Limited Market Reaction on Venezuela Situation

Limited Market Reaction on Venezuela Situation

Walz exits Minnesota gov race | Greene’s resignation shrinks GOP House margin

LINKS

Link: Venezuela Shock Tests Markets — Risk Premiums Appear,
Panic Does Not

Link: Video: Wiesemeyer’s Perspectives, Jan. 4
Link: Audio: Wiesemeyer’s Perspectives, Jan. 4

Updates: Policy/News/Markets, Jan. 5, 2026

UP FRONT

TOP STORIES

— Markets tune out Venezuela shock unless oil flows are hit: Investors largely ignore dramatic geopolitics unless energy supply is disrupted; Venezuela’s low output means headlines alone won’t move markets.

— Haven assets catch a bid after Maduro ouster: Gold jumps, the dollar firms, Treasury yields dip, and the Mexican peso weakens as investors seek safety and watch regional spillovers.

— Venezuela’s regional and geopolitical stakes: Migration flows, U.S. influence in the hemisphere, and China/Russia ties raise the stakes, with reconstruction upside contingent on stability and governance reform.

— Trump’s Venezuela raid reshapes global power politics: The operation sharpens U.S. dominance in the Western Hemisphere, forces rivals to reassess red lines, and signals a more assertive U.S. posture.

FINANCIAL MARKETS

— Equities steady despite geopolitics: Global stocks mostly higher or flat as markets shrug off Venezuela developments.

— U.S. growth defies recession calls into 2026: Strong GDP, profits, transfers, and AI-driven investment underpin continued expansion despite long-term fiscal risks.

AG MARKETS

— China books more U.S. ag exports: Fresh soybean, sorghum, cotton, and pork sales lift export momentum despite some cancellations.

— Cotton AWP rises: Higher adjusted world price trims loan deficiency payments.

ENERGY MARKETS & POLICY

— Oil muted after Venezuela action: Adequate global supply and undamaged infrastructure cap price reaction.

— Heavy crude rebalancing: Gulf Coast refiners stand to benefit from potential Venezuelan barrels; Canadian oil sands face pressure.

TRADE POLICY

— EU signals Mercosur deal nearing signature: Brussels points to early 2026 completion after renewed progress.

POLITICS & ELECTIONS

—Walz exits 2026 governor’s race, upending Minnesota politics: Mounting Democratic pressure and political headwinds prompt the governor to abandon a historic third-term bid

— Greene resignation tightens GOP margin: Georgia special election looms as House Republicans’ majority narrows.

FOOD POLICY & INDUSTRY

— Tyson settles beef price-fixing claims: $82.5 million deal advances resolution of long-running antitrust case.

WEATHER

— Active U.S. weather pattern: Heavy rain West, wintry precipitation Midwest to Northeast, expanding warmth east, and elevated wildfire risk in the southern High Plains.

