CoreMacro | Global

Much like the 2000 episode, we expect this year to unfold in two stages: A “Great Rotation” from tech stocks to non-tech names in the first half of 2026 followed by a broad-based selloff in stocks in the second half on the back of a weakening US economy.

At major technical crossroads, markets eitherpull back before staging a sustainable breakout, or attempt to break out only to drop considerably (i.e., a fakeout). We believe the latter dynamics are more likely to play out.

Special Report

Every year, the Global Asset Allocation team compiles a list of our favorite books, essays, and articles from our strategists ahead of the holiday season. This year, we focus on writings by practitioners in the world of finance, business, and beyond. While diverse in their backgrounds, one theme stands out: Adaptation.

Lots of data out today, most of which point to a global economy that is cooling but not (yet) freezing.

This year, we once again present our 2026 outlook as a retrospective from the future – a future in which the AI boom turned to bust. Next week, please join me for a Webcast on Wednesday, December 17 at 10:30 AM EST (3:30 PM GMT, 4:30 PM CET) to discuss the economy and financial markets. We will also host a Webcast for APAC on Tuesday, December 16 at 8:00 PM EST (9:00 AM HKT+1 day). And with that, I will sign off for the year. I wish you and your loved ones a very happy and healthy 2026. We will be back on Friday, January 2 with our MacroQuant Model Update.

Japanese financial assets will finally have unfettered access to outsized returns. This performance will come in fits and starts, but we are comfortable laying our cards down on buying the yen, and Japanese industrial stocks.

There is an old joke about the drunk who searches for his keys under the light post. When asked why he is looking for his keys there, he replies that “this is where the light is.”

The odds have risen that we have reached a “Metaverse Moment” – a situation where investors punish AI companies for increasing capex. This warrants greater caution towards AI stocks specifically, and the broader S&P 500 more generally.

Special Report

Germany’s economy is regaining momentum after nearly two years of recession. Despite the ongoing cyclical rebound and fiscal stimulus, political gridlock and deep-seated structural challenges threaten to limit the country’s long-term growth potential. Investors should be underweight German Bunds and favor Eurozone equities over German equities.

Special Report

We examine past capex booms which turned into busts. Our analysis suggests that AI is following the same script as those ill-fated booms.