Blain’s Morning Porridge, January 5^th 2026 – Another Judder in Geopolitics.

“When America brings its full capabilities to bear, no tyrant is beyond reach.”

Concepts about global law and order were left by the wayside over the weekend – Trump’s administration delivered what it said it would in terms of America First, Western Hemisphere focus. Do Venezuela and Iran raise or diminish the risks of Global Conflict in 2026. What comes next?

Link to Podcast

Happy New Year. Let’s hope it is a good and prosperous one…. The signals are looking mixed.

My bear-scenario outlook for 2026 markets was based around a significantly higher risk of global conflict destabilising the global economy – the potential for an even larger shock than Covid. Have the events in Venezuela and Iran over the weekend caused that perception of risk to rise or fall? That will become clearer in coming days.

What will President Trump’s surgical removal of President Maduro from office in Venezuela, of the rising prospect sfor regime change from internal dissent in Iran, mean for global trade and geopolitical risks? How will markets account for yet another geopolitical judder moment? Will they even care?

Nothing should have surprised us about the Maduro takedown. It played to all the themes Trump has quite openly exposed around Project 2025, America First, his new “Don-Roe” Doctrine of American hegemony over the Western hemisphere, and in the recent National Security Strategy release. He is not wasting time on difficult and destabilising regime change – effectively telling Maduro’s cronies in power they have the choice to kow-tow and follow US direction, or be removed with prejudice. Last night they appeared to be falling into line.

Trump’s actions would have shocked us a decade ago. His disdain for the US constitution and political system, international law, and diplomatic niceties horrifies many. The World has changed. This is the new age of the authoritarian state.

But let’s not be blind-sided by how Trump’s actions shattered any illusions we retained about America, freedom, democracy and justice. The reality is the US military just proved how supremely effective it is, able to mount an operation no other nation could even contemplate. The complexity of integrating and executing a plan combining 150 aircraft, human, signals and satellite intelligence, and special forces insertions, was stunning.

It sent a clear message. America may not have immediate answers to Chinese ballistic missiles able to take out carrier groups, or Russian hyper-sonics, but they have military competency and the ability to deliver force, power, and effect when and where it matters. The fact US airpower overcame “state-of-the-art” Russian SAM systems will not have been missed by the Kremlin or Beijing.

Few will shed tears for Maduro, but the Trump plan is not to recreate some imagined free, just and democratic Venezuela while welcoming back the 25% of the population that fled over the Chavez/Maduro interregnum. It’s about creating a US aligned state that furthers the objectives of an American hemisphere where American firms and interests are the priority. Columbia and Cuba are in the immediate sights. The Danes are under pressure on Greenland. Mexico and Canada will be wondering how much negotiation room there is with a US president who talks openly about the takeover of nations to be run by US oil interests.

The key issue is how China reacts. China has invested heavily in Latin America, and buys nearly 70% of Venezuela’s oil (although that is less than 3% of its total imports). The message delivered from Washington was simple – stay out of our backyard. Xi may take that as a win. The weekend socials in Beijing were positive – commentary suggesting Trump’s actions give China a green light to mount something similar in Taiwan.

There has been comment on how China may now embark on increased internal political destabilisation on the Island, cyber-attacks, and false-flags, culminating in a swift special forces operation to remove hostile politicians. Perversely, that could be a preferable outcome to an all-out military assault and invasion across the Formosa straights, offering opportunities for Trump’s USA to look the other way to avoid a destructive global conflict over Taiwan. America gets the Americas and China gets Taiwan.

Where will that leave Europe?

And that’s a big question for China. It’s no secret the Chinese economy is struggling – facing multiple headwinds from over-capacity and over-production, destructive price competition between domestic firms, the deflationary impetus from continuing home-price declines, and limited domestic consumption. To maintain the Iron Ricebowl compact between the Chinese Communist Party and the people offering jobs and prosperity in return for allegiance, China needs to export more and more to simply stand still.

Nurturing markets for Chinese goods is critical. Does China really want prioritise 140mm dirt-poor Russians over 900mm relatively wealthy Europeans? China needs markets, not the costs of paying for Putin’s dreams of aggrandisement. If China really expects to sell 2 million Chinese electric cars to Europe this year – then they need to prioritise. (What China really wants is Russia’s vast untapped minerals reserves in Siberia and access to cheap Russian energy – hence the new oil and gas pipelines under construction.)

They myth – perpetrated by the populist right-wing from Trump and across Europe- is Russia is a strong and effective military power, economically prepared and able to fight total war. It is not. The reality is a domestic economy in bits, swirling resentment from the oligarchs towards Putin, and a state sustained by Chinese largesse. Anything that weakens Russia and makes their resources vulnerable to Chinese seizure ultimately benefits Beijing.

The fact Russian air defences in Caracas were utterly unable to defend Maduro from US air power should give hope to Europe. Europe has the wealth, the ability and the capacity to overwhelm Russia – if it had the intent, ambition and political will to do so. And that is the problem at the root of Europe’s weakness. After 80-years under a US umbrella Europe lacks the basics for defending itself – politically addicted to welfare spending, diminished manufacturing capacity and a populace now largely disconnected from concepts such as national service or sacrifice. There are serious doubts whether some Western leaders have the stomach for defence, or the ability to cooperate as a European polity to deter aggression.

Watching how this plays out will be critical for 2026 markets.

Out of time, and back to the day job…

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital

Special Advisor – Spitfire Strategic Capital