Brew Markets – January 5, 2026

Episode Title: The Venezuela Trade & Rocket Lab’s Sky-High Valuation
Host: Ann Berry (A) with Producer John (B)
Podcast: Morning Brew

Episode Overview

This episode dives into three headline topics shaping the financial markets in early 2026:

• The market’s dramatic response to regime change in Venezuela and its global resource implications
• Wall Street’s bullish forecasts for 2026 amid concerns of bubble-like valuations and historical comparisons
• A deep-dive listener Q&A into Rocket Lab’s soaring valuation as a preview for SpaceX’s potential IPO

Ann Berry and Producer John combine sharp market analysis with real-time data, providing context, historical perspective, and forward-looking insights.

Key Discussion Points & Insights

1. The Venezuela Trade and Market Ripple Effects

[00:50 – 04:58]

• Backdrop: The US removal of Nicolás Maduro over the weekend unleashed speculation about American access to Venezuela’s vast reserves:
  • ~300 billion barrels of oil (20% of global proven reserves)
  • 6th largest gas deposits, plus significant gold, iron, bauxite, diamonds, & rare earth minerals
• Immediate Market Reaction:
  • U.S. Equity markets bounced, with the Dow hitting an all-time intraday high
  • Energy stocks led the rally:
    • Chevron (only US major in Venezuela presently)
    • Valero (VLO) & Philips 66 (PSX), two refiners best set up for Venezuela’s heavy, sulfur-rich crude
    • ExxonMobil & ConocoPhillips (potential for reentry after past nationalization losses)
    • Oilfield services: Halliburton, SLB, Baker Hughes
• Caution Underneath the Euphoria:
  • Ann notes the immense capital and stability needed to revamp Venezuela’s battered infrastructure:

    “Years of corruption, underinvestment and destruction have left Venezuela’s crude infrastructure in a state of disrepair that could take at least $100 billion and a decade or more to fix.” (A, 02:59)

  • Example: Chevron’s global capex budget is $19bn – Venezuela needs much more, with high geopolitical risk
  • Ann reflects personal hesitation about diving into the “Venezuela trade” despite temptation
  • Broader beneficiaries included defense (Palantir, Northrop Grumman, Lockheed Martin) and financials (Goldman Sachs, JP Morgan)—all at all-time highs, as they’re linked to the reconstruction/defense financing boom
  • Ongoing:

    “This feels to me like a market high on hope, at least for right now.” (A, 02:39)

2. 2026 Market Outlook: Bubble, Boom or Bust?

[04:59 – 17:39]

S&P 500’s Record Streak

• Recent Run:
  • S&P 500 up ~80% across 3 years (2023–2025), posting double-digit annual gains; 2025 saw 39 record highs
  • If 2026 is another up year, it’d be the first four-year streak since 2007—right before the Great Financial Crisis

    “That wasn’t just the end of a five-year run. That was a catastrophic falling off the cliff and became known as the great financial crisis, the GFC.” (A, 05:59)

• Analysts’ Consensus:
  • Banks/analysts are bullish despite bubble talk; projections for the S&P 500 year-end:
    • Bank of America: 7100 (~3.7% rise)
    • Barclays: 7400
    • JP Morgan, HSBC: 7500
    • Citi: 7700
    • Deutsche Bank (most aggressive): 8000 (~15% rise)
    • Average estimate: ~10% (long-term market average)
• Driving Factors:
  1. Interest Rates & The Fed:
     • December 2025 saw a contentious Fed rate cut, despite patchy economic data from government shutdown
     • Wall Street expects at least one more rate cut in 2026; Chair Jerome Powell’s term ends in May, with President Trump interviewing “dovish” successors—potential for even more accommodative policy
     • Ann reads Ray Dalio:

       “It appears most likely that the newly appointed Fed Chair and the FOMC will be biased to push nominal and real interest rates down, which would be supportive to prices and inflate bubbles.” (B quoting Ray Dalio, 10:13)

     • Ann: “[Dalio] has actually been a real voice suggesting that there should be bubble fears in this market. ... If rates continue to head downwards it’s simply going to inflate the risk.” (A, 10:29)
  2. AI & Tech Concentration:
     • Tech magnifies the market: “10 largest stocks accounted for nearly 40% of the S&P 500 ... 45% of the S&P 500’s gains in 2025 came from the magnificent seven.” (B, 11:31)
     • 40% of total capex also from these tech titans, increasing systemic risk if AI’s productivity promise lags
  3. Corporate Earnings Growth:
     • Expectation for 15% S&P 500 profit growth in 2026—the highest since post-pandemic 2021
  4. Macro Data Watch:
     • BLS December jobs report due Friday
     • Market eagerly awaits fresh Fed signals and new macro/commodity data, including oil, gold, and currency
  5. Valuations:
     • S&P 500 now trades at 22x forward earnings (10-year avg is 19x)

     “If you take a look at companies in the S&P 500 right now they’re trading at 22 times their expected earnings ... significantly above the 10 year average of 19 times. ... I think stock valuations are looking rich.” (A, 15:54)

Generational Perspective & Investment Risk

• Missed Lessons:
  • Ann shares concerns about younger investors and entrepreneurs lacking experience with bear markets/high rates:

