Commodities in Flux After US Captures Venezuela’s Maduro

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1:02Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest on the situation in Venezuela following an extraordinary weekend of airstrikes in and around Caracas and the capture of President Nicolas Maduro. With questions swirling about what comes next, President Trump says the U.S. needs total access to Venezuela. We're going to run everything. We're going to run it, fix it. We'll have elections at the right time. But the main thing you have to fix is a broken country. President Trump spoke aboard Air Force One on his way back to Washington from Mar-a-Lago, where he oversaw the weekend strike.

1:47The president says the U.S. will work with acting Venezuelan President Delcy Rodriguez, though he says he has not spoken to her. Rodriguez put out a statement last night inviting the U.S. to work with her on a cooperation agenda. It's a contrast to her initial reaction calling for Maduro's return, as we hear from Bloomberg's Jill Deesis. Definitely a change in tone from her initial statements, which were denouncing the actions of the U.S. and calling for Maduro's return. But I think the really important thing to remember here is that, I mean, Trump seems certainly content with leaving her in charge.

2:18So, you know, I kind of point to that as being potentially a factor there in her now talking about cooperation. It's Bloomberg's Jill Deesis. As for Maduro, he is due to appear in Manhattan federal court today to face charges that could keep him and his wife behind bars for the rest of his life. A trial on narco-terrorism charges is not expected until next year. It's unclear if Maduro has hired a lawyer for today's hearing. Well, Nathan, Secretary of State Marco Rubio is emerging as the Trump administration's point man on Venezuela. He appeared on several of the Sunday political shows to say the U.S.

2:52is running where Venezuela goes from here. There's a quarantine right now in which sanctioned oil shipments, there's a boat and that boat is under U.S. sanctions. We go get a court order, we will seize it. That remains in place. And that's a tremendous amount of leverage that will continue to be in place until we see changes, not just further the national interest of the United States, which is number one, but also that lead to a better future for the people of Venezuela. And that was Secretary Rubio on CBS's Face the Nation. Republican hawks are rallying around the administration following the weekend attacks.

3:24Senate Intelligence Chairman Tom Cotton was also on face the nation. This was an excellent operation. Only the United States military could have pulled it off, but they couldn't have pulled it off without the support of the professionals in the intelligence community. Republican Senator Tom Cotton, but isolationists within the party like Congresswoman Marjorie Taylor Greene are criticizing the strike. This is the same Washington playbook that we are so sick and tired of that doesn't serve the American people, that actually serves the big corporations, the banks, and the oil executives. Congresswoman Marjorie Taylor Greene appeared on NBC's Meet the Press, and you can hear Meet the Press and Face the Nation every Sunday on Bloomberg Radio.

4:05Well, Karen, the U.S. plan to revive Venezuela's oil industry could take years and cost up to$100 billion. Bloomberg's John Tucker joins us with that part of the story. John, good morning. And Nathan, experts say rebuilding Venezuela's oil infrastructure enough to lift output back to its peak levels of the 1970s would require companies that include Chevron to invest about$10 billion a year over the next decade. Well, right now, Chevron shares up 8 % pre-market. Chris Sabatini, senior research fellow at Chatham House, says there isn't much left of the oil infrastructure in Venezuela. Problem is, and this was the case in Iraq, too, you're looking at basically in the case of Venezuela, more than two decades of an autocratic corrupt regime.

4:49At Venezuela's oil parts, the equipment is in such poor shape it takes up to five days to fully load super tankers. Oil rigs have been abandoned. Spills go unchecked. Drilling pads have been ransacked. Fires and explosions have gutted equipment there. Venezuela does sit atop the world's largest oil reserves, but output plummeted during the 12-year term of Nicolas Maduro. The nation currently produces about 1 million barrels a day. Compare that to nearly 4 billion barrels in 1974. And if output does increase, oil prices may decline, offering less incentive for the oil companies to invest. In New York, I'm John Tucker, Bloomberg Radio.

5:28All right, John, thank you. Well, the Chinese foreign ministry is expressing concerns about the capture of Venezuela's Nicolas Maduro. And here's spokesman Lin Jian speaking through an interpreter earlier in Beijing. China expresses grave concern of the U.S. seizing Nicolas Maduro and his wife and taking them out of the country. The U.S. move is in clear violation of international law and the principles of the U.N. Charter. China calls the U.S. to ensure personal safety of President Nicolas Maduro and his wife, release them, stop toppling the government of Venezuela, and resolve issues through dialogue and negotiations.

6:05Spokesman Len Jian says China is committed to deepening cooperation with Venezuela. Well, for his part, Karen, President Trump is warning other drug-producing nations in the Western Hemisphere that he won't long tolerate the flow of illegal substances into the U.S. Here he is again aboard Air Force One. We have a very sick neighbor. It's not a neighbor, but it's close to a neighbor. And that's Venezuela. It's very sick. And Colombia is very sick, too, run by a sick man who likes making cocaine and selling it to the United States. And he's not going to be doing it very long, let me tell you. President Trump referred there to Colombian President Gustavo Petro, a frequent Trump critic who denounced the weekend raid.

