by Jonathan Scott, Managing Director
The first week of January 2026 opened with something that looked like stability. Markets were calmer. The language of emergency had softened. The sense of immediate crisis that had hung over so much of the previous period seemed, at least for a moment, to have lifted. But I think that surface calm risked creating the wrong conclusion. A pause in visible stress is not the same thing as genuine resilience. It can just as easily be a breathing space before the next pressure point makes itself known.
That was the real mood I would have taken from the opening of the year. Not panic. Not optimism. Something more cautious than either. The global economy still looked too dependent on fragile trade arteries, too exposed to political decisions, and too eager to treat the absence of immediate shock as proof that the underlying system had been repaired. I do not think it had been repaired. I think it had simply become quieter, and quiet can be deceptive.
Energy was one of the clearest examples of this false comfort. In the opening week of January, oil prices softened after remarks from President Trump about Venezuelan oil flows, and Reuters reported that U.S. crude settled down more than 1 percent on 7 January. EOG Resources said oversupply and increased Venezuelan output were weighing on shale prices. That gave the market a short-term sense of ease. More barrels on the margin always help sentiment. But sentiment is not the same thing as security.
I think this is where people often read too much into a price chart. When oil drifts lower, it is tempting to conclude that the underlying energy picture must be healthier. Yet lower prices can just as easily reflect temporary relief, marginal supply adjustments, or softer expectations rather than durable strength. Europe was still more dependent on imported LNG than many liked to admit, and Reuters noted later in January that European LNG purchases had surged 25 percent in 2025, with the United States supplying more than 60 percent of the EU’s LNG and roughly a quarter of total gas supplies. Even without knowing the exact shape of the year ahead in that first week, it was already clear that Europe’s energy problem had changed form more than it had disappeared.
That is why I would not have described the opening of 2026 as a period of true energy confidence. It was a period in which immediate fear had faded, but structural dependence remained. The winter position looked better than the nightmare scenarios once feared. Yet better is not the same thing as safe. I think that distinction mattered then, and it matters now.
The same illusion could be seen in global trade. One of the habits of modern economic commentary is to speak as though trade is automatic, as though goods simply move because markets want them to move. But trade is not automatic. It depends on a chain of physical conditions remaining intact. Ports must function. Crews must be willing. insurers must price routes sensibly. Governments must not interfere too aggressively. Narrow maritime corridors must remain open. When any of those things starts to wobble, the wider economy feels it.
Even in the opening week of January, geography was quietly reasserting itself. Reuters reported on 7 January that China’s top diplomat was using his annual New Year tour of Africa to focus on strategic trade access across eastern and southern Africa, with Beijing seeking to secure key shipping routes and resource supply lines. That is not the behaviour of a world that believes logistics has become a solved problem. It is the behaviour of a world that understands access, corridors, and physical control still matter enormously.
I think that point is easy to miss when markets are calm. People start talking about trade as if it were a spreadsheet rather than a map. But the map is always there underneath. The first week of January may have looked quieter than the periods that came before it, yet the great strategic powers were still acting like powers that knew geography could tighten again without much warning.
East Asia began the year looking stronger than many other parts of the world economy. Even in the first days of January, it was clear that semiconductors would remain one of the most important industrial stories of 2026. South Korea and Taiwan still sat close to the centre of that story. The region had momentum. It had capital expenditure. It had industrial depth. Above all, it had relevance to the global AI build-out that was still gathering pace.
But even here, I would not have written in a tone of easy confidence. The semiconductor story was strong, but it was also narrow and politically exposed. Reuters reported later in January that South Korea expected semiconductor export growth to rise sharply in 2026 on the back of the AI cycle, while also reporting that Seoul saw only limited immediate damage from new U.S. tariffs on some advanced chips because memory chips, its main strength, were initially excluded. That is encouraging on one level, but it also reveals the vulnerability underneath. The outlook for one of Asia’s most important industries was being shaped not only by demand, but by tariffs, national security investigations, alliance politics, and the geographic placement of future capacity.
That is why I think the East Asian technology story at the start of 2026 required a more disciplined reading. Yes, the sector had forward momentum. Yes, the AI boom was real. But the world’s most valuable technology supply chains were not floating above politics. They were becoming more entangled in it. Taiwan’s later trade and investment arrangements with the United States would reinforce that point, but the pressure was already obvious at the start of the year to anyone paying attention. Strategic industries were being pulled more tightly into strategic competition.
There is a tendency to look at new fabs, rising chip shares, and bullish forecasts and assume that means security. I do not think it does. It means importance. And in the modern world, importance often attracts pressure rather than peace.
Food and agriculture also belonged in any honest January outlook, even if they did not yet dominate the headlines in the first week. The reason is simple. Food systems are slow-moving until suddenly they are not. Trouble often begins in the background, in fertiliser costs, transport bills, energy inputs, and credit conditions, long before it becomes obvious in supermarket prices or political unrest.
I would not have claimed in the first week of January that a new food shock was already visible. That would have been hindsight disguised as foresight. But I would have said that the conditions for renewed pressure were still present. Energy remained central to fertiliser production and transport. Grain routes remained vulnerable to geopolitical strain. The war in Ukraine had not stopped mattering simply because it had become familiar. And any serious disruption in energy or shipping would eventually feed through to agriculture. That was not a dramatic prediction. It was just the underlying logic of the system.
I think this is one reason so many supposedly stable periods later turn out not to have been stable at all. The visible indicators look manageable, but the slow mechanics underneath are already accumulating strain. Farming never really escapes the wider economy. It inherits the cost of fuel, gas, fertiliser, freight, and finance. If those remain fragile, then the calm in food markets is often only provisional.
So why did the first week of January feel more stable than it really was? Partly because people were exhausted by disruption and wanted a cleaner story. Partly because markets always prefer the appearance of consolidation to the admission of fragility. And partly because modern commentary still has a habit of abstracting the economy away from its physical foundations.
That is the mistake I would have wanted to avoid in this essay. The economy is not an abstract machine. It is a geographical system. It runs through ports, gas terminals, chip plants, trade corridors, power grids, pipelines, warehouses, and maritime choke points. When those things are functioning, commentators talk as though geography has disappeared. When they fail, geography suddenly returns as if from nowhere. But it was never gone. It was simply being ignored.
I think that was the real insight of January 2026. Not that the world had healed, but that people were briefly behaving as though it had. The system looked calmer because the stress had become less dramatic, not because the stress had been removed.
My view, standing in the first week of January 2026, would have been cautious. Not bleak. Not alarmist. But cautious. I would have said that the world economy had entered the year with less visible panic, yet still with very little slack in it. Energy dependencies remained substantial. Trade routes remained politically exposed. Semiconductors remained both a source of strength and a point of strategic tension. Food systems still sat downstream of all of those pressures.
In that sense, the title still fits. The January illusion was the illusion that a calmer surface meant a stronger structure. I do not think it did. I think it meant only that the next disruption had not yet announced itself clearly enough. The world had not become stable. It had simply become quieter for a moment.
And sometimes that is the most deceptive moment of all.