Trump Vows Land Strikes on Mexican Cartels

Remarks of Officials

Political

Summary:

Former President Trump announced plans for direct U.S. land strikes against Mexican drug cartels, a move swiftly rejected by Mexico's government amidst sovereignty concerns.

Former President Donald Trump has announced that the United States plans to launch direct strikes against drug cartels inside Mexico, signaling a significant shift in counternarcotics strategy from sea to land operations.

In an interview aired on January 8, Trump told Sean Hannity of Fox News that after successfully interdicting most maritime drug routes, the focus must now turn to land. "We knocked out 97 percent of the drugs coming in by water, and we are going to start now hitting land with regard with the cartels," he said.

Trump asserted that cartels now control Mexico and are responsible for hundreds of thousands of deaths in the United States annually. "They're killing 250,000, 300,000 in our country every single year," he stated.

U.S. officials are preparing for a strategic pivot to land operations to combat drug trafficking organizations in Mexico.

Heightened Pressure on Mexico's Government

The announcement came just five days after Trump ordered an operation to capture Venezuelan leader Nicolás Maduro and bring him to the U.S. on narco-terrorism charges. Following that action, Trump issued warnings to several Latin American countries, including Mexico.

He urged Mexico to "get its act together," telling reporters that while he would prefer Mexico to handle the problem, the U.S. may be forced to intervene. "We're going to have to do something. We'd love Mexico to do it; they're capable of doing it, but unfortunately, the cartels are very strong in Mexico," Trump said.

He also noted that he has spoken with Mexican President Claudia Sheinbaum multiple times and offered to send in U.S. troops, an offer she has declined. Trump described her as "afraid" and claimed "the cartels are running Mexico," not her administration.

Mexico Rejects US Intervention

Mexico has consistently opposed proposals for U.S. military action on its soil. Responding to the pressure, President Sheinbaum firmly rejected the idea of foreign interference.

"We categorically reject intervention in the internal affairs of other countries," Sheinbaum stated during a press conference. "The history of Latin America is clear and compelling: Intervention has never brought democracy, never generated well-being, nor lasting stability."

A Broader Anti-Cartel Strategy

This potential escalation is part of a broader intensification of anti-cartel policy under Trump's administration, which includes designating Mexican syndicates as terrorist organizations. Officials maintain that with sea-based trafficking nearly halted, land operations are the logical next step.

Trump has previously indicated that a formal declaration of war is not a prerequisite for taking military action. "I think we're just going to kill people that are bringing drugs into our country," he said on October 23, 2025.

While U.S. officials link the cartels to tens of thousands of American overdose deaths each year, Trump did not provide a specific timeline for when the announced land strikes might begin.

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George Anderson

Remarks of Officials

Data Interpretation

Economic

Central Bank

American workers are taking home the smallest portion of the country’s economic output since federal records began in 1947, according to new data that highlights a growing disconnect between economic growth and employee compensation.

Figures from the Bureau of Labor Statistics (BLS) reveal that the share of GDP paid to workers through wages and salaries fell to 53.8% in the third quarter of last year. This marks the lowest level ever recorded in the modern data series.

The figure represents a sharp decline from 54.6% in the previous quarter and sits well below the 55.6% average recorded so far in the 2020s. This trend has emerged even as the overall economy expands and many companies report some of their strongest profit margins in decades, raising fresh questions about income distribution.

A Widening Gap Between Growth and Wages

The labor share metric, tracked since 1947, briefly spiked in 2020 during the pandemic but has been on a steady downward trajectory since. Over the same period, corporate profits have climbed, suggesting that the benefits of GDP expansion are not being shared proportionally with the workforce.

The BLS defines labor share as "the percentage of economic output that accrues to workers in the form of compensation." This includes not only wages and salaries but also bonuses and pension contributions. Despite solid GDP growth, this percentage has continued to fall.

Productivity Surges as Hiring Stays Muted

The same BLS report that detailed the shrinking labor share also showed a significant jump in U.S. labor productivity, which rose at its fastest pace in two years during the third quarter. Economists suggest this gain may be partly linked to the increasing adoption of artificial intelligence.

This creates a complex economic picture:

• On one hand, higher productivity allows for faster GDP growth without triggering higher inflation.

• On the other, it enables companies to increase their output while hiring fewer workers, putting downward pressure on overall wage growth relative to GDP.

More data is needed to fully understand AI's long-term impact on jobs and pay, but the current trend points toward a scenario where efficiency gains are not translating into a larger slice of the economic pie for employees.

