Economic Outlook - Recession odds for 2026 are now at 25% [1]

Economic Overview - The U.S. economy presents a mixed picture with consumer activity remaining intact but shifting towards necessities rather than discretionary spending [2] - Businesses are operating under tighter margins and selective demand, creating a functional yet vulnerable economy [2] Market Sentiment - Investors are becoming more cautious as expectations for 2026 are tempered due to slower economic momentum and rising uncertainty around corporate earnings [1][3] - The market may experience increased volatility as growth becomes less predictable and earnings visibility narrows [3] Defensive Stocks - Defensive stocks are expected to perform better during uncertain periods as they cater to everyday needs, providing more predictable revenues compared to cyclical businesses [4] - These stocks can help reduce portfolio volatility while still allowing for long-term market participation [5] Company Analysis: Turning Point Brands, Inc. (TPB) - TPB has seen a 40% increase in share price over the past year, benefiting from stable consumer demand in habitual consumption categories [6] - The company is focused on maintaining brand strength while evolving its portfolio to align with consumer preferences, including expanding into modern oral nicotine products [7] - The Zacks Consensus Estimate for TPB's EPS suggests growth of 50.6% for the current fiscal year and 7.1% for the next [8] Company Analysis: Johnson & Johnson (JNJ) - JNJ benefits from steady non-discretionary healthcare demand and a diversified portfolio in pharmaceuticals and medical technologies [11] - The company emphasizes disciplined innovation, advancing its pharmaceutical pipeline and enhancing its medical technology offerings [12] - The Zacks Consensus Estimate for JNJ's EPS indicates growth of 8.9% for the current fiscal year and nearly 5.7% for the next [13] Company Analysis: NextEra Energy, Inc. (NEE) - NEE has risen 12.1% in the past year, providing essential electricity services that support predictable operations and earnings visibility [14] - The company is positioned to benefit from long-term energy infrastructure demand driven by population growth and electrification trends [15] - The Zacks Consensus Estimate for NEE's EPS suggests growth of 7.6% for the current fiscal year and 7.8% for the next [16] Conclusion - As uncertainty increases approaching 2026, investors may prefer companies like TPB, JNJ, and NEE that offer stability through essential products and services while continuing to invest in growth initiatives [17]

“When you go a very long period without recession, costs do begin to mount.” On “The Intelligence” @econcallum explains why uninterrupted economic growth is risky https://t.co/BEe6Wf3V8m ...

Coming to the economy. Investors are watching for signals from policymakers heading into a key year for the Federal Reserve, with a new chair expected to be announced soon. Cleveland Fed President Beth Hammack among those, preferring to hold rates higher for longer.Well, our next guest is taking the other side, voting for a 50 basis point cut at the Fed's last meeting. Joining us now is Federal Reserve Governor Stephen Myron. Very good morning to you, Stephen.Thank you so much for joining us. Good morning. ...

Core Viewpoint - The price of bitcoin could exceed $170,000 by 2026 if the Federal Reserve loses control of the economy and resorts to aggressive stimulus measures, according to CoinShares' latest outlook report [1] Scenario Summaries - The base case scenario predicts bitcoin trading between $110,000 and $140,000 during a slower economic expansion, characterized by subdued growth, persistent inflation, and cautious Fed rate cuts [2] - In the bull case, bitcoin could rise above $150,000 if inflation decreases steadily and AI-related productivity gains enable the Fed to implement more decisive rate cuts [3] - The bear case presents two outcomes: in a recession where the Fed cannot respond quickly, bitcoin may initially fall but could rebound past $170,000 as aggressive easing is interpreted as the Fed losing control [4] - A stagflation scenario, combining weak growth with rising inflation, could see bitcoin drop to the $70,000–$100,000 range due to ETF outflows [5] Investment Opportunities - Investors can gain exposure to bitcoin and ether futures through the CoinShares Bitcoin & Ether ETF (BTF), which currently holds $14.5 million in assets and has seen net inflows of $913,570 over the past month [6] - BTF invests in CME bitcoin and ether futures contracts, as well as treasuries, corporate bonds, and cash, rather than holding digital assets directly, with a 1.25% expense ratio [7] - Beyond the cyclical dynamics of 2026, the gradual decline in dollar reserve dominance is expected to provide a long-term structural tailwind for cryptocurrencies as central banks diversify away from single-currency dependence [7]

