Market breadth gives us more confidence for 2026 performance, says US Bank's Tom Hainlin

Leslie Picker (Reporter) 00:00.350

joining us for more on the markets tom hainland national investment strategist at US bank asset management good morning to you sir i'm

Thomas Hainlin (National Investment Strategist) 00:10.190

curious

Leslie Picker (Reporter) 00:12.070

i'm curious as we think about just the last few trading days of the year and going into next year we're doing so at fairly lofty valuations the markets seen decent appreciation this year is that a concern of yours as you think about your portfolio heading into the new year you

Thomas Hainlin (National Investment Strategist) 00:30.030

know leslie i think what was confidence building was that the market hit an all time high on on christmas eve but it wasn't tech that that hit all time highs it was actually industrials and financials and so seeing that broadening out across the sectors especially those cyclical

Thomas Hainlin (National Investment Strategist) 00:42.830

sectors i think gives us a little more confidence heading into the next year you've also seen strong performance really down cap and mid and small cap stocks so it's not just tech leading the way now you've got those cyclical sectors those smaller companies also participating i

Thomas Hainlin (National Investment Strategist) 00:56.070

think that's a helpful set up into the new year

Leslie Picker (Reporter) 00:59.070

you also know that the consumer remains the anchor to US growth and that's expected to continue next year thanks to rate cuts and tax benefits from the plan passed earlier in the year how concerned are you about the labor market kind of pouring cold water on that

Thomas Hainlin (National Investment Strategist) 01:14.260

you know as the linchpin right so i mean consumers are spending money that they earn so they both have to earn the money and then the confidence to go ahead and spend that so we're looking for layoffs that's kind of a particular area of focus as long as those stays relatively

Thomas Hainlin (National Investment Strategist) 01:26.460

subdued we think that's a you know a positive setup for the consumer to continue to have another good year in twenty six which is really the the linchpin of the economy and the other has just been businesses investing the money that they're earning into capital equipment and AI

Thomas Hainlin (National Investment Strategist) 01:39.060

and everything else that's really driving the economy i was going to

Leslie Picker (Reporter) 01:42.100

say that's obviously been a key area of growth as well it's just the AI economy how much has gone into capex there do you expect that to continue in a in a big way or do you think there we could see some changes on that front just given the size of the investment this year and

Leslie Picker (Reporter) 01:57.670

whether the market will still be open for it next yeah

Thomas Hainlin (National Investment Strategist) 02:00.430

we haven't really seen any changes in in kind of the investment levels in in in AI and other productivity tools and those benefits are not just flowing to the kind of the you know the picks and the shovels of the AI industry but the companies that are employing that to to drive

Thomas Hainlin (National Investment Strategist) 02:14.230

growth and productivity and maintain those profit margins so we see continued investment in in AI robotics other other capex in in the technology sector again just really driving that that productivity again in the twenty twenty six

Leslie Picker (Reporter) 02:27.990

and then in terms of the top opportunities you see it's an income and foreign equities where specifically within those two buckets do you think are key opportunities next year

Thomas Hainlin (National Investment Strategist) 02:39.430

you know for bond market investors you're starting with pretty pretty good yields but there's additional opportunities in the and for example in the mortgage market those mortgages that aren't backed by federal agencies to kind of capture that additional income on the back of

Thomas Hainlin (National Investment Strategist) 02:52.750

that healthy consumer and homeowner and then foreign equities both you know europe and asia we see opportunities you know valuations aren't the same that they are here in the united states and you have kind of positive monetary and fiscal policies supporting growth and then you

Thomas Hainlin (National Investment Strategist) 03:05.910

also get that capture of additional dividend yield and those cash tend to go into share buybacks which again support price appreciation hey

Steve Liesman (Senior Economics Reporter) 03:13.430

tom just real quick how do you play that foreign equity story is it a broad based mutual fund that one buys i mean you could also buy US multinationals as well in terms of capturing foreign growth

Thomas Hainlin (National Investment Strategist) 03:24.910

you know it's a good question steve we we prefer kind of broad allocations and and capturing also not just those multinationals but those local champions whether it's in in europe and asia so you've got the the fiscal stimulus within europe you know you want to own those those

Thomas Hainlin (National Investment Strategist) 03:38.350

local companies and then asia is embarking also on AI investment against some of those companies aren't aren't listed you know globally there aren't us multi so both the multinationals but also those local champions and allocating that towards more of a broad approach