Author: Zac Martin, Investment Associate
Week Ending January 2nd – Madur-OUT
Geopolitics: Venezuela – with recent US involvement US energy stocks have jumped on the news that these companies will be able to re-start operations in Venezuela. The global impact on energy prices could be meaningful, with Venezuela accounting for 17-20% of the global proven oil reserve. With increased US oil production and OPEC production remaining stable, global oil production is already near highs and the price of oil has decreased to near multi-year lows. Additional supply could continue keeping oil prices low, additionally, this could be more impactful for the US economy as the type of oil that Venezuela produces is crucial for US refineries. Nearly 70% of US refineries run the most efficiently by refining heavier crude oil than the US currently produces, as a result 90% of the crude imported to the US is heavy crude oil to compliment the US light shale during refinement. In 2023 the US imported nearly 6.5 million barrels a day, mostly from Canada, while producing a record 12.9 million barrels a day.
US GDP: Q3 2025 Real GDP grew 4.3% at an annualized rate. On first glance this is a very strong GDP report, with the last report being stronger than this in Q2 2023. However, looking into the components suggests a slightly weaker economy than the headline number stated. Gross domestic investment remained unchanged, although AI sensitive variables continued to increase, consumer consumption accelerated, and net exports remained a large driver of GDP growth. The story for GDP this year has been focused on trade, with Q1 GDP being negative as imports detracted -4.68% and Q2 net exports added 4.83% to GDP. Q3 has continued this trend, with trade adding 1.6% to GDP growth. Removing trade, GDP grew 1.46% in Q1, 2.44% in Q2, and 2.97% in Q3.
See year-end returns below:
The Week Ahead:
- ISM PMI (1/6)
- JOLTS & ADP Employment (1/7)
- Nonfarm payrolls & unemployment (1/9)
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