Weekly Research Briefing: Welcome to the New Year

What comes next? The oil reserves are still there — but political stability, lots of money, and time are needed to see a revival.

“Venezuela could produce 4 million barrels instead of the 1 million barrels it produces per day, but it would take maybe a little bit less than a decade and $100 billion in total over that period to get it to 4 million barrels,” Francisco Monaldi, an expert in Latin American energy policy at Rice University, told us. “Very few countries can do something like that.”

Of course Venezuelans want change. We said as much in the 2024 elections, in which tallies gathered by thousands of volunteers showed an overwhelming opposition victory. For many, the demand for change is not ideological, or limited to new leadership. Venezuelans want change in their quality of life; they want to regain more control over their futures and not be beholden to corrupt networks of power. They want a state with the capacity to honor its obligations, whose power is balanced and limited.

The Venezuelan government no longer reliably provides basic services, but that doesn’t mean it has gotten weaker. It’s just changed shape. The regime’s power has trickled down across Venezuela. Thousands of “comunas,” state outposts scattered across the country, now often conduct political surveillance under the guise of community management projects. Millions of people — whether bought, coerced or true believers — still voted for Mr. Maduro in 2024. It would be a mistake to assume that he does not maintain an organized political base.

Even without Mr. Maduro, the state remains a maze, comprising a sprawling web of overlapping intelligence services, paramilitary groups known as “colectivos” and regional bosses who compete for kickbacks. This fragmentation has been the ultimate insurance policy: It helped ensure that no single general or minister held enough unified power to lead a coup, while keeping every official tethered to the center through the shared need for protection and profit.

@JoePompliano: A newly created Polymarket account invested over $30,000 yesterday in Maduro's exit. The US then took Maduro into custody overnight, and the trader profited $400,000 in less than 24 hours. Insider trading is not only allowed on prediction markets; it's encouraged.

About 45% of the S&P 500’s gains in 2025 came from the Magnificent Seven. While investors who own index-tracking ETFs have benefited, active fund managers who pick stocks and build diverse portfolios to mitigate concentration risk have struggled.

Only 22% of actively managed large-cap funds have outperformed the S&P 500 this year, the lowest proportion since 2016 and well below the average of 40%, according to BofA Global Research data.

Fund managers have been selling tech stocks to the point where they’re the most underweight the sector in five years, contributing the underperformance of active funds, Seaport Research Partners said in October.

@dailychartbook: "Around $1 trillion was pulled from active equity mutual funds over the year ... marking an 11th year of net outflows and, by some measures, the steepest of the cycle."

US asset owners have legged into a barbell of S&P 500 index funds for beta and private equity for long-term alpha. Passive ownership now comprises the lion’s share of S&P 500 float.

@lisaabramowicz1: Cash allocations have fallen to record low levels in Bank of America's latest fund manager survey, with relatively few investors expecting an economic or markets downturn in 2026.

Today, Warren Buffett clocks out as Berkshire Hathaway's CEO, leaving behind a 1965-2025 compounding machine that turned 19.9% a year into over 5,500,000% overall, roughly 140 times the S&P 500's return.

@neilksethi: The 2/10 Treasury spread pushed up to +0.72% on Friday, the highest since Jan ‘22.

65%-75% of S&P 500 returns, profits and capital spending since the launch of ChatGPT in 2022 have been derived from 42 companies linked to generative AI. In other words, the generative AI investment theme has smothered the rest of the US equity market. Without the benefit of these 42 AI stocks, the S&P 500 would have underperformed Europe, Japan and China. To reinforce the point: tech sector capital spending contributed 40%-45% of US GDP growth over the last three quarters, up from less than 5% in the first three quarters of 2023.

After 20 years of flat electricity demand, the US now needs to meet new demand from data centers, EVs and electrification of commercial, industrial and residential heating. While US electricity generation grew by 2%-4% each year from 1950 to 2006, during that era 70%-90% of new capacity additions came from a small number of large coal, nuclear and gas plants. Whether the same pace can be maintained today is another question, particularly given associated shortages of skilled energy labor.

