Markets Are Primed To Explode HIGHER In 2026

0:00Hello, everyone. Today, we've got a very special treat. We've got Ryan Dietrich from the Carson Group. He's going to join us and talk about what's going on in public markets, his outlook for 2026, the Fed, interest rates, inflation, deflation, and much, much more. We're live today from the desk of