As we start the year, many clients are understandably asking the question “What will the markets do in 2026”?

 

Before I answer this question, I also think it’s worth acknowledging that many of our clients, for some reason, are feeling quite negative (and in some cases, they are the same clients that were feeling negative at the beginning of 2025). I know that many people would like me to be pessimistic. Pessimism often sounds sensible, and caution makes people feel that we are being more responsible. However, it’s hard to be negative right now – at least for the next few months. Forecasting longer than a few months in today’s world is very difficult because of policy shifts, geopolitics, and a very noisy political backdrop with the Trump administration.

 

Here are four clear, data-driven reasons that support a constructive market outlook over the next few months:

1. Liquidity is improving

• Markets tend to rise when liquidity improves, and that’s exactly what’s happening. Seasonal year-end effects, falling cash balances on the sidelines, and easier financial conditions are supportive for risk assets in the near term. Markets rarely struggle when money is available and looking for a home.

2. Economic data remains resilient

• Despite constant recession talk, key indicators continue to hold up. Employment remains solid, consumer spending is stable, and corporate earnings have been better than feared. This doesn’t point to overheating; it points to a “good enough” economy that historically supports equities.

3. Fiscal support is a tailwind

• Upcoming tax relief and expected $2,000 credit refunds put cash directly into consumers’ hands. That money tends to flow quickly into spending, earnings, and ultimately markets. Fiscal stimulus, even modest, matters – especially when layered on top of a growing economy.

4. Corporate investment (A.I.) isn’t slowing

• AI-related spending remains one of the strongest secular trends in the market. Companies are still allocating aggressively to data centers, semiconductors, and software – supporting capital spending and productivity growth. That investment cycle is acting as a powerful offset to geopolitical and political noise.

THE BOTTOM LINE...

The market doesn’t need perfection to move higher; it just needs stability, liquidity, and earnings support. For now, those boxes remain checked, which makes staying constructive over the next few months reasonable.

 

As always, if you have any questions, please feel free to give us a call at any time.

 

Have a great weekend and Happy New Year!

 

Milan