Victoria Fernandez on 2026 Market Expectations and Investment Strategies

Market Outlook for 2026

• 📉 Expectations for equity and fixed income markets are being tempered for 2026 after two years of strong growth.
• 💡 The first quarter of 2026 is anticipated to be strong due to stimulus, but this may fade, making earnings survival a key question.
• ⚠️ If earnings struggle, a pullback in the markets is expected; however, if they survive, a decent year is possible.

Consumer Spending and Earnings Impact

• 📊 A slowdown in consumer spending, even if not a collapse, could lead to less spending, lower revenues, and margin compressions.
• 📉 These factors suggest that earnings may start to pull back in the coming year.

Market Volatility and Opportunities

• ⚖️ While tariffs have been a "non-event" economically, potential Supreme Court decisions could bring more volatility.
• 💰 The shift in money market fund rates from 3.6% to 4.X% is changing client behavior, moving them to seek opportunities beyond just holding cash.
• 📈 There are emerging opportunities due to rotation in market internals, including transportation, global autos, global materials, and homebuilders, indicating a shift beyond traditional sectors like healthcare and utilities.