that our Age of Chaos thesis is alive and well in 2026.

Longtime readers will know that the Age of Chaos is our way of describing what happens when the global order breaks down… currencies are debased (aka inflation)… and we see the biggest, fastest technological change ever – all at the same time.

That’s the weight economies and financial markets have been straining under since the 2020 pandemic. And it’s why we’ve been warning you that the 2020s are shaping up to be one of the most turbulent, volatile, and chaos-filled decades of our lifetimes.

But beneath the surface noise and volatility the Age of Chaos produces, human behavior still follows repeating patterns and cycles.

Farmers still plant, harvest, and rotate their crop in seasons that offer the best weather conditions.
Energy markets also shift dramatically as demand rises with winter heating and summer cooling – then falls in between.
Gold prices are also higher at certain times of year when shoppers are buying jewelry… or central banks are buying gold… or annual festivals spike demand in India and China.

Commodity traders place very lucrative bets accordingly.

And stock traders can do much the same, as we’ve shown with our breakthrough Seasonality software.

By focusing on underlying seasonal cycles in stocks, you can find order, opportunity, and clarity – even when the world feels increasingly unstable.

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Our Trade Cycles folks know how to handle the Age of Chaos…

Since Jan. 6, they’ve had the chance to get in and out of five trades that lasted no longer than 10 days.

Four were winners, and only one was a loser. On average, these trades returned 9.7%.

That’s compared to an S&P 500 that is, as of this morning, completely flat for the year.

Our subscribers had the chance to take part not by trading news headlines, but by following the regularly recurring patterns our Seasonality algorithm has unearthed after crunching more than 2.2 quintillion data points over decades of market history.

Like this seasonal pattern in Advanced Energy Industries (AEIS), which makes power control systems for chip-making equipment and data centers…

From Jan. 5 to Feb. 17, AEIS has risen in all but two of the past 15 years. And counting both winners and losers, it’s delivered a 9.4% gain during this bullish seasonal window.

Trade Cycles editor William McCanless spotted this seasonal pattern at the start of the month and recommended a set of trades based on it.

William typically recommends simply buying shares of any given trade. And for more experienced readers, he’ll also recommend an options trade. Often, he’ll even give you a multi-leg options spread that’s designed to limit risk.

His AEIS stock recommendation rose 11.6% in just seven trading days. And his risk-capped options trade recommendation gained 18.1% over that same stretch.

For more from William on how he trades seasonal patterns like this, you can catch my Saturday interview with him right here.

Here’s another example of a seasonal trade, this time in Onto Innovation (ONTO), which makes quality-control gear for chipmakers…

This stock’s seasonal pattern is shorter and even more consistent. For all but one of the past 15 years, ONTO has risen between Jan. 9 and Feb. 3, for an average return of 7.7%.

Shares of ONTO gained 16.7% in just four days before William recommended closing out. And the options trade gained 38.2%.

There are dozens more seasonal trades flashing green right now…

They’re the subject of a research presentation our CEO, Keith Kaplan, gave this morning.

He walked through decades of data showing how thousands of stocks follow surprisingly consistent seasonal patterns – specific calendar windows when certain tend to move higher or lower.

These patterns have shown up through crashes, bear markets, interest rate shocks, and political chaos.

Folks who joined Keith saw real examples pulled directly from our Seasonality algorithm and watched how stocks reliably move higher during seasonally bullish windows, even when the market is struggling.

Over our 18-year backtest, these seasonal trades delivered 857% in total growth. That’s more than twice what the S&P 500 delivered over the same time.

Even in 2007, the worst year in our testing, we saw an average gain of 2.5% per trade and an average annual return of 37.9%. That’s close to four times the long-term average annual gain of the S&P 500.

Keith also showed why Jan. 28 is shaping up to be a critical day for volatility in 2026 and how you can use seasonality to manage your risk instead of reacting after the damage is done.

Finally, he unveiled a new kind of investing strategy that revolves around trading only stocks with superior seasonal windows. The select few that, together, offer the best risk/reward potential at any given time.

The Hidden Order Behind This Age of Chaos