Above the Fold
Markets and Events - US and Worldwide thus Far in January 2026
Happy Australia Day and Happy Republic Day !
The Maduro Effect : We opened this year with the US capturing Maduro and taking control of Venezuela’s oil. When we opened on that Monday 1/5, we saw very short-lived spikes in Chevron, Exxon, ConocoPhillips and Halliburton. Oil price did not spike much because there was an excess of supply in the market
Which brings us to
Why does the US need Venezuela’s Oil ? Trump and Rubio announced that the US will take control of Venezuela’s oil, sell it at market price and use the cash flow to help the people of Venezuela and the United States. That is the official position of the administration
We produce plenty of oil domestically, while we do need more than we produce, why do we specifically need Venezuela’s oil ?
Our refineries on the gulf coast were built a long time ago, and they are tailor-made to refine heavier and more sour crude - which we import from Mexico, Canada and Venezuela. The crude we produce within the country is lighter and sweeter, hence our refineries become inefficient when trying to refine domestic crude
American Fuel and Petrochemical Manufacturers (AFPM) report that ~ 70% of our refining capacity runs more efficiently with heavier crude and that type of crude comes from Venezuela. AFPM also reports that refineries need heavier crude to maximize the flexibility to produce gasoline, diesel and jet fuel oil. Between re-tooling and waiting for permits, it is very expensive to change our refineries to process the light and sweet crude that we produce stateside
The illegal cocaine influx from Venezuela to the US is the catalyst, but there are undeniable oil undertones involved as well. Both of these things can be true, and are true
Unrest in Iran : Anti-government protests raged in Iran, and the US is seriously considering strikes on Iran if more protestors perish, but as of mid January, DC has walked-back direct intervention
The primary catalyst for the whole intervention ? Ayandeh bank, a large private lender, let regime insiders and owners of the bank themselves borrow cash, and when the loans were not repaid, the Central Bank stepped in and printed cash to make the depositors whole. What do you think happens when you print this much cash ?
The depositors were made whole, but the insiders who didn’t pay back the loans had effectively no consequences. Main Street found out and justifiably took to town-square to voice their discontent
That good ol’ thang hah ? principles of macro-economics. Supply was already constrained due to sanctions, and when you flush the economy with an excess of cash, inflation spikes up. Its just macro-economics
Trump Announcements : Trump announces that he plans to cap credit card interest rates at 10%, prevent institutions from buying single family homes, and want defense companies to improve their production process before stock buybacks or paying dividends - all these are good things
With such a macro event of talking about capping credit card rates, B of A, Wells Fargo, JPM and Citigroup, all of them, even after topping EPS estimates, had mixed reaction from the Street in terms of stock price. Tough week to trade when price behaves counter-intuitive
Trump rules out using force to acquire Greenland, for now at least (as of 1/21). The market rallied in response to this news on Wednesday evening
US DOJ Investigates the Fed Chair : Trump’s DOJ starts a criminal investigation on Fed Chair Jay Powell, Powell is on his way out, he ends his tenure on May 2026 and for the most part he has always made decisions based on the founding principles of macro-economics
In what is perhaps a truly unprecedented event, Powell returned fire - forcefully so. With five months left, I think he’s way past that stage where he is going to pull his punches. Politics aside, Jay Powell has managed our economy without any major fumbles - and you can juxtapose his tenure with the storylines above in terms of inflation (our inflation stands ~ 2.71% right now)
EPA’s New Rules and Renaming Labs : The EPA announced on 1/12 that it would stop considering lives saved due to pollution. This is a deviation from how the agency computed benefits of reducing pollution and GHG emissions, for almost 13 years. This isn’t particularly surprising, the National Renewable Energy Lab (NREL) has been renamed to National Laboratory of the Rockies (NLR) too
We politicized science a long time ago, and these are just the spillover effects. Let us not waste our time being shocked and chagrined
NFL : The New York Football Giants hire John Harbaugh as their head coach to right the ship. With Mahomes and Burrow gone, this was Josh Allen’s incredible chance to at least get to a Super Bowl. Allen quite spectacularly fumbled his way out of the playoffs last weekend, in what is a devastating outcome for the Buffalo Bills. Their head coach was promptly asked to clear out his office. Out of the 32 teams, ten or more teams are currently looking for a head coach. Being a head coach in the NFL has a shorter tenure than being Leonardo DiCaprio’s hot supermodel girlfriend
With 15 days to go for the Super Bowl, the winners of Pats at Broncos, and Rams at Seahawks (games on 1/25) will meet in the Super Bowl in Santa Clara on 2/8. The Broncos quarterback Nix broke his ankle last week, and in what I can only describe as Sean Payton’s worst nightmare, he needs to start his back up quarterback on Sunday. The margin for error at this stage in the season is … next to zero
Best Non-Fiction Book of 2025 : Karen Hao’s brilliant - Empire of AI (as ranked by Scientific American)
Hottest New Book in 2026 : Written after speaking to insiders such as top level executives in FanDuel. I’ll give you an example of the predatory practices of online sports books. If your team is on a drive, as a fan you are way more likely to think your kicker will make the kick than miss it (take a second to think about it, I think the same all the time), it’s pure fan psychology. The sports books know fans think this way, and even if the kicker has a statistically 50/50 chance of making the kick, they shave the odds
If you bet 100 on the kicker making it, they’ll give you 95 in profit (total 195), but if you lose, you lose all of your 100 (you were supposed to get 200 if you win, not 195) - that’s shaving odds. Top personnel in sports books also call parlays as Sucker Bets. Honestly, an n leg parlay has a (1/2)^n chance of being successful. So, for a five leg parlay, the house wins 31/32 times. You may as well light it on fire
That’s about it
My Trader Name : It is street culture that I need a trader name, that is different from my Government name. I chose mine earlier in January, it is Axe (from Robert Axelrod in Billions)
I have to get used to being called Axe - and I will
Be good to yourself, enjoy AO and the conference finals
I’m traveling to the Caesars Sportsbook Lounge in Las Vegas to watch the conference finals, and I’ll touch base from Las Vegas next week
— Deepak Sivaraman PhD (Axe), adeadcatbounce@gmail.com
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