Oil

Sell America? No. The GeoMacro trade is Buy RoW! Left-tail risks are easing because the US isn’t collapsing. That argues for less enthusiasm for safe havens, not selling US assets. The S&P 500 can perform while remaining underweight the US – it happened in 2025 and will happen again.

MacroQuant recommends a slight underweight in equities, favors a below-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, has upgraded oil and copper to overweight, and is bullish on gold.

The US is likely to take significant military action in Iran, justifying our 40% risk of a major oil shock. Tactically go long Brent crude.

The risk to Iran's regime survival raises the probability of a massive global oil supply shock back to around 40%, where we put it last year. 

Venezuelan crude output is unlikely to alter the global oil market outlook for this year. However, US control of Venezuelan crude is a risk to Canadian oil sands producers and Canadian oil prices. Go long US oil refiners/short Canadian oil producers. 

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.

The first week of January is always the most difficult for investment strategists. The annual outlook is usually penned in early December. Ours went to your inbox on December 2, perhaps too early to get a read on the next 12 (really 13!) months. But between the publication of the outlook and the…

MacroQuant has downgraded equities to underweight, favors a below-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, and is still bullish on gold.

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.

Commodity market analysis usually focuses heavily on supply-demand balances. Yet in this framework piece, we argue that reported balances are an overrated gauge of underlying commodity price trends.