Group 1: Dollar Index and Economic Outlook - The dollar index (DXY00) is down -0.30%, retreating from a one-week high, indicating underlying weakness in the dollar as the FOMC is expected to cut interest rates by about -50 bp in 2026 [1] - The Fed is increasing liquidity in the financial system by purchasing $40 billion a month in T-bills, contributing to the dollar's pressure [2] - Markets are pricing in a 20% chance of a -25 bp cut in the fed funds target range at the upcoming FOMC meeting on January 27-28 [3] Group 2: Euro and ECB Position - EUR/USD is up +0.48% due to dollar weakness, supported by ECB officials' comments expressing satisfaction with the current outlook for interest rates [4] - ECB Governing Council member Gediminas Simkus stated satisfaction with current interest rates, citing inflation levels close to the 2% target and improved, albeit sluggish, economic growth [5] - The ECB is not expected to cut rates at the next policy meeting on February 5, with swaps pricing in a 0% chance of a -25 bp cut [6] Group 3: Yen and Bank of Japan - USD/JPY is down -0.47%, with the yen supported by a recent +25 bp rate hike by the Bank of Japan and rising interest rate differentials [6]

Group 1 - The inevitability of recessions is acknowledged, with the Federal Reserve's role being to mitigate their impact as much as possible [1] - The current rise in the unemployment rate is typically observed before recessions, but there is no immediate recession anticipated due to policy rate adjustments [2] - Various economic shocks, including changes in population growth due to border policy, have led to a decrease in the neutral interest rate, necessitating downward adjustments in policy rates to avoid increasing recession risks [3] Group 2 - The expectation is that interest rates will continue to be adjusted downward in the near future [4]

Joining us now, Ed Yardeni, president of Yardi Research. What a year. We can start looking back at it.Um, all of the uh liberation day angst turned into >> a buying opportunity. Did >> indeed >> obviously >> we hear the this is the worst economy that the world has ever seen, although the stock market keeps hitting new highs. Correct.So, I don't >> Well, I mean, we we've had the most widely anticipated recession of all times. This didn't happen. I mean, how many years has it been now.>> Yeah. >> And the econ ...

Group 1 - The stock market is closing out a record-breaking year, but investors have mixed feelings about the future, with around 80% of Americans concerned about a potential recession and 44% feeling optimistic about the market [1][2] - Historical data suggests that stock prices are likely to fall eventually, but the timing of such a downturn remains uncertain [2][4] - The Buffett indicator, which measures the ratio of the U.S. stock market's total market cap to GDP, is currently at nearly 234%, indicating that the market may be significantly overvalued [5][6] Group 2 - Despite warning signs from some market indicators, there are reasons for optimism about the long-term future of the market, as it is expected to recover from periods of volatility [8][9] - Investors with a long-term outlook have historically earned the most in the stock market, even after significant downturns [9]

Global Economic Overview - A higher nominal world has emerged, driven by persistent fiscal deficits, rising protectionism, and competitive currency devaluations, leading to a higher equilibrium for inflation and interest rates [2][20] - Global activity remained resilient in Q4 2025, despite renewed tariff pressures and persistent geopolitical tensions [4][20] - The US economy experienced moderate growth with easing inflation pressures and rising policy and trade uncertainty [4][8] United States - In Q4 2025, the US economy showed slowing but still positive activity, with disinflationary trends and intensifying policy and trade uncertainty [8][11] - Payroll gains decelerated, unemployment rose to 4.4%, and job cuts surged, indicating a softening labor market [8][11] - The Federal Reserve cut rates by 25 basis points in October and December, concluding quantitative tightening [11] Europe - Economic conditions in Europe improved modestly, with the HCOB Composite PMI rising to a 17-month high of 52.5 in October, although recovery remained uneven [12][15] - Eurozone headline CPI held steady at 2.1% in October and 2.2% in November, complicating the ECB's ability to guide markets towards a clearer easing trajectory [12][15] - The quarter reaffirmed a fragile but stabilizing growth trajectory, constrained by tight financial conditions and external trade headwinds [15] China and Emerging Markets - China maintained a GDP growth target of around 5% for 2025, despite facing weak domestic demand and property stress [16][20] - The People's Bank of China (PBoC) maintained an accommodative stance, relying on targeted liquidity injections to stabilize the property sector [16][20] - Asian equities modestly outperformed global peers, supported by strong AI-related demand and solid earnings [19][20] Investment Conclusions - The global economy continues to show resilience despite trade frictions and policy uncertainty, with a low probability of a deep US recession [20] - A moderate re-acceleration in global activity could revive cyclical inflation, emphasizing the importance of corporate earnings [20] - The investment strategy prioritizes capital preservation while using volatility and dispersion as opportunities for active management [20]