A busy week at the Oval Office
The U.S. administration announced that it will oversee Venezuelan oil sales going forward, with proceeds directed toward purchases of U.S.-made goods. Initial volumes discussed appear at first glance meaningful, but markets barely moved on crude and for good reason. Venezuelan production is still constrained by years of underinvestment, damaged infrastructure and operational limits. This is not a near-term supply story but more of a leverage story. By inserting itself into Venezuelan oil flows, the U.S. is strengthening its geopolitical and commercial position, ahead of trade negotiations with Canada.
Trump said his administration is moving to block large institutional investors from buying additional single-family homes and wants Congress to codify the rule. Related private equity stocks, most famously Blackstone, reacted negatively. They have often been accused of buying very large proportions of single-family homes in specific regions, hurting the prices and liquidity of local real estate, and restricting access to property. While institutions may not be the root cause of the housing shortage — supply is — from a philosophical perspective, it’s difficult to oppose the direction of this move. This introduces a new regulatory risk premium and signals a clear preference for owner-occupiers over financial-industry buyers.
The Trump administration restricted dividends and stock buybacks for defence contractors, until production performance and capacity investment improve. The rationale is straightforward; delivery timelines are long, inventories are thin, and shareholder payouts are being blamed for underinvestment in manufacturing capability. Pentagon officials have been instructed to identify underperforming contractors and tie future contracts more closely to reinvestment and execution. Defence stocks reacted negatively initially, as investors reassessed capital return assumptions, but longer-term spending targets were pushed materially higher, mitigating the shock. Higher demand is supportive, even if tighter financial constraints are not. This rule will shift how much of the growth will make its way back to shareholders.
Looking ahead, it’s hard to believe that earnings season in the U.S. will already be starting next week. After a week dominated by policy moves and political headlines, markets will try to refocus on fundamentals.
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