Many friends have asked me about my expectations or views for 2026. In fact, I wrote about it on November 7, 2025.
Let me summarize and refine a bit:
- I personally feel that the first quarter, from January to April, will be full of challenges. On one hand, the Federal Reserve is very likely not to adjust interest rates in January; the next adjustment would be in March, and there will also be a dot plot in March, which actually sends the best signal to Trump.
I believe that before the March FOMC meeting, Trump will definitely announce the successor to the Federal Reserve Chair. March will be Powell's last dot plot, and even if there is no interest rate adjustment in March, we can see the expectations of Federal Reserve officials regarding the change of chair from the dot plot, and it is even possible that there will be a loyalty pledge.
Powell's departure date is May 15, 2026, and there is no FOMC meeting in May, so the April meeting will be Powell's last one, and the new chair will be in place for the June meeting. Therefore, the closer we get to May, the greater the potential volatility, and the market will start to bet.
So I personally think this period is still a showdown between Trump and Powell, but Trump probably has no way to deal with Powell and can only wait for Powell's term to end, while Trump himself has a lot on his plate.
The most important thing is whether Trump's tariffs will be overturned by the Supreme Court. If they are overturned, it will significantly affect Trump's reputation, trustworthiness, and even the support rate of the Democratic Party. In order to prepare for the midterm elections, Trump will inevitably have to make some moves to stimulate the market; I don't know what it will be, but as long as Trump intends to continue holding both houses in the midterm elections and does not want to repeat the mistakes of his first term, he must do something.
The removal of tariffs is beneficial for the risk market, as it reduces the possibility of sustained inflation.
During this period, my personal predictions are:
A. Trump's tariffs will be overturned or partially overturned by the Supreme Court.
B. Trump's approval rating will hit a new low.
C. The S&P 500 will experience around a 3% fluctuation (both up and down) due to tariffs.
D. Bitcoin's impact may expand to around 5%.
E. Federal Reserve officials will not have a majority supporting Trump before June.
F. Powell will call for caution against easy interest rate cuts before he leaves.
G. The U.S. government is very likely not to continue the shutdown before January 30, but it probably won't provide a complete framework; a short-term CR (continuing resolution without additional terms) is the most likely outcome.
H. Japan will likely raise interest rates at least once more before June.
- I personally feel that the third quarter, from June to September, presents opportunities, with the biggest opportunity being Trump's unwillingness to accept defeat. This should be Trump's last effort before the midterm elections. If he cannot improve his approval rating or revitalize the market, he will likely lose one chamber of Congress, with the House of Representatives being the highest risk.
From my personal perspective, the market should be vibrant during this period, and if my predictions are correct, Trump's tariffs may encounter some troubles. Even if partially overturned, it would be beneficial for the U.S. in alleviating inflation, and currently, the Federal Reserve is most concerned that inflation triggered by tariffs may not be a one-time issue.
By October, market tension may increase. If Trump's approval rating remains low, investors may worry about political uncertainty, potentially leading to risk-averse sentiment.
During this period, my personal predictions are:
A. The Nasdaq and S&P will break to new highs.
B. Gold prices will experience a pullback.
C. The Federal Reserve's dot plot will exceed expectations.
D. The cryptocurrency market will experience a small surge.
E. The new Federal Reserve Chair will send a signal of easing to the market.
- I personally feel that the fourth quarter, starting with the midterm elections and continuing to the end of the year, will present even greater opportunities. This aspect does not require much explanation; it is very likely that the market will respond positively until January 2027. Even if Trump really loses the House of Representatives, the competition between the two parties in the midterm elections will still bring about an increase in risk appetite and liquidity.
Overall, I believe that 2026 will be better than 2025, although liquidity will not return to 2021 levels. However, expectations for easing will still lead some investors to increase their risk appetite. The most important thing is that although the unemployment rate will rise in 2026, the GDP growth rate of the U.S. stock market should also be good. However, the biggest risk in 2026 is that a decrease in Trump's approval rating may increase political risks.
During this period, my personal predictions are:
A. The Republican Party will lose the House of Representatives.
B. The Russia-Ukraine conflict will end.
C. No larger-scale wars will occur globally.
E. The U.S. will not experience an economic recession.
F. Both the U.S. stock market and cryptocurrency will see the last wave of rebounds for the year.
G. The Federal Reserve will exceed expectations for the number of interest rate cuts throughout the year (current expectations).
These are my personal views on 2026; they may not be comprehensive or accurate, but they are my personal predictions.
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