The Fed's View on a Cautious Labor Market

Federal Reserve officials are closely monitoring these dynamics. Tom Barkin, President of the Federal Reserve Bank of Richmond, characterized the current situation as a "low-hiring environment" with modest job growth.

Recent BLS figures support this view, showing employers added 50,000 jobs last month. The unemployment rate edged down to 4.4%, but the pace of hiring has slowed considerably.

"This fine balance between a modest job growth environment with a modest labor-supply growth environment seems to be continuing, and that was encouraging," Barkin told reporters.

Businesses Prioritize Efficiency

According to Barkin, businesses are remaining cautious, choosing to rely on productivity gains to operate with fewer workers rather than expanding their payrolls. This strategic choice is a key factor shaping hiring decisions and contributing to the suppressed labor share, even as GDP continues to grow.

He stressed that Federal Reserve officials must remain vigilant about the dual risks of rising unemployment and persistent inflation.

Uncertainty Clouds Future Rate Cuts

While policymakers cut the benchmark interest rate for a third consecutive meeting last month, they are divided on the path forward. Uncertainty surrounding inflation and the labor market has tempered expectations for further cuts.

Investors are currently pricing in two quarter-point rate cuts this year, with the first move not anticipated until April or June.

Barkin noted that while inflation has improved, the fight is not over. "Inflation has been above our target now for almost five years," he said. "It's in a lot better shape than it was two or three years ago, but it's certainly not all the way there."

He concluded that policymakers must keep a close eye on both sides of their mandate. "The unemployment rate has ticked up in the last year, and job growth is modest," Barkin said. "So I think you've got to watch both of them."

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Manuel

Commodity

Political

Major US oil executives expressed caution to Donald Trump about reentering Venezuela, even as the president pressured their companies to spend at least $100 billion to revive the country’s production following the brazen capture of leader Nicolás Maduro.

Trump convened nearly 20 industry representatives in the East Room of the White House on Friday and predicted they could come to an agreement “today or very shortly thereafter” to restart operations in the oil-rich Latin American country.

“If you don’t want to go in, just let me know, because I got 25 people that aren’t here today that are willing to take your place,” Trump told the oil representatives.

Comments from some of the executives indicated the president may need to do more convincing. Exxon Mobil Corp. (XOM) Chief Executive Officer Darren Woods said that Venezuela is currently “uninvestible” and noted his company’s assets had been seized by the government in Caracas twice before.

“So you can imagine to reenter a third time would require some pretty significant changes from what we’ve historically seen here and what is currently the state,” Woods said, including changes to legal and commercial frameworks. “There has to be durable investment protections.”

Even Continental Resources Inc.’s Harold Hamm, a longtime Trump donor, declined to commit resources to Venezuelan operations though he said the prospect “excites me as an explorationist.”

Trump, looking to rally support, said the US would provide security guarantees to companies that went into the country, without detailing how that would work. He also predicted that companies would quickly make back investments in new or updated equipment.

“We’re dealing with the country, so we’re empowered to make that deal. And you have total safety, total security,” Trump said. “You’re dealing with us directly, you’re not dealing with Venezuela or we don’t want you to deal with Venezuela.”

But at the same time, Trump said the US would not consider prior losses suffered by companies who had to abandon their operations in Venezuela.

At one point, Trump asked Ryan Lance how much the company had forefitted in Venezuela, prompting the ConocoPhillips (COP) CEO to say it had taken a $12 billion loss.

“Good write-off,” Trump joked.

“It’s already been written off,” Lance responded.

The exchanges underscored the difficult road ahead the Trump administration faces in enticing major oil producers back to Venezuela. The US’s military intervention there stunned many Americans, including some of Trump’s own supporters, who called it a naked attempt to seize another country’s natural resources. The president has framed it as a chance to oust a leader in Maduro who posed a national security threat and tap Venezuela’s massive oil reserves as a source of hemispheric power and revenue.

“If we didn’t do this, China or Russia would have done it,” Trump said.

To do that, Trump is looking to Western oil companies, including firms that joined him in the White House’s East Room, to revitalize Venezuela’s dilapidated oil infrastructure. He sought to reassure executives they would have the guarantees they need to do that work. Oil firms Lukewarm on Venezuela return despite Trump pressure_1

Oil firms Lukewarm on Venezuela return despite Trump pressure_1

Trump’s exhortations to the oil industry dovetail with a broader push to address cost-of-living concerns weighing heavily on Republicans’ bid to maintain control of Congress in November’s midterm elections.

