Fourth quarter earnings season is underway, what is the market thinking? The expected blended earnings growth rate for the quarter stands at 8.3%, up from estimates at the start of the quarter. Since our last review, valuations have continued to grind higher; the forward P/E now sits at 22.2x, well above both the 5- and 10-year averages.

Following the U.S. military operation in Venezuela over the weekend, discussion of the country’s energy resources has taken center stage. Venezuela accounts for roughly 0.1% of global GDP and approximately 1% of world oil supply. Despite holding significant reserves of oil, natural gas, and other commodities, years of mismanagement have severely degraded production capacity. A meaningful recovery would require sustained investment and structural reform, making any near-term impact on the global economy negligible as any meaningful increase in production would likely take several years.

Artificial intelligence (AI) is driving a surge in infrastructure spending. Today’s hyperscalers are racing to build data centers and compute capacity, pushing capital expenditures (capex) sharply higher to unsustainable levels. While the market has rewarded these capex leaders, history suggests that as capital cycles mature and spending stabilizes, market leadership often shifts.