Venezuela Regroups With New President, Old Repression Tactics

Summary

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Bloomberg Businessweek

Episode: Venezuela Regroups With New President, Old Repression Tactics
Date: January 5, 2026
Hosts: Carol Massar, Tim Stenovec
Featured Guests:

• Rockford Weitz (Professor, Tufts University)
• Mike Collins (Managing Director, PGIM Fixed Income)
• Ximena Zuniga (Geo-Economic Analyst, Bloomberg Economics)
• Sam Stovall (Chief Investment Strategist, CFRA Research)

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Episode Overview

This special episode dives into the global, economic, and political repercussions following the dramatic U.S. raid in Venezuela that resulted in the capture of President Nicolás Maduro and his wife. With a rapidly shifting power landscape, the hosts and guests dissect the motivations behind U.S. intervention, explore parallels from history, analyze the economic fallout, and discuss possible futures for Venezuela—and for regional and global markets.

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Key Discussion Points & Insights

1. U.S. Motivations and Strategic Shifts

(Segment starts around 02:29)

• Geopolitical Context: Rockford Weitz frames the U.S. raid as a move in the ongoing competition for influence over Venezuela between the U.S., China, and Russia.
• Changing Alliances: Previously, Venezuela leaned on China (infrastructure), Russia (military), Iran, and Cuba. With the U.S. operation, Americans now have the most influence over Venezuelan affairs.
  • “Everything has changed since Saturday morning […] the great power that's going to have the most influence over Venezuela is now the United States.”
    — Rockford Weitz, 04:26

2. The International Precedent and Legal Justification

(Segment starts around 04:45)

• Historical Analogy: Weitz likens the Maduro raid to the 1989 U.S. seizure of Panamanian dictator Manuel Noriega. Both actions were justified under narcotrafficking indictments and loosely under self-defense per UN Charter, although legality remains “gray.”
• Implications: Sets a precedent: “This does set a precedent that other narco trafficking leaders around the world could be taken not just by the United States, but by others … But this doesn't really apply to Taiwan.”
  — Rockford Weitz, 06:27
• Risks of Copycats: Large powers will watch to see if they can exploit similar justifications elsewhere.

3. Potential for Global Contagion

(Segment begins at 07:07)

• Could Russia Use This Pretext? Weitz argues Putin lacks legal grounds to attack Zelensky: “Zelensky clearly is not a narco trafficker.”
  — Weitz, 07:18
• U.S. Military Dominance: Emphasis on U.S. supremacy in the Americas, minimal Chinese or Russian military presence in the Caribbean.

4. Operation Details and Intelligence Involvement

(Segment starts at 08:43)

• Covert Support: U.S. had intelligence on the ground, with well-executed logistics and possible local assists.
• Decapitation Strike: The Venezuelan Navy and Air Force are rendered inoperable; the operation relied heavily on U.S. intelligence and special operations.
  • “This was almost perfectly executed from a special operations perspective. They had one mission: seize Maduro and his wife... the Venezuelan military essentially no longer exists.”
    — Weitz, 09:40
• Cuban Security: Maduro's security detail was mostly Cuban, reflecting broader regional alliances.

5. Aftermath: Nation Building and The Day After

(Segment starts at 10:42)

• Power Vacuum Concerns: The U.S. must now avoid the pitfalls of nation-building seen in Iraq and Afghanistan.
• Transition Models: The closest historical analog is Panama, not the Middle East. Venezuelan opposition figures Maria Corina Machado and Edmundo González could facilitate transition.
  • “I call this the day after challenge… It's going to be very difficult to smoothly create a transition to a new government in a peaceful way without triggering an insurgency.”
    — Weitz, 11:06
• No Appetite for Long-Term Occupation: U.S. likely to maintain a limited but visible military presence to support stability.

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Economic Implications & Market Reactions

6. Impact on Markets & Debt Investing

(Segment starts at 15:42, with Mike Collins)

• Investor Perspective: Despite headlines, Venezuela now produces less than 1% of global oil; its impact on GDP and oil is much diminished.
  • “Venezuela is producing now less than 1% of global oil... they have taken a huge fall from grace. They do not have a big impact economically on the global stage.”
    — Mike Collins, 16:40
• Asset Flows: Investors eyeing opportunities in distressed Venezuelan debt, especially as sanctions may be relaxed and asset values could rise if regime change leads to stability.
  • “Some of their bonds have doubled or tripled over the last few weeks. So, they're still trading at really distressed levels... But there are opportunities, for sure.”
    — Collins, 20:08
• Risks and Upsides: Markets are “whistling past the graveyard”—focused on fundamentals, while acknowledging possible upside. There remains concern about nation-building going awry.

