Why these market watchers say the AI play has yet to unfold, but inflation will still be key in 2026
December 26, 2025 • 6m 31s
Contessa Brewer (Correspondent)
00:00.070
gina
let
me
begin
with
you
set
the
scene
for
us
as
we
come
into
the
final
trading
week
of
twenty
twenty
five
what
are
you
expecting
Gina Sanchez (Chief Market Strategist)
00:08.510
well
obviously
we
have
had
a
bang
up
year
and
that
looks
to
continue
the
i
think
this
next
week
is
just
going
to
continue
that
trend
it
has
been
driven
by
AI
despite
concerns
that
it
might
be
overvalued
the
reality
is
is
that
the
infrastructure
play
and
so
much
of
that
story
has
Gina Sanchez (Chief Market Strategist)
00:28.950
yet
to
continue
to
unfold
so
i
think
that
that
continues
to
power
us
through
the
the
end
of
the
year
you
know
i
think
as
we
look
into
twenty
twenty
six
our
big
is
around
inflation
which
has
been
moderating
but
we
think
that
there's
sort
of
a
limit
to
that
and
some
of
the
things
Gina Sanchez (Chief Market Strategist)
00:45.390
that
you
described
are
inflationary
i
mean
you
know
oil
will
potentially
be
inflationary
if
we
get
into
any
kind
of
contracted
you
know
anything
around
that
but
the
reality
is
is
that
the
the
the
stage
is
set
for
a
lot
of
inflationary
pressure
that
have
been
bubbling
on
the
Gina Sanchez (Chief Market Strategist)
01:05.510
backdrop
of
a
consumer
that
has
gotten
weaker
and
weaker
over
the
years
so
even
though
we're
going
to
end
the
year
strong
i
think
we
have
some
caution
going
into
twenty
twenty
six
so
Contessa Brewer (Correspondent)
01:15.110
i
hear
some
concerns
about
inflation
some
questions
over
the
AI
trade
justin
does
that
match
what
you're
how
you're
setting
up
for
twenty
twenty
six
Justin Bergner (VP & Senior Analyst)
01:26.350
thank
you
contessa
for
two
thousand
twenty
six
i
think
there's
a
wide
range
of
possible
market
outcomes
i
think
that
inflation
is
probably
more
contained
and
i'm
more
concerned
about
the
strength
of
the
consumer
and
the
job
market
i
could
see
inflation
constraining
the
market
Justin Bergner (VP & Senior Analyst)
01:42.510
multiple
as
we
look
into
two
thousand
twenty
seven
and
so
i'm
investing
more
based
on
an
expectation
i
should
say
an
average
expectation
of
a
flat
market
plus
dividend
returns
after
you
know
the
strong
run
in
the
last
few
years
the
Contessa Brewer (Correspondent)
01:58.150
the
fact
that
you're
looking
so
much
at
the
consumer
here
are
is
it
a
bifurcated
consumer
again
like
the
this
this
tale
of
two
consumers
justin
where
you've
got
the
affluent
just
cruising
along
and
spending
and
perhaps
propping
up
what
we're
seeing
in
terms
of
corporate
results
Contessa Brewer (Correspondent)
02:16.630
and
then
that
that
lower
end
consumer
who's
really
feeling
the
pinch
potentially
from
tariffs
as
well
one
of
the
things
that
we
haven't
been
diving
into
quite
yet
Justin Bergner (VP & Senior Analyst)
02:27.830
yeah
it
certainly
is
a
bifurcated
consumer
but
the
overall
job
market
isn't
that
strong
and
of
course
the
spending
by
the
higher
income
you
know
consumers
is
somewhat
tied
to
the
overall
market
level
so
that
creates
another
cake
if
the
market
should
you
know
sell
off
modestly
or
Justin Bergner (VP & Senior Analyst)
02:46.630
moderately
as
we
tend
to
see
in
midterm
election
years
at
some
point
in
the
year
even
if
the
overall
you
know
year
ends
up
pretty
well
gina
Contessa Brewer (Correspondent)
02:55.240
we've
seen
these
corporate
balance
sheets
looking
fairly
strong
how
much
of
that
is
is
due
to
the
strength
of
the
consumer
so
Gina Sanchez (Chief Market Strategist)
03:03.550
i
think
if
you
look
at
what's
been
driving
consumer
i
want
to
go
back
to
your
question
about
the
bifurcated
the
K
shape
this
we
we
see
definitely
AK
shaped
economy
and
we
see
that
actually
resulting
in
different
companies
experiencing
you
know
different
outcomes
and
so
yes
i
i
Gina Sanchez (Chief Market Strategist)
03:21.070
agree
that
the
consumer
has
been
powering
balance
sheets
but
that
has
also
been
a
lot
of
business
spending
as
well
and
the
consumer
meanwhile
has
racked
up
credit
card
balances
to
levels
we
haven't
seen
in
a
very
long
time
which
is
to
say
that
they
can
only
do
that
for
so
long
Gina Sanchez (Chief Market Strategist)
03:39.830
especially
you
know
even
if
we
see
some
you
know
some
further
rate
cuts
this
year
i
don't
think
it's
going
to
be
enough
to
deal
with
the
carrying
cost
of
what
the
consumer
has
amassed
so
while
that
has
been
a
twenty
twenty
five
experience
i
think
the
twenty
twenty
six
experience
Gina Sanchez (Chief Market Strategist)
03:56.350
is
going
to
be
moderating
spending
OK
Contessa Brewer (Correspondent)
03:59.310
so
given
that
where
are
you
looking
to
put
your
money
at
work
yeah
Gina Sanchez (Chief Market Strategist)
04:04.150
we
are
actually
very
focused
on
the
AI
infrastructure
play
because
even
though
we
feel
like
we
are
unquestionably
in
you
know
a
bit
of
a
bubble
just
like
the
internet
the
internet
had
a
bubble
but
it
didn't
go
away
it
became
a
part
of
our
lives
and
we
think
that
that
AI
and
Gina Sanchez (Chief Market Strategist)
04:23.110
continued
machine
learning
is
going
to
be
a
part
of
our
lives
and
the
spending
that
is
going
into
the
infrastructure
side
of
that
that
part
of
the
market
isn't
actually
as
overpriced
as
let's
say
applied
AI
or
other
segments
of
the
market
that
are
just
sort
of
on
you
know
Gina Sanchez (Chief Market Strategist)
04:41.310
working
on
top
of
these
innovations
but
if
you
look
at
the
cloud
computing
components
the
anybody
selling
chips
anybody
making
chips
anybody
designing
chips
that
whole
segment
of
the
market
is
actually
still
not
as
overpriced
and
and
so
and
we
see
that
spending
and
that
spending
Gina Sanchez (Chief Market Strategist)
05:01.630
is
not
as
on
the
consumer
and
is
really
more
a
business
infrastructure
decision
over
the
next
twenty
twenty
six
we
think
that
continues
and
that's
a
big
component
of
what
we're
focused
on
and
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