Johnson: I think the market is looking for more stimulus

Market Outlook & Potential Risks - The market anticipates further stimulus, but a "hawkish cut" by the Federal Reserve, signaling a potential end to rate cuts, could disappoint investors and compress market gains [1][2] - Mega-cap stocks may not experience significant further gains, potentially leading to market consolidation [2][3] - A hawkish Fed message, indicating a pause until the next Fed president is in office (February), could benefit mid and small-cap stocks while the MAG7 stocks may underperform [4] - Historical trends suggest that after three consecutive years of 10% S&P returns, the median return is only 25%, raising concerns about potential consolidation or pullback [5] 2026 Forecast & Volatility - The firm's 2026 S&P price target is 7,150, representing approximately a 4% increase from the previous day's close [5] - Technical and fundamental analysis suggests higher volatility in 2026, with strength in the first half followed by a drawdown in the third quarter before midterm elections [8] - The firm anticipates mid-single-digit returns for 2026, requiring a recalibration of market expectations [8] - A potential 20% pullback is expected around Q2 or Q3, driven by midterm elections [9][10] - The potential loss of the House or Senate by the current administration could trigger the drawdown, while subsequent Fed cuts could catalyze a market recovery [10][11]