While we spend so much time on domestic policies and domestic markets, it seemed like a good weekend to highlight the opportunities and risks across the globe. Just like Dorothy realized she wasn’t in Kansas anymore, we need to make sure we pay attention to the rest of the world, despite how easy it is to get sucked into a very domestic mindset.

While the S&P 500 was up 18% this year, a variety of other markets outperformed:

• The Euro Stoxx 50 and FTSE 100 had similar returns to the S&P 500 in their own currencies, but were up over 30% in dollar terms. The Spanish market was up a whopping 48% and over 68% in dollar terms. The Polish ETF (EPOL) is up 77% year to date – this is a country that should thrive if there is any peace between Russia and Ukraine – please see last weekend’s What A Peace Deal Could Look Like.
• The Nikkei and Hang Seng both clocked in gains of around 28% – eclipsing the Nasdaq.
• Mexico was up 35% (57% in dollar terms) and could continue to thrive if we are correct in our assessment that once Venezuela’s drug trade is dealt with, the admin will turn its attention to Mexico’s cartels. Most of the South American markets beat the U.S. – some by more than double. ILF, a Latin America-focused ETF, is up 54% YTD. Even the 51^st State (aka Canada) provided 29% returns, and about 35% in dollar terms.

Clearly there were a lot of opportunities around the globe last year, and there will continue to be going forward.

We had the opportunity to discuss this on Bloomberg Radio on Wednesday (Academy starts at the 22:10 mark).

It is also clear from our Geopolitical Content. While our Around the World piece does just that (it goes around the world), our SITREPS seem to have been not only increasing in terms of frequency, but they are also jumping from region to region (with former regulars – the Middle East and Russia/Ukraine only gathering a modicum of the attention that they once held).

Strikes in Nigeria, Strikes in Syria, “Blockade” in Venezuela, followed by more on Syria, and a LOT more on Venezuela. We do put the term “blockade” in quotations, because despite the President using that phrase, we are not actually enforcing a complete blockade, because that is an act of war (yes, there are all sorts of rules and nuances about what is/is not an act of war). So, view it more as a limiting of sanctioned shipping activity than a blockade – even if the two things sound similar. Just like strikes, as we’ve pointed out, including on the most recent ATW Podcast, are not considered acts of war by the administration. While we are on the theme, the “ceasefire” continues to hold in the Middle East (despite it not looking like a ceasefire to people like me, with a lack of understanding of how these things really work on the ground).

We’ve written about and spoken about the opportunities related to any Russia/Ukraine peace deal. Regarding the Middle East, it is all about getting their AI and Data Centers up and running (and buying chips and military equipment from the U.S.). The focus on South and Central America is also going to create great opportunities and should be part of everyone’s supply chain shipping considerations.

Much of what we’ve been discussing was confirmed in Academy’s Analysis of the new U.S. National Security Strategy.

Africa

While “Sure as Kilimanjaro rises like Olympus above the Serengeti” might be the most majestic line in the song, “Hurry, boy, it’s waiting there for you” might be the most relevant line for today’s purposes. For the record, I cannot distinguish between the Toto and Weezer versions of the song – despite AI telling me that it should be easy to do.

The new National Security Strategy is refreshingly short. Only 29 pages, double spaced, in a font even I could read.

Africa is mentioned 10 times. Once in the index (which doesn’t count), once on page 23 (in reference to critical minerals), and once on page 28 where we suggest working with Middle East partners to open markets in other parts of the world, such as Africa.

To be honest, it is a little disappointing that it doesn’t get more attention, but that may not diminish from its importance in 2026 (and beyond).

Page 29 has the entire section on Africa. It is so small that we reprint it in its entirety here (plus I needed some help getting to 4 pages in this holiday-shortened T-Report). The parts in bold were selected by us, as we think they are extremely relevant.

E. Africa

For far too long, American policy in Africa has focused on providing, and later on spreading, liberal ideology. The United States should instead look to partner with select countries to ameliorate conflict, foster mutually beneficial trade relationships, and transition from a foreign aid paradigm to an investment and growth paradigm capable of harnessing Africa’s abundant natural resources and latent economic potential.

Opportunities for engagement could include negotiating settlements to ongoing conflicts (e.g., DRC-Rwanda, Sudan), and preventing new ones (e.g., Ethiopia Eritrea-Somalia), as well as action to amend our approach to aid and investment (e.g., the Africa Growth and Opportunity Act). And we must remain wary of resurgent Islamist terrorist activity in parts of Africa while avoiding any long-term American presence or commitments.

