Summary of Key Points from the Macro Outlook 2026 Conference Call Industry Overview - The report focuses on global economic growth forecasts for 2026, with specific attention to the US, China, and the Euro area, highlighting macroeconomic trends and potential investment opportunities. Core Insights and Arguments - **Global Growth Forecast**: Expected global growth of 2.8% in 2026, surpassing the consensus forecast of 2.5% [2][4] - **US Economic Performance**: The US is projected to grow at 2.6%, significantly above the consensus of 2.0%, driven by reduced tariff impacts, tax cuts, and improved financial conditions [2][5] - **China's Resilience**: China is forecasted to grow at 4.8%, slightly above the consensus of 4.5%, supported by strong exports despite sluggish domestic demand [2][16] - **Euro Area Growth**: The Euro area is expected to grow at 1.3%, aided by fiscal stimulus in Germany and robust growth in Spain, despite underlying structural weaknesses [2][27] - **Job Market Outlook**: The job market remains weak, with rising unemployment rates in the US despite solid GDP growth, indicating a disconnect between economic growth and job creation [2][35] - **Inflation Trends**: Inflation is expected to stabilize near target levels, with core inflation in the US and UK projected to decrease from around 3% to near 2% by the end of 2026 [2][38] - **Federal Reserve Policy**: Anticipated Fed rate cuts of 50 basis points to a range of 3-3.25%, with dovish risks due to disinflation and labor market concerns [2][62] - **Market Implications**: The forecasts are favorable for equities and emerging market assets, with expectations of better US growth and lower inflation not fully priced into the markets [2][79] Additional Important Insights - **AI Investment Impact**: The direct impact of AI investment on GDP growth is currently negligible, with potential future benefits not yet realized in broader economic metrics [2][8] - **China's Current Account Surplus**: Expected to rise to nearly 1% of global GDP by 2029, which may negatively impact competing economies, particularly in Europe [2][22] - **Structural Weaknesses in Euro Area**: Increased competition from China exacerbates existing issues such as demographic decline and high energy costs, leading to a downward revision of growth estimates [2][25] - **Labor Market Dynamics**: The disconnect between productivity gains and job growth raises concerns about the sustainability of economic recovery, particularly in the US [2][32] - **Investment Opportunities**: The report suggests that sectors benefiting from US demand and China's export growth may present attractive investment opportunities, despite potential volatility [2][84] This summary encapsulates the key points from the macroeconomic outlook, emphasizing growth forecasts, inflation trends, and the implications for investment strategies across different regions and sectors.

Key Takeaways from the 2026 Macro Research Outlook Industry Overview - The report focuses on the global economy, particularly the macroeconomic outlook for 2026, with specific emphasis on the US, Europe, and China. Core Insights and Arguments 1. **Sturdy and Above-Consensus Growth** - Global growth is forecasted at **2.8%** for 2026, with the US expected to grow at **2.6%**, surpassing the consensus of **2.0%** and this year's estimated **2.1%**. The growth is attributed to fading tariff impacts, tax cuts boosting disposable incomes, and easing financial conditions due to Fed rate cuts and deregulation [2][3][10] - China is projected to grow at **4.8%**, driven by strong export growth despite sluggish domestic demand [3][10] - The Euro area is expected to grow at **1.3%**, slightly above consensus, supported by strong growth in Spain and fiscal stimulus in Germany [3][10] 2. **Target-Consistent Inflation in Sight** - Core inflation in the US and UK is expected to decrease from around **3%** to slightly above **2%** by the end of 2026, as tariff impacts and administered price hikes diminish [6][10] - Disinflation is anticipated to progress, reducing the risk of high inflation, with further monetary easing expected in the US (50 basis points), UK (75 basis points), and many emerging markets [6][10] 3. **A Broadening Bull Market Favors Equity Diversification** - The macro environment is expected to support a broadening equity bull market, with forecasts of **13%** price returns and **15%** total returns in 2026 [10][12] - Investors are encouraged to diversify across regions, factors, and sectors, with a focus on emerging markets and a selective combination of growth and value strategies [10][12] 4. **Not Your 2025 Dollar Depreciation Story** - A solid global growth backdrop may lead to further Dollar depreciation, but it is expected to be shallower than in previous years. High-beta G10 currencies are likely to benefit from this trend [13][10] 5. **Protection Remains Key** - Several risks are highlighted, including potential deterioration in the US labor market, institutional risks from a new Fed chair, trade and geopolitical conflicts, and pressures on the AI theme [14][10] - Recommendations for protection include positioning for higher equity volatility and potential credit underperformance, as well as considering bonds as a hedge against risks [14][10] Other Important Insights - The report emphasizes the importance of diversification and protection in investment strategies, given the anticipated macroeconomic conditions and potential risks [2][14][10] - The analysis suggests that while the macro environment is friendly, investors should remain cautious of elevated equity valuations and market volatility [12][14][10]

