We had dinner last night with a family friend who’d just returned to Baltimore.
The family was on lockdown in the British Virgin Islands after a scuba diving excursion because the airspace over the Caribbean had been closed. They had to split up to catch any available flights over the next week.
Hearing the details, we had to admit, we didn’t feel too bad for them.
If you’re going to get stuck somewhere during a sporadic incidence of geopolitical violence… it doesn’t hurt that the sun is shining and the sea is warm and calm, azure blue.
History is being unrolled like an old parchment map.
The extraordinary operation in Caracas — the removal of Nicolás Maduro in what amounts to the largest U.S. military action in the Americas in decades — has been rationalized as a return to spheres of influence.
The “Donroe Doctrine,” the White House is calling… because Trump hasn’t yet stamped his name on every facet of U.S. political life.
America in the Americas. China in East Asia. Russia, where Russia still can.
There is a certain gangster logic to it. Not the UN Charter. Not the Magna Carta. More Godfather than Geneva.
Markets, predictably, shrugged.
Oil stocks rallied. Defense stocks jumped. Consultants booked flights to the oil fields near Lake Maracaibo and the Orinoco Belt.
As Graham Allison observed years ago, spheres of influence never disappeared. They collapsed into one overwhelming American sphere after 1989 — and have been fragmenting ever since.
The difference now is a heightened political divide all across the Americas. While getting set up for our Grey Swan Live! In a conversation yesterday with Matt Smith, speaking to us from a “regenerative” cattle ranch in Uruguay, he mentioned offhand that the locals were not too happy with the U.S. raid in Caracas.
Geopolitics Are Not A Footnote
If you’re allocating capital in 2026 without a geopolitical framework, you’re flying blind.
Iran shut down the internet overnight to suppress protests. Reza Pahlavi, the exiled son of the last shah, is urging broader demonstrations. President Trump says he has again warned Tehran not to harm civilians.
Russia launched an intermediate-range ballistic missile in a widespread air attack on Ukraine, striking energy infrastructure and damaging apartment buildings.
Iran, in particular, now sits at the intersection of energy markets, global liquidity, great-power rivalry, and long-dated asymmetric opportunity.
Over the last 18 months, its position in the global system has shifted materially: confrontation with Israel, U.S. strikes on nuclear infrastructure, a visibly hollowed-out regime, and quiet distancing from both Russia and China.
Near-term regime change remains unlikely—but the probability is no longer zero. Rule of thumb: Buy the rumor, sell the news.
The Bull Market with a Gentle Smile
Global stocks are projected to return 11% over the next 12 months.
Goldman Sachs tells us diversification is back in fashion, that profits — not valuations — will do the heavy lifting, and that modest Federal Reserve easing should keep the road smooth enough for another year of gains.
It’s a confident forecast, delivered in the calm, reassuring tone of a man who has never been bucked off a horse.
Goldman’s Peter Oppenheimer calls it a “broadening bull market,” noting that global equities rose smartly in 2025 and that regions outside the U.S.—Japan, Europe, emerging markets — finally had their turn at the punch bowl.
Valuations are high everywhere now, which is why returns in 2026, we’re told, will come from “fundamental profit growth.”
It’s a reasonable argument. It’s also one that assumes the floorboards are sound.
Markets, after all, don’t need belief in order to rise. They need liquidity, momentum, and just enough narrative glue to keep participants from asking impolite questions.
China’s Export Machine Keeps Running
Goldman also expects 4.8% real GDP growth in 2026 in China, driven by resilient exports and a property slump that is finally losing its power to drag everything else down.
Despite Trump’s tariff pressure, Chinese export volumes are up.
The current account surplus is projected to widen to 4.2% of GDP —well above consensus. High-tech exports and dominance in critical minerals continue to drive the economy.
Yet even Goldman admits the obvious: transforming China into a consumption-driven economy will take years, likely decades.
We’ve been making this case since the first edition of Demise of the Dollar. China is playing the role of raw material processor to the world in a similar fashion to what made the United States a powerhouse in the 1800s after the Civil War.
Trade Deficits, Tariffs, and Statistical Miracles
The U.S. trade deficit unexpectedly shrank 39% in October, falling to $29.4 billion, the lowest level since 2009. Exports rose 2.6%. Imports fell 3.2%.
Economists are surprised. Headlines this morning ask if tariffs are “actually working.”
Notably, nearly 90% of the export increase was attributed to a surge in gold shipments. Import declines were primarily driven by pharmaceutical companies unwinding earlier stockpiling ahead of threatened tariffs. Imports of computer equipment rose — another quiet nod to the AI capex boom.
On the legal front, the Supreme Court is weighing the legality of tariffs imposed under emergency powers. Traders were eagerly awaiting opinions regarding tariffs following a 10 a.m. release this morning. The opinion on tariff powers, however, did not come… not yet.
