Markets & Melodrama: A 2026 Forecast

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They say what goes up must come down. It’s a comforting thought, really, like a parent assuring you that skinned knees heal. Except in finance, the landing isn’t usually cushioned by a Band-Aid and a kiss. It’s more like…a carefully calculated tumble into a net woven from other people’s misfortune. I spend my days analyzing these nets, poking holes in them, occasionally strengthening a strand or two if it suits my purposes. It’s a peculiar occupation, I admit. My sister thinks I’m just good at worrying, which, honestly, isn’t far from the truth.

Right now, everything looks deceptively pleasant. The Fed’s been fiddling with interest rates, GDP is inching upward, and everyone’s breathless about AI. It’s all very shiny and optimistic. But I’ve learned to distrust optimism. It’s usually a prelude to something deeply, profoundly irritating. Like a timeshare presentation disguised as a vacation.

So, let’s talk about what could go wrong. Not in a hysterical, end-of-days sort of way – I’ve had enough of those conversations with my Uncle Barry – but in a pragmatic, “prepare for turbulence” kind of way. Specifically, two things are keeping me awake at night, and it’s not the caffeine.

The Tariff Tango

Remember when President Trump announced those tariffs? It felt like a dare, a grand gesture of economic defiance. I was at a pottery class at the time, attempting to center a lump of clay, and the news broke on someone’s phone. It was oddly fitting. Both involved a lot of pressure, a lot of spinning, and a high probability of things collapsing into a messy heap.

The initial predictions of runaway inflation were…off. Businesses absorbed the costs, or so the government claims. I’ve seen enough spreadsheets to know that “absorbed” often means “passed on to someone else, eventually.” And the president boasts about $600 billion in tariff revenue. Which is impressive, until you realize that money is now propping up a deficit that’s ballooning faster than my collection of novelty mugs.

Here’s the problem: reversing those tariffs won’t be a simple act of economic goodwill. It’ll be like yanking out a vital organ. That revenue is now baked into the budget, and removing it will create a fiscal crisis. Treasury yields will spike, borrowing costs will rise, and businesses will start to choke. I’ve seen this movie before. It doesn’t end well.

And the truly terrifying part? According to the Cato Institute, there’s a very real chance Trump could simply reimpose those tariffs, regardless of what the courts say. It’s like a particularly stubborn rash. Uncertainty is the enemy of investment. Businesses need stability to plan, to grow, to…well, to exist. This constant shifting of the goalposts is exhausting, and frankly, bad for everyone, except maybe the lawyers.

The Fed’s Independence Day

Then there’s the whole mess with Jerome Powell and that renovation. A criminal investigation? Really? It feels…performative. Like a particularly passive-aggressive power play. I’m not saying Powell is a saint – no one in Washington is – but the timing is…convenient. It’s as if someone is sending a message: “Comply, or face the consequences.”

Lower interest rates might give the stock market a temporary boost, sure. But it’s a sugar rush, not a sustainable solution. It masks the underlying problems – the tariff uncertainty, the unsustainable debt – and kicks the can down the road. I’ve learned that ignoring problems rarely makes them disappear. They usually just multiply, like dust bunnies under the sofa.

What’s an Investor to Do?

Look, I’m not saying the sky is falling. Good businesses with strong fundamentals will survive, even thrive, through these headwinds. But it’s going to be a bumpy ride. Corrections are inevitable, and they present opportunities. Buy great companies when they’re on sale. It’s a simple strategy, really. Although, finding those truly great companies is the hard part. It’s like searching for a perfectly ripe avocado at the grocery store – a frustrating, often disappointing, but occasionally rewarding experience.

My advice? Don’t panic. Don’t listen to the talking heads on television. And for heaven’s sake, avoid Uncle Barry at Thanksgiving. Some things are just not worth the stress.

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2026-01-15 21:05