6:45Nathan, the events in Venezuela have sparked new questions about America's stance toward Europe. Denmark's Prime Minister Mette Frederiksen is urging President Trump to stop threatening to annex Greenland. The comments come after President Trump again doubled down that he wants to take over the country. Right now, Greenland is covered with Russian and Chinese ships all over the place. We need Greenland from the standpoint of national security. And Denmark is not going to be able to do it, I can tell you. And Greenland's elected leader, Jens Friedrich Nielsen, posted on Facebook saying there's no reason for panic as Greenland's position is firmly anchored in international law.

7:25We're seeing immediate reaction to the developments in Venezuela across several markets, Karen. Spot gold has climbed above$4 ,400 an ounce. Right now it's at$44.31, while silver is up nearly 5%. Surprising to some, Nathan, we are not seeing a dramatic move in the oil sector. In fact, right now, NYMEX crude oil is little changed at$57.29 a barrel. Stephen Stepsinski leads Bloomberg's team covering energy. I think overall, you just look at what is being produced out of Venezuela, and they produce less than 1 % of global supply. And so where they stand in the grand scheme of things, if you were to cut out their supply, it can be easily replaced.

8:07But also, there's this look at, well, they have all these reserves, can they add that supply as well? And there's expectations that they can't really add the supply very quickly either for a number of reasons. So the market has really shrugged this off. There's sort of a wait and see situation. And in a separate note, Bloomberg, Stephen Stapsinski says at a meeting yesterday, OPEC Plus stuck with plans to pause supply increases in the first quarter. And Karen, U.S. airlines have begun rebuilding their Caribbean operations after the military incursion in Venezuela triggered airspace closures across the region.

8:41American Airlines and Delta are among those that have added extra flights and seats to accommodate displaced customers. Hundreds of flights were canceled over the weekend after the Federal Aviation Administration restricted parts of Caribbean airspace.

8:56Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Congress returns to Washington this week. The Senate returns today. The House comes back Tuesday. They will address government funding with a January 30th deadline to pass a bill or face another government shutdown. In addition, Congress must deal with health care now that health care tax credits under the Affordable Care Act expired last month. Millions of Americans are unable to afford health insurance without the subsidies.

9:31Senate Minority Leader Chuck Schumer says Democrats are willing to work with Republicans on their plan to bring health care costs down, hinting that refusal to do so could impact the GOP in the midterm elections. The Republicans have screwed this up to a fairly well. If they can find a way out of the mess, we won't work with anybody to lower the prices. Senator Schumer spoke on ABC's This Week, Heard Sundays on Bloomberg. Republican Georgia Representative Marjorie Taylor Greene's resignation from Congress takes effect today. There are mixed reviews about her legacy. Larry Sabato is the director of the Center for Politics at the University of Virginia.

10:08I think it's always wrong to focus on the latest event involving a person and not look at the entirety, at least, of the public career. And her career, to say it's been checkered, is a compliment. Larry Sabato is with the University of Virginia. Meanwhile, local Republican Party chair Jackie Harling says Green was a fighter who gave them a voice. Green's resignation will shrink the Republican majority in the House of Representatives to six seats. Protests continue to grow in Iran over the weekend, as concerns sparked by the Islamic Republic's ailing economy puts new pressure on its regime to act.

10:51Since international sanctions returned in September, Iran's currency is now in a freefall. More than 580 protesters have been arrested. Crews cleared mud from key California highways. Forecasters warn that more thunderstorms were on the way after downpours and high tides caused flooding, prompting road closures and rescues of people trapped in cars. Global News, 24 hours a day and whenever you want it. With Bloomberg News Now, I'm Michael Barr, and this is Bloomberg. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. The NFL regular season is over.

11:30The playoffs begin on Saturday. There were still two spots up for grabs yesterday. Carolina won the NFC South despite losing its game Saturday at Tampa Bay. Atlanta's win over New Orleans created a three-way tie, and the Panthers won the tiebreaker. The Falcons, after winning that game, fired their coach, Raheem Morris. Last game of the season was last night in Pittsburgh, a back-and-forth fourth quarter. The Steelers, on an Aaron Rodgers touchdown pass with a minute to go, beat the Ravens 26-24, won the division. That's a Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

12:04As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more. Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. After an extraordinary weekend of airstrikes and the ouster of Nicolás Maduro, the world is watching for what comes next in Venezuela. President Trump says leadership in the country right now is clear.

