2026 Outlook
Weekly Wrap, Dec 12, 2025
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Part 3: Country-specific drivers to matter more in 2026 (Dec 11)
Global: Cyclical tailwinds still intact for 1H26, still supports EM over DM
DM
Japan Resolving the impossible trinity problem means JPY can finally rally in 2026
UK Growth LEIs yet to bottom, necessary to support domestic equity rally
Canada Steady growth and inflation LEIs, 10y bond short (yield up) playing out
Australia Accelerating nominal growth, stay long AUD vs short EUR
EM
Brazil Disinflation the key macro driver, stick with riskparity, add on election volatility
Mexico Growth downside risks, USMCA renegotiation looms
Indonesia IDR and equities have catch up potential in 2026 as headwinds fade
South Africa Broad tailwinds from easing cycle, low energy prices, high metals price
Part 2: A US-China world, and Europe is just living in it (Dec 8)
US
Growth: Steady, potential for upside surprise
Labor: Labor market softening, ’02-’03 “jobless growth” remains the template
Inflation: Soft labor + falling inflation => dovish Fed bias in 2026
Consumer: Still bifurcated but steady in aggregate
Capex: Tailwinds aligned for capex-driven upside surprise
China
Growth: Growth outlook remains weak as structural headwinds strengthen
Inflation: “Anti-involution” efforts helping at the margin, but disinflation persists
Assets: Not yet time to look for CNH strength, buy dips in Chinese tech stocks
Eurozone
Growth: Structural headwinds outweigh cyclical rebound as global pressures mount
Inflation: Inflation outlook mixed, disinflation will be gradual
Assets: Weaker EUR remains the release valve to maintain export competitiveness
Part 1: The appropriate amount of greed (Dec 2)
2025 Recap: Everything Everywhere All at Once in 2025
Cyclical Asset Allocation: Macro Risk Indicator remains in “risk-on” territory
Leading Indicators: LEIs paint a picture of resilient growth and inflation rolling over
Structural Asset Allocation: Financial repression, high valuations, changing profit drivers, high real yields
Volatility: Don’t forget to look for opportunistic long vol hedge.
#1 Trump’s capex boom arrives a year late, broadens beyond AI
#2 US growth surprises to the upside despite muted labor market
#3 Housing disinflation breaks sticky inflation narratives
#4 US 10y yields go nowhere, trades in a tight range around 4%
#5 Value equities outperform growth
#6 G10 FX divergence: Apac (AUD & NZD) over Europe (EUR & GBP)
#7 EM equities outperform DM, led by Brazil
#8 Oil trades below 50 and above 75 at some point during the year
#9 China tech stocks outperform US tech stocks
#10 Capital Cycle: US regional banks & energy services outperform
Really thorough breakdown of the 2026 setup. The value over growth call (surprise #5) is intresting, especially when paired with the capex boom thesis. Last cycle I watched that exact combo play out in early 2022 before the rate shock scrambled everything, but the macro setup now feels way cleaner with inflation actually rolling over instead of just wishful thinking.