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Scenarios for Venezuela’s Future

7. Three Possible Paths Ahead

(Segment starts at 23:46, with Ximena Zuniga)

• Scenario 1: An eventual stable, market-friendly, pro-Western democratic government—“the best and most favorable outcome for Venezuela and the world.”
  — Zuniga, 24:20
  • Could see the return or rise of opposition leaders barred in previous elections.
• Scenario 2: Power vacuum, infighting, and chaos, leading to greater violence, migration, and non-viability for a democratic transition.
• Scenario 3: An “intermediate outcome”—de facto U.S. supervision via the Chavista regime for stability’s sake, at the cost of democracy. Risk that U.S. pursues resource access over transition.
  • “That’s an intermediate outcome that might...look more stable...but would still be an authoritarian, non-democratic government, a non-sovereign one.”
    — Zuniga, 30:21

8. The Depth of Venezuela’s Economic Collapse

(Segment starts at 27:26)

• Once a $400B middle-income country, now at $100B GDP, with per capita income slashed and ~8 million Venezuelans emigrated.
  • “Venezuela used to be among the richest and largest economies in the region...Now Venezuela is a lower-income country...an impoverished population, 8 million people have left the country.”
    — Zuniga, 27:43

9. Risks of U.S. Involvement: Business Interests vs. National Renewal

(Segment starts at 29:55)

• Historical U.S. interventions raise skepticism; risk that the U.S. focuses on resources and delays genuine democracy.
  • “Trump may shift gears and focus on domestic issues and leave the democratic transition unattended, but there are also things mitigating that risk.”
    — Zuniga, 30:38
• Alignment of interests may help push Venezuela towards institutional and sectoral recovery.

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Market & Investment Backdrop

10. Market Calm Despite Political Turmoil

(Segment starts at 33:26, with Sam Stovall)

• Headline vs. Bottom-Line: Historically, military events have little long-term market impact, except for specific sectors (e.g., energy).
  • “Military events going all the way back to World War II, most of them have really ended up being more headline events than bottom-line events.”
    — Stovall, 34:23
• Oil Markets: Venezuelan oil could come back online, but global impact is marginal; potential for long-term price decreases if infrastructure improves.
• National Security & Resource Competition: Ongoing trend toward protecting strategic assets could make global markets less cooperative and more volatile.

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Notable Quotes & Memorable Moments

• “Everything has changed since Saturday morning... the great power that's going to have the most influence over Venezuela is now the United States.”
  — Weitz, 04:26

• “This does set a precedent that other narco trafficking leaders around the world could be taken not just by the United States, but by others.”
  — Weitz, 06:27

• “This was almost perfectly executed from a special operations perspective. They had one mission: seize Maduro and his wife... the Venezuelan military essentially no longer exists.”
  — Weitz, 09:40

• “Venezuela is producing now less than 1% of global oil... they have taken a huge fall from grace.”
  — Collins, 16:40

• “Military events... most end up being headline events rather than bottom-line events.”
  — Stovall, 34:23

• “Venezuela used to be among the richest... now Venezuela is a lower-income country... an impoverished population, 8 million people have left the country.”
  — Zuniga, 27:43

• “That’s an intermediate outcome that might look more stable... but would still be an authoritarian, non-democratic government, a non-sovereign one.”
  — Zuniga, 30:21

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Timestamps for Key Segments

• 02:29: Introduction of U.S. raid and guest Rockford Weitz
• 04:45: Historical parallels and legal justification
• 07:17: Russia comparisons and U.S. military supremacy
• 09:14: U.S. intelligence role, operation execution
• 10:42: The 'day after' challenge—nation-building risks
• 15:42: Investor response; Venezuela’s diminished global oil role
• 20:08: Investment opportunities, bond market impacts
• 24:14: Ximena Zuniga's three scenarios for Venezuela’s future
• 27:43: Economic collapse, diaspora, and potential recovery
• 33:26: Sam Stovall analyzes market reaction and oil market impacts

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Concluding Thoughts

The episode offers an in-depth, nuanced look at the dramatic intervention in Venezuela, situating current events in historical context and examining consequences across geopolitics, law, democracy-building, debt markets, and global energy. The discussions reflect a consensus: the hardest part for Venezuela—and the U.S., now in the driver’s seat—begins now, with stabilization and transition open to both opportunity and profound risk. Markets, for now, are keeping calm, but the road ahead is fraught with uncertainty—both for Venezuela, and for those wagering on its future.

