Hello Morning Bid readers!
Welcome to the first week of the year – and what a week it has been. The audacious U.S. raid to arrest Venezuelan President Nicolas Maduro has dominated headlines, along with President Donald Trump’s renewed talks about “acquiring” Greenland – potentially via payments to the Arctic island’s citizens.
The broad market implications of all this geopolitical drama have been limited thus far, with the S&P 500 ending essentially flat on Thursday after moving around only modestly this week. However, a U.S. aerospace and defence index hit an all-time high yesterday, as did European defence shares.
Of course, when news of the U.S. strike in Caracas hit on Saturday, most investor attention turned to the energy markets. Venezuela (as I’m sure you’ve read this week) is home to the world’s largest oil reserves, some 300 billion barrels, around one-fifth of the global stock.
Crude prices tumbled earlier this week, with Brent closing below $60 a barrel on Wednesday on expectations that more oil will be added to an already well supplied market. But prices have since recovered.
The initial winners of the U.S. actions in the Caribbean will likely be oil refineries along the U.S. Gulf Coast, which were built decades ago to process heavy-grade crude – the type Venezuela exports.
Indeed, Caracas has already agreed to export up to $2 billion worth of Venezuelan oil to the U.S. – a shift that will come largely at the expense of China, which became the main importer of Venezuelan oil after Trump imposed sanctions on the country’s energy industry in 2019.
The potential to increase Venezuela's oil production is enormous, but doing so could take years and billions of dollars. So even though President Trump has claimed that U.S. energy companies will have the opportunity to revive Venezuela’s derelict oil industry, it’s an offer they may want to refuse.
While there were likely many motives behind America’s actions in Caracas, one little-discussed factor could be the White House's concerns about the waning global prominence of the "petrodollar" – a tool that has long helped the U.S. maintain its dominance in the global financial system.
Ultimately, Trump’s words and actions this week suggest that investors may want to start taking the White House’s national security strategy released last year a bit more seriously.
Away from geopolitics, markets this week got some of the first “clean” U.S. labor market data since the government shutdown last fall – but the picture it painted is far from clear.
The JOLTS report showed that U.S. job openings fell to a 14-month low in November while hiring remained sluggish. And ADP's national employment report noted that private employment rose by 41,000 jobs last month after dropping by 29,000 in November.
The clearest snapshot of the U.S. labor market will be released on Friday: the December non-farm payrolls. They’re expected to show a drop in the unemployment rate to 4.5% from 4.6% in November.
None of this data is likely to move the needle much for the Federal Reserve, however, as the deeply divided policymaking body considers the future path for interest rates.
And, ultimately, the biggest news for markets on Friday may be the Supreme Court ruling on the legality of President Donald Trump's global tariffs – which could come later today.
Finally, in merger news, the metals world today learned that Rio Tinto is reportedly in early talks to buy Glencore in what could create the world's largest mining company with a combined market value of nearly $207 billion.
For more commodities and markets news, check out Reuters Open Interest. You can learn why China has found itself in an unusual competition with the U.S. over spare copper and learn what may be most likely to spoil Wall Street’s party in 2026.
As we head into the weekend, check out some reading, listening and watching recommendations from the ROI team.
I’d love to hear from you, so please reach out to me at anna.szymanski@thomsonreuters.com.