If OpenAI stays on its current trajectory, the company projects it will still need more compute for training than for inference through to 2030. But look at the table; for these forecasts to materialize, OpenAI would need 30 GW of new generation capacity by 2030. That’s a tough hurdle; as we explain in the next section, the entire US added just 25 GW in 2024 after adjusting for the intermittency/reliability of new capacity. Given combined cycle turbine delays, grid interconnection bottlenecks, wildly overly optimistic timetables for small modular reactors and nuclear fusion and limited opportunities to recommission shuttered but still viable nuclear fission plants, energy may be a significant constraint on AI, a topic we discuss next.

One by one, hyperscalers and AI Labs are following suit and temporarily abandoning the grid to build their own onsite power plant. As we discussed months ago in the Datacenter Model, in October 2025, OpenAI and Oracle placed the largest order ever for onsite gas generation, with a 2.3GW plant in Texas. The market for onsite gas generation is entering an era of triple-digit growth annual growth.

The beneficiaries extend far beyond the usual suspects. Yes, GE Vernova and Siemens Energy have seen their stocks surge. But we’re witnessing an unprecedented wave of new entrants, such as:

• Doosan Enerbility, the Korean industrial giant, timing its H-class turbine launch perfectly. It already booked a 1.9GW order to serve Elon’s xAI - as we exclusively unpacked to our Datacenter Industry Model subscribers several weeks ago.
• Wärtsilä, historically a ship engine manufacturer, realized the same engines that power cruise ships can power large AI clusters. It has already signed 800MW of US datacenter contracts.
• Boom Supersonic—yes, the supersonic jet company—announced a 1.2 GW turbine contract with Crusoe, treating the margin from datacenter power generation as another round of funding for their Mach 2 passenger jets.

To understand growth and market share by supplier, we built a building-by-building tracker of sites deploying onsite gas in our Datacenter Model. The results surprised us: 12 different suppliers have now secured >400 MW of datacenter orders each in the US alone, for onsite gas generation.

@Similarweb: Gen AI Website Traffic Share, Key Takeaways:
→ Gemini is approaching the 20% share benchmark.
→ Grok's momentum continues.
→ ChatGPT drops below the 70% mark.
12:55 AM · Dec 25, 2025

@bespokeinvest: 46% of investors think we’re in the early innings (1-3) of the AI Boom versus 12% that think we’re in the late innings (7-9).

I am skeptical of the decisive strategic advantage when I filter it through my main preoccupation: understanding China’s technology trajectories. On AI, China is behind the US, but not by years. There’s no question that American reasoning models are more sophisticated than the likes of DeepSeek and Qwen. But the Chinese efforts are doggedly in pursuit, sometimes a bit closer to US models, sometimes a bit further. By virtue of being open-source (or at least open-weight), the Chinese models have found receptive customers overseas, sometimes with American tech companies. If US labs achieve superintelligence, the Chinese labs are probably on a good footing to follow closely. Unless the DSA is decisive immediately, it’s not obvious that the US will have a monopoly on this technology, just as it could not keep it over the bomb.

One advantage for Beijing is that much of the global AI talent is Chinese. We can tell from the CVs of researchers as well as occasional disclosures from top labs (for example from Meta) that a large percentage of AI researchers earned their degrees from Chinese universities. American labs may be able to declare that “our Chinese are better than their Chinese.” But some of these Chinese researchers may decide to repatriate. I know that many of them prefer to stay in the US: their compensation might be higher by an order of magnitude, they have access to compute, and they can work with top peers. But they may also tire of the uncertainty created by Trump’s immigration policy. It’s never worth forgetting that at the dawn of the Cold War, the US deported Qian Xuesen, the CalTech professor who then built missile delivery systems for Beijing. Or these Chinese researchers expect life in Shanghai to be safer or more fun than in San Francisco. Or they miss mom. People move for all sorts of reasons, so I’m reluctant to believe that the US has a durable talent advantage.