Market Overview - Markets are experiencing a comeback driven by cooler inflation data, with NASDAQ showing significant gains, particularly influenced by AI and major tech stocks like Micron [1] - The recent inflation report has been viewed positively, despite some concerns regarding data quality, indicating a potential disinflation trend in the economy [2][3] Economic Indicators - Key factors contributing to disinflation include oil, labor, and shelter, with shelter data in the CPI report being particularly encouraging [3] - The market has seen one of the largest six-month returns in history, with technology stocks rising approximately 70% from their lows [5] Market Trends - The NASDAQ has been fluctuating between 22,000 and 24,000, while the S&P 500 has been stuck between 6,500 and 6,900, indicating a period of consolidation [3][4] - Historical analysis suggests that following bull markets, gains are typically observed in the subsequent year, with seven instances since 1950 showing this trend [6] Earnings Outlook - Projections indicate that the S&P 500 could rise more than 10% by the end of next year, with a target of 7,850 [8] - Strong earnings growth is anticipated for the upcoming year, the best since 2021, with Q4 estimates showing positive trends [8][9] - There is an expectation of modest multiple expansion due to rising margins, contradicting the notion of multiple compression in the current market environment [10]

Now, as I mentioned, markets staging a comeback today thanks to cooler inflation data. NASDAQ's the big standout, pushed higher by AI, MAG7, and of course, Micron. Is this a sign we're going to see a rotation back into these names or have investors moved on.Joining me now are Keith Learner from Truest Wealth and Warren Pives from 314 Research. Guys, welcome. Warren, how good was this inflation report versus what some of the fears were out there.Disinflation perhaps. Yeah, thanks for having me, John. I I thi ...

Market Performance - Stocks rebounded strongly on Thursday, with the Nasdaq leading the recovery, jumping 313.04 points or 1.4 percent to 23,006.36 [1] - The S&P 500 advanced 53.33 points or 0.8 percent to 6,774.76, while the Dow closed up 65.88 points or 0.1 percent at 47,951.85 [1] Economic Indicators - The Labor Department reported a slowdown in the annual rate of consumer price growth, with consumer prices in November up by 2.7 percent year-over-year, down from 3.0 percent in September [2] - Core consumer prices, excluding food and energy, also slowed to 2.6 percent in November from 3.0 percent in September, contrary to expectations of remaining unchanged [3] Sector Performance - Semiconductor stocks rebounded significantly, with the Philadelphia Semiconductor Index surging by 2.5 percent, driven by Micron Technology's 10.2 percent increase after better-than-expected quarterly results [6] - Software and networking stocks also showed strength, contributing to the Nasdaq's rise [6] - Airline stocks performed strongly, while energy stocks declined after a previous rally [7] International Markets - In overseas trading, the Asia-Pacific region showed mixed performance, with Japan's Nikkei 225 Index down by 1.0 percent and China's Shanghai Composite Index up by 0.2 percent [7] - Major European markets moved upward, with the German DAX Index increasing by 1.0 percent, the French CAC 40 Index by 0.8 percent, and the U.K.'s FTSE 100 Index by 0.7 percent [8] Bond Market - Treasuries rose in response to the inflation data, leading to a decrease in the yield on the benchmark ten-year note by 3.5 basis points to 4.116 percent [9]

