Momentum into 2026: Mark Smith, Wells Fargo Advisors

2025-12-29_12-13 • 4m 30s
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I want to talk to you about the Santa Claus Rally. Are you a believer? We haven't really talked about it this show. We're kind of in the middle of it right now. Do you see it coming through this year? We've never missed three years in a row. We haven't had it the last two years.
Mark Smith (Senior Vice President) 00:11.320
Listen, the consumer is showing that they have a lot of of um of money left to spend and um and I think that you're going to see that retail uh is going to show the numbers uh are are very good this year and I think that Santa Claus Rally is going to show momentum into 2026. All
Mark Smith (Senior Vice President) 00:26.840
right.
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So equity market we're seeing that possibly a Santa Claus Rally used seem bullish, but we're definitely seeing a rally despite today actually. When it comes to metals, just finished last week with gold at record high, silver at a record high. Um again, pulling back today, but
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still a tremendous growth. And we were talking about the fact that for the first time with the exception of COVID since the dot com bubble, an ounce of silver is worth more than a barrel of oil. What does that say to you about this market going into the new year?
Mark Smith (Senior Vice President) 00:52.000
Uh commodities have obviously over the last three years shown a lot of resilience and I think it's going to continue. Um beginning I think that most uh management firms are saying that golds could hit $5,000 in 2026 an ounce. So I think that it'll continue silver right along
Mark Smith (Senior Vice President) 01:07.120
with it. Uh number of reasons for that is a lot of trepidation in regards to equity pricing. And then you're also seeing a lot of uh you know coming stuff coming out of Washington where we're not really getting our fiscal house in order. So all that's a great backdrop. All
Mark Smith (Senior Vice President) 01:20.280
right.
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Your worth the day today is momentum. What momentum are you looking at? So much momentum going on. Uh what particular area of momentum are you seeing and is it momentum that carries into the new year? Does it carry through next year?
Mark Smith (Senior Vice President) 01:31.600
As a portfolio manager, loving the momentum I'm seeing from a number of different sectors. Uh one, communication services, two, the industrials, three, the financials, all done very well. When you look at the financials, AI is kind of leading the charge there, making sure that
Mark Smith (Senior Vice President) 01:44.400
these financials are look acting more like tech companies. On the industrial side, you're seeing that the data center build out and all this money that came out of the government to rebuild national infrastructures is going to propel that sector even further. Um and then you're
Mark Smith (Senior Vice President) 01:57.440
going to see communication services. I think with all the consolidation you've seen this year, you're going to see really start to see that sector shine as well. We're
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just showing a best performing sector year to date. It's also your pick for us today. So that's some of the momentum you're talking about. You see the momentum in that particular sector carrying into the new year. Are there I know you can't talk specific stocks, but is there a
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certain theme that you're looking at in com services?
Mark Smith (Senior Vice President) 02:17.160
Yeah. Well, listen, the theme is again what I just talked about, which is the consolidation. I've I've never seen it before in my in my career where you hear this much consolidation over the last year, companies merging, and I think that's going to be great for profit margins. I
Mark Smith (Senior Vice President) 02:30.880
I also think that there's going to be a lot of um interesting IPOs that come out. I think SpaceX the name one is going to really propel that sector um and give it catalyzed going further into the next year.
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What do you think SpaceX goes into com services, not tech?
Mark Smith (Senior Vice President) 02:43.840
I I think that when you're looking at the uh the satellites and all that what I'm talking about, I think you're going to really see the change um and and how we traditionally look at communication services over the next decade.
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All right. Um coming up later this week, we get the Fed minutes. Last day of the year, uh we're kind of used to some backwards-looking data, delayed data this year due to the government shutdown. How meaningful are these Fed minutes, especially for your thoughts going into 2026?
Mark Smith (Senior Vice President) 03:07.720
I think they're really interesting. I mean, listen, you you in order for us to be propelled higher in 2026, I think the rates and where they are going to be is going to be a huge uh backdrop. And so, when you have administration that's really pushing for lower rates, I I think
Mark Smith (Senior Vice President) 03:20.600
that's going to help businesses uh be able to get more better lending and for our consumers to be able to either buy real estate or to invest in their business who are small business owners. So I think all this is really important when you're looking at a backdrop of having 2026
Mark Smith (Senior Vice President) 03:35.480
be a positive year.
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How many cuts do you see coming up next year? And can these Fed minutes can they change your mind knowing the change that we're going to see on the FOMC next year with Jay Powell's replacement and maybe some other key members also changing.
Mark Smith (Senior Vice President) 03:48.400
Listen, I I the Fed has a hard task right now, right? I mean, you have the fact that they have just lowered rates and you're going to have a new Fed chairman come in who um is under the pressure of the presidency to possibly lower rates even further. I can't see more than one or
Mark Smith (Senior Vice President) 04:02.800
two honestly because I I think we just fed has a difficult job in keeping inflation low and and and that in inflation is going to be a big part of how they make that that decision and it's going to be very interesting to see.