TOP STORIES—Markets tune out Venezuela shock — unless oil flows are at riskGeopolitical headlines matter to investors only when they threaten energy supply, according to Sevens Report analysis The sudden U.S. operation in Venezuela and the arrest of President Nicolás Maduro grabbed global attention, but markets are unlikely to react in a sustained way unless the situation disrupts oil supplies, according to analysis from the Sevens Report. The analysis group argues that investors consistently filter geopolitical shocks through a narrow lens: whether they reduce the availability of critical resources — chiefly oil. If they do not, markets tend to absorb even dramatic headlines with little lasting impact. Why Venezuela may not move markets. Despite Venezuela’s status as a major oil reserve holder, Sevens notes that the country’s oil output has already collapsed — from roughly 3 million barrels per day more than a decade ago to around 1 million barrels per day today following nationalization and chronic underinvestment. As a result, political change in Caracas is more likely to increase oil production over time by reopening the sector to Western oil companies, rather than constrict supply. From a market perspective, that dynamic actually leans bearish for crude prices over the medium term by adding to an already oversupplied global oil market — an outcome that would be supportive of global growth and corporate profits rather than a threat to them. The broader geopolitical playbook. Sevens places Venezuela alongside other headline-heavy flashpoints such as Russia/Ukraine and rising U.S./Iran tensions. In each case, markets have largely ignored geopolitical risk because oil flows have remained intact. The Russia/Ukraine war has not materially disrupted global crude supply, and Iran’s capacity to shock markets is limited by sanctions and deteriorated infrastructure. The key exception, Sevens cautions, would be a scenario that directly impairs global oil transit — most notably a closure of the Strait of Hormuz. Such an event would likely trigger a sharp rise in oil prices and a negative market response. Bottom Line: Sevens’ conclusion is blunt: geopolitical events, no matter how dramatic, rarely matter to markets unless they threaten oil supply. In Venezuela’s case, unless new developments point to falling production, investors are likely to keep tuning out the noise—even as headlines remain eye-catching. —The ouster of Venezuela’s President Nicolás Maduro drove gains in haven assets on Monday. Spot gold advanced more than 2% to climb above $4,430 an ounce, the dollar the hit its strongest level in two weeks and the yield on 10-year Treasuries fell two basis points to 4.17%. The Mexican peso was the worst performer among major currencies, weakening 0.7% against the dollar after Trump said the U.S. will “have to do something” about flows of drugs from the country. Investors will also track Colombia’s peso after Trump said the country’s leader has to “watch” himself. —More on Venezuela: Regional and geopolitical stakes. The exodus of nearly seven million Venezuelans has already reshaped the region. A credible transition could slow or reverse flows; failure would intensify them. Strategically, the intervention signals a sharper U.S. posture in the hemisphere, even as China’s sizable creditor role and Russia’s security ties complicate alignment. For Europe, the episode underscores the tension between support for democratic change and caution over military intervention. Who might benefit — if stability holds. Reconstruction could unlock opportunities across energy infrastructure, construction and engineering, finance, consumer goods, and mining — assuming security improves and property rights are clarified. Energy majors such as ExxonMobil, ConocoPhillips, and Chevron would weigh returns against the risk of renewed expropriation. European firms face the same calculus: large upside, contingent on governance reform.—Trump’s Venezuela raid sends shockwaves through global power politicsCapture of Nicolás Maduro sharpens U.S. dominance in the Western Hemisphere and forces rivals and allies alike to reassess Washington’s red lines. The U.S. raid that captured Venezuelan leader Nicolás Maduro marks one of the most consequential American interventions in Latin America in decades, triggering immediate geopolitical recalculations worldwide. President Donald Trump framed the operation as a reaffirmation of U.S. primacy in the Western Hemisphere, declaring that American dominance in the region “will never be questioned again” and stressing Washington’s willingness to protect strategic assets and resources tied to national security. The move aligns with the administration’s recently released National Security Strategy, which elevated Latin America’s importance just days before China issued its own policy paper reinforcing Beijing’s long-term economic and strategic commitments across the region, including ports, energy, and infrastructure. While analysts do not expect the Venezuela operation to immediately derail the recent U.S./China détente, they see deeper, longer-term consequences for the global order. It could lead to a total shift in the global power dynamic. Direct access to cheap oil and minerals could give the U.S. huge leverage over rivals like Russia, Iran and China — and neighbors like Canada. A key concern is signaling. Some strategists worry that a bold U.S. show of force could encourage Beijing to test boundaries elsewhere — most notably around Taiwan, which China claims as its own. The episode underscores a world drifting toward clearer spheres of influence, with Washington demonstrating it is prepared to act decisively inside its traditional backyard. Attention is now turning to what comes next. Trump publicly cited Mexico and Colombia in connection with drug trafficking, but analysts are more focused on Cuba after Secretary of State Marco Rubio warned Havana it should be “concerned.” Asked about the prospects of a similar operation against Gustavo Petro, Colombia’s president and a Trump critic, Trump said, “It sounds good to me.” Trump also renewed his focus on Greenland, telling The Atlantic that the U.S. “absolutely” needs the semiautonomous Danish territory. That drew pushback from the leaders of Denmark and Greenland. Together, these signals suggest the Venezuela operation may not be an isolated event, but part of a broader effort to reassert U.S. authority and redraw geopolitical boundaries closer to home.

FINANCIAL MARKETS

—Equities today: U.S. equity futures are modestly higher despite more geopolitical volatility as the U.S. infiltrated Venezuela and arrested President Maduro. Market reaction to Maduro’s arrest has been generally muted. In Asia, Japan +3%. Hong Kong flat. China +1.4%. India -0.4%. In Europe, at midday, London +0.1%. Paris +0.1%. Frankfurt +0.8%.

