Economics Update January 2026 - Power before rules: Venezuela, the new world order, and four lessons learned

One of the central theses of our annual outlook for 2026 has already been confirmed in the first few days of the year: “Politics drives markets.” The rules-based world order is disintegrating, and a new structure is emerging in which individual countries are attempting to assert their interests without regard for overarching values. The fact that this also applies to the US comes as no surprise to sober observers. Rather, since Donald Trump took office, this has been the conceptual basis on which the US government operates. The consequences of this development need to be analyzed carefully. 

For the time being, the events in Venezuela will have no immediate consequences for strategic and tactical asset allocation: a rapid increase in oil production in Venezuela is unlikely given the high investment requirements, the probably high production costs, and the existing oversupply of oil on the world market. The concrete effects are also limited by the fact that Venezuela's political order is not fundamentally changing for the time being and that a return to democracy does not appear to be a priority for the US. Nevertheless, there are some lessons and insights that we can already draw from the events of the past few days.

Firstly, potential conflicts between the respective countries and other powers must also be taken into account when assessing the attractiveness of regional markets. The freedom of individual countries to decide with whom they want to ally themselves is severely limited by the actual balance of power. In Latin America, for example, Venezuela's attempt to align itself with China has failed. This is likely to have consequences for Colombia and Cuba, while the governments in Argentina and Chile are already explicitly counting on US support and can benefit from it. The situation is different in Brazil, whose government will continue to try to maintain a kind of equidistance from the US and China – but it remains to be seen to what extent this will succeed. With regard to Europe, it should be noted that the conflict over Greenland could escalate in the coming months, which would be a negative factor for European investments.

Greater global instability – Europe must act

Secondly, the dissolution of the rules-based order fundamentally leads to greater global instability and a higher probability of regional conflicts. However, the specific potential risks should be viewed soberly in each case: in the relationship between China and Taiwan, recent events have not changed the interests of the parties involved or their calculations regarding their own options for action. China's position on the Taiwan issue and its own positioning in the South China Sea is clear. The country has not taken internationally applicable rules into account in its actions in this regard and will not do so in the future. An attack by China on the island nation has not become more or less likely since the beginning of the year.

Thirdly, Europe once again faces the urgent need to recognize geopolitical realities regardless of its own desires and ideals and to adjust its own positioning accordingly. This includes developing its own European (!) strategy and reforming decision-making mechanisms within Europe so that the European Union (EU) can act as a unified player in foreign policy and is capable of taking action. In the immediate term, this means finally signing the free trade agreement with the South American Mercosur countries, as the strategic interest in expanding trade relations with the countries in the region far outweighs the particular interests of individual professional groups or countries. The fact that, after a long struggle, the majority of EU member states finally voted in favor of the agreement last Friday is a sign of hope. However, the European Parliament must now also give its approval.

Fourthly, the robustness with which the US asserts its own interests is likely to drive other players' efforts to limit their existing dependencies on the United States as far as possible. Even if this quickly reaches its limits with regard to the US dollar, these efforts could potentially lead to a further depreciation of the US dollar and a further rise in the price of gold.