Transcript

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[Carol Massar]

Radio While the US Raid that captured Venezuelan President Nicolas Maduro put America's allies and adversaries definitely unnoticed, President Trump has a new world order. Tim of his own at least that's how it's been reporting out.

[Tim Stenovec]

Yeah, in the aftermath of the stunning late night operation that saw Maduro and his wife whisked from a guarded military base near Caracas to a New York jail. President Trump demonstrated just how far the US Is willing to go to eliminate a leader seen as a threat, threat to American interests and security. So we're looking at the challenges that come next. Those are the ones that are presented by the US Raid on Venezuela. We welcome Rockford Weitz, president, professor of practice and director of the Maritime Studies Program at Tufts University's Fletcher's School, Fletcher School of Law and Diplomacy. He joins us from Tucson, Arizona. Professor, good to have you on the program. What do you believe is the true motivation of the US when it comes to Venezuela?

[Karen Moscow]

Great question. What we're looking at here is this is a geopolitical competition between the United States and China and Russia over who is the main ally of Venezuela in the Caribbean.

[Tim Stenovec]

Wow. Okay. So before what we saw late Friday and early Saturday, what would you have said is the true ally? Who would you have said is a true ally? And then now after, how does the US Become the true ally?

[Karen Moscow]

Okay. All right. So great question. I love these questions. So before it was a combination of China was their geo economic ally helping them with infrastructure. Russia was a military ally with basing rights there and supporting their military. And even Iran, even though it's not a great power, was helping Venezuela. So they had that was their sort of cast of characters as well as Cuba. Cuba is frankly a little bit more reliant on Venezuela than vice versa. Everything has changed since Saturday morning in the sense that there is obviously new leadership in Venezuela, a transition leadership. We it's unclear who will be in charge in the long run, but it's very clear that the great power that's going to have the most influence over Venezuela is now the United States.

[Carol Massar]

What I'm wondering, Professor Weitz, you know, what's the international precedent for doing something like this? I mean, how should we read what is essentially a kidnapping of a leader of a foreign country and his wife, removal of that leader from said country? What's it akin to in our past history, our recent past history? And to be fair, it's not the first time the US or others have removed a global leader or worked behind the scenes to support US Friendly groups, leaders in foreign countries? So we get that we're not all naive. But I'm just curious, are we setting up for kind of a leader grab around the world among countries and among global powers?

[Tim Stenovec]

Great.

[Karen Moscow]

Another great question. Thank you. So let me try to answer it using history. So it was actually ironically, 36 years ago to the day that the United States took Noriega from Panama and that's the closest parallel. So he also was charged with narco trafficking. He was also then taken to the United States for prosecution. They also justified it in exactly the same way. There was an indictment against him in the United States. So that covered the domestic law piece. And then under the UN Charter, countries are allowed self defense and also self defense of their population. So it was framed, this was back in 1990 under Bush Senior, as Noriega is a narco trafficker and therefore must be taken care of to protect the American people from the drug trade. That is allowed under the UN Charter as self defense. So that covers you under international law. Again, every legal issue is gray. So people will say it's against international law. But you can make a case that it's consistent with international law. In the UN Charter, you can make a case that it's consistent with domestic law. And I would say it does set a precedent that other narco trafficking leaders around the world could be taken not just by the United States, but by others. But this doesn't really apply to Taiwan. I've spent a lot of time in Taiwan and narco trafficking is not their game. And so I think that the precedent can be narrowed. But it also means that other large countries, other great powers like China and Russia, will look at this to see how they can use it to their advantage.

[Tim Stenovec]

Well, you mentioned Taiwan, but, but what about Russia? And what about Vladimir Putin in Russia? Could he use this as justification for doing something to Zelensky?

