Steve Sosnick on 2026 Market Trends: Global Rally, AI Companies, and Retail Investor Behavior

Global Market Rally and International Exposure

• 🌍 The rally at the start of the year was global, extending beyond just AI, which is generally a positive sign for markets.
• 📈 There has been a significant increase in international exposure within portfolios as investors look for opportunities beyond traditional US markets.
• 💡 The idea that tariffs would cripple emerging markets and Asian economies has largely backfired, as companies found ways to navigate these challenges.
• 💰 A desire for exposure away from the US dollar and into other currencies has also driven international investment.

Key Developments to Watch in 2026

• ⚠️ Markets tend to perform poorly in midterm election years, with two bare markets occurring in 2018 and 2022.
• 🏛️ New Fed chairs often face stern tests early in their terms, with historical examples like Bernanke and Greenspan facing crises.
• 🚀 The immense scaling required by AI companies to meet future commitments, such as a company with $20 billion in revenue meeting a trillion dollars in commitments, poses a significant uncertainty.
• 📊 If these AI companies fail to scale, it could significantly impact the earnings growth priced into the market, especially given its top-heavy nature.

Retail Investor Activity and Risk Assets

• 📈 Retail investors at Interactive Brokers generally performed well in the past year, with many buying the dip as institutions sold off.
• 💡 This strategy of buying dips has been successful, though there's a concern it may not always work.
• 🪙 There was a notable increase in speculation earlier in the year, with a significant recent interest in silver (SLV).
• ⚠️ While retail customers are drawn to volatility, parabolic moves in assets like silver are inherently unstable and can unravel quickly.
• 📊 Sosnick is comfortable with customers trading volatile assets as long as they manage their risk effectively.