Unhedged – "Imperialism and the Markets"

Date: January 6, 2026
Hosts: Katie Martin (A), Rob Armstrong (B), Jamie Smith (C)
Main Theme:
The episode dissects the dramatic start to 2026 with the U.S.-led regime change in Venezuela, focusing on whether markets' muted response makes sense, and if oil is truly the motivation behind these actions. The FT team also reflects on the global oil market, U.S. corporate interests, and the broader implications for financial markets and geopolitics.

Episode Overview

The 2026 New Year opens with geopolitical shock: Donald Trump orchestrates a regime change in Venezuela, detaining Nicolás Maduro and declaring American control. Yet, markets barely react. The hosts examine the economic logic (or lack thereof) behind the U.S.’s actions, Venezuela’s oil industry realities, and why markets are largely unfazed. They end with their trademark “long/short” segment on market bets and regional cricket banter.

Key Discussion Points & Insights

1. The Shock of Venezuela Regime Change and Market Apathy

• Geopolitical Bombshell:
  Donald Trump removes Maduro and claims temporary control over Venezuela (00:00).
  “If you think he’s joking about taking control of Greenland next, then I hope you’re sitting down because ... he’s absolutely serious.” — Katie Martin (00:24)
• Muted Market Reaction:
  Despite the upheaval, financial markets, especially oil, react with a shrug.
  “We did predict this kind of shrug at Venezuela on this very podcast just before Christmas. And for once, we were right.” — Katie Martin (00:12)

2. Is It About the Oil?

• Quality and Economics of Venezuelan Oil:
  • Venezuela has the world’s largest oil reserves (300 billion barrels, 17% global share), but the oil is “heavy,” expensive to extract, and currently unprofitable.
    “It’s called heavy oil...very thick. It costs a lot of money to get out of the ground. Average cost per barrel...as high as $80.” — Jamie Smith (03:37)
    “Global price is hovering around $60...so if you’re producing at $80, you know you’re losing money at the minute.” — Jamie Smith (04:09)
    “People don’t generally steal things that have a negative value...You don’t just go around taking on liabilities voluntarily.” — Rob Armstrong (04:28)
  • U.S. Gulf Coast refineries are calibrated for heavy oil; dwindling supply from Mexico and trade frictions with Canada give Venezuela added strategic value, if infrastructure improves (05:00–06:32).
• Oil Company Perspectives:
  • Initial market bumps seen in stocks like Chevron (who already operate in Venezuela) and especially in refiners like Valero (06:33–07:32).
  • Despite “pole position,” Chevron and others likely face huge investment and political risk, deterring major moves for now (09:29–10:47).

3. Investment Realities & Market Logic

• Massive Investment Needed:
  • $100 billion over 10 years is the ballpark to double Venezuela’s output—still only to 2% of global production (09:52–09:58).
  • Oil majors have better low-risk/high-return options elsewhere, e.g., Chevron’s recent $50 billion deal for a Guyana stake with break-evens below $30/barrel (10:47–11:46).
  • Political instability, infrastructural decay, and long timeframes make rapid gains implausible.
    “So, no, the big challenge for these companies...they have other great opportunities around the world.” — Jamie Smith (10:47) “President Trump apparently might have only three years left in office. So who’s going to be in charge when these companies are operating?” — Jamie Smith (11:48)

4. Contrasting the Market’s Response to Geopolitical Events

• Why No Oil Price Shock?
  • Market sees Venezuela’s infrastructure and embargoes as barriers to quick supply gains; short-term impact is actually lower Venezuelan output (08:32–09:29).
  • “Oil market...has been very subdued...because this is going to take years, decades to achieve anything significant.” — Jamie Smith (08:32)
• Comparing Venezuela to Ukraine Crisis:
  • Russia’s invasion brought immediate price surges due to massive European supply dependency; Venezuela is far smaller in production and global influence (15:41–16:19). “Russia was just such a massive supplier...the volume is so much more compared to Venezuela.” — Jamie Smith (15:41) “It’s the difference between having a lot of reserves and having a lot of production.” — Rob Armstrong (15:57)
  • Taking Greenland, by contrast, would likely be a “market event” due to NATO implications (14:31–16:20).