[Karen Moscow]

So Putin will try to come up with any justification to go after Zelensky, but Zelensky clearly is not a narco trafficker. I don't think anyone's saying that. So we can argue not. The other thing is Zelensky has very powerful friends right next door. The NATO, the North Atlantic Treaty Organization, Poland borders, Ukraine, the U.S. although Trump, you know, has not supported as much as, as maybe previous presidents have. We're behind Zelinsky. Zelensky's got powerful friends. Venezuela really didn't have powerful friends in this part of the world. China is a very strong navy around Taiwan, for example. They don't have a major naval presence in the Caribbean. Russia as well is a naval power. It's not nearly as strong as either China or the United States, but it doesn't have a major Caribbean presence. So what's fundamentally happened is in the Americas, the US Is the major great power with the major military. And I will just note this because it is important for the bigger conversation. The Trump administration did issue its national security strategy just last month. It, it said we're going to focus more attention on the Americas. And it was consistent with this operation in Venezuela. Though I will admit I was surprised at how much force was used to take Maduro and his wife. 150 aircraft. I mean, major, this was a major operation on Saturday. Wow.

[Carol Massar]

So many different places to go. Well, having said that, you know, listening to a lot of the coverage here on Bloomberg, Professor Weitz, it sounds also like that the US Intelligence has been on the ground for some time. We're going to talk about this a little bit later on, on, on our broadcast, but I that they had help in kind of pulling this together. Is that a bad assumption or read into the US Getting an assist from, from other leaders in Venezuela?

[Karen Moscow]

I think it's an accurate read. I've been following this basically night and day since Saturday. A lot of coffee. But basically what has happened is it's not surprising. The United States has been focused on on Maduro and his regime. Really, it's been bipartisan. Biden also had a, had a bounty out for Maduro to be removed. So Maduro is not popular internationally, he's not popular domestically. He's essentially clinging on to power. I thought one of the most interesting thing was that his, almost his entire security staff were Cubans. This has come out from multiple sources. So it's not surprising that the United States would spend a couple months gathering intelligence. I have to say that this was almost perfectly executed from a special operations perspective. They had one mission kidnapped. Well, not kidnapped, but seize Maduro and his wife, take them to the United States, at the same time essentially take out the Venezuelan military. So the Venezuelan Navy essentially no longer exists. Same for the Air Force. No more radar. Any tanks they had are probably gone. So this was executed very well. And of course intelligence was involved. So and Trump even said that publicly. CIA is already there. So I would say public sources have verified it, multiple sources. I think it's probably accurate to say that's correct.

[Tim Stenovec]

Well, that's one part of the mission and that was, that was certainly this mission. But I think many critics out there and even observers saying now comes the hard part, the potential power vacuum. And we've seen what quote, unquote, nation building for the United States has looked like in the past. How does that play out? What is the right way for the US to do that?

[Karen Moscow]

This is literally what I think is the most important question for today. So I call this the day after challenge. This is a big deal. It's going to be very difficult to smoothly create a transition to a new government in a peaceful way without triggering an insurgency. The Venezuelan military wasn't really strong before Saturday. They're really not not strong now. That being said, similar to Vietnam, similar to Colombia. I used to live in Colombia. I know the country well. I've been to Venezuela as well as a tourist in the 90s, this, there's parts of Venezuela that are the perfect guerrilla warfare area. The United States has, I think, no interest in a long term occupation of Venezuela because it would not be, it would, it would not be pretty and it would look similar to some of our misadventures in the Middle East. But I think the model to look at is Panama. You have in Venezuela a recognized opposition. You have Maria Carina Machado, who is the recent Nobel Peace Prize winner. You have Edmundo Gonzalez, who is the declared winner, internationally recognized, of the last presidential election. They're friends. They're a good opposition. I think what can happen is that they can be brought into this process and that the US can help them establish some, some level of control. Probably involves a few hundred, maybe a few thousand elite American troops guarding, say, the presidential palace in Caracas and, and, and, and essentially having a presence at all the major military bases certainly around Caracas. And then eventually that gets transitioned over to, to the new government. It's going to be hard. The essentially Venezuela has had a dysfunctional government since 1999. Maduro was in power for over 10 years as a dictator. All of his allies are in the National Assembly. They're in the government, they're in the military. There's narco traffickers who are well armed. So it's not going to be easy. But I do think it's possible. I also think it's very different from Iraq or Afghanistan because there's no religious element here. Venezuelans, not only are they all Christian, they're all Catholic. So there's no that's not a piece of it doesn't mean it's easy. I think it's going to take a lot of bandwidth. Do it well, I'm not sure if the Trump administration is ready to do it, but we will see. We will see.