China has other advantages in building AI. Superintelligence will demand a superload of power. By now everyone has seen the chart with two curves: US electrical generation capacity, which has barely budged upwards since the year 2000; and China’s capacity, which was one-third US levels in 2000 and more than two-and-a-half times US levels in 2024. Beijing is building so much solar, coal, and nuclear to make sure that no data center shall be in want. Though the US has done a superb job building data centers, it hasn’t prepared enough for other bottlenecks. Especially not as Trump’s dislike of wind turbines has removed this source of growth. Speaking of Trump’s whimsy, he has also been generous with selling close-to-leading chips to Beijing. That’s another reason that data centers might not represent a US advantage for long.

Tesla Inc. ceded the title of world’s top seller of electric cars to China’s BYD Co., squandering a lead the Elon Musk-led company built as it popularized plug-in vehicles over the past decade.

The US automaker reported a 16% decline in fourth quarter deliveries, trailing analyst estimates. For the year, Tesla sales slid almost 9%, its second consecutive annual drop.

BYD, by contrast, increased battery-electric vehicle sales both for the quarter and the full year, delivering almost 2.26 million EVs in 2025 to Tesla’s 1.64 million.

The startup, which is known for its sci-fi in-wheel electric motor that powers Verge’s electric motorcycles, claims the game-changing liquid-less battery cells and modules are available now at a gigawatt-hour level production capacity to companies worldwide. Verge Motorcycles said that its updated TS Pro two-wheeler will become the world’s first production all-solid-state-powered EV when it reaches customers in the first quarter of this year.

So, what makes this battery special? Well, pretty much everything. It’s lighter, more energy-dense, safer, lighter, faster-charging, more resilient and–most importantly–promises more range than conventional lithium-ion batteries with liquid-based electrolytes.

According to Donut Lab, its production-ready all-solid-state battery has an energy density of 400 watt-hours/kilogram and can be fully charged in as little as five minutes for as many as 100,000 cycles, without having to limit charging to 80%. By comparison, some of the top-tier traditional Li-ion batteries available today have an energy density of around 250-300 Wh/kg and can last for up to 5,000 full cycles, while limiting the maximum state of charge to 80%.

What’s more, extreme temperatures have little to no effect on Donut’s solid-state battery, with the startup claiming its product retained over 99% of its capacity at temperatures as low as -22°F (-30°C) and as high as 212°F (100°C).

Safety-wise, the startup claims the battery will not ignite if it’s damaged, and that it can be built pretty much anywhere in the world because it doesn’t use rare materials. Donut Lab didn’t specify what materials are needed to make the solid-state cells, but it did say that it’s “100% green, made from materials that are found everywhere,” making it immune to geopolitical issues. The startup also claims its solid-state cells are cheaper to build than comparable lithium-ion batteries.

The median age of companies going public has increased to 14 years. With more companies staying private for longer, and in some cases staying private forever, there is a bigger need for private markets in debt and equity.

We focus on three new themes for 2026: the blurring line between public and private markets, with a surge in secondaries liquidity; a material pickup in animal spirits in the form of M&A and IPOs, driving public equity and IG debt issuance while generating headwinds for current index constituents; and the opportunity for reduced S&P 500 concentration to make way for financials sector leadership. Watch deal-volume metrics for secondaries, M&A, IPOs and debt issuance. Consider preparing for new equity index leadership and liquidity opportunities in “privates,” while rebalancing for maximum strategic diversification and avoiding single-name concentration.

Despite a hesitant start to the year amid tariff and volatility anxieties, a second-half surge catapulted global mergers and acquisitions to a near-record volume of $3.6 trillion. That was thanks in part to a $500 billion December—the biggest month ever for M&A.

Private equity firms, enabled by ever-growing stores of dry powder and often teaming up with investment firms, boosted the M&A totals through acquisitions of publicly traded companies, a deal type that was unusual a couple decades ago. The $239 billion in take-private deals in 2025 topped every prior year except 2022, with the size of those transactions more than doubling from 2024 to an average of more than $2.9 billion in 2025. Among them is Electronic Arts agreeing to sell itself for $55 billion to a group including Silver Lake Management and Saudi Arabia’s Public Investment Fund in the biggest-ever LBO.

North America, which accounted for half of global M&A volume in 2024, took a 61% share in 2025. While other regions saw modest gains, M&A deals for companies based in North America reached $2.2. trillion, with Canada garnering $341 billion of that total.

