Five for Friday
January 9, 2026
Geopolitics in Focus, Bull Market, Midterms, 4 in a Row, and On This Day
1. Venezuela
For decades, the correct investor response to major geopolitical events (even ones involving the U.S.) has been to ignore them. Because despite real-world stakes and media coverage, the U.S. stock market has tended to either look past these events or recover fairly quickly from any volatility. There are exceptions to every rule, but from the Cuban Missile Crisis to the Gulf War to today, stock markets have rarely been impaired long-term by even the most consequential events. That said, getting a handle on how impactful a geopolitical event might be to one’s portfolio involves two questions: 1) how will it impact corporate profits? 2) how will it impact the U.S. consumer? More often than not, the answers are “not enough to matter long-term.” Of course, that’s not always the case. U.S. support for Israel in the 1973 Yom Kippur War led to an OPEC oil embargo that sent gas prices soaring, straining consumers and corporations for years. And though the U.S. is far less reliant on foreign oil now than it was in the 1970s, a spike in energy prices is still the primary way that geopolitical shocks can impact the U.S. economy. Today, however, oil prices hover near post-Covid lows amidst an oversupplied market… with new Venezuelan oil potentially on the way. U.S. companies do very little business in Venezuela, and the conflict is far enough from U.S. soil that it hasn’t impacted consumer spending or sentiment much yet (relative to something like 9/11). We will monitor the situation from here.
2. Trend
In re-reading commentary from the initial Russia invasion of Ukraine, I was struck by this insight from our partners at Strategas, a Baird Company: “It’s always tempting to prognosticate how a headline event – geopolitical conflict, Fed action, etc. – may change the complexion of the market, but it’s been our experience that exogenous inputs do more to reinforce trends in place than to change the game.” I hope that remains the case, because the trend today is a bull market in both U.S. and International stocks—with increasing participation from cyclical, risk-on corners of the market like Value stocks, Small Caps, and Commodities. In fact, the S&P 500 Equal Weighted index has actually outperformed the Tech-heavy S&P 500 over the last 2 months. Things can change but today the trend is very much our friend.
3. Midterms
2026 is a midterm election year. Of the four years in a presidential cycle, midterm years are historically the most volatile and worst for stock market returns (though, interestingly, the best for economic growth). We take a look at this – the stats behind it and whether 2026 might be an outlier – in our 2026 Market Outlook and Q4 Market Update.
4. Four in a row?
The S&P has now had a positive return 3 years in a row and if 2026 is to be positive, that would mean 4 consecutive up-years. Now, that might sound like a big ask but it is actually quite common. Since 1928, there have been 36 calendar years that followed a stretch of 3 straight up-years. And the median return in that fourth year? +15%. It might be prudent to temper expectations if you’re hoping that 2026 will match the stellar annual returns of 2023 (+26%), 2024 (+25%), or 2025 (+18%). But recent strength alone is not a reason to be bearish today.
5. On this day
in 2007, Steve Jobs announced the first iPhone. Hindsight makes its massive success seem obvious, but sales were initially muted, and four years later, only 35% of Americans owned a smart phone of any kind. Today, that number is north of 90% and the iPhone stands as one of the best-selling products ever. Even great ideas need time.
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