The Year Sets Up Better Than Many Expect

Six Things You Should Know

1. Equity Markets –  were up this week with U.S. stocks (S&P 500) gaining +1.59% while international stocks (EAFE) rose +1.82%. 
2. Fixed Income Markets – were also up this week with investment grade bonds (AGG) rising +0.34% and high yield bonds (JNK) increasing +0.48%. 
3. Venezuela Fallout – Oil prices are declining as President Trump announced that Venezuela would begin shipping up to 50 million barrels of oil to the United States with proceeds benefitting both countries. U.S. officials are set to meet oil bosses over the next couple of weeks to discuss rebuilding the industry. 
4. Mortgage Debt – In an attempt to lower housing costs U.S. officials have directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds. While some remain skeptical, FHFA Director Bill Pulte noted it could be a “one-two punch” alongside a proposal to ban institutional investors from purchasing single-family homes. 
5. Cybersecurity Reminder- Scammers are increasingly using Remote Access Tools (RATs) along with phishing emails or texts to take control of devices like phones, tablets, and computers. Once installed, these tools can give cybercriminals access to sensitive information, including your Schwab accounts. These attacks can be hard to spot, so if something doesn’t feel right- like unusual account activity or suspicious messages- trust your instincts. If you sense suspicious activity, please call us immediately or report any concerns to Schwab at 800-515-2157. 
6. Key Insight – [VIDEO & ARTICLE] We take a look at some key data, significant pending catalysts for markets and the economy and the most important takeaways from those realities in the opinions of a number of analysts we respect the most. 

Insights for Investors

By Tim Mitrovich

The Year Sets Up Better Than Many Expect 

As we enter into 2026, there remains a fair amount of pessimism, but there are also a number of commentators pointing out the positives as we enter a new year. The big question is whether policy tailwinds and corporate fundamentals can keep markets climbing despite relatively elevated valuations. Over the last few weeks, a few of our favorite macro voices have been notably aligned in their views with Torsten Slok (Apollo), the team at Strategas, and Tom Lee (Fundstrat/FS Insight), all pointing to resilient activity and constructive early-year signals as we’ll discuss below.  

1) The Data Entering 2026: Expansion, Not Exhaustion 

The US Bureau of Economic Analysis’ latest GDP report showed real GDP increased at a 4.3% annual rate in Q3 2025, with profits from current production rising by $166.1B—a meaningful improvement in the corporate profit engine. (Source: U.S. Bureau of Economic Analysis — “GDP, 3rd Quarter 2025 (Initial Estimate) and Corporate Profits (Preliminary)” (Dec 23, 2025). 

Corporate profit trends matter in 2026 because they are the bridge between a still-positive macro backdrop and the market’s ability to absorb high starting valuations. 

Furthermore, real-time activity measures are consistent with “firm but not overheating” growth: the Dallas Fed’s Weekly Economic Index sits around 2.23% (week ended Dec. 27), with a 13-week average of 2.24%. (Source: Federal Reserve Bank of Dallas — Weekly Economic Index (WEI) (Updated Dec 31, 2025) 

And while consumer sentiment remains weak, consumer demand also looks steady in the highest-frequency retail read. Johnson Redbook same-store sales were +7.1% YoY on Jan. 6, 2026 (vs. +7.6% prior week). (Source: Investing.com — United States Redbook YoY (accessed Jan 7, 2026).  

2) Recent Strategist “Color” from the Last Two Weeks 
 

One of the most useful ways to reset the 2026 debate is to look at the fastest-turning parts of the dataset. Apollo Chief Economist, Torsten Slok, recently pointed to weekly GDP tracking and weekly same-store retail sales as the simplest reality check – and his message was blunt: the weekly data show “no signs of a slowdown” as the US enters 2026. (Source: Apollo, 1/1/26) 

Similarly, the team at Strategas summarized their positive outlook, despite some “wobbly” data as follows, “In a delayed release, U.S. real GDP rose a strong 4.3% q/q A.R. in 3Q. Consumption contributed +2.4% points, capex +0.4%, housing -0.2%, inventories -0.2%, net exports +1.6%, and govt 0.4%. Real GDI was ok but a bit less positive. Importantly, corporate profits continued to trend upward in this report. Headline U.S. durable goods orders remained choppy in Oct, but core cap goods orders ex aircraft rose +0.5% m/m and shipments +0.7%. The Conference Board measure of U.S. consumer confidence fell in Dec (-3.8pt) & present situation worsened sharply (-9.5pt)”. Bottom line: The U.S. economy was running at a solid pace before the 4Q soft patch. True, wobbles in the U.S. labor market have hit confidence. But even here timely data (ADP, claims) give us some hope. If profits & capex remain positive (so far, so good), the economy can likely digest sluggish payrolls. (Source: Strategas, 12/23/25) 

3) Policy Tailwinds for 2026: Monetary Easing + Tax Cuts + Deregulatory Push 

Given further confidence to the collective outlook of many, beyond the recent solid data, is the level of supportive fiscal and monetary policy set to take effect in 2026. 