—U.S. growth defies pessimism as profits, transfers, and AI investment power the economy into 2026

Strong GDP, resilient consumers, and a profit-led investment cycle challenge recession fears, even as debt and policy risks loom

The U.S. economy ended 2025 on far stronger footing than most forecasters anticipated, extending a pattern of upside surprises that have repeatedly confounded recession calls, argues Michael Drury,Chief Economist, McVean Trading & Investments, LLC.

Drury highlights a striking 4.3% annualized gain in real GDP in the third quarter, supported by an export surge but also by solid domestic demand. Even stripping out trade, final sales to domestic purchasers grew at a robust 2.9%. More notable, however, was nominal GDP growth of 8.2%, driven by a GDP deflator running well above the Federal Reserve’s preferred inflation gauges — underscoring that inflationary pressures remain broader than consumer prices alone suggest.

A central theme of Drury’s Weekly Economic Update is the mismatch between popular “K-shaped economy” narratives and the actual income data. While asset markets and AI-linked equities delivered outsized gains for a narrow slice of the ultra-wealthy, Drury finds that the biggest income gains in 2025 accrued to households receiving government transfers, which rose at a 9.3% annual rate. Medicare, Medicaid, veterans’ benefits, and Social Security all posted strong increases, while labor compensation grew a still healthy 4.2%, comfortably ahead of consumer inflation. By contrast, traditional investment income — interest, dividends, rents, and proprietors’ income — lagged badly, complicating claims that capital broadly dominated labor.

Drury also pushes back on fears that tariffs and immigration reforms would derail growth. He argues that strong corporate profits and balance sheets have allowed firms to absorb policy shocks without triggering mass layoffs, keeping consumption intact. Third-quarter profits jumped at a 14.1% annual rate, reinforcing what he sees as the key leading indicator for the business cycle. With profits rising faster than GDP and revenues, he expects the AI-driven investment boom to persist into 2026, following the typical lag between profit strength and capital spending.

Looking ahead, Drury identifies federal debt tied to population aging as the most serious long-term risk, not an imminent recession. While Social Security and medical spending will pressure public finances, he notes that tariffs and higher personal tax receipts have already lifted revenues by roughly 2% of GDP, reducing near-term fiscal stress. In his view, political angst over deficits is unlikely, by itself, to end the expansion.

On artificial intelligence, Drury strikes a cautiously optimistic tone. While acknowledging job displacement — particularly in government and tech — he argues that historical experience suggests productivity gains ultimately raise real incomes and living standards. The deflationary effects of productivity, he contends, can expand purchasing power and gradually redistribute benefits beyond early winners.

The bottom line, according to Drury, is that profits, productivity, and policy absorption capacity—not consumer distress—define the current cycle. Entering 2026, corporate sector strength and elevated savings suggest the U.S. economy remains positioned to extend its expansion, even as longer-term fiscal and distributional challenges demand attention.

AG MARKETS

—More U.S. soybean, sorghum, cotton and pork export sales to China. USDA weekly Export Sales data for the week ended Dec. 25 showed activity for 2025/26 to China including cancelations of 60,000 MT of wheat, net sales of 81,395 MT of sorghum, net sales of 396,419 MT of soybeans, and net sales of 10,429 running bales of upland cotton. There were also sales of 66,000 MT of soybeans for 2026/27. For 2025, there was no activity reported for beef with net sales of 545 MT of pork and net reductions of 337 MT for 2026. With export commitments for soybeans to China at 6,422,446 MT as of Dec. 25 and daily export sales announcements since then, U.S. soybean export commitments to China are at 6,558,446 MT.

—Cotton AWP rises, trimming LDP. The Adjusted World Price (AWP) for cotton moved up to 50.76 cents per pound, effective Jan. 2, up from 50.02 cents per pound the prior week. While an LDP remains available, the rise in the AWP reduces the level to 1.24 cents per pound, down from 1.98 cents per pound the prior week.

ENERGY MARKETS & POLICY

—Monday: Oil prices pared their early losses to trade slightly higher as traders assessed the impact of the U.S. attack on Venezuela and the capture of President Maduro over the weekend. Venezuela has vast oil reserves, but currently only produces less than 1 million barrels of crude per day, accounting for less than 1% of global output.

