Weekly Investment Update (01/09/2026)

Outside of the jobs report (covered in more detail below), a key development this week was a sharp improvement in productivity. Nonfarm productivity rose at an annualized rate of 4.9% in the third quarter, the strongest reading since 2020. Unit labor costs declined nearly 2%, indicating that output is rising even as employment gains moderate. This combination — stronger growth with less inflationary pressure — is often viewed as an ideal backdrop for markets as it gives the Federal Reserve more room to ease without fueling price instability.

Geopolitical developments also added a new layer of complexity. U.S. military operations in Venezuela have renewed questions around long-term energy supply and regional stability. While near-term market impacts are limited, the broader signal that the U.S. is willing to assert military power to protect strategic interests in the hemisphere could carry lasting implications for policy, global supply chains, and future investment trends. As markets digest these shifts, the combination of resilient productivity growth and moderating inflation keeps the broader backdrop relatively constructive.

Venezuela Regime Change Raises Long-Term Energy Market Questions

What is happening: Early Saturday morning, U.S. military forces detained Venezuelan President Nicolás Maduro, who had governed the country since 2013, following the death of Hugo Chávez. Over the past decade, Venezuela experienced a severe economic collapse as a result of declining oil production and increasing international isolation along with prolonged hyperinflation from poor policy decisions. During this period, according to U.S. government statements and sanctions designations, the country also became more closely associated with transnational criminal networks and sanctioned organizations.

Delcy Rodríguez, previously vice president under Maduro, was sworn in as interim president, while the U.S. government has stated it will play an active role during the transition until elections are held. Venezuela’s opposition, led by María Corina Machado, has also stated that it should play a role in shaping the transition. The details and timeline of the transition remain unclear, contributing to continued uncertainty around Venezuela’s political and economic outlook.

The White House justified its actions by citing the illegitimacy of the Maduro regime and its alleged ties to drug trafficking, but the move more clearly reflects the national security strategy unveiled in November. That strategy introduced what has become known as the “Donroe Doctrine,” asserting U.S. dominance in the Western Hemisphere and a willingness to use any means necessary to further U.S. interests in the region. These interests include protecting critical supply chains, combating narcotics, curbing migration, and limiting the influence of China, Russia, and Iran. Venezuela appears to be the first real-world application of this doctrine.

Why it matters: From a market perspective, the immediate impact is limited. Venezuela was once a major global oil producer, supplying over 2.5 million barrels per day until 2013. Production has since fallen to below 1 million barrels per day, despite the country holding the largest proven crude oil reserves globally, estimated at over 300 billion barrels and compared with roughly 250 billion barrels in Saudi Arabia and about 38 billion barrels in the U.S. Oil exports remain central to Venezuela’s economy, though volumes are far lower than in the past, with China currently the largest buyer. Many Western nations, including the U.S., adopted formal sanctions in the late 2010s that limited their ability to import Venezuelan oil.

Recent statements from the Trump administration indicating that U.S. oil companies could participate in a future rebuilding of Venezuela’s energy industry led to modest gains in select energy equities, including Chevron, a Bessemer holding, which is the only major American oil company still operating there, and a small rise in crude prices. Any meaningful recovery in Venezuelan oil production would likely take years, requiring significant investment, infrastructure rehabilitation, and sustained political stability. As a result, Venezuela represents a long-term and uncertain source of potential supply, with limited near-term impact on global energy markets.

The broader geopolitical signal, however, is far more significant. The United States is now actively implementing a more assertive hemispheric strategy that includes military force. The success of the operation may further embolden the Trump administration to rely more heavily on force to achieve strategic objectives in the region, while simultaneously alarming other governments in the Western Hemisphere that are viewed as weak or misaligned with U.S. interests, such as Cuba, Nicaragua, Mexico, and Colombia, as well as Greenland. Broader market implications could emerge if the United States continues to implement this strategy across the hemisphere. Potential investment themes related to this include increased global defense spending beyond what was announced in 2025, as well as continued de-globalization and reshoring efforts as political priorities lead to economic activity becoming increasingly localized.

Jobs Data Underperformed Expectations, but Overall Labor Market Holding Steady

What is happening: This week’s U.S. jobs market data continued to show a labor market slowing from the rapid expansion of prior years. Weekly initial jobless claims ticked up modestly to around 208,000 but remain near historically low levels, underscoring that layoffs have not surged despite soft hiring trends. Meanwhile, JOLTS job openings fell more than expected in November to roughly 7.15 million, a larger decline than economists had forecasted and reflecting weaker labor demand. December ADP and nonfarm payroll data also underwhelmed with monthly net additions of 41,000 and 50,000 relative to expectations of 48,000 and 73,000, respectively. Moreover, nonfarm payroll additions for the two prior months were revised down by a combined 76,000. However, a few data points exceeded expectations. The unemployment rate decreased from 4.6% to 4.4%, partly due to a slight drop in the labor participation rate, and year-over-year average hourly wage growth increased to 3.8% from 3.5% in the previous month.

Why it matters: For the broader U.S. economy, the labor data suggest we remain in a “low-hire, low-fire” environment where employment growth is modest and layoffs are contained. While the jobs data this week largely missed expectations, their absolute levels are indicative of a labor market that is gradually softening and not dramatically declining. A monthly net job addition in the 40,000- 50,000 range is reflective of a balanced economy that can still absorb new job seekers. The ADP data’s reversal back into positive territory is also an encouraging sign after negative prints in four of the previous six months.

From a monetary policy perspective, slowing labor market conditions increase the likelihood that the Fed will opt to cut rates more aggressively than published in its latest summary of economic projections. At the December FOMC meeting, the Fed dot plot had projected only one 0.25% rate cut for 2026, but we believe the actual number of cuts this year will likely be higher given the Fed’s likelihood to prioritize jobs over inflation. At 3.75%, the fed funds rate currently remains above the FOMC members’ median long-run projection of 3% and should allow room for additional rate cuts. The case for monetary easing would strengthen further if inflation pressures continue to moderate. At the same time, this week’s data in aggregate were likely strong enough to allow the Fed to remain patient in the very near term. Markets are currently pricing the next rate cut to occur in June.