This Week in Review | US-Venezuela, US Jobs Data, Consumer Sentiment

Transcript

Mackenzie Winner:

Hello and welcome to This Week in Review. This weekly segment is designed to highlight a few important developments you may have missed this week, what they mean for markets, and most importantly, the potential impact for investors.

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Now, let's review what happened this week.

First, US-Venezuela.

Over the weekend, US forces captured Venezuelan President Nicolás Maduro and brought him to the United States to face federal charges related to narcotics trafficking. This is a sensitive topic with geopolitical impacts, but for investors, the key question is whether these actions impact the profitability of global businesses.

While no one can predict exactly how events will unfold, it's important to remember market volatility can occur as uncertainty flares, but global stocks are forward looking. They weigh future earnings, quickly price in developing risks and then move on.

In fact, history overwhelmingly shows most regional conflicts are unlikely to cause a global economic recession or bear market— even when the US or other major powers are involved.

In this case, the most obvious potential impact is to energy markets, but both short- and long-term outcomes are hard to predict. Venezuela has significant proven oil reserves, but its current output accounts for less than 1% of global production. And after decades of mismanagement, some estimates show it could cost hundreds of billions to modernize its oil fields, expand production and transport it to market. Furthermore, Venezuela's history of asset seizures and political instability has multinational oil firms hesitant to invest. That said, there are both legal and financial paths the government may pursue to ease these challenges.

Meanwhile, an oversupply of oil has led prices for the global benchmark, Brent crude, to decline for the third year in a row in 2025. Prices are now hovering around $60 per barrel. This downward price pressure means oil companies have little incentive to invest heavily to increase supply.

Even if we do see oil market volatility, that doesn't automatically mean bad news for the broader economy or stock market. Historically, even oil prices nearly double today's were not automatically bearish for stocks. And we see no reason to believe instability in Venezuela alone could drive prices anywhere near high enough to disrupt the global economy.

So, all-in-all, while the situation is worth watching, we doubt there's much impact on global businesses over the next 3 to 30 months, which is typically all stocks ultimately care about.

Next, the latest US jobs figures.

This week, the Bureau of Labor Statistics released a variety of US jobs data, including the nonfarm payrolls and unemployment figures.

In December, nonfarm payrolls grew by 50,000 jobs, while unemployment ticked down to 4.4%. Despite months of lackluster employment reports and downward revisions, overall job creation more than offset cuts in 2025, resulting in a net positive payroll growth of 584,000 for the full year.

Looking back to 2022 and 2023, the labor market faced a significant shortage of workers, with far more job openings than available job seekers. This was a major constraint for businesses. Since then, labor markets have gradually moved toward more balance. Now, there are slightly more people seeking jobs than there are open positions—a notable shift from just a few years ago. But we think this shift reflects a rebalancing of the labor market.

It's worth pointing out that while the labor market has been slowly weakening for years, it now resembles the pre-pandemic labor market, which, at the time, was widely regarded as strong and healthy. And because the shift in the labor market has been gradual, it is not a surprise for stocks. So, we don't think long-term investors need to worry about what this data means for stocks or the broader economy.

At the end of the day, these labor market trends, like most economic indicators, are backward looking. Stocks, on the other hand, are forward looking. If this were a red flag, stocks would already be signaling it.

Finally, a note on consumer sentiment.

Here's something you might have noticed in 2025: consumer sentiment surveys like those from the University of Michigan and The Conference Board, painted a bleak picture of the economy, even as economic data showed growth and stocks hit many new record highs.

This situation left many worried the apparent disconnect was a warning sign of trouble ahead. But as we highlighted in a recent MarketMinder article, a closer look at economic and market history shows this divide is nothing new. For example, the University of Michigan's Consumer Sentiment Index currently sits lower than any reading in 2020, when the Covid-19 pandemic caused widespread economic uncertainty.

And yet, in 2025, global stocks continued their upward climb. So, what's going on? Some commentators call this a disconnect— a gap between what people say they feel about the economy and how they actually behave. But the truth is, sentiment surveys often don't reflect the underlying economic or market fundamentals.

Take the University of Michigan Sentiment Index. Seven of its top ten readings came in the year 2000— right before the Tech bubble burst and the 2001 recession hit. Feelings about the economy are fleeting and often shaped by headlines, recent market swings or other temporary factors.

We think today's low sentiment likely comes down to a few key factors: growing political polarization, people's reluctance to participate in surveys, and most of all, frustration over the high prices caused by inflation in 2022 and 2023.

So, what's the takeaway? We think the best way to interpret sentiment surveys hasn't changed—focus on what consumers do, not what they say.

That's it for this week.

Thanks for tuning in to This Week in Review. If you're looking for more insights, then don't miss our other series, 3 Things You Need to Know This Week, released every Monday.

You can also visit FisherInvestments.com anytime for our latest thoughts on markets.

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