00:00I know you mentioned this going into year end, thinking about 2026 and beyond as we go through
00:05the National Security Review coming out of the administration. As you take a step back and think
00:09about things, how does reasserting the so-called Monroe Doctrine change the market map in Latin
00:14America and maybe beyond? Good morning and happy new year. Welcome back. So look, I mean, I think
00:21what to start with, what occurred yesterday was not really regime change. It was, you know,
00:26the extraction of the leader or really decapitation of the leadership of this regime. So as we go
00:33forward and think about, you know, what's going to happen in Venezuela, it looks like the current
00:37base cases, Delcey Rodriguez, the vice president, will lead some sort of transition, hence the
00:43small R regime change that we talked about before. When we pull the lens back on Latin America, I mean,
00:49certainly, and as I mentioned on this show last month, you know, I totally agree. I think what
00:54this is about, it's not about necessarily the re-democratization of Venezuela, but the recapturing
01:00of the Americas for the United States, you know, the Monroe Doctrine, the Roosevelt Corollary, and now
01:04what everybody's calling the Trump Corollary or the Dunro Doctrine. So it means different things for
01:10different countries, you know, hearing previous speakers this morning talk about Colombia, you know,
01:14I'm less concerned about seeing action in Colombia. Colombia's got an election coming later this year
01:19where it's pretty clear that the right is scheduled to return to power. You know, action there could
01:25only probably hurt the right and actually embolden the left. So that probably wouldn't be a great move.
01:31But, you know, there's a move towards the right in Latin America, and these things tend to happen
01:34in trends, you know, towards dictatorships, towards democratization. And I think we're seeing a move
01:39towards democratization. We've seen that in Chile, in Bolivia, in Argentina, certainly governments that
01:44align more closely with the thinking of the current administration. Robert, are there limits to this?
01:47How much further can things go in places like Brazil? Do you believe the pendulum will swing
01:51back in the other direction there, too? I mean, it's hard to say. I mean, the leader of the left
01:57is not a young individual, and Brazil has its challenges. You know, Brazil reminds me a little
02:02bit more of Argentina, where there's just this core base of the left within Brazil that will always
02:09support Lula or whoever Lula supports. So I think Brazil will be interesting. I think the jury's still
02:14out on that. We heard from Panama's leader over the weekend who said that Delcy Rodriguez is Maduroism
02:21without Maduro. Do you think she can generally change the country and the U.S. could direct
02:27interest towards Washington with her in power?
02:31Look, I think it's possible. I mean, I think the bet that the administration made is that,
02:35you know, let's say that leaving her in place was the least worst option or the optimal option.
02:42And what I mean by that is going from, you know, Maduro to Machado was probably a bridge too far in
02:48that, you know, Machado and the opposition hadn't really demonstrated that they could control the
02:52state. The problem with Venezuela today is the state has been destroyed over the past 20, 25 years. So
02:58there needs to be a, you know, elections tomorrow and putting in the opposition is not going to
03:02solve the issues of Venezuela. I think you need to start by rebuilding the state itself,
03:07the institutions, the courts, what have you, before you can expect to, you know, have democratization
03:12take hold for a long period of time.
03:15Do you think American CEOs will follow suit and will want to go back into Venezuela?
03:21I do. You know, particularly around the oil sector, you know, as previous guests have mentioned,
03:26you know, Chevron's there today. Wouldn't be surprised to see ConocoPhillip and others,
03:30you know, the Repsol's of the world. But then you go below that, you have all the suppliers,
03:35you know, the Chamburgés or the Halliburton's of the world, and then folks below those that need
03:40to be supplied. So I do think there's going to be a big exodus. When you think about Venezuela,
03:45think about prior states that had failed that needed to be rebuilt. You know, what comes to mind
03:49for me is like Peru, when Fujimori came in, a complete rebuilding of the state, you know,
03:54financial services, insurance, banks, what have you, grocery stores. I mean, just the basic things
04:00for a country and also Iraq. I mean, look at the, if you want to think about the potential for
04:04Venezuela today, think about Iraq when the Marines invaded. They were doing about a million barrels
04:09a day. Today, they're doing five million barrels a day. The GDP was something like 25 billion.
04:13Today, it's 250 billion. So there's tremendous, that type of tremendous potential in Venezuela today.
04:19And I think it's going to be hard for American and international CEOs to ignore that.
