Morning Bid: Trump's visible hand

• Defense stocks initially rallied to record highs on the budget news but were whipsawed by a White House executive order immediately banning dividends and buybacks for contractors; RTX shares fell 7% after Trump singled out Raytheon on Truth Social
• Oil prices steadied after two days of declines following Trump's announcement to sell 50 million barrels of sanctioned Venezuelan crude, with revenues earmarked to stabilize Venezuela's economy and repay Exxon Mobil and ConocoPhillips for assets nationalized nearly 20 years ago
• The proposed defense budget increase would require congressional approval, with budget experts expressing skepticism about the feasibility of such a dramatic 66% spending increase in one year

Market Summary: Trump's Visible Hand

Key Developments

President Trump announced plans to increase the U.S. defense budget to $1.5 trillion by 2027, up significantly from the $901 billion approved for 2026. However, budget experts remain skeptical about congressional approval for such a dramatic increase.

Defense Sector Impact

European defense stocks hit all-time highs on the budget news. Trump simultaneously issued an executive order banning defense contractors from paying dividends or conducting share buybacks until they deliver "superior products, on time and on budget." Raytheon (RTX unit) was specifically singled out in a Trump Truth Social post, causing stock volatility despite the broader sector rally.

Energy Markets

Oil prices stabilized after two days of declines following Trump's announcement that the U.S. would sell up to 50 million barrels of Venezuelan crude currently stuck under sanctions. The administration is "selectively rolling back sanctions" on Venezuelan oil, with revenues earmarked to stabilize Venezuela's economy and eventually compensate Exxon Mobil and ConocoPhillips for assets nationalized nearly 20 years ago. Venezuelan production currently stands at approximately 1 million bpd, down from a 1970 peak of 3.7 million bpd.

Other Notable Events

• Samsung Electronics projected a three-fold jump in Q4 operating profit to record highs, driven by AI demand
• China launched an anti-dumping probe into Japanese dichlorosilane imports (used in chipmaking), escalating trade tensions
• U.S. November JOLTS data showed steady job openings but sluggish hiring
• December non-farm payrolls report due Friday remains the key focus for Fed policy expectations

Wall Street touched record highs Wednesday before slipping amid the flurry of policy announcements.