Becky Quick (Co-anchor of Squawk Box) 00:00.000
Joining us right now is Jason Pride. He is Glen Mead's Chief of Investment Strategy and Research. And Jason, you'd think a lot of people would like to maybe sit back and relish what we've seen this year with gains uh double-digit gains across the board for the major averages.
Becky Quick (Co-anchor of Squawk Box) 00:13.920
But hey, this is the markets and they're always looking forward. So what will 2026 bring?
Jason Pride (Chief of Investment Strategy and Research) 00:20.240
Well, first, good morning and premature Happy New Year to both of you, you, Becky and and Joe. Um, as we look forward to the next year, yes, we can relish some the gains from the previous year, because they are thick across the board, independent of what asset class you're
Jason Pride (Chief of Investment Strategy and Research) 00:35.240
looking at, equities or fixed income. On average, balanced portfolios are up more than 10% for and maybe even more solidly into the double-digit territory for 2025. So investors are feeling pretty good. As we look ahead to the coming year, number one, we think there's an
Jason Pride (Chief of Investment Strategy and Research) 00:53.320
acceleration that's going to occur in the economy because we are shifting from a fairly large headwind on tariffs to a small had won on tariffs in 2026 and a significant amount of upfront fiscal stimulus is coming from the one big beautiful bill. They'll feel a little bit like a
Jason Pride (Chief of Investment Strategy and Research) 01:10.640
bazooka for both the consumer and for businesses around tax season and throughout the year of 2026. But at the same time, we do need to look over our shoulders at some some key risks. One of the which as you mentioned just a second go is is haunting the Fed and the potential
Jason Pride (Chief of Investment Strategy and Research) 01:28.840
upside risk to inflation surrounding the magnitude of fiscal stimulus that we actually have in the pipe.
Becky Quick (Co-anchor of Squawk Box) 01:36.640
So you're looking at the potential risks, thinking that the signs are set for another good year. I think in the list of risks that you laid out, the one that jumped out the most to me was the AI spending that we've sent seen, particularly with data centers and expectations for
Becky Quick (Co-anchor of Squawk Box) 01:54.560
chips that will be needed for those data centers. How do you read that? How do you prepare your portfolio? for any potential risks there.
Jason Pride (Chief of Investment Strategy and Research) 02:02.600
I think you read on our risks are right. The inflation risk in our perspective is the more likely, but more likely a smaller magnitude because the Fed will probably just adjust with their their rate path and and tamp that down a little bit. The AI risk is the one that we think
Jason Pride (Chief of Investment Strategy and Research) 02:19.840
is probably a lower likelihood for 2026, more likely a higher likelihood in 2027, but it really bears watching because there's uncertainty around that. What we're noting is that there's simply a lot of money being placed on the same spot on the board at the same time, right?
Jason Pride (Chief of Investment Strategy and Research) 02:37.800
There's a lot of money from the markets perspective. And then those companies that investors are putting their money in, whether they're they're fairly large tech companies or even in the private equity space, they're all pushing their chips in on the exact same item. And we've
Jason Pride (Chief of Investment Strategy and Research) 02:52.760
seen this playbook before is when everybody bets on the same thing side by side, likelihood is they're probably going to be some winners, but there's also probably going to be some losers because not everybody can win when everybody is pushing in and doing the gold rush at the
Jason Pride (Chief of Investment Strategy and Research) 03:08.680
exact same same time. The The question is is when that will occur. 2026, we think we probably still have a little bit of legs to it, but as we inch forward and more money is placed, the likelihood of of that countdown to finally seeing some situations where people are not
Jason Pride (Chief of Investment Strategy and Research) 03:27.120
getting the return on investments they're expecting uh begin Begins to become more likely.