Attack the Week (ATW)
A new War / Weekly Calendar / Charts for the Week / Asset Allocation Model Update
Sunday Thoughts
The year barely has its shoes on, and we’re already staring at a fresh geopolitical bonfire. I had warned about my uneasy feeling last Friday, although little did I know that things would escalate so rapidly in 2026.
“I am keeping an open mind this year, focusing less on tail risks in isolation and more on conditional probabilities: the likelihood that specific events gain traction once underlying economic, political, or societal conditions are in place. Markets rarely reprice because of shocks alone; they reprice when shocks collide with fragility.”
- Paper Alfa, January 2nd, 2026
Just as the weekend began, the US says it struck targets in Venezuela and captured President Nicolás Maduro and his wife, flying them out and moving them toward prosecution in New York on narco-terrorism/drug-related charges.
If you feel your brain itching to draw a clean line from “event” to “outcome,” you’re not alone.
But that itch is exactly what hurts portfolios.
Right now, we don’t have a single “Venezuela trade.” We have a branching tree of conditional paths — political, legal, military, energy, and domestic US politics — and the market will keep repricing as that tree gets pruned in real time. That’s the part most people are losing sight of in the first few trading days: second- and third-order effects.
Trump’s messaging matters here. Not because it tells us “the forecast,” but because it frames the operating doctrine: a drug-and-gangs justification, an explicit willingness to act first and litigate later, and a straightforward linkage to Venezuela’s oil infrastructure and future output.
So what should I do with it, as an investor?
First, I try to slow down.
Early conclusions are usually futile. Not because nothing matters — but because too many things matter at once, and they don’t resolve in a tidy sequence.
It could be good news
The optimistic path is seductive: a quick removal, a relatively orderly transition, oil capacity rebuilt, capital comes back, the region stabilises, risk premium compresses.
Oil sells off, some risk assets breathe out, and the market starts daydreaming about “more supply” and “lower prices.”
That path exists. It’s not crazy.
But it is only one branch.
It could be bad news
Power vacuums are not spreadsheets.
The tails are where the real trouble lives: fragmentation, armed factions, sabotage, spillovers, and a US “temporary” role that stretches — because reality is messy and the incentives change once you’re in. Reuters itself is already pointing at the quagmire-risk analogies investors don’t like to say out loud.
And then there’s the chain-reaction problem.
If the US is willing to do this here, what does that imply elsewhere? How do regional governments respond? How do Russia, Iran, and others calibrate retaliation or signalling?
This is where “shock” meets “fragility.” Markets don’t reprice just because something big happened. They reprice when something big happens, and the system was already leaning.
My process this week
I’m not going to pretend I know which branch wins.
Instead, I’m going to watch for the gating items — the things that collapse the tree into fewer paths:
Who actually governs Caracas this week? (Not in theory, in practice.)
Evidence of civil fragmentation vs consolidation. Protests are one thing; organised armed control is another.
The legal/legitimacy battle. Some news outlets are already highlighting serious questions about the legality of the UN Charter's use of force — and that matters for coalition behaviour, sanctions, corporate risk appetite, and the calculus of retaliation.
Oil plumbing, not oil headlines. Announcements are cheap. Ports, pipelines, security, contracts, and insurance are where the real constraints sit.
And then, the all-important portfolio question: Do I need to do something right now?
Sometimes the correct answer is “no.” Primarily, when the tape is driven by adrenaline and narrative.
I’d rather miss the first few percentages than get caught in the next big move the wrong way.
The new year loves to hand us a “defining moment” early, as if daring us into overcommitment.
Do we really need to accept the dare? Stay nimble and don’t get caught in early narratives.
Let’s now read some Macro D’s detailed thoughts on the BoJ, the Fed, and some of his preferred Macro FX trades before we analyse the weekly calendar, look at some interesting chart setups and interpret the output of our weekly asset allocation model.
Let’s go!