After numerous false dawns, the exit window for private equity-owned companies finally appears to be opening. In an effort to satisfy their investors’ thirst for distributions, some fund managers are selling their crown jewels now, even if it means giving up potential returns.

Several deal lawyers and advisers to buyout firms said they are seeing an uptick in the sale of strong-performing assets in the early years of their hold period, which has stretched from an historical average of 3-5 years to more than 7 in recent years.

Many of these investments were made in late 2021 or in 2022, with a small number of assets coming to market after being held for less than three years.

“We are surprised by how quickly GPs are moving on [these assets],” said Brad Haller, a senior partner at West Monroe who advises buyers on post-merger integration.

Since 1972, sales grew from $9M to $26B, operating profit grew from $600K to $2.8B and enterprise value grew from $9M to $50B. Retained earnings funded all the growth. No down years. 50+ years of clean high-teens compounding.

• BP (BP.ln) has agreed to sell a majority stake in its Castrol lubricants division to US infrastructure group Stonepeak in a deal that values the business at $10.1bn including debt, as the UK oil and gas major steps up asset sales under new chair Albert Manifold. As part of the deal, BP will sell a 65 per cent stake in the century-old engine oils and lubricants business to Stonepeak but retain a 35 per cent stake via a joint venture, according to the company.
• A group of private equity firms led by Permira and Warburg Pincus has agreed to acquire Clearwater Analytics Holdings Inc. (CWAN) in a deal valuing the investment and accounting software maker at $8.4 billion including debt. Clearwater investors would get $24.55 a share for an equity value of about $7 billion. The company said the price represents a 47% premium to the price on Nov. 10, before it was reported the two buyout firms were in talks to buy it.
• Artificial-intelligence software company ServiceNow (NOW) agreed to acquire cybersecurity startup Armis for about $7.75 billion in cash in a move intended to take advantage of growing demand for AI security. Armis recently raised $435 million in a funding round that valued the company at $6.1 billion, and it had been planning for an initial public offering at the end of 2026 or early 2027. ServiceNow said on Tuesday that the acquisition would triple its market opportunity for security and risk solutions and entrench its position in the market for securing AI technology.
• Nelson Peltz's hedge fund Trian and venture capital firm General Catalyst have agreed to acquire New York-listed Janus Henderson (JHG) for $7.4bn. Investors in the London-headquartered asset manager will receive $49 per share in cash, representing an 18% premium to the closing price on 24 October 2025, the last trading day before the initial takeover proposal was revealed.
• BioMarin Pharmaceutical (BMRN) has struck a deal to buy fellow biotech Amicus Therapeutics (FOLD) for about $4.8 billion in cash, expanding the company’s portfolio in treatments for rare diseases. BioMarin said it would pay $14.50 a share for Amicus, a 33% premium price of $10.89 for the Princeton, N.J., company.
• Alphabet Inc. (GOOGL) has agreed to buy clean energy developer Intersect Power LLC for $4.75 billion in cash, plus existing debt, marking one of the largest deals by the tech giant to dramatically expand its data center footprint for AI. Intersect, backed by private equity firm TPG Inc., has focused on clean energy solutions to help power large data centers, including solar and battery storage projects. The company has been in close touch with hyperscalers this year marketing enormous facilities in Texas, which Intersect’s CEO Sheldon Kimber has called “the Disneyland of energy” for its abundant wind and solar resources.
• SoftBank Group (9984.jp) agreed to buy DigitalBridge (DBRG) for $4 billion, including debt, part of the Japanese conglomerate’s strategy to take advantage of an AI-driven boom in digital infrastructure. Under the terms of the deal, SoftBank will purchase all of DigitalBridge’s outstanding shares for $16 apiece. The price represents a 50% premium to its unaffected 52-week average closing price as of Dec. 4.
• Hogan Lovells said it will merge with one of Wall Street’s oldest law firms, Cadwalader, Wickersham & Taft, in a tie-up it described as the industry’s largest ever, creating a $3.6 billion megafirm with more than 3,000 lawyers. Hogan Lovells Cadwalader will be the fifth-largest global law firm by revenue, according to the firms’ announcement.