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[Carol Massar]

Money managers, they've been loading up on Venezuelan debt. This is one of the stories that we've been reporting out here at Bloomberg. This has been happening in the past few months as President Trump ramped up pressure on President Maduro, with some investors seeing the potential for restructuring as early as this year. And then of course, Tim, then we had the weekend happen.

[Tim Stenovec]

So with more on that, let's head to Sarasota, Florida and to Mike Collins, Managing director and Executive Portfolio adviser on the multisector team over at pjm. PJM Fixed Income Approximately one and a half trillion dollars in total ass under management for PJM fixed income. It's more than $1 billion. Mike, big picture. How big of a deal is it? What happened in Venezuela, especially when it comes to the global market and investing landscape. How are you looking at it?

[Mike Collins]

Yeah, Tim and Carol, Happy New Year. Great. Great to be here. You know, I get these questions all the time whenever you have these geopolitical flare ups around the world, whether they're in Asia, the Middle east or Latin America. And my answer is always the same. You know, kind of fade the headlines is generally the the knee jerk instinct that you should have as an investor, you should really focus on the fundamentals of the global economy, the fundamentals of the U.S. economy, where growth is going to be, where inflation is going to be. Obviously commodity prices are in the headlines today with the Venezuela thing. But remember, Venezuela is producing now less than 1% of global oil. Remember 60 years ago, back when I was born, they were producing 15% of the world's oil and now they're less than 1%. Right. So they have taken a huge fall from grace. They do not have a big impact economically on the global stage. 60 years ago, believe it or not, Venezuela was in the top quartile of all countries in terms of GDP per capita. Today they are at the bottom of the list. Right. And you think of other countries where they've been geopolitical flare ups. Typically these countries don't have huge international economic implications. So that's why the markets are just kind of, you know, whistling past the graveyard here and just ignoring the geopolitical risk. That is the, that is the standard playbook.

[Tim Stenovec]

And Michael, just forgive me, I want to go back more than $1 trillion over at PJM Fixed Income under management. I misspoke earlier. Okay? So if that's why, if that's why we're seeing sort of a relative calm today, let's then focused on, focus on kind of what comes next and the political and potential implications for that. Because I think that is a big question that investors have right now. I mean certainly people don't want to see some prolonged and you know, dare I say boots on the ground mission in the country. But, but I think that meaning me going into this week, that was a big concern that I thought investors would have. What if this actually gets turns into something akin to like we've seen with past quote unquote nation building activities from.

[Mike Collins]

The US We've spent most of the weekend and a lot of this morning doing deep dives into the situation in Venezuela. I mean I'm fortunate to work on this gigantic team where we have, you know, geopolitical political analysts. We have really deep economic analytical resources. We have people who've been in the military. So we have a lot of great color just from our own team and our contacts. And there's really two scenarios, right? One, Tim, is the one you pointed out that things do get ugly, that Venezuela kind of gets worse, conditions get worse, that the US tries to do a more aggressive takeover and it gets really messy a la some of the situations in the Middle east that your last guest was talking about. But there's also this upside scenario. Right. And I think it kind of confirms the fact that we're moving into this, you know, G3ish type of world. And the US is certainly trying to take the lead there and shown that, hey, we have control of the Americas here, which could result in better outcomes for countries like Venezuela, could result in better outcomes for the US could result in better outcomes for other Latin American countries.

[Tim Stenovec]

Right.

[Mike Collins]

And I think that's what the markets are focusing on. Focusing on. I mean, we were looking at all the emerging market debt quotes and runs out there right now. And, and generally the bonds are trading better. Right. And I think they're looking at this as potentially the upside scenario, not, not the downside. But, but you're absolutely right. I mean, we really have to, you know, keep our radar attentive to, to those potential downside risks.

[Carol Massar]

Yeah. Mike, on that point, a raft of investment firms eyeing opportunities in Venezuela after that US Strike. Tribeca Investment Partners is sending a team to coup to, excuse me, Caracas this week to inspect potential assets, calling it a gold rush. Have you guys changed any of your investment theses when it comes to Venezuela at this point or not yet?

[Mike Collins]

Well, remember, they've been pretty heavily sanctioned in terms of trading and also trading some of their security. So good news is for people have a huge emerging market debt team and big investments around the world in emerging market debt. You know, this could potentially free up trading opportunities and relative value opportunities. I mean, again, these bonds, some of their bonds have, you know, doubled or tripled over the last, over the last few weeks. So, so they're still trading at really distressed levels. Right. We're talking, you know, 20, 30 cents on the dollar. But, you know, there are opportunities, for sure. There are going to be a lot of relative opportunities. We're looking at even places like Colombia today. We're talking about where their, their local interest rates are really high and their credit spreads are pretty wide. And, and so, you know, I think it sets up the world for better relative value trading opportunities. And that's something we're really looking to capitalize on.

