Happy Monday. Several years back, President Donald Trump said in debate that the United States has to, "Take the oil." Of course, at the time, he was talking about Iraq. This weekend, he was squarely focused on a different country on a totally different continent: Venezuela. U.S. resources seized the country's dictatorial leader and have plans for its oil industry.
Usually, geopolitical shocks like this would have negative impacts on markets, but traders are bidding up equities today. As you'd imagine, energy and defense names are leading much of the discussion today, leaping on the intervention. For energy firms, it's the optimism that domestic firms might be able to collect on the country's 800,000 barrels per day of heavy sour crude production.
And for defense names, it's the promise that the President's new imperial ambitions won't simply stop at Venezuela. In remarks to the press this week, the President offered clues of where the U.S. might strike next in pursuit of so-called 'national security' interests. On the shortlist of possible interventions were the countries of Colombia and Mexico, while Greenland was once again name checked.
Monday Reading:
It isn't just energy and defense names, though. Midway through today, an astonishing 68.9% (3,809) U.S. issues were seen advancing, while 28.7% (1,588) were in decline. The Dow (+1.62%) and Russell 2000 (+1.59%) led the way, up more than one and a half percent.
And the Nasdaq (+0.69%) and S&P 500 (+0.75%) were also seen trading in tandem as well as investors rotated towards financials, energy, cyclicals, and communication services from technology, healthcare, and utilities.
It's quite the theatrical showing to start the year, but it's just the beginning. This week, investors will need to spar with new geopolitical question marks alongside a wide array of economic data, the start of a Consumer Electronics Show (CES) overshadowed by rising memory costs, and a small trickle of Q4 earnings. Lock in.
-- Noah Weidner, markets reporter
