By Thierry Hasse, Chief Investment Officer
Jan. 12, 2026
The new year is shaping up to be anything but quiet for financial markets. As 2026 begins, investors are navigating a mix of geopolitical developments, strong equity market performance and policy signals that warrant both optimism and discipline.
Global Macro Events Take Center Stage
Just days into this new year, the United States conducted a military operation in Venezuela that resulted in the removal of President Nicolás Maduro. The U.S. subsequently asserted control over Venezuelan oil resources. In the near term, the impact on oil prices has been limited.
The muted reaction from energy markets reflects the reality that Venezuela’s current oil output is extremely constrained. Decades of underinvestment and infrastructure deterioration under the Chávez–Maduro regime have left production capacity severely impaired.
The longer-term implications for oil prices and global supply will depend on whether Venezuela’s vast reserves (the largest proven oil reserves in the world, estimated at roughly 300 billion barrels) can be mobilized into meaningful production. If political clarity emerges and substantial investment by major U.S. energy companies follows, Venezuela could eventually become a material source of global crude supply, potentially challenging OPEC’s ability to maintain supply discipline.
From a geopolitical perspective, increased U.S. involvement would also likely realign Venezuela’s energy trading relationships, including reducing exports to China, currently its largest customer. While many uncertainties remain about the future of a post-Maduro Venezuela, one thing is clear: shareholders of Chevron and Exxon Mobil—both holdings in the Elevage Partners Focused Equity portfolio—may have multiple strategic pathways to participate in what could become a significant shift in the Western Hemisphere energy landscape.
U.S. Equity Markets Finish the Week at Record Highs
U.S. stock markets ended last week at new record closing levels. The S&P 500 advanced just over 1%, while the Dow Jones Industrial Average and the Nasdaq gained 2.3% and 1.9%, respectively, marking a strong start to the year (Source: CNBC).
For some investors, the only cautionary note was that the year began almost too smoothly. The recent rally has been characterized by a broadening of market leadership away from the so-called “Magnificent Seven” tech stocks. Cyclical sectors—including banks, transportation companies and small-cap stocks—led the advance, reflecting growing confidence in an economic reacceleration in 2026.
That optimism has been supported by expectations for tax-based fiscal stimulus associated with the One Big Beautiful Bill and the pro-business posture of the current U.S. administration. Additional support came from the president’s announcement that Fannie Mae and Freddie Mac were directed to purchase $200 billion in mortgage-backed securities in an effort to help lower mortgage rates for homebuyers.
While unconventional, this move underscores the administration’s willingness to use policy tools aggressively to stimulate economic activity and address housing affordability challenges. At the same time, the Federal Reserve has remained broadly supportive of risk assets, as it continues to contemplate further monetary easing later in 2026.
And, as if the financial calendar were not already packed, weekend news added a new layer of uncertainty. The New York Times reported that the Department of Justice has opened a criminal investigation involving Federal Reserve Chair Jerome Powell, related to the renovation of the Fed’s headquarters building. While the situation remains fluid, early market reactions included a softer U.S. dollar and renewed selling pressure across U.S. risk assets as investors weighed the potential implications for central bank independence and monetary policy credibility.
Even as markets entered the year on strong footing, rapidly changing news headlines and market participants’ reactions underscore the importance of balancing investor emotions with disciplined investment management.
A Mixed Jobs Report Likely Keeps the Fed on Hold
Friday’s release of the U.S. employment report was the first since October that was free from distortions related to the federal government shutdown. The data reinforced the “low hiring, low firing” dynamic that characterized the second half of 2025.
Nonfarm payrolls increased, but below expectations, at 50,000 jobs. Prior months were also revised downward, reinforcing signs that employers remain cautious about expanding headcount. At the same time, the unemployment rate edged down to 4.4%, with labor force participation holding relatively steady and no evidence of widespread layoffs (Source: Bloomberg). Consequently, we believe the Federal Reserve is unlikely to view the data as justification for a January rate cut and will instead continue its current period of monetary “fine-tuning.”
Markets Look Ahead to Inflation Data and Earnings Season
For many market participants, the new week effectively began Friday night, when the president announced a proposal to impose a one-year cap of 10% on credit card interest rates, effective Jan. 20. Setting aside questions about implementation, trading activity in credit card-exposed financial stocks is likely to be volatile early in the week.
Names such as Visa, Mastercard, Citigroup and Bank of America could experience initial selling pressure. While near-term reactions may be sharp, investors should be cautious about drawing longer-term conclusions too quickly.
With the jobs report now behind us, attention will shift back to the ongoing debate between labor market softening and sticky inflation. The Consumer Price Index, scheduled for release on Tuesday, Jan. 13, is expected to show inflation remaining elevated but stable—supporting the Federal Reserve’s current wait-and-see approach.
Earnings season also begins this week, led by the major U.S. banks. JPMorgan reports on Tuesday, followed by Bank of America and Citigroup on Wednesday. Traditionally, these earnings calls focus on consumer balance sheets and corporate loan demand. This quarter, however, it would not be surprising if much of the discussion centers on the potential implications of proposed credit card interest rate caps.
Discipline in a Fast-Moving Environment
As the year unfolds, we expect that markets will continue to test investors amidst fast-moving headlines and competing narratives. In this environment, staying anchored to a disciplined investment process—rather than reacting to every development—remains one of the most valuable advantages an investor can have.