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- The US carried out a targeted strike on Venezuela, capturing President Nicolas Maduro and his wife. They were taken to the US and indicted on drugs charges in New York. The strikes are the culmination of a period of pressure on the Maduro regime along with the use of military resources built up in the region to attack alleged drug shipments leaving Venezuela bound for the US. The US claimed Maduro himself was the leader of the ‘Cartel de los Soles’ criminal group. Back in December, President Trump ordered a “complete blockade” of oil tankers under sanctions that enter or leave Venezuela. The US had deployed a dozen warships, including its newest and largest aircraft carrier, along with 14,000 troops and F-35 fighter jets.
- President Trump said the US will “run” Venezuela “until such time as we can do a safe, proper and judicious transition”. Vice President Delcy Rodriguez was granted presidential powers on an interim basis by the Supreme Court, with President Trump saying Rodriguez would “pay a very big price” if she did not meet America’s policy demands but was “essentially willing to do what we think is necessary to make Venezuela great again”. Trump insisted the US was “in charge” and played down the idea that opposition leader (and 2025 Nobel Peace Prize winner) Maria Corina Machado, should lead the country, suggesting “she doesn’t have the support or respect within the country”.
- President Trump again raised the prospect of the US ‘acquiring’ Greenland, saying last weekend “we need Greenland from the standpoint of national security”. Danish Prime Minister Mette Frederiksen said she took the threats seriously and “if the US chooses to attack another NATO country militarily, then everything stops, including NATO”. The White House said “a range of options” are being considered to acquire Greenland and that using military force “is always an option”. The leaders of the UK, France, Germany signed a statement alongside Denmark, and others reiterating “Greenland belongs to its people. It is for Denmark and Greenland, and them only, to decide on matters concerning Denmark and Greenland. NATO has made clear that the Arctic region is a priority, and European Allies are stepping up”. NATO secretary-general Mark Rutte commented that NATO “collectively has to make sure the Arctic stays safe. We all agree that the Russians and Chinese are more active in that area… the Danes are totally fine if the US would have a bigger presence [in Greenland] than they have now”. The US has an established base on the island under a 75-year-old defence agreement; from a cold war peak of over 10,000 troops, the base currently has fewer than 200 soldiers.
By the numbers
- 4.3% – the pace of US economic growth in Q3 of 2025, much higher than the expected level of 3.2% and the fastest in two years. The US economy accelerated from annualised growth of 3.8% in Q2 and a contraction of 0.5% in Q1. Consumer spending grew by 3.5% annualised while business investment climbed by 2.8%.
- 17% – Venezuela’s share of global oil reserves. Venezuela claims 303 billion barrels of proven oil reserves. For some context Saudi Arabia has 267 billion, Canada has 170 billion… and the USA 46 billion. But Venezuela produced only 0.8% of global crude oil supplies in 2023. Recent years have seen exports impacted by both sanctions, as well as a lack of investment by the state-run oil company, meaning production in Venezuela has declined by around 65% over the past 20 years.
Market movers
Financial markets were unfazed by the geopolitical dramas with indices in the US, UK, Europe and Japan hitting record highs during the week. The biggest moves came in Venezuelan bonds, with 2027 maturities up by 29% to 42.5 cents on the dollar. US energy stocks also rallied; of the oil majors, Chevron, already established in Venezuela, led the way. Gold resumed its strong performance seen in 2025. The oil price initially declined, then reversed the move on expectations any improved supply is actually a long way off, and indeed supply could be curtailed in the short term. News broke that Venezuela had agreed to export up to $2bn worth of crude oil to the US in a deal that redirects exports oil previously destined for China. President Trump posted on social media that Venezuela would be “turning over” 30-50 million barrels of “sanctioned oil” to the US and that “this oil would be sold at its market price, and that money will be controlled by me, as President of the United States of America, to ensure that it is used to benefit the people of Venezuela and the United States”. With export routes currently closed due to the US embargo on shipping that started in December, Venezuela is running out of oil storage facilities. Running out of storage would bring a halt to production which would then take time to re-start. Around a dozen US oil tankers are sailing towards Venezuela or are already docked.
The investment lens
While economic fundamentals are benign and the outlook for 2026 is a positive one, the geopolitical backdrop is more unsettling. The first twelve months of ‘Trump 2.0’ has seen the US conducting military operations in Somalia, Nigeria, Iraq, Iran, Yemen, Syria and now Venezuela. The interventions give weight to President Trump’s comments over other countries and territories including Mexico, Cuba, Colombia, Canada and Greenland. As we have seen previously with tariffs, Trump may leverage the threat of intervention to meet his policy goals.
The US National Security Strategy published late last year emphasises US dominance of the western hemisphere and an evolution of the ‘Monroe Doctrine’ written in the 1820s to ensure US dominance over external interference. For European leaders, the erosion of trust in a key military and political ally should be concerning It would appear that the US, China and Russia are all cultivating their geographical ‘spheres of influence’, with limited deference to international law or, notably in the case of the US, seeking authorisation from Congress. The uncertain backdrop suggests that we are in for an extended period of heightened geopolitical tensions, and higher defence spending. President Trump this week proposed increasing the US defence budget from a record $900 billion this year up to $1.5 trillion.
In terms of Venezuela, the regime beneath Maduro appears intact, with no clear ‘day after’ or transition plan other than threats of further interventions in the absence of co-operation and there appears to be no prioritisation of a return to democracy. Interim President Delcy Rodriguez has been insistent her government is in charge and not beholden to Washington. Over time we will learn if that is correct. History shows that ‘regime change’, if this is what it is, generally never progresses as intended. The recent US track record in Haiti (1994), Afghanistan (2001), and Iraq (2003) shows that the removal of the leadership is the ‘easy’ part of the process.
So, we start the year with plenty of geopolitical unknowns. But this contrasts with a backdrop for financial markets of strong economic and corporate fundamentals, and our positioning is still positive. The economic outlook still looks reasonable – economic growth on a par or potentially stronger than last year, solid earnings growth, easing inflation and a backdrop of loose or loosening monetary policy. We remain slightly overweight risk expressed via equities with our positioning under regular review.
