Smothers: AI Buildout Biggest 2026 Risk, FOMC to Cut Interest Rates 100bps

Market Overview - The market is currently driven by headlines, with investors showing a tendency to shrug off negative news and maintain optimism going into 2026 [2][3] - There is a strong focus on discipline and sticking to investment plans despite market fluctuations [3] Economic Indicators - Recent GDP figures have been unprecedented, and there is speculation that the incoming Federal Reserve chair will not use GDP data as a basis for raising interest rates, potentially leading to continued rate cuts into 2026 [4] - The market is expected to continue climbing despite concerns, driven by growth and productivity [5] Risks and Opportunities - A significant risk identified is the potential lack of profitability in AI investments, which could impact market confidence if companies fail to justify their infrastructure spending [6][7] - The market may experience overreactions to headlines, creating opportunities for investors to buy undervalued stocks [9][10] Investment Strategies - The current strategy involves maintaining a strong position in major indexes like the S&P 500 and NASDAQ while purchasing oversold stocks [10] - Royal Caribbean is highlighted as a strong investment opportunity due to its solid earnings, dividend returns, and active debt reduction strategies [11][14] Federal Reserve Outlook - The uncertainty surrounding the new Federal Reserve chair is noted, with expectations that their policies may lead to a more favorable market environment if they pursue rate cuts [19] - Speculation suggests that the Fed may aim for interest rates approximately 100 basis points lower than current levels, which could positively influence stock prices [19]