The United States should transition from an aid-focused relationship with Africa to a trade- and investment-focused relationship, favoring partnerships with capable, reliable states committed to opening their markets to U.S. goods and services. An immediate area for U.S. investment in Africa, with prospects for a good return on investment, include the energy sector and critical mineral development. Development of U.S.-backed nuclear energy, liquid petroleum gas, and liquified natural gas technologies can generate profits for U.S. businesses and help us in the competition for critical minerals and other resources.

While the word “transactional” isn’t mentioned once in this document, the above section outlines, to me, what is going to be a shift from aid (accompanied with a dash of admonishment) to business dealings that make sense.

Nigeria, for example, is projected (according to Grok) to become the third largest nation (by population) as early as 2040.

We’ve discussed the risks associated with millions and millions of displaced people in Africa – as war, fighting, famine, and other things beyond comprehension to the western world continue to be “normal” in much of Africa.

As much as we have been highlighting the opportunities with India for years (and remain somewhat confused by the current tariffs stance towards India), we’ve been remiss on not bringing enough attention to Africa.

There are some issues – which hopefully we can overcome.

• Russian influence is alive and well in the region. Despite Russia appearing relatively weak in its efforts against Ukraine, it has a strong presence in the region. You would think this could be throttled back as Russia just doesn’t have the economic resources to compete if we can give it our full attention.
• The legacy of colonization remains an issue. Much greater for Europe than the U.S., but the U.S. gets rolled into that bucket to some extent. It probably hasn’t helped that much of the U.S. involvement in the region seemed to come in conjunction with some “finger wagging.” Again, a more “transactional” tone should help.
• China has done a lot in terms of their Belt and Road Initiative in the region.
  • The rich and the powerful may have benefitted, but it is far from clear that the populace benefited, which may be an issue going forward for China.
  • Massive debt was created in some cases, with little hope of paying it back organically. That was likely China’s intent from the start.
  • Jobs were certainly NOT created. In most cases, large numbers of workers were brought in from China. Also, the IP was incredibly well protected. China understands the need to protect IP (read into that what you want).
  • Many of the projects are apparently not lasting as long as projected. A few of our generals have been highlighting the fact that the water quality was not good enough to make the cement or concrete set properly. Therefore, many projects are experiencing problems well before they should. That is damaging China’s reputation and creates openings.
• China Inc. versus the U.S.
  • China’s investment in a region (whether from corporations or the government directly) is all treated “wholistically.” We do not currently do a good job of that. In many countries, if we aggregated the capital committed by the U.S. and its companies, the number would be very meaningful. In some countries it may well surpass China’s involvement. We need to do a better job of projecting “America” as including both our government and corporations – we want capital and companies to be the driving force in investment.
  • The State Department needs potentially more resources to fully compete with China on the diplomatic front.

The opportunities for U.S. (and European) companies exist in Africa. I suspect, based on ProSec™ (Production for Security) being led by the U.S. government and investors (with industry specific companies), that Europe will be slow to capitalize on the opportunity.

Africa itself could do really well.

On a quick glance I found the very small (in terms of AUM) Africa ETF (AFK), which is up 75% year-to-date. Haven’t really had time to explore its investment potential here, but I will be working on it.

Africa seems to fit so well with our ProSec™ initiative (even the National Security Strategy seems to focus on it), that there will be lots of opportunities to be found in the region in the coming years and certain companies will win those opportunities.

Bottom Line

We avoided AI today, but I wanted to point out what I think is a subtle change in how many (including me) incorporate: “used AI for this.”

• At one time, highlighting that AI was used seemed to signal how state-of-the-art you were.
• Now, for me, it has more of a tone of “I was too lazy to work through something, so I used AI, and any mistakes are AI’s fault, not mine, and there probably are some mistakes.”

Maybe I am extrapolating my behavior to a bigger group (though, I hear similar things during conversations). No one is going to worry about an AI Spend Diet in the next week, but that is an issue that is likely to rear its head again at the start of the year.

Hope you had a great holiday last week and have another one this week! Academy will be kicking off the new trading year on Bloomberg TV at 7amET on January 2^nd! Hopefully, I will be almost done with my year ahead outlook by then. And yes, that will be a more domestic-focused outlook, even as “not in Kansas” will continue to provide opportunities and risks.

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