• Services firm WSP Global (WSP.ca) said it will acquire U.S. power and energy firm TRC Companies in a $3.3 billion all-cash deal. WSP Global said the proposed acquisition will position it as the largest engineering and design firm in the U.S., growing its power and energy sector, which would contribute to 34% of its U.S. revenue. TRC Companies, majority-owned by funds managed by Warburg Pincus, is an engineering, consulting and advisory firm with a particular focus on power and energy, utilities, environmental services and program management.
• Harbour Energy (HBR.ln) to acquire LLOG Exploration Company from LLOG for $3.2B, comprising of $2.7B cash and $0.5B of Harbour’s voting shares. The Acquisition marks Harbour's strategic entry into the US Gulf, strengthening its global portfolio and establishing another core business unit alongside Norway, the UK, Argentina and Mexico.
• Japan's Sapporo Holdings (2501.jp) will sell its real estate business to a consortium led by private equity firms KKR and PAG for 477 billion yen ($3.06 billion), Sapporo said in a release. The deal to buy Sapporo Real Estate will close in stages over three years, with the first tranche of a 51% stake expected to close next June, the companies said in a joint statement Wednesday.
• Online education platform Coursera (COUR) said on Wednesday it would buy rival Udemy (UDMY) in an all-stock deal, valuing the combined company at $2.5 billion, as the industry consolidates after a post-pandemic slowdown and heightened investor scrutiny. Udemy shareholders would receive 0.8 shares of Coursera for each held, valuing the company at about $930 million. Based on Coursera's last close, the offer implies a price of $6.35 per Udemy share, a premium of roughly 18.3%.
• CACI International (CACI) announces $2.6B acquisition for cash of ARKA Group from Blackstone. “Aligned with CACI’s commitment to delivering advanced technology for national security customers, ARKA supports national security missions through its space-based sensor portfolio and ground-based software processing, accelerating the delivery of actionable intelligence to the warfighter.”
• Indian technology services provider Coforge Ltd. (COFORGE.in) agreed to buy Encora at an enterprise value of $2.35 billion in an all-stock deal, adding artificial intelligence, data and product engineering expertise. Encora’s shareholders, including Advent International and Warburg Pincus, will get about 20% stake in Coforge through a share swap. Coforge will issue 93.8 million shares at 1,815.91 rupees each to shareholders of Encora at equity value of $1.89 billion. The technology firm wants to reshape its services portfolio with the acquisition of the US-based digital engineering company. The transaction, when final, will mark one of the largest overseas acquisitions by an Indian IT player in recent years.
• Diageo (DGE.ln) just announced an agreement to sell its 65% stake in East African Breweries (EABL.ke) to Asahi Group (2502.jp) for net proceeds $2.3bn, implying a 17x EBITDA multiple.
• Sanofi (SAN.fr) will buy U.S. biotech Dynavax Technologies (DVAX) for around $2.2 billion (1.9 billion euros) in an agreed deal that will add an adult hepatitis B vaccine and a promising experimental shingles shot to its portfolio. The French drugmaker will pay $15.50 a share in cash for Dynavax, 39% above the Emeryville, California-based firm’s closing price.
• Meta Platforms (META) has agreed to acquire AI startup Manus, a Singapore-based company with Chinese founders that conducts deep research and performs other tasks for paying users. Meta is closing the deal at more than $2 billion, according to people familiar with the acquisition. Manus was seeking a fresh round of fundraising with a valuation of $2 billion when Meta approached the startup, some of the people said. The acquisition is among the highest-profile examples of a major U.S. tech company buying an artificial-intelligence product developed in Asia’s AI and startup ecosystem.
• Stanley Black & Decker (SWK) announced it has entered into a definitive agreement to sell its Consolidated Aerospace Manufacturing business to Howmet Aerospace (HWM) for $1.8B in cash. CAM provides critical fasteners, fittings, and other engineered components for the aerospace and defense industries. The combination of synergies and the aforementioned tax benefit is expected to result in a FY 2026 adjusted EBITDA transaction multiple of approximately 13x.