Venezuela, an OPEC member with the world’s largest proven oil reserves, has seen its production capacity sharply eroded by years of mismanagement and underinvestment following the nationalization of its oil sector. Output averaged about 1.1 million barrels per day last year — roughly 1% of global supply — limiting its ability to move prices even amid political upheaval.

President Donald Trump said Washington would take control of the country while keeping the oil embargo in place, underscoring policy uncertainty. Still, analysts said the global market remains well supplied, muting any immediate price response. U.S. strikes did not damage Venezuelan oil infrastructure, further easing supply fears.

Much of Venezuela’s crude — more than 80% — is shipped to China, which analysts note has built ample strategic reserves. That cushion, combined with signals from Venezuela’s acting leadership expressing willingness to cooperate with Washington, has reduced expectations of a prolonged export disruption.

Adding to the bearish tone, Organization of the Petroleum Exporting Countries and its allies agreed over the weekend to maintain current output levels, reinforcing perceptions of adequate supply.

Traders are also monitoring Iran after renewed U.S. warnings, but for now, fundamentals continue to outweigh geopolitics in the oil market.

—Heavy crude rebalancing: Oil’s winners and losers after Venezuela’s regime change

A U.S.-aligned Caracas could reshape heavy-oil flows, boosting Gulf Coast refiners while pressuring Canadian oil sands producers

Inflection point for heavy crude markets. The U.S. military’s capture of Venezuelan leader Nicolás Maduro and President Donald Trump’s pledge for deep U.S. involvement in Venezuela’s oil sector mark a potential inflection point for heavy crude markets, according to reporting by Barron’s.

Winners: U.S. Gulf Coast refiners. Venezuelan crude is heavy and sulfur-rich — the precise grade many Gulf Coast refineries were engineered to run. Years of sanctions on Venezuela and Russia forced refiners to rely on costlier or less-optimal substitutes. Even modest, reliable Venezuelan volumes would improve feedstock flexibility and margins for complex refiners with coking capacity.

Recent import data underscores the fit: U.S. refiners took roughly 4.2 million barrels of Venezuelan crude in October, led by Valero, PBF Energy (via its Paulsboro plant), Chevron, and Phillips 66. A sustained reopening would restore a well-matched supply stream and ease heavy-crude scarcity.

Losers: Canadian oil sands producers. Venezuelan barrels compete most directly with Canadian oil sands crude on quality and refinery fit. Canada currently enjoys strong positioning, exporting about 3.3 million barrels per day to the U.S. But renewed Venezuelan competition could cap heavy-crude differentials, erode the scarcity premium, and pressure cash flows for U.S.-listed Canadian producers such as Suncor, Cenovus Energy, Canadian Natural Resources, and Imperial Oil.

Largely insulated: U.S. shale. U.S. shale producers face limited impact. Their output is predominantly light crude, which is not a substitute for Venezuelan heavy oil. Shale economics remain driven by drilling productivity, costs, and benchmark prices — not competition from heavy barrels.

Bottom Line: If Venezuela’s infrastructure is repaired and exports normalize under U.S. alignment, the biggest near-term beneficiaries are Gulf Coast refiners. The principal risk sits with Canadian oil sands producers as heavy-oil competition returns and premiums compress.

TRADE POLICY

—EU signals Mercosur deal near signature

Brussels says recent progress puts long-delayed trade pact on track for early 2026 completion

A spokesman for the European Union said negotiations with the Mercosur countries have advanced in recent weeks, raising hopes that the long-pending trade agreement could be signed “quite soon.” According to the spokesman for the European Commission, the sides are “on the right track” following additional talks held after the deal was formally finalized. Those discussions were aimed at resolving remaining political and technical issues that have delayed ratification.

EU officials now hope the outstanding concerns can be settled and the agreement formally signed in early 2026, potentially unlocking one of the world’s largest inter-regional free-trade areas after years of on-again, off-again negotiations.

POLITICS & ELECTIONS

—Walz exits 2026 governor’s race, upending Minnesota politics

Mounting Democratic pressure and political headwinds prompt the governor to abandon a historic third-term bid

Minnesota Gov. Tim Walz announced Monday that he is dropping his bid for re-election, abruptly reshaping the state’s political landscape ahead of the 2026 midterms.