04:22So Robert, these are companies that in the past have been burnt. Do you think they'd be willing
04:25to make a multi-decade commitment at this point? And what do you think companies like the ones we're
04:30talking about would need to see before they really put money to work?
04:34Yeah, I mean, I would suspect, John, that it would be incrementalism that, you know, if a new
04:39company is going to come to Venezuela or come back to Venezuela, it's not going to be, you know,
04:44all in at once, but it'd be incrementalism. And if you look at, you know, Chevron, they're not doing
04:49today what necessarily they were doing yesterday, but they're hoping to do more tomorrow.
04:52So I think everyone would think about a foothold today. You know, the Rodriguez administration
04:57is clearly a transition government. If I were going to Venezuela, I'd want to understand what
05:03that transition was toward and how strong that new transition would be before I went, you know,
05:09all in.
05:10So the Rodriguez government at this point, I'm not sure if they'd see it quite the same way.
05:14They understand that this is obviously not going to be the finished article. But ultimately,
05:17Robert, I wonder, we didn't see much resistance over the weekend. How much resistance would you
05:21expect to see in the coming weeks and months?
05:25Look, I mean, I think the lack of resistance demonstrates that there was some sort of
05:30collaboration before the extraction. And I wouldn't be surprised to see, you know, some sort
05:36of quid pro quo, which is you, you behave this administration, this transition, you behave
05:41in a certain fashion, you know, you will get the immunity. Let's get, you know, transition
05:47to new elections. And, you know, there are examples in Latin America of leftist regimes
05:52that were dictatorships that participated democratically and lost and came back. And
05:59I'm thinking about, you know, Nicaragua in the early 1990s. You know, the Sandinistas
06:02controlled Nicaragua for a decade. There was an election. Daniel Ortega lost. And then in
06:08following elections, he was able to come back. So that may be the path for the Chavistas, which
06:12is some short term loss for some medium term to long term prospects.
06:16Robert, as you know, there's a lot of distressed debt connected with the story. I just wonder
06:20from your perspective, how you're thinking about how much recovery assumptions should
06:24shift and the limits to how much it should shift.
06:27Sure. I mean, if you look at prices this morning, I mean, think Venezuelan bond prices,
06:31Pedevesa bond prices are up about eight points. So that's 20 percent on Venezuela, 30 percent
06:35on Pedevesa. And that compares to, you know, they're probably both up three to four times
06:41since the sanctions were lifted in October of 23. So there's been quite a run. And I'd
06:46say the asymmetry that was there is certainly not there today. But that being said, if you
06:51look at the type of state that the Trump administration is signaling will be built, there can certainly
06:57be more upside. I would expect that upside to be maybe the pot of gold to be a little further
07:01out, but the but the reward higher. And I think the key is going to be what type of restructuring
07:08ensues and when that ensues. And I wouldn't expect that during the transition government.
07:13I would be surprised. Typically, you need to see a stable government that's signaling multilateral
07:18harmony and and then signaling a bond restructuring. It's certainly not their first priority.
07:23But, you know, I would think about some sort of patient capital bond approach where
07:27the long term value Venezuela is is undeniable and bondholders, stakeholders, you know, companies
07:34foreign direct investment. The challenge would be how does everybody come together in a fashion
07:39that's not a zero sum game? Robert, for the people who have the foresight to get in early,
07:42they might see developments over the weekend as an exit point, not an entry point. And they're
07:46thinking about the next trade related to this story. Just one piece of a much bigger puzzle.
07:51What's your approach to that at the moment? Look, I mean, I was asked about
07:56this more broadly yesterday in terms of, you know, is there going to be this flood of new
08:01investment into Venezuela? And we have to remind ourselves that this is still an OFAC restricted
08:06country. In fact, the president herself is a sanctioned individual. The head of the Congress
08:11is a sanctioned individual. So in order for the floodgates to open up to Venezuela, there's going
08:16to have to be a change in the sanctions regime. And that certainly hasn't occurred yet. And what I mean
08:21by that is you just couldn't simply get on an airplane at the Caracas airport was open and start
08:26knocking on doors and having conversations because these are still sanctioned individuals. That
08:30being said, there's a lot of examples in emerging markets over the past 10, 20, 30, 40 years
08:35that there's certainly upside from prices here in the 30s.
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