Citigroup just downgraded European stocks for the first time in over a year, and their reasoning is... the U.S.-Denmark spat over Greenland. I'm calling it: this smells like an excuse.

According to Bloomberg, Citi analysts cited "worsening relations between Brussels and Washington" as their primary concern. Here's what makes me skeptical: European stocks have been outperforming U.S. stocks. That's literally mentioned in the Reddit discussion that flagged this story.

So let me get this straight: European equities are doing well, and Citi's response is to downgrade them because of a geopolitical crisis that just started this week? That's some impressive timing.

Here's what Wall Street analysts don't like to admit: Sometimes downgrades are about protecting their own positioning, not helping you make money. When a market is outperforming and you missed it, one way to save face is to call the top.

Don't get me wrong - the U.S.-Denmark situation is serious, and NATO fractures could absolutely impact European markets. But ask yourself: If this Greenland crisis is such a game-changer for European stocks, why wasn't Citi warning about deteriorating U.S.-Europe relations before Europe started outperforming?

The pattern you should recognize

This is classic Wall Street: When they miss a rally, they find a reason to call it overextended. When U.S. tech stocks surge, it's "innovation and growth." When European stocks rally, suddenly geopolitics is an urgent concern.

I've covered markets long enough to know the game. Analysts are rarely held accountable for wrong calls. If European stocks keep climbing despite Citi's downgrade, they'll quietly upgrade again in a few months and nobody will remember. If stocks fall, they'll claim they "called it."

Here's what actually matters: European valuations are cheaper than U.S. stocks, their central bank has more room to cut rates, and the energy crisis that hammered them in 2022-2023 has eased. Those fundamentals don't change because of a diplomatic crisis that might blow over in weeks.

What you should do

If you own European stocks or funds, don't panic-sell because Citi changed their rating. Do your own homework. Are the companies you own exposed to U.S. trade? Are they defense-related (which might actually benefit from NATO tensions)? Are they domestic-focused?

The Greenland situation is worth monitoring, but it's not a reason to reflexively dump European exposure just because one bank's analysts said so. Especially when that same bank had a buy rating last week.

If they can't explain why this crisis changes the investment thesis more than any other geopolitical risk we've lived with for years, they're probably just covering their own missed call.