AI will still be a tailwind in 2026, says NB Private Wealth's Shannon Saccocia

Market Trends & Investment Themes - The market is experiencing ebbs and flows, with a resurgence in the AI sector [1] - The engagement of the US consumer and the performance of the holiday season are key factors to watch in early January [2] - AI is expected to remain a significant tailwind, contingent on capex investments from companies beyond the technology sector, including industrials and financials [4] - Healthcare sector price cuts may provide a tailwind [4] Small Cap vs Large Cap - Small caps are favored entering the year, particularly if economic growth strengthens, rates decrease, and liquidity is infused around tax time in April and May, potentially leading to strong performance in the first half of 2026 [5] - The recent rally in small caps has been primarily in lower-quality companies with low or no earnings [5] Interest Rates & Monetary Policy - At least one more interest rate cut is anticipated in the first quarter [6] - The Fed's actions in the second half of the year remain uncertain [6] - The potential for inflation to decrease may lead the Fed to adopt an easier monetary policy in the second half of the year [7] Global Markets - The US market continues to show significant strength [8] - Optimism surrounds the Japanese market, making developed markets excluding the US (Developed XUS) attractive [8] - Emerging markets (EM) are becoming more appealing, despite concerns about the Chinese consumer and real estate [8][9] - Korea is seen as offering opportunities in the next phase of the AI trade [9] - When considering EM exposure, diversification beyond China is recommended [10]