[Carol Massar]

So, Mike, if you had to kind of make a bet, I mean, is it 50% that the fortunes and maybe economic and investment outlook for Venezuela are changing for the better at this point.

[Mike Collins]

Or, you know, I would say it's a little better than, than a coin toss, Carol. I probably put higher odds. Maybe I'm just, you know, talking our book or agreeing with the market's reaction so far. But. Yeah, but it certainly feels like, you know, when you're having more private sector resources coming to a country that's been totally mismanaged in terms of their natural resources and their, and their politics, you know, there is, I think, a higher likelihood of a better outcome there. But, you know, the road to that better outcome can be really long.

[Carol Massar]

Right.

[Mike Collins]

And with all kinds of problems.

[Carol Massar]

Right. Lots of bumps can always happen, certainly in a situation like this. Many would agree with that. Hey, Mike, before you go, I'm thinking about the US this week. We do get a jobs report on Friday. We have a bunch of economic news. We did see the US treasury curve move down today. A little bit of economics news today. What is more important though, in terms of the US treasury trade at this point? Is it the US Economy? What the Fed does ultimately? Just give us about 30, 40 seconds on that, if you would.

[Mike Collins]

Yeah. Again, it's going back to the fundamentals, Carol. Right. And if you're looking at US Growth, I mean, if anything, expectations for growth this year have ticked up over the last few months. We're entering 2026 with really strong kind of real GDP or consumption and capital expenditure expectations, momentum going into this year. So most forecasts now for US GDP have two handles. Right. Whereas not that long ago there, there were in the ones I think the recession risks have moderated in the US and we've taken our probabilities down and the upside risk to growth, to more productivity from, from AI maybe to higher inflation and permanently higher rates has, has gone up. And that's actually not a great environment for risk assets necessarily. Right. So we've been threading this needle. We call it the, the muddle through scenario where you kind of run at 2%, you have inflation stuck, you know, between 2 and 3, the Fed eases a couple of times. That's a great environment for growth and for inflation and for financial assets.

[Ed Ludlow]

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[Tim Stenovec]

A big question that many people have been asking in the wake of the US Strikes in Venezuela and the capture of President Nicolas Maduro is what comes next. The surgical extraction of Maduro is done, but what about the future of the country? Ximena Zuniga is Bloomberg Economics Geo Economic Analyst for Latin America. She joins us from the Bloomberg Buenos Aires bureau. Ximena, it's good to have you on the program. You and the team write the range of possible outcomes is wide what are some of these outcomes?

[Ximena Zuniga]

Thank you. Thanks for having me. I think there are. We can point out three possible scenarios for Venezuela going forward. The first one is that after this transition, there is the establishment of a stable, market friendly, pro west democratic government in Venezuela. And that would probably, of course, be the best and most favorable outcome for Venezuela and the world, with consequences for debt markets, oil prices, the Venezuelan diaspora and beyond.

[Tim Stenovec]

Who? Sorry, I just want to jump in. I just want to jump in here on this one. Who would be the leader of the country in a scenario such as this?

[Ximena Zuniga]

I think in this scenario there are two distinct possibility. There could be one interpretation that is, the US has just cleared the path for the constitutional order to be restored, and in that case, the leader that should assume the government should be the winner of the 2024 presidential elections. However, there's also the possibility that that leader, because of all the institutional disorder that has been in the past few years, there could be a call for a constitutional assembly, a constituent assembly, so that the government, so that the country drafts a new constitution, and then calls for presidential elections again. In which I think that Maria Corina got Machado, the winner of the Nobel Peace Prize and the leading figure in the opposition, the winner of the 2023 primaries, who did not, could not run in 2024 because she was barred by the government. I think she would be in the most favorable position to win Jimena.

[Carol Massar]

How, how much of a guarantee, I guess, is the question I want that Venezuela does ultimately have a lasting, market, friendly, pro democratic government.

