The U.S. conducted targeted air strikes in Venezuela and captured President Nicolás Maduro early Saturday. He now faces drug and weapons-related charges in New York. These events are the manifestation of our long-held new macro regime framework: a world with a wide range of long-term outcomes driven by mega forces, notably geopolitical fragmentation and the energy transformation in this case — underscoring the need for scenario planning and plan B portfolios. We see limited global market impact for now. Our pro-risk stance and overweight to U.S. equities, the AI theme and emerging market bonds have not changed.
U.S. President Donald Trump’s remarks highlighted that the administration doesn’t see this as regime change but a leadership change leaving Maduro’s top lieutenants in place. With no clear political and military plan for what comes next, we see plenty of uncertainty ahead. But this may not matter much to global markets. For us, one thing is certain: Saturday’s events underscore deepening geopolitical fragmentation: we’re now in the third distinct world order since World War Two, marked by the U.S. resetting its economic and geopolitical relationships with the world, reflected in its recently released National Security Strategy. We are watching how regional fragmentation evolves and any broader ramifications. For Venezuela, we are watching any roadmap to a transition and whether Vice President Delcy Rodríguez, a loyalist to Maduro and former President Hugo Chávez, remains central in any interim leadership. How the U.S. administration deals with a future Venezuelan government can play out in a wide variety of ways, but with limited transmission to global markets. Other factors we’re watching include migration from Venezuela to neighboring countries and any calls for new elections. On the macro front, we expect very limited near-term changes in Venezuela’s oil, gas and mining output. That means the commodities channel is unlikely to drive immediate macro impacts.
What does this mean for investing? We see three key questions: First, has our central assessment changed? Second, has the long-term range of potential outcomes changed? And third, will markets price in a higher risk premium of geopolitical events with binary outcomes before they happen? On the first question, Venezuela may have the world’s largest oil reserves but only produces about 1% of the world’s oil. We expect limited near-term impact and a slightly negative longer-term impact on oil prices, so oil isn’t a transmission channel to global markets. On the second, the local political uncertainty ahead is unlikely to impact global markets: we’re already in a “polyfurcated” world with a wide range of outcomes driven by mega forces. Saturday’s developments are a manifestation of that. On the third, we find that markets do not sustainably reposition for binary geopolitical risks even when risks rise. If risk assets are hurt in the near term solely on geopolitical concerns, we could consider taking the other side.
Our bottom line: We start 2026 keeping a risk-on stance. We stay overweight U.S. equities on the AI theme. We also are overweight emerging market (EM) hard currency bonds and like select EM equities. The latest geopolitical developments don’t change our assessment of the center of gravity in this new regime but further underscore the importance of scenario mapping.
