What to Expect from This Report MARKET STRATEGY REPORT
We’re holding a constructive outlook for both economic growth and corporate earnings in 2026. Equity markets should benefit from this fundamental strength, in our view. But there are two more reasons stocks could feel tailwinds in 2026: accommodative fiscal and monetary policy.
The Federal Reserve already resumed rate cuts in late 2025, and we think the conditions—moderating inflation, weak jobs market data—for additional cuts are becoming evident. On the fiscal side of the ledger, the One Big Beautiful Bill Act (OBBBA) is poised to deliver near term stimulus in the form of refunds/credits for both businesses and households, which lift disposable income, capex, and margins. In a midterm election year, we could also see additional fiscal stimulus to ‘juice’ the economy, and those proposals are already being floated by the Trump administration.1
In this report we’ll also address the Venezuela issue, separating Venezuela’s geopolitics from investable math, showing why sub-1% global output and slow-to-scale oil capacity argue for limited, slow-moving effects on prices and Energy earnings. Lastly, we’ll zoom out to earnings: Tech remains a powerful engine, but the setup favors broader participation in 2026, with revisions and cash-flow dynamics doing more heavy lifting than headlines.
How Fiscal + Monetary Policy Could Form a 2026 Tailwind
2026 is setting up for what we’re calling a “policy one-two”: lagged effects of Fed easing with the potential for more rate cuts on deck, combined with a visible fiscal impulse from the One Big Beautiful Bill Act (OBBBA) and additional f iscal stimulus proposals that the Trump administration seems poised to pursue.
Let’s start with monetary policy.
December’s employment report capped a weak year for hiring, with total job gains in 2025 averaging fewer than 50,000 per month—the slowest pace outside of recessions since the early 2000s. While the unemployment rate edged lower to 4.4% in the latest jobs report, other indicators point to softening beneath the surface. Average weekly hours declined, temporary help employment fell, and long-term unemployment rose. Job growth became increasingly concentrated in healthcare and leisure, while manufacturing employment continued to contract.
In our view (assuming inflation doesn’t reaccelerate), this should open the door for further easing in 2026. Markets broadly expect additional policy support.
The Fed has already cut rates at the last two meetings, and financial conditions have been easing. We think this will continue to serve as a positive tailwind for stocks.
On the fiscal side, the OBBBA is designed to arrive in 2026 in a way households will actually feel. Rather than mid-year paycheck withholding changes, the bill channels relief through tax filing season. Some estimates call for an aggregate 44% jump in 2026 tax refunds versus this year, roughly $150 billion flowing to consumers.
1 Wall Street Journal. January 13, 2026. https://www.wsj.com/politics/policy/in-pivot-on-affordability-trump-unveils-barrage-of-proposals-to-address-costs961e4343?mod=article_inline
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