My Five Predictions for 2026 VIEW IN BROWSER Time really does fly. And I can tell you firsthand – the older we get, the faster it seems to move. That’s certainly been true in the markets, where the past year seemed to unfold at breakneck speed. As we turn the page to a new year, this is a good moment to step back, assess what 2025 revealed and think carefully about what could come next. That’s why, in today’s Market 360, I’ll share five of my predictions for 2026 and explain why I believe these developments could help propel stocks higher. While I don’t have a crystal ball and I can’t predict the future with certainty, these are the trends and shifts I expect could take shape in the year ahead – and, in turn, positively impact the stock market. Prediction #1: Kevin Hassett Should Be Named the Next Federal Reserve Chair Federal Reserve Chair Jerome Powell’s final term ends in May 2026, and President Trump is expected to name his replacement soon. Several candidates have been discussed, but my money is on Kevin Hassett, Director of the National Economic Council. Because the Fed Chair nomination is a big deal and requires congressional approval, President Trump is likely to announce his choice this month. Publicly, Hassett has emphasized his independence, telling The Wall Street Journal he would rely on his own judgment and not bow to political pressure when setting interest rates – language that’s all but required to secure confirmation. At the same time, Hassett has made clear there is “plenty of room” to cut rates in the months ahead, aligning with President Trump’s view that lower rates are needed to support housing and other interest-sensitive sectors of the economy. If confirmed, Hassett will likely strike a more optimistic tone than his predecessor – a “glass half full” approach that could help bolster market confidence in 2026. Prediction #2: At least Two More Key Interest Rate Cuts in 2026 If Kevin Hassett is confirmed as the next Fed Chair, I expect at least two additional interest rate cuts in 2026. The Fed already cut rates three times in 2025, including a 0.25% cut at its December Federal Open Market Committee (FOMC) meeting, which brought the fed funds rate to a range of 3.5% to 3.75%. While the Fed has signaled only one more cut in the year ahead, futures markets are pricing in at least two. That expectation makes sense when you look at the data. Deflationary pressures are spreading globally, and we’re beginning to see early signs in the U.S. housing market. With inflation cooling, the Fed’s focus is likely to shift toward its second mandate: employment. The labor market continues to weaken, with unemployment rising to 4.6% in November and job growth remaining uneven. Taken together, I believe the Fed will need to cut rates at least twice in 2026 as it moves toward a more neutral policy stance. | Recommended Link | | | | If you’re buying rare earth or other critical mineral stocks, you’re already one step behind — because we believe that political insiders in Washington are preparing to buy a whole new group of stocks, which could begin soaring 500%+ just days from now. The man once ranked in 2020 as America’s #1 stock picker is doing something extraordinary and giving away the name and ticker of every single stock that could be next. Everything you need to know is here. |  | | Prediction #3: AI Revolution & Data Center Boom Accelerates There was no shortage of negative chatter around the AI Revolution and data center boom in 2025. At various points throughout the year, bearish bets piled up on AI-related stocks amid claims of an AI bubble and fears that the aging U.S. power grid couldn’t support rising data center demand. But the reality is far different. The AI Revolution is very real, and the data center buildout continues to accelerate. As you can see in the chart below, construction activity has surged over the past two years, underscoring the magnitude of this infrastructure expansion.  At the center of it all is NVIDIA Corporation (NVDA). NVIDIA’s latest earnings report silenced many critics. And AI demand will remain robust, with NVIDIA expecting 65% year-over-year revenue growth in its fourth quarter of fiscal year 2026. So, it’s no surprise that NVIDIA remains the most valuable company in the world. While valuations across AI-related stocks have risen, I continue to see opportunities in this space. Following the short-covering rally in October and November, analysts have revised earnings estimates higher for many of these stocks. And with earnings and sales momentum still accelerating, this remains exactly where we want to be invested in the year ahead. Prediction #4: U.S. Economy on Track to Achieve 5% GDP Growth The U.S. economy is already growing at a solid pace. Recent data show annual GDP growth running between 3.5% to 3.8%. Treasury Secretary Scott Bessent has also pointed to a “very strong” holiday season, which should help keep growth near 3% for 2025 overall. Looking ahead, I believe economic growth could accelerate meaningfully in 2026. Key interest rate cuts and the ongoing data center boom, coupled with a shrinking trade deficit and increased onshoring, could converge to boost U.S. GDP growth to at least 5% in 2026. The trade data already support this view. Onshoring is also accelerating, particularly in the pharmaceutical industry. So, when you add it all up, U.S. GDP growth of 5% or more in 2026 is no longer a stretch – it’s a very real possibility. Prediction #5: Earnings Momentum Set to Hit the Gas in 2026 Taken together, my first four predictions suggest an environment that remains highly favorable for stocks – particularly for companies with strong fundamentals and earnings momentum. We’re already seeing this play out. The S&P 500 achieved its strongest revenue growth in three years and its strongest earnings growth in four years in the third quarter. Also, earnings surprises in the third quarter were the strongest in four years. Importantly, earnings momentum is expected to accelerate further. Fourth-quarter earnings are now forecast to increase 8.1%, up from estimates for 7.2% at the end of September. FactSet also projects that the S&P 500 will achieve 12.1% average earnings growth in calendar year 2025.  After that, earnings and revenue are expected to accelerate in 2026, driven by higher guidance, especially from data center companies with a growing order backlog. FactSet currently projects earnings will accelerate to a 14.5% annual pace in calendar year 2026. In my view, this is exactly the kind of earnings environment that allows the strongest stocks to continue leading the market higher. What Ties These Predictions Together When you look across all five of these predictions, a clear theme emerges. Growth isn’t going away. But it is becoming far more selective. We’re entering a market environment where productivity gains, AI-driven efficiency and scale advantages matter more than ever. Some companies are accelerating. Others are quietly falling behind, even as the broader market moves higher. That split is already underway. And it’s why simply “owning stocks” is no longer enough. In the years ahead, returns will increasingly depend on whether you’re positioned on the right side of this shift – or stuck holding businesses that can’t keep up. This is what I call the Economic Singularity. It’s a full-scale reset in how companies grow and compete. Software is replacing labor. AI is compressing costs. What once took teams of people weeks to accomplish can now be done in minutes. Sometimes seconds. That kind of change doesn’t just reshape industries. It reshuffles winners and losers inside the market. And it creates a quiet risk for investors who don’t adapt. Tomorrow, I’ll be sharing a short video briefing that digs into one specific development tied to this shift – something I believe investors should be paying close attention to as we move deeper into 2026. But the broader framework matters even more. I break this down in more detail during my Economic Singularity video, including how I believe investors can position for this transition, where I see the strongest opportunities emerging, which types of stocks are likely to struggle – and how investors can position themselves as this new phase of growth takes hold. If you want to better understand the forces tying these predictions together – and how I’m thinking about the road ahead – I encourage you to watch the presentation now. Sincerely, | .png)
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