    “A lot of young companies have been funded in the age of very, very low interest rates. ... It’s a very, very different world. ... Those of us who came into really investing post 2009 ... haven’t lived through a different kind of macro environment.” (A, 14:06)

  • Importance of portfolio diversification and risk awareness highlighted

3. Listener Q&A: Rocket Lab vs. SpaceX—Valuation Soars, But Profits Don’t

[18:21 – 23:01]

• Listener asks: “Would you please explore Rocket Lab’s valuation and tell us why you’re keeping an eye on the company?”
• Ann’s Deep Dive:
  • IPO Context: As SpaceX preps for a rumored $1.5tn IPO, Rocket Lab serves as the best public comp
  • Rocket Lab Snapshot:
    • NZ-founded, now US-based satellite launcher; public via SPAC in 2021, up 680% to a $40bn market cap
    • Revenue in 2025: ~$600mn; backlog: $1.1bn; net losses persist—burned $70mn last quarter; no cash flow breakeven expected until 2027
    • Growing via US defense contracts ($815mn from Space Development Agency in 2025)
  • Valuation vs. Peers:
    • Rocket Lab now at 70x revenue—a “massive, massive multiple” (A, 22:27); 1/3 of covering analysts rate as “hold”
    • SpaceX’s implied $800bn–$1.5tn valuation (up from $100bn in 2021, $400bn in late 2025) rapidly elevated Rocket Lab’s share price
    • Retail investors hold 40% of Rocket Lab, but Ann notes lacking “Elon Musk premium”:

    “If there’s one thing we’ve seen with Tesla stock, which is a retail investor darling, folks do like to own a little bit of access to Elon Musk, which is one thing that Rocket Lab just doesn’t offer.” (A, 22:46)

  • Takeaway:
    • “If privately owned SpaceX goes public ... the market will be able to sharpen its currently hazy comparative analysis.” (A, 22:38)
    • For now, Rocket Lab’s valuation arguably may be “fully valued”

4. Quick Market Wrap & Industry News

[23:07 – 24:24]

• Market Recap:
  • S&P 500: +0.6%
  • Nasdaq: +0.7%
  • Dow: +1.25%, but just shy of 49,000
• Notable Spin-off:
  • Versant Media Group (VSNT), cable networks spun off from Comcast, debuted on Nasdaq; opened at $45.17, dropped 15% to $40 on Day 1
  • Market watching this as a signal for media industry valuation dynamics, (Warner Bros. Discovery, Netflix, Paramount, etc.)

5. Looking Ahead: CES, Earnings, and Regulatory Watch

[24:24 – 25:20]

• CES Underway: Tech innovation week in Las Vegas kicks off; big speeches expected (Jensen Huang, Samsung product reveals, etc.)
• Financials Earnings: Major banks’ earnings imminent, to be a key driver of Q1 sentiment
• Regulatory & Macro:
  • Tax changes from the “One Big Beautiful Bill Act” expected to aid corporate profits
  • Possible tariff changes pending Supreme Court ruling
  • Currency moves to be watched as the U.S. dollar’s strength/weakness impacts trade and profitability

Notable Quotes & Memorable Moments

• “This feels to me like a market high on hope, at least for right now.”
  — Ann Berry (02:39), regarding Venezuela-fueled euphoria

• “If the S&P 500 goes up again in 2026 for a fourth consecutive year, it would be the longest streak since ... 2007, when it ended a five-year run. That wasn’t just the end of a five-year run. That was a catastrophic falling off the cliff and became known as the Great Financial Crisis, the GFC.”
  — Ann Berry (05:58)

• “It appears most likely that the newly appointed Fed Chair and the FOMC will be biased to push nominal and real interest rates down, which would be supportive to prices and inflate bubbles.”
  — Ray Dalio, quoted by Producer John (10:13)

• “A lot of young companies have been funded in the age of very, very low interest rates. ... Having that balanced portfolio is really important.”
  — Ann Berry (14:06–15:43)

• “Rocket Labs, despite that revenue number, loses money. ... [It is] now trading at around 70 times revenue, which is a massive, massive multiple.”
  — Ann Berry (21:38, 22:27)

Timestamps for Important Segments

• Venezuela Market Reaction & Analysis: 00:50 – 04:58
• S&P 500 Recent History & 2026 Projections: 05:02 – 08:20
• Key Market Drivers (Fed Policy, AI, Earnings): 08:21 – 13:41
• Investor Caution & History Lessons: 13:42 – 15:43
• Macro Data & Valuations: 15:44 – 17:39
• Listener Q&A: Rocket Lab & SpaceX: 18:21 – 23:01
• Market Wrap & Versant Spin-off: 23:07 – 24:24
• CES & What’s Next: 24:25 – 25:20

Final Thoughts

Ann Berry’s Brew Markets reemerges in 2026 with a sense of cautious optimism yet strong awareness of market history’s cyclical nature. The Venezuela trade underscores the speed at which geopolitics and hope can move markets, while the detailed analysis of S&P 500 drivers and the Rocket Lab/SpaceX comparison lays out the mix of opportunity and risk. The tone is brisk, informed, and accessible—perfect listening for active investors and market watchers navigating uncertain times.