The decision follows months of growing unease among Democrats, driven by sagging approval ratings and intensified scrutiny over fraud in state programs. Walz had announced in September that he would seek an unprecedented third consecutive term as governor, after serving as the Democratic vice-presidential nominee in 2024.

While Democrats have held every statewide office in Minnesota since 2006 and most forecasts still tilt the governor’s race in their favor, party leaders increasingly viewed Walz as a potential liability. Those concerns helped attract a crowded and high-profile Republican field, including House Speaker Lisa Demuth and MyPillow CEO Mike Lindell.

With Walz stepping aside, attention now turns to the Democratic-Farmer-Labor (DFL) primary and who will emerge as the party’s standard-bearer. U.S. Sen. Amy Klobuchar, Attorney General Keith Ellison, and Secretary of State Steve Simon are all widely viewed as potential contenders.

Walz’s exit removes an incumbent but opens a volatile new chapter, setting the stage for a wide-open race that could redefine Minnesota politics heading into 2026.

—Greene’s resignation shrinks GOP House margin, sets up crowded Georgia special election

Trump-backed district heads toward a likely runoff as House Republicans face a narrower path on legislation and shutdown talks

Marjorie Taylor Greene’s exit from Congress will trigger a fast-moving, crowded special election in Georgia’s 14th District — while immediately tightening the House Republican majority at a sensitive moment for Capitol Hill.

Marjorie Taylor Greene is resigning Monday after five years in office, prompting Brian Kemp to call a special election within 10 days. The contest must be held at least 30 days later and will feature a single, all-party ballot. If no candidate wins a majority, the top two vote-getters advance to a runoff four weeks later — a likely outcome given the crowded Republican field.

The northwest Georgia district is a deep GOP stronghold, backing President Donald Trump by 69%–31% in 2024. Roughly 20 Republicans have already filed with the FEC, including Clayton Fuller (a prosecutor and Air Force veteran), Brian Stover (a former county commissioner), Colton Moore (a state senator), and Jim Tully (a former district GOP chair). Democrat Shawn Harris, a retired Army general who lost to Greene in 2024, is running again.

Greene announced her resignation in November after Trump labeled her a “traitor” for helping push the Justice Department to release files tied to Jeffrey Epstein.

Her departure narrows the House GOP margin to 219–213, making it incrementally harder for Republican leaders to advance legislation as lawmakers race toward a Jan. 30 deadline to avert another government shutdown.

The Georgia contest is one of three House vacancies. In Texas’ 18th District, Democrats face a Jan. 31 runoff to replace the late Sylvester Turner. In New Jersey’s 11th District, an April 16 special election will fill the seat vacated by Gov.-elect Mikie Sherrill.

FOOD POLICY & FOOD INDUSTRY

—Tyson Foods agrees to $82.5 million settlement in beef price-fixing case

Deal would resolve grocers’ claims that major meatpackers conspired to restrict supply and inflate beef prices from 2015 to 2022

Tyson Foods reached a proposed $82.5 million settlement with grocers and other business buyers who accused the company of conspiring to inflate beef prices by restricting supply, according to court filings.

The agreement, which still must be finalized and approved by a judge in the U.S. District Court for the District of Minnesota, would resolve claims that Tyson and other large meatpackers coordinated actions to drive up prices for retail beef cuts and boxed beef between 2015 and 2022.

Tyson is the second major defendant to settle in the long-running antitrust case. JBS USA previously agreed to pay $52.5 million to resolve similar allegations.

The lawsuit continues against the remaining defendants, Cargill and National Beef. According to Reuters, those companies did not respond to requests for comment.

If approved, the Tyson settlement would mark another significant step toward resolving claims that consolidation among the largest meatpackers harmed competition and raised costs for downstream buyers across the U.S. beef market.

WEATHER

— NWS outlook: Lingering moderate to heavy rainfall for California today with an isolated risk for flash flooding; another system to bring heavy precipitation to Pacific Northwest Tuesday… …A couple rounds of wintry precipitation from the Upper Midwest to New England the next couple of days… …Well above average conditions begin to expand eastward from the Plains to the East Coast this week; Wildfire risk for portions of the southern High Plains Monday.