Our suspicion is that in the end, the White House will be allowed to proceed with caution. But as with all politics today, forecasting outcomes is not as easy as it was before Trump got into politics, to Hilary Clinton’s chagrin, a decade ago.
Next Up? The White House Reaches for the Housing Lever
Domestically, President Trump has directed Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, framing the move as an effort to lower housing costs ahead of the November midterms.
Federal Housing Finance Agency (FHFA) Director Bill Pulte called it a “one-two punch,” pairing bond purchases with a proposed ban on institutional investors buying single-family homes. Blackstone, (not Blackrock mind you), one of the biggest players in the home building space, got whacked for 6% in the stock market immediately after Trump’s Truth Social post.
Skeptics were, of course, unimpressed. “Much of the juice appears to have been squeezed already,” said Neil Dutta of Renaissance Macro. Dutta is probably right to be skeptical. When the government intervenes late in a cycle, it rarely restores affordability.
The do-gooders tend to redistribute incorrectly after the fact — and distort incentives.
“Hyperscale” Is In: $540 Billion and Counting
Get used to this new buzzword.
Hyperscale technology companies are expected to drop $540 billion in infrastructure spending in 2026 — up sharply from estimates just a few months ago.
The figure may actually be low.
In both 2024 and 2025, analysts expected roughly 20% growth in hyperscaler capex. The actual number exceeded 50%.
Artificial intelligence spending currently sits at about 0.8% of GDP. Past technology booms—the railroads, electrification, telecom — peaked north of 1.5%.
By that measure, $700 billion is not excess.
The “strong” balance sheets of these firms make the spending possible. The question is not whether the money will be spent but whether the real economy beneath it is prepared to absorb it without cracking.
Capital misallocation rarely announces itself as folly. Like the build out of the “Information Superhighway” in the early 2000s investors are convinced the buildout is inevitable.
Silver, Volatility and Gold Purchases
We’re keeping a close eye on silver, the most schizophrenic of assets of late.
After a 145% surge in 2025, index rebalancing threatens forced selling. Deutsche Bank estimates selling pressure equivalent to 25% of open interest.
Volatility has exploded. Inverse ETFs see record inflows and outflows in the same week. Jesse Colombo suggests we’re at a make-or-break moment for poor man’s gold:
(Source: Jesse Colombo on x)
Silver is demonstrating what happens when speculation, critical use, and liquidity collide in a small market. It looks chaotic and is anything but random.
Silver’s market capitalization now rivals the largest technology companies on Earth.
At the same time, central banks are voting with their vaults. In November, 45 tonnes of gold were added to global reserves.
Poland alone bought 12 tonnes, bringing its total to nearly 28% of reserves. Since 2022, more than 3,500 tonnes have been accumulated worldwide. Goldman expects roughly 70 tonnes per month in 2026 — four times the pre-2022 pace.
The Confidence Paradox Of Popular Politics
The forecasts are confident because the system is still functioning. Earnings exist. Exports move. Capital spends. Stocks rise.
When you put it together, the market appears legible. That’s a good thing for now. Reading the tea leaves is a tenuous business, at best.
But for now, we’re betting Trump and co. are going to do whatever’s necessary to keep voters interested in their agenda through this 205-year anniversary of the United States as a democratic republic.
For the investor who has lived through cycles — who remembers when interest rates mattered, when currencies failed, when markets punished certainty—the task is not to argue with Trump optimism.
The context matters. Maybe more so than we’ve witnessed in the modern era.
But let’s not forget, populism doesn’t always produce the best results.
The 18th Amendment to the U.S. Constitution was ratified 97 years ago, prohibiting the manufacture, sale, and transportation of alcohol. The movement began with moral certainty and popular support.
It ended with black markets, organized crime, and a public loss of faith in institutions that confused virtue with control.
Populist governments, convinced of their righteousness, have a long history of making large, irreversible mistakes.
~Addison
P.S. We just wrapped our first Grey Swan Live! of the year, with Matt Smith, publisher at Casey Research. Matt and co-author Doug Casey have just released a new book titledThe Preparation.
Quick hit: Since 2021, Matt has been operating a “regenerative” cattle ranch in Uruguay.
The Preparation: How to Become Competent, Confident and Dangerous lays out a 16-cycle skills-based alternative to traditional 4-year college degrees.
Maxim Smith, Matt’s 20-year-old son, is on his way to Thailand for an intense training course in martial arts. That’s part of cycle number 4 in the program.
Last year, he crewed a sailing vessel on a journey across the Atlantic from the Falkland Islands to the southern tip of Africa.
Our conversation with Matt was on a different plane than our usual Live! themes. It’ll be well worth your time to listen to the replay, which is posted to the Grey Swan Live archive in the members’ section.
We also recommend members buy a copy of The Preparation for a young man in their lives.
If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.