[Ximena Zuniga]

I think, of course, that's a messy path, right? It's not easy. Venezuela currently has still a military that for years has been very intertwined with the regime. They have privileges, they have businesses. There's also paramilitary militias that have arms and have interests and control certain areas. There are elements of foreign governments like Hezbollah and FARC and ELN from Colombia. And so it's a very challenging situation for a government to take over. And that's part of the reason why the Trump administration has said, however controversial this is, that they havethey are running the country, meaning that they are allowing the vice president of the regime now sworn in President Elsie Rodriguez, to take over, because the regime does actually have the levers of power to, to keep things under control and avoid a scenario of chaos, chaos and infighting. The key question is whether this is the first step of a transition that over time, you know, for example, by disarming armed militias, by cracking down on drug trafficking, et cetera, can lead to an opposition taking over down the line under conditions that allow it to establish civilian control of armed forces and, and project political and economic stability.

[Carol Massar]

Ximena, for those who aren't familiar with the Venezuelan economy, what is it today and what are the Venezuelan people facing in terms of inflation and the economy? What could it be?

[Ximena Zuniga]

I think thank you for that question because that's what many people may not have so top of mind. Venezuela used to be among the richest and largest economies in the region. An economy of about $400 billion with a GDP per capita of about 13,000 per capita, which puts it squarely in the middle income bracket along with countries like Argentina or Uruguay. And it was a country of regional and global relevance because it also sits on the largest share of oil reserves. And now Venezuela is a lower income country of about GDP, about 100 billion GDP per capita in the 4000s, an impoverished population, 8 million people have left the country. And so the upside if Venezuela could recover its political and economic normalcy is enormous towards that path of economic significance it had in the past.

[Tim Stenovec]

Okay, you've certainly laid out one scenario here, two more scenarios that you mentioned. I want to make sure we get to those two. What is the worst possible outcome for Venezuela?

[Ximena Zuniga]

I think the worst possible outcome, the risks of that one are reduced now would, would be that there is not a power vacuum right with the exit of Maduro, that there is a power vacuum and then different factions fight for power and therefore there is the establishment of a credible, stable democratic government begins to seem unachievable. There could be a surge in violence, there could be exacerbating migration and security spillovers to other countries in Latin America. And things could go worse. Latin America Venezuela now has a GDP about $100 billion, but it used to be about half that much in the 2020. Bottom also similar with oil production, it's now at about a million, down from 2.5 million barrels per day before the collapse. But it was about halfless than half this much in the trough. So things could go worse. And so that's definitely the worst case.

[Carol Massar]

You know, Ximena, the other thing I think about my daughter, you know, who has studied some of Latin America, South America, in terms of the history it has had kind of a tortured relationship certainly with US involvement and it's not always been a good one. How do we ensure that what happens isn't just protecting business interests, but instead really once again, putting Venezuela on a path to long term prosperity?

[Ximena Zuniga]

No, absolutely. I think that that brings me to the third scenario, which is that the US sort of running the country via the the pressure exerted over Del Cy Rodriguez or elements of Chavismo who might succeed her if this lingers into the future. That's an intermediate outcome that might, you know, look more stable in terms of they're not being infighting or a very chaotic situation, but would still be an authoritarian, non democratic government, a non sovereign one. In addition, I think the risk of that scenario is there in the sense that the US could be more focused on the resources. The Trump administration's sort of transaction or in nature might lead them to prioritize some economic policy measures and delay a democratic transition. Trump may shift gears and focus on domestic issues and leave the democratic transition unattended, but there are also things mitigating that risk. And one key issue I would highlight is that the Venezuela's incentives are fairly aligned with the US Incentives in the sense that it is in Venezuela's interest also to recover its economic institutions, open up its energy sector so that it can take off and probably a democratic opposition, which would be ideally opposition to win upcoming elections would probably also be pro west and pro us. So I think that that limits the risk that the US Is as a stay on.

[Tim Stenovec]

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[Carol Massar]

We've got markets, stocks in particular off their best levels of the session still up about 7.10of a percent on the S&P 500. Nasdaq 110 right now up about 8.10of a percent. We have seen seen more names higher in today's session. So it's been largely a risk on trade today, but does feel like investors are kind of coming off some of those highs or earlier highs.

[Tim Stenovec]

This might not have been on the predictions for the analysts out there with their Wall street target.

[Carol Massar]

Guessing not.

[Tim Stenovec]

Well, let's see what Sam Geopolitics maybe, but in general, right. Sam Stovall is chief investment strategist at CFR Research. He joins us from Allentown, Pennsylvania. Sam, we wanted to talk general markets with you, but I mean, we got to talk about the topic that really is gathering all the news today and that's everything happening with Nicolas Maduro and in Venezuela and it's seemingly not affecting at least the equity market in terms of investor concerns. Investors bullish today. How do you explain it?

