- At some point in the not-so-distant future, the American public will likely get to enjoy the political theater of yet another government shutdown.
- If recent history serves as a guide, the U.S. may continue to use a scattershot approach to foreign policy. The proverbial $64,000 Question could be whether the potential successes outweigh any losses.
- Due to its sheer size and complexity, the U.S. economy doesn’t usually turn on a dime. As a result, if you liked the overall economic conditions in the second half of 2025, there is a decent chance you could like them at the start of 2026.
- Conflicting economic data at the end of 2025 may likely put the Federal Reserve in a somewhat difficult situation to begin 2026. While the markets, and the administration, would love the Fed to continue cutting the overnight rate, it will likely need to see either greater improvement in the inflation data or more severe deterioration in labor market conditions. It might need to see both.
- If the Fed doesn’t continue to cut the overnight rate, the stock markets will probably need to see stronger growth in corporate profitability to justify another strong leg up in the recent rally.
- At the end of 2025, the Federal Reserve resumed purchases of short-term U.S. Treasury debt in order to provide liquidity in the domestic financial system.1 In 2026, if the yield to maturity on the 10-Year U.S. Treasury Note approaches 5.00%, many people believe it is possible the Fed might buy longer-term Treasury debt in order to keep interest rates in check.
- While the long-term conditions remain constructive for precious metals and other hard assets, it is decidedly uncertain if silver and gold can repeat their unusually strong 2025 performance. Let’s just say almost doubling in a single calendar year is very unique for any asset or asset class.2
- In May 2026, there will be another chairman of the Federal Reserve. Most market participants are speculating that it is relatively safe to assume the new chairman, whoever it is, will likely be prone to adopt a more “dovish” approach to monetary policy. Market commentary leads us to think it is unlikely President Trump would appoint them for the position if they weren’t.
- In New York, the new Mamdani administration will likely frustrate both the far-left and the far-right sides of the political spectrum for either being not enough or too much. However, that is the case with most politicians.
- At some point, the investment growth rates in artificial intelligence (AI) technology will slow. While the timing of any slowdown is uncertain, it would be incredibly difficult for this growth to continue at its current feverish pace. After all, in absolute terms, it is much easier to grow, say, 25% off a base of $1 million than it is to grow off a base of $100 billion.
- At the end of 2025, Russia and Ukraine appeared to be too far in their demands/conditions to forge a lasting peace. As the war drags into its fourth year, it remains to be seen which side of the Russo-Ukrainian War will either blink first or run out of money, let alone soldiers. Much will depend on Europe’s continued willingness and ability to heavily subsidize Kyiv’s war effort.
- The domestic real estate market may show some signs of improvement. More than likely, the decrease in immigration the U.S. experienced in 2025 could lead to a decrease in demand for housing in aggregate. After all, fewer people coming into the country will need fewer housing units. Further, at some point, the market will just have to accept that 2-3% mortgage rates are simply a thing of the past. When that happens, the markets should get back to some sense of normalcy.3
- The United States men’s soccer team will not win their first World Cup.
SOURCES:
- Board of Governors of the Federal Reserve System (FederalReserve.Gov) – “Decisions Regarding Monetary Policy Implementation” (December 10, 2025)
- Bloomberg – “Gold and Silver Hit All-Time Highs as Geopolitical Tensions Rise” (December 22, 2025)
- Pew Research Center – “Striking Findings from 2025” (December 9, 2025)
This material is provided for informational and educational purposes only and reflects the opinions of the Investment Committee as of the date indicated. Statements contained herein that are not historical facts are forward-looking statements and are based on current expectations, estimates, and assumptions. Actual results may differ materially, and views expressed are subject to change without notice. This commentary is not intended as investment advice, does not constitute a recommendation to buy or sell any security, and should not be relied upon as a basis for investment decisions. Past performance is not indicative of future results.