Brian Belski on Fed Rate Cuts, Market Outlook, and Stock Picking for 2026

Fed Rate Cuts and Economic Assumptions

• 💡 The Federal Reserve's recent rate cuts, with three dissents, are viewed as a hawkish move, indicating confidence in managing unemployment.
• 🎯 The Fed's dual mandate of inflation and unemployment is highlighted, with an expectation that unemployment will tick down, suggesting a successful management of the economy.
• ⚠️ While some question the effectiveness of the Fed's actions due to higher bond yields despite rate cuts, this is not seen as a red flag, potentially being a seasonal or snapback effect.

Market Outlook and Stock Picking

• 📈 The concept of "stock picking" is emphasized for 2026, moving away from solely buying indexes or ETFs.
• 🧩 Even within the "Mag Seven" stocks, significant fundamental dispersion is observed, suggesting a need for more nuanced investment strategies.
• 🚀 The broadening of the market rally is considered a positive sign, with the equal-weighted S&P expected to perform well due to improving earnings, valuation, and operating performance.

Investment Themes and Picks

• 🏦 Wells Fargo is identified as a potential turnaround story with strong management and operating performance, similar to previous successful investments.
• ✈️ Delta Airlines is recognized as a top-tier brand in the airline industry.
• 🏭 Rockwell Automation is highlighted due to the significant trend of automation and its importance in the industrial sector, driven by AI.
• 🚗 A cyclical approach to consumer discretionary spending is also noted as a theme.

New Firm and Personal Update

• ✅ Brian Belski reports that his new firm, Humilis Investment Strategies, is off to a great start and performing well.