12:49Don't ask me who's in charge because I'll give you an answer and it'll be very controversial. What does that mean? It means we're in charge. That was President Trump aboard Air Force One last night. This morning, we're joined by Terry Haynes, the founder of Pangea Policy. Sharp words, Terry, from the president, but it does leave a question, doesn't it, of what the U.S. in charge means in Venezuela. What does it mean? Good morning. Hi, good morning, Nathan. And bottom line is, I wish I knew, and that's no jab at the Trump administration, I think. But I think the policy here is a little more improvisational than a lot of people would like, particularly in markets.

13:30They are, I think, going to make this up as it goes along. If they can get some sort of cooperation from the existing government, they might take that. I think that the existing government from Ms. Rodriguez on down is likely to be found wanting. You know, people forget that it's not just Maduro that's under indictment. And people also forget that it's not as if this is some sort of conventional democratic country in which, you know, the succession will work. and somehow they'll manage to steer the ship slightly differently. The kind of change that the United States now wants in Venezuela is not the kind of change these people are poised to deliver, I think.

14:22Well, if it is the U.S. making it up as it goes along, Terry, what does that mean in terms of a potential U.S. military presence in Venezuela and this idea of U.S. oil companies coming in to rebuild Venezuela's vastly decimated oil infrastructure? Well, two things. One, I think that it is very unlikely that there will be some kind of major sustained boots-on-the-ground presence from the United States to Venezuela. You know, might there be some sort of small, relatively small force that does specific things? That's entirely possible. I mean, but we have that all over the world in a variety of ways and a variety of guises.

15:08So I'd kind of look at that in the extreme. Secondly, I think what they looked at very broadly, the observations that what's going on in Venezuela, or what had been going on in Venezuela, for that matter, as part of the South America policy of the administration, is about oil or resources or something else, that's both true and too narrow a focus. from the national security perspective of the Trump administration, you have to look at it holistically, meaning understanding what the situation is pre-last weekend. Those competing or opposing the United States now have control of all those resources.

15:55So it is very important for this country, our government judges, that we have access to that as well. Taking your point about looking at it holistically, the administration has said it's about oil and it's about drug flows out of Venezuela as well. And the president just last night aboard Air Force One sent a warning to the president of Colombia calling him a very sick man. What could potentially come next here, given those potential implications, Terry? Well, I think the – I've been pointing out since the release of the national security strategy in November that what was in that document was called the Trump Corollary to the Monroe Doctrine.

16:41had in its sights basically reducing Chinese influence in South America. It needs to be understood that China is today South America's largest trading partner, and they seek to use that trade status to increase its geopolitical influence in South America. What that means, I think, for the overall region is that you have, whether it be in Cuba or Colombia or elsewhere, you know, the administration has now put those folks on notice that it is very interested in changing that behavior or having those governments fall, frankly. And the president was very explicit about that in Cuba, but also thinks that no United States action is necessary to bring that about.

17:29I'd suggest only there that the Cubans have proved themselves to be far more tenacious, surviving the loss of the Soviet Union, now surviving the loss of Venezuela. And we'll see if they can find another benefactor now. Well, one of the big benefactors of Venezuela has been China, of course. I mean, we've seen the Chinese foreign ministry come out pretty strongly against the weekend events. I mean, what could this mean for the U.S.-China situation where they're trying to keep a trade truce intact? Well, they're trying. Well, you know, the China statement, I've had a lot of irony to it. Nothing beats the Russian statement, of course, for irony.

18:18I'll let the listeners go look that up. But, you know, what that means fundamentally is, you know, the terms of the United States competition here has been that what we're trying to do as the United States government is, you know, really try to right size and push back against China adventurism and trying to influence gathering in, you know, many different continents. and the administration judges that it's going to start in South America. But Trump, since day one, has expressed interest to kind of clean up the United States defense in the Atlantic and the Pacific. And this is why Greenland is discussed, for example.

19:09It's not just because of the resources, but also because it's got, you know, it's right on the front lines, whether you look across to Europe or up through the Arctic, which increasingly is more important. But, you know, we've been pushing back at China for a year now, whether it be, you know, kind of pushing back against its client state, Russia and Ukraine. Its interests have been pushing Iran and its proxies in the Middle East. and also helping our ally Japan and others in the Philippines and others in the South China Sea. You mentioned Greenland. Do you think there's going to be a serious move by the U.S.

19:52on Greenland in the short to medium term now? Today, I look at this more as a means of the takeover talk of Trump's as pressuring Denmark to make some sort of a deal on Greenland. It also bears noting that going back a few years, there was some interest in Greenland itself to separate or create a different political arrangement with Denmark. I think both of those strings are being twanged rather unsubtly. But I look at this as much as the administration's view as much more interested in making some sort of oil-minerals deal and all the rest. Again, going back to China, I think none of this, consider that none of this might have happened had not China kind of pulled the rare earth string here, which is still unresolved and part of the unresolved U.S.-China trade tensions.

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21:33Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.