• Samsung unit Harman acquires ZF’s driver-assistance (ADAS) business for $1.77B. Co notes that the market for ADAS and central vehicle controllers is expected to grow from KRW62.6T ($42.18B) in 2025 to KRW97.4T in 2030.
• Crestpoint Real Estate Investments Ltd. agreed to take Ottawa-based landlord Minto Apartment Real Estate Investment Trust (MI.cn) private Monday in a deal that values the firm at C$2.3 billion ($1.7 billion), including debt. Crestpoint, which is part of Vancouver-based Connor, Clark & Lunn Financial Group Ltd., will buy majority control of the apartment REIT at C$18 per unit. Crestpoint’s bid for Minto Apartment REIT represents a 32% premium to the trust units’ last closing price.
• Jacobs (J) announced an agreement to acquire the remaining stake in PA Consulting for upfront consideration of £1.216 bn ($1.6 bn) and deferred consideration of £75 mn payable in shares two years following closing. The transaction implies a valuation of PA Consulting of £3.05 billion or 13x 2025 adjusted EBITDA (12.3x including estimated synergies).
• Mortgage lender UWM Holdings (UWMC) agreed to acquire mortgage servicing rights-focused REIT Two Harbors Investment (TWO) in an all-stock deal valued at ~$1.3B, providing UWM with expanded servicing expertise and a $176B unpaid principal balance MSR portfolio, the companies said on Wednesday. The acquisition will almost double its UWM's existing MSR portfolio to ~$400B, which will create significant recurring revenue and the opportunity for ~$150M of cost and revenue synergies on an annual basis to drive earnings growth, the company said.
• An investor group led by Apollo Global Management Inc. has agreed to invest $1.2 billion in QXO Inc. (QXO) to support the building products company’s acquisition strategy. The financing for the company will be in convertible perpetual preferred stock and will pay an annual dividend of 4.75% with a conversion price of $23.25 per share, roughly 18% above QXO’s Friday closing price of $19.72. The stock rose 18% to $23.34 giving the company a market value of about $16 billion.
• Gold and copper miner SolGold (SOLG.ln) said it had agreed to be acquired by its largest shareholder Jiangxi Copper (JIX.hk) in a deal valuing it at 867 million pounds ($1.17 billion). The offer represents a 43% premium to SolGold’s share price before the first bid last month, it added. The deal comes amid a surge in interest in copper mines with the metal trading at a record high.
• TransDigm Group (TDG) has entered into a definitive agreement to acquire Stellant Systems for $960 million in cash. Stellant Systems is a major manufacturer of radio frequency (RF) and microwave power amplification products used in space, defense, and medical markets.
• OceanFirst Financial Corp. (OCFC) and Flushing Financial (FFIC) announced a definitive merger agreement. The $579 million deal would combine the entities in an all-stock transaction, with Flushing Bank merging into OceanFirst Bank. The combination will create a high-performing regional bank operating across New Jersey, Long Island and New York. At the same time, OceanFirst also announced a $225 million investment agreement with affiliates of funds managed by Warburg Pincus LLC. Following the close, the combined OceanFirst will establish a company with approximately $23 billion in assets, $17 billion in total loans and $18 billion in total deposits across 71 retail branches.

Unless you worked for Ford’s plastics, paint and vinyls division in the 1980s, you probably don’t know the name Jim Moylan.

But you might well know the idea that made this unknown engineer who recently died into one of America’s greatest inventors.

One rainy day 40 years ago, Moylan was headed to a meeting across Ford’s campus and hopped in a company car. When he saw the fuel tank was nearly empty, he stopped at a gas pump. What happened next is something that’s happened to all of us: He realized that he’d parked on the wrong side.

Unlike the rest of us, he wasn’t infuriated. He was inspired. By the time he pulled his car around, he was already thinking about how to solve this everyday inconvenience that drives people absolutely crazy. And because the gas pump wasn’t covered by an overhead awning, he was also soaking wet. But when he got back to the office, Moylan didn’t even bother taking off his drenched coat when he started typing the first draft of a memo.

A meta-analysis published in The Lancet last year showed robust reductions in all-cause mortality and positive intermediate benefits from 6,000–12,000 steps per day.