Economic Outlook - The consensus in the market suggests that next year will see robust economic growth, supported by fiscal and monetary tailwinds, as well as deregulation [7] - Clarity around trade policy and a government focused on economic performance ahead of midterm elections may reduce the need for significant Federal Reserve rate cuts [7] Inflation Trends - Current inflation data is viewed with skepticism, and there is an expectation of a higher inflation number in the next report due in mid-January [4] - Despite concerns, there is a belief that the pace of inflation is moderating, indicating a disinflationary trend [4] Federal Reserve Policy - The Federal Reserve's approach to interest rates will depend on economic growth and inflation rates, with modest rate cuts possible if labor market softness is observed [8] - The Fed is unlikely to make drastic changes unless there is significant evidence of economic downturns, particularly in small businesses, which have not been hiring [8][9] Small Business Impact - Small businesses, which account for 46% of employment in the U.S., are a key area to monitor for hiring trends and overall economic health [9] - The NFIB small business sentiment survey will be an important indicator; stabilization and improvement in hiring from small companies could signal a bullish market outlook [10]

Inflation & Pricing - Gradual pass-through of tariff costs onto CPI inflation and consumer prices, with core goods prices rising at a 14% clip annually [2] - Services less energy are showing disinflation, rising at a 3% pace, driven by shelter cost disinflation, but this may be overstated [3][4] - Alleviating tariff cost pressures is a key lever to reduce pressures on businesses and potentially lower prices for consumers [9] - Since 2019, inflation has accumulated to approximately 25% [10] Economic Outlook & Growth - The US economy is supported by three "Apillars" of growth: affluent consumers, AI investment, and asset price appreciation (stock market gains) [11] - These pillars create a virtuous cycle but also represent a narrow and fragile foundation, with risks of an AI-related bubble and stock market correction [12][13][14] - Expects US growth of 19% next year, roughly on par with this year, supported by this narrow foundation [14] - Consumer spending is expected to grow at a moderate 15% pace [15] - Greater investment in AI-connected areas is anticipated [16] Economic Polarization - Expects greater polarization within and between economies, with the well-offs and AI-focused businesses driving most of the spending and investment [16][17]

Core Insights - US inflation slowed more than expected in November, with the headline Consumer Price Index (CPI) rising 2.7% year over year, below market expectations of 3.1% [1] - Core CPI, excluding food and energy, increased 2.6% year over year, also missing forecasts of 3.0%, indicating a notable deceleration in price pressures [2] Market Implications - The softer-than-expected inflation data suggests that inflation is cooling faster than anticipated, which may lead to a shift in Federal Reserve policy towards a more accommodative stance sooner than previously expected [3] - Markets are likely to interpret the data as supportive of rate cuts, particularly for early 2026, as lower inflation reduces pressure on real yields and the US dollar, benefiting risk assets [4] Crypto Market Reaction - A downside inflation surprise typically acts as a macro tailwind for the crypto market, improving liquidity conditions and risk appetite [5] - Short-term price action in the crypto market will depend on how quickly markets adjust Fed policy expectations and whether follow-through buying occurs after the initial reaction [5]

China’s export of excess domestic capacity is adding to the disinflationary impulse in India, and may be helping RBI keep rates lower for longer. Read for free with your email on what could move markets today https://t.co/OBpKBeZM34 ...

Core Viewpoint - The current sentiment in the energy sector is mixed, with some analysts viewing the situation as a potential value trade while others express concerns about a value trap, particularly in relation to crude oil prices and their impact on energy stocks [1][3]. Group 1: Crude Oil Market Outlook - Analysts predict that crude oil prices could decline to around $40 per barrel, with some suggesting it may even drop lower, influenced by geopolitical factors and market dynamics [4][11]. - OPEC's decision to reverse production cuts and increase supply, along with non-OPEC countries like Brazil and the US producing at record levels, is contributing to a potential glut in the market [5][10]. - The overall sentiment is that the energy sector may face challenges, with expectations of lower commodity prices impacting the profitability of energy companies [5][8]. Group 2: Energy Stocks and Investment Strategy - Despite the challenges, there is still perceived value in major energy companies such as Chevron and ExxonMobil, particularly due to their operational efficiencies and lower break-even costs [3][5]. - The energy sector constitutes only 2.7% of the S&P 500, indicating limited influence on the broader market, yet the dividend yields from these stocks may become more attractive in a lower interest rate environment [6][11]. - The outlook for energy stocks remains cautious, with analysts suggesting that owning these stocks outright may be difficult in a declining oil price scenario [8][10]. Group 3: Broader Economic Implications - The declining oil prices may have positive implications for other sectors, such as airlines and industrials, potentially benefiting from lower energy costs [9][10]. - A disinflationary trend could lead to a more accommodative Federal Reserve, which may further influence investment strategies across various sectors [9][10].