[Sam Stovall]

Well, Tim, I think it really is what we've seen in the past that military events going all the way back to World War II, most of them have really ended up being more headline events than bottom line events and think this one would be the same. Of course, you know, you do have some areas like energy prices that are rising for today. But expectations are that should we be able to improve the transportation, refining and so forth coming out of Venezuela, then their 1% exposure or contribution to worldwide energy could be on the rise and that would bring down energy prices in the longer term. So, you know, in general, I think it just adds to the overall risk on feeling that we started to get at the beginning of this new year.

[Carol Massar]

I will say though, you know, Sam, it does feel like there's like national security issues that a lot of nations are thinking about what they need to be secure. And maybe Covid taught us all having supply chains concentrated in certain parts of the world, not necessarily a good thing. And so people are thinking about AI and the technology and what's needed in terms of rare materials in order to kind of keep that engine going. So I'm trying to understand what that means. Then if there is a bit of a grab around the world as different nations shore up their national security interests and concerns, what that means for the investment environment. Is it more friendly? Is it more volatile? In general.

[Sam Stovall]

I think it's probably a little less friendly. You know, we started out 2025, the worry about tariffs indicating that we're probably going to get thrown back into a smoot hauly kind of situation back in 1930 where, you know, that would end up causing all of the trading partners to become adversaries. So with countries now playing it, or likely to play it very cautiously, wanting to hold on to whatever rare earth minerals that they have, energy that they have, etc. Then it would probably make these trading partners less likely to cooperate. And that could end up being a concern that could hold back prices and optimism in the intermediate and longer term.

[Tim Stenovec]

In your role at cfra, how do you look at oil prices? I know that's not necessarily your bailiwick, but I'm wondering if, if that's, if it does have a broader effect and we know it has a broader effect on the economy and therefore I'm wondering if, in your view, how it affects markets. Like what does it possibly mean that all this oil could come online?

[Sam Stovall]

Well, there's an old saying that for every $10 increase or decrease in the price of oil will raise or lower gdp by about 20% of one basis point. So. So the thought being then that with higher energy prices that actually could end up slowing overall growth with lower energy prices could actually be contributing to that. And so as a result, yes, longer term energy, because we still haven't switched over to cell powered, et cetera, that energy, the carbon materials still end up being the dominant energy force. And so. So we're going to have to be playing with that for quite some time.

[Carol Massar]

Hey, Sam, you know, in terms of markets and, and I'm just thinking about, here we are coming off of three really strong years for the S&P 500. One wonders whether or not it could be four in a row. Having said that, I think a lot about earnings. We know JP Morgan will kind of officially, unofficially kick it all off on January 13th. What are your expectations for earnings and whether or not that is a fundamental catalyst for equities in particular to maybe move to the upside or continue to move higher?

[Sam Stovall]

Sure. Well, I'll answer a couple of those questions. First off, we had a three peat. We've had three three peats over the last 85 years. In the S&P 500, we've had two four peats and only one five peat. So you could say that, you know, the atmosphere is getting pretty rare up here and it's less likely that we will end up with a 4 peak. Doesn't mean we're not going to have a double digit or that we will not have a positive move. We don't get the double digit gain. Actually in that fourth year after the third double digit advance, we have seen the market up by about 10% on average, rising 60% of the time. So you could say that that is favorable. What would be driving that? Well, earnings growth. The Q4 2025 estimate right now is for a 7% gain. According to S&P Capital IQ consensus estimates. We're looking for a 14% gain for all of 2026 and inching our way up to about a 15% advance in 2027. So with investors being concerned a bit about valuations, certainly that is being in a sense whittled away at by the improving earnings outlook that we've been seeing over this year and next year.

[Carol Massar]

What about midterms? Throw that into the mix. How does that complicate or change things?

[Sam Stovall]

Yes, well that ends up being a big headwind overall because midterm election years have actually seen the S and P post only a 3.8% annual increase and that compares with the 9.3% that we normally get in the S&P 500 in those three other years. Also, the frequency was really a coin toss, up 55% of the time versus 76% of the time for the other three years. And in terms of volatility, average drawdown of 18%, which is the highest of the four years in the presidential cycles. So essentially we could end up with a good year, but it's likely to be a very bumpy one.

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