5. Market Mood, U.S. Fed, and Trump’s Appetite for Disruption

• Broader Market Shrug as Encouragement:
  • Market apathy may embolden Trump to pursue further aggressive actions (13:53).
  • Discussion on whether Trump’s geopolitical risk tolerance “crosses over” into economic policymaking, including possible Fed shakeups (12:57–13:53). “Every time the market has given him a pass...it nourishes him, it makes him feel stronger and more powerful and able to do more.” — Katie Martin (14:31)
  • “I think you're raising the right question. I’m just not sure how to go about answering it.” — Rob Armstrong (12:57)

6. Oil Price Outlook

• The near-term global oil price direction is more sensitive to Russia-Ukraine dynamics than Venezuelan developments; downside risk prevails due to oversupply (16:39–17:30). “Most people would suggest that the world is awash with oil right now. We have a supply glut and that the price could be heading below $60 again.” — Jamie Smith (16:53)

Notable Quotes & Memorable Moments

• On the surprise of regime change:
  “This was not on my bingo card at all...was sort of outside of the realm of what I thought he would get up to.” — Rob Armstrong (01:53)
• On the economics of heavy oil:
  “When you make something for $80 and sell it for $60...you’re behind there.” — Rob Armstrong (04:16)
• On market response to Venezuela:
  “If the oil market...hasn't really done very much...is the oil market effectively saying, this ain’t going to happen, lads, this is just a fantasy?” — Katie Martin (07:35)
• On political and investment risk:
  “The big challenge for these companies are they have other great opportunities around the world...A Venezuelan expedition...is not something investors would like to see.” — Jamie Smith (10:47)
• On Greenland as a market event:
  “Would it be a market event if Trump said, we're simply taking Greenland...? I would think it would have to be.” — Rob Armstrong (14:31)
• On the broader risk appetite:
  “Is risk appetite domain specific?...Will that translate to a kind of new level of risk tolerance domestically or economically? I just don't know.” — Rob Armstrong (12:57)

Key Timestamps

• 00:00–01:30 – New world order in Venezuela; Trump’s bold moves; introducing the panel
• 03:21–06:15 – Venezuelan oil explained; economics of heavy crude; refinery needs
• 06:33–07:32 – Stock market responses; who benefits from Venezuela turmoil
• 08:32–09:29 – Why no immediate oil impact? Infrastructure and embargo headwinds
• 09:29–11:46 – Capital expenditure realities; oil major decision-making
• 12:57–14:31 – Potential Fed shake-ups and risk appetite discussion
• 14:31–16:20 – Geopolitical stakes: comparing Venezuela and potential U.S. moves on Greenland
• 16:39–17:30 – Oil price outlook: supply glut persists, Russia-Ukraine remains key
• 17:59–19:07 – Long/Short segment: cricket, U.S. vs. global stocks, praise for London

Long/Short Segment Highlights

• Jamie Smith: Long Australia/short England due to the Ashes cricket results (17:59).
• Rob Armstrong: Long U.S. stocks, short Japan & Europe—U.S. profit and GDP growth trumps (18:21).
• Katie Martin: Long London—challenging the city’s negative reputation (18:48).
• Bantery Moment:
  “It’s a lawful hellhole, as we all know.” — Rob Armstrong on London (19:02)

Tone & Style

The conversation is lively, lightly self-deprecating, and avoids hyperbole despite covering dramatic events. The experts guide listeners through the intricacies of oil economics and market psychology with clarity and dry wit.

Conclusion

In summary, the episode argues that Venezuela’s oil is not an immediate economic prize, and practical hurdles make American “imperialism” in Venezuela more bark than bite—at least for now. Markets seem to agree, focusing instead on broader supply/demand dynamics and remaining unmoved by headline-grabbing geopolitics. The panel closes with their signature blend of market calls and cultural asides, offering a grounded, nuanced take on 2026’s chaos.