On the monetary front, the Federal Reserve cut their policy range to 3.50%–3.75% in December and signaled ongoing data dependence. The Fed’s projections imply a lower median 2026 policy rate of 3.4%, consistent with further easing if inflation continues to cooperate and the labor market softens. (Sources: Board of Governors of the Federal Reserve System — FOMC statement (Dec 10, 2025) and Board of Governors of the Federal Reserve System — Summary of Economic Projections (Dec 10, 2025) 

On the fiscal/tax policy: Strategas expects OBBBA to generate a sizable 2026 impulse—roughly $150B in incremental consumer stimulus via tax refunds and ~$230B via business investment provisions (including 100% expensing for capex and domestic R&D). (Source: Strategas 1/2/25) 

JP Morgan Asset Management makes the “bridge to GDP” explicit: if 80% of the extra refunds are spent, that alone could be roughly 0.27% of GDP; spread over the first half of 2026, it could add more than 0.5% to annualized real GDP growth in Q1, and when combined with lower withholding, the boost could reach ~0.8% in Q1. (Source: JPMorgan, 8/25/25) That doesn’t guarantee a boom, but it does raise the odds that the first half of 2026 feels better on Main Street than many surveys suggest. 

Torsten Slok noted that fiscal stimulus is not limited to the U.S., and should be expansionary for the upcoming year stating, “The IMF estimates that fiscal policy will boost growth by 1% in Germany and 0.5% in Japan in 2026. The CBO estimates that the One Big Beautiful Bill will boost US growth by 0.9%. The bottom line is that fiscal policy in the G3 will be very expansionary over the coming quarters, see chart below.” 

Related to policy matters in the likelihood of greater banking deregulation this year. Treasury Secretary Scott Bessent has argued that “burdensome and duplicative” regulation can impose real economic costs—and that resilience and growth should be considered together in the financial stability framework. (Source: U.S. Department of the Treasury — Remarks by Secretary Scott Bessent before the FSOC (Dec 11, 2025) 

The growth channel is straightforward: if capital and liquidity rules are relaxed at the margin (without compromising safety), banks can deploy balance sheet capacity into credit creation. J.P. Morgan Private Bank estimates large U.S. banks have accumulated about $200B of excess capital versus current requirements; easing could translate into more lending, as well as buybacks and M&A—supportive for both activity and markets. (Source: J.P. Morgan Private Bank — “Get ready: Bank deregulation now has Washington’s support” (Sep 15, 2025) 

4) The “First Five Days” Indicator – Historically Informative, Never Decisive 

The early-year tape can matter because it captures investor positioning at the moment new capital is put to work. Stock Trader’s Almanac’s long-running First Five Days (FFD) study finds that, since 1950, the prior 48 positive FFDs were followed by 40 up full years and eight down years, with an average gain across all those years of 14.2%. Importantly, the “false positives” can still be painful (the Almanac flags 1966, 1973 and 2002 as double-digit down years despite a positive start). (Source: Stock Trader’s Almanac — “First Five Days Positive” alert, Jan 9, 2025) 

The right way to use this in 2026 is not as a forecast, but as a risk-management prompt: if the first week is strong, it often signals that liquidity, positioning and risk appetite are aligned; if the first week is weak, it raises the bar for the “policy tailwinds” to show up quickly in hard data. 

Tom Lee of Fundstrat made a point to give this phenomenon some credit this week, but did so less from a superstitious standpoint and more from a possible confirmation bias indicative of whether institutional buyers are adding risk or fading rallies. (Source FS Insight (Tom Lee) — “Macro Minute: 2026 tracking positively on rule of ‘first 5 days’…”, Jan 5, 2026). 

In Closing 

As we often have to remind people, markets and the economy are far more resilient than many people give them credit for. And while it’s easy to sound smart by pointing out everything that could go wrong, a perhaps more honest and certainly more constructive approach is to give due credit to both those things that are going right as well as the historical fact that markets and economies have spent far more time growing than contracting. 

As always, if you or someone you care about has questions about any of the above and/or how it may impact their financial goals, please don’t hesitate to reach out. 

Have a wonderful weekend, 

Tim and the team at TEN Capital 

Data, Just the Data

• U.S. Manufacturing – The ISM Manufacturing PMI fell for the third straight month to a reading of 47.9 in December, the lowest level since October 2024.  

• U.S. Jobless Claims – initial claims rose by 8,000 last week for a total of 208,000, remaining well below recent averages. Continuing claims rose by 56,000 to 1,914,000, slightly higher than expected.  

• U.S. Housing Starts – fell by 4.6% in the delayed October report to a seasonally adjusted annualized rate of 1.246 million. 

• Eurozone Retail Sales – sales were up 2.3% year-over-year in November, well above market expectations of 1.6%.