While the Dollar and Gold advanced, equities (buoyed by Tech and Defense) remained resilient. Why didn’t this trigger a sell-off?
📉 THE ANALYST CONSENSUS:
1️⃣ The “Irrelevance” of Current Output: Tai Hui (J.P. Morgan Asset Management) and David Chao (Invesco) point to the hard data:
- Venezuela currently accounts for only ~1% of global oil output.
- Years of under-investment means the country cannot ramp up (or disrupt) supply significantly in the near term.
- Verdict: This is a political shock, not a supply shock.
2️⃣ The “New Normal” Regime: Charu Chanana (Saxo) and Gary Tan (Allspring) argue that investors have become desensitized.
- Geopolitics is now a “persistent feature,” not a surprise.
- Unless broader supply chains are threatened, the market playbook is to “fade the first shock” and rotate back to fundamentals.
- Credit Angle: Allspring actually expects credit spreads for lower-rated sovereigns might narrow as US engagement is viewed as a stabilizing force in LatAm.
3️⃣ The Real Signal: Gold vs. Oil: Kyle Rodda (Capital.com) notes the divergence.
- Oil: Muted reaction due to ring-fenced trade channels.
- Gold: The true safe haven. Investors are “front-running governments” and increasing exposure to non-fiat alternatives, anticipating that uncertainty is here to stay.
4️⃣ The Long Road Ahead: Vasu Menon (OCBC) warns that while Trump pledged to revitalize Venezuela’s oil industry, restoring operations will require “significant time and substantial capital.” The “Bonanza” is a 2027 story, not a Q1 2026 story.
💡 ANALYST TAKEAWAY: The market’s calm response confirms that Geopolitical Risk has been decoupled from Market Risk—at least until trade flows are hit. For now, Wall Street views Venezuela as an idiosyncratic “Headline Risk” rather than a systemic contagion event. The smart money isn’t selling stocks; it’s just buying more Gold.