The president frequently touts sinking prices for oil and gasoline, which on Friday averaged $2.81 per unleaded gallon, according to the American Automobile Association, as salve for American consumers. That’s a double-edged sword. Low prices are viewed warily within the oil industry, which Trump is counting on to keep pumping crude.

Some US oil operators, particularly independent producers, are concerned about current prices that have strained the economics of some domestic drilling. And they’re worried about the prospect of an influx of Venezuelan crude suppressing prices further, making more wells too expensive to produce.

“I hope you’re going to build all brand new stuff, rip out the old crap that’s been there for so many years, and do it the right way,” Trump told the executives.

Markets have already reacted to the administration’s plans to start selling upward of 50 million barrels of Venezuelan crude, including supplies that built up in storage amid the US naval blockade.

Futures for West Texas Intermediate, the US benchmark, were hovering around $59 on Friday. Oil firms Lukewarm on Venezuela return despite Trump pressure_2

Oil firms Lukewarm on Venezuela return despite Trump pressure_2

The meeting creates an awkward dynamic for oil companies that belies Trump’s predictions of bountiful Venezuelan production under US control.

Some industry representatives have expressed worry that attending the gathering risks casting them as willing participants in a callously opportunistic grab for Venezuela’s crude, said people familiar with the matter. That’s especially because broad reluctance remains about investing in the country immediately. At the same time, executives need to tread a fine line with the president, who is pressing them to swiftly pledge new investments.

Adding to the tension is the strong political support Trump has enjoyed from the oil industry, including representatives in the room Friday. During an energy roundtable during the 2024 campaign, Trump promised oil executives a suite of policy changes — including undoing some environmental regulations — as he asked the group to raise $1 billion for his political operation, according to people familiar with the exchange.

This week, executives have stressed to administration officials that any Venezuelan oil rebuild requires guarantees of physical security and contract certainty, given concerns about Venezuela’s stability under acting leader Delcy Rodriguez. While Chevron still operates in Venezuela under a special US license, Exxon Mobil and ConocoPhillips left after Maduro’s predecessor, Hugo Chávez, nationalized their assets. Oil firms Lukewarm on Venezuela return despite Trump pressure_3

Oil firms Lukewarm on Venezuela return despite Trump pressure_3

Venezuela sits atop the world’s largest proved crude reserves, but its output has dwindled to less than 1 million barrels per day amid decades of disrepair and the exodus of foreign firms.

Cleaning up environmental damage and rebuilding the country’s abandoned rigs, leaky pipelines and fire-ravaged equipment could take years — and tens of billions of dollars — simply to modestly boost production, much less approach the country’s 1970s peak of almost 4 million barrels per day.

And though the president had previously dangled the prospect of US subsidies for overseas oil work, Interior Secretary Doug Burgum on Friday reiterated Washington is unlikely to provide financial support.

“The capital is going to come from the capital markets and come from the energy companies,” Burgum told Bloomberg Television. “I don’t see that these companies are going to need support from the US, other than things around security. If we can provide a secure, stable environment, the resource here is so significant and so large that it’s going to be attractive for people to go in and develop.”

Energy Secretary Chris Wright, a former oil company executive who is taking a lead role implementing Trump’s plans, was part of the session Friday alongside Burgum and Secretary of State Marco Rubio.

Trump also said Friday he’d called off a second wave of attacks on Venezuela, citing improved cooperation from the country after the release of some political prisoners. Still, the US military continues to position itself in the region in the event of further action; on Friday the US Coast Guard boarded another oil tanker.

Source: Bloomberg

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King Ten

Remarks of Officials

Political

President Donald Trump has escalated his campaign to acquire Greenland, stating he is prepared to secure the Danish territory "the hard way" if a deal cannot be reached.

“I would like to make a deal, you know, the easy way. But if we don't do it the easy way, we're going to do it the hard way,” Trump told reporters at the White House on Friday.

The president's focus on Greenland, which he frames as a national security imperative, has sharpened following a recent U.S. raid targeting Venezuelan leader Nicolas Maduro. The move has heightened concerns among allies about the potential use of U.S. military force to achieve foreign policy objectives.

A Geopolitical Move Against Russia and China

When asked about a potential financial offer for the island, Trump dismissed the idea for now.

"I'm not talking about money for Greenland yet," he said. "I might talk about that, but right now, we are going to do something on Greenland, whether they like it or not."

The president justified his stance by pointing to geopolitical competition with Russia and China, arguing that U.S. action is necessary to prevent them from establishing a presence in the region. “We’re not going to have Russia or China as a neighbor,” Trump stated.

