Goldman Sachs(US:GS)2025-12-19 03:13Key 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]