Denmark and NATO Allies Push Back

The comments have strained relations with Denmark, a key NATO member. Danish Prime Minister Mette Frederiksen issued a stark warning, stating that a U.S. attack on Greenland would signify the end of the NATO alliance.

Other European leaders echoed this sentiment, calling on Trump to respect the island’s territorial integrity and affirming that it is protected under the bloc's collective security framework.

State Department Aims for Purchase Amid Mixed Signals

While the president has not ruled out using military force, the official U.S. position appears to be focused on a transaction.

On Tuesday, U.S. Secretary of State Marco Rubio told lawmakers that the administration’s goal is to buy the island. Rubio is scheduled to meet with Danish officials next week to discuss the matter.

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Manuel

Economic

Two Federal Reserve officials on Friday expressed some skepticism that a Trump administration plan to lower housing costs by buying billions in mortgage-backed bonds will do much to lift the troubled sector.

The policymakers - Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin - instead argued that while financing costs are a real issue, housing affordability is even more a function of the supply ‌of homes available for purchase.

"I do think that a lot of the housing affordability challenges are about more than just financing, and there's a supply and demand issue that has persisted in many major ‌markets," Bostic said in an interview with Florida radio station WLRN.

"I cut my teeth as a housing economist and understand how important housing is for families and also for creating stability so that families can do all the things that they want to do," Bostic said, adding "certainly financing is one piece to this, but it's not the only one, and we definitely need to get everything in order if we want to make sure that people can buy housing."

Barkin, speaking with reporters in suburban Baltimore, said when it ⁠comes to making housing more affordable, "the answer is on the ‌supply side."

"If you tell me that there's a couple hundred billion dollars that could be put into buying mortgage bonds, then depending on what duration you're buying, that should have an impact on the mortgage resale market, which perhaps will have an impact ‍on mortgage rates," Barkin said.

But he added, "I'm an advocate for the kind of initiatives that would get more houses into the market and onto the market" and would need to think if government purchases of bonds that support that market would notably help affordability.

TRUMP'S HOUSING FINANCE CHIEF SAYS PURCHASES HAVE STARTED

The Fed officials' comments followed an announcement by President Donald Trump on Thursday that laid out an effort to take money from government-sponsored housing lenders to buy $200 billion in mortgage bonds. While there are many uncertainties over the plan, ‌its aim is to help lower borrowing costs for homes, which have been elevated due to the Fed's tight monetary policy stance, as policymakers have lifted short-term borrowing costs in a bid to lower inflation pressures.

Federal Housing Finance Agency Director Bill Pulte told reporters on Friday that the buying push has begun with $3 billion in purchases. He declined to say when the full scope of purchases would take place.

The plan has lifted mortgage bond prices and boosted the stocks of home builders, but analysts say it will have a modest impact at best. "We believe that $200 billion of MBS purchases could drive (around a) 10-to-25 basis-point reduction in mortgage rates, potentially reducing the current ⁠30-year headline mortgage rate to roughly 6.0%" from the prevailing 6.21% rate, UBS analysts said.

The Trump administration's effort to make housing more affordable by way of asset purchases, while happening separately from any Fed-related action, is nevertheless akin to a central bank policy called quantitative easing, in which the central bank buys bonds to stimulate the economy by driving up asset prices and pushing down bond yields.

Fed mortgage bond purchases formed a key plank in the central ‍bank's efforts to support the economy during ⁠the COVID-19 pandemic.

Those purchases, starting in the spring of 2020, pushed central bank mortgage bond holdings from $1.4 trillion to a peak of $2.7 trillion by the summer of 2022. The Fed currently holds about $2 trillion in mortgage-backed bonds, against total housing-related borrowing of $13.1 trillion in the third quarter, according to New York ⁠Fed data.

Trump's willingness to buy mortgage bonds outside of the crisis conditions blurs once firm lines between normal and emergency market conditions. Derek Tang, an analyst with forecasting firm LH Meyer, said the plan ‌shows the administration is "willing to cross the line into crisis-fighting mode and using all levers at their disposal when there is not recession ‌or financial crisis."

Source: Reuters

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Samantha Luan

Stocks

Economic

Traders' Opinions

Remarks of Officials

Data Interpretation

Central Bank

Bond

The massive spending on artificial intelligence that drove stocks to record highs last year may not need an encore to keep the rally going. According to a report from BCA Research, potential interest rate cuts from the Federal Reserve could be enough to support tech stocks, even if AI infrastructure investment slows down.

This combination of lower rates and persistent inflation could delay or prevent a market crash reminiscent of the Dotcom Bubble.

The AI Spending Boom Nears a Historic Peak

America's largest tech companies—Microsoft, Alphabet, Amazon, Meta, and Oracle—are on track to spend over $500 billion on infrastructure this year, with a significant portion dedicated to AI.

According to Dhaval Joshi, chief strategist at BCA Research, this level of capital expenditure as a percentage of GDP is approaching a threshold that historically marked the peak of major tech investment cycles. Previous cycles include the personal computing boom of the 1980s, the dot-com boom of the 1990s, and the post-pandemic "Zoom boom."

In past cycles, tech stocks typically started to underperform the broader market about a year before capital spending peaked. If history repeats itself, Joshi noted, "AI-plays in the stock market are in imminent danger."

Why This Cycle Could Be Different

Despite historical parallels, the current environment may have more in common with the recent "Zoom boom" than the dot-com crash, primarily due to the Federal Reserve's monetary policy stance.

"Even if the AI capex boom ends, an ultra-accommodative Fed can prolong the stock market rally," Joshi wrote.

This matters because fears of slowing AI spending already caused tech stocks to hesitate in late 2025. The key difference lies in the behavior of real interest rates.

The Critical Role of Real Bond Yields

For stock valuations, what truly matters is not the nominal interest rate but the real bond yield—a bond's return after adjusting for inflation.

Joshi points out that the tech sector held its ground in 2021 because while inflation was rising, real bond yields continued to fall. Tech stocks only began to falter in 2022 when the Federal Reserve’s aggressive rate hikes sent real rates soaring.

Today, the situation is reversed. "Fast forward to today, and rate hikes are not on the Fed's agenda. Quite the contrary, the Fed is signalling more rate cuts," Joshi explained. If inflation remains around 3% while the central bank cuts rates, real yields would decline, providing crucial support for stock valuations.

Market Risks and Broader Outlook

Of course, an "ultra-accommodative" Fed is not guaranteed. Several factors could force policymakers to delay or limit rate cuts, including:

• Persistently sticky or resurgent inflation

• A surprisingly stable job market

• Robust overall economic growth

Following a mixed jobs report on Friday, the probability of the Fed holding rates steady through the first half of the year rose to a one-month high.

While most Wall Street analysts remain optimistic about the stock market's prospects for 2026, the sustainability of the AI rally is a primary concern. Mega-cap tech stocks now represent an unusually large portion of the S&P 500, making the entire index vulnerable to a downturn in the tech sector.

However, lower interest rates could also boost market liquidity, while tax cuts from last year's One Bi Beautiful Bill could stimulate economic growth, potentially offsetting any drag from a slowdown in tech investment.

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Kevin Du

Economic

Cryptocurrency

Remarks of Officials

Central Bank

Political

Stocks

Wall Street is bracing for the Federal Reserve to continue cutting interest rates in 2026, with analysts now forecasting at least a 50 basis point reduction. The expectation comes as President Donald Trump prepares to name a successor to Fed Chair Jerome Powell, signaling a potential policy shift.

Morgan Stanley and Citigroup Update Forecasts

Leading financial institutions have revised their outlooks, anticipating a more aggressive easing cycle. According to recent client notes:

• Morgan Stanley now projects two 25-bps rate cuts in 2026, shifting its timeline from January and April to June and September.

• Citigroup has also adjusted its forecast, now expecting rate cuts in March, July, and September. This outlook implies a total reduction of up to 75 bps in 2026, which would push the federal funds rate range below 3%.

Why Wall Street Anticipates More Cuts

The market's dovish sentiment is building on the three rate cuts already anticipated for 2025. The primary driver is the expected appointment of a new Fed Chair by President Trump, which investors believe will lead to a more accommodative monetary policy.

This view is supported by officials like Treasury Secretary Scott Bessent, who has advocated for lower interest rates to stimulate economic growth, despite weaker-than-expected jobs data.

Figure 1: Market pricing for cumulative Fed rate cuts by December 2026 shows expectations firming around the 50-to-75 basis point range, reflecting growing anticipation of a dovish policy shift.

Potential Impact on Bitcoin and Crypto Markets

This macroeconomic environment is seen as highly favorable for digital assets. The expected rate cuts align with other expansionary policies, including the Federal Reserve's Quantitative Easing (QE) program that began in early December 2025 and a planned $200 billion injection into the housing industry by President Trump.

These dovish signals are prompting Wall Street investors to adopt a "risk-on" appetite. As the stock market continues its bull rally, a capital rotation away from precious metals and into riskier assets is expected. Consequently, Bitcoin and the wider altcoin industry appear poised to benefit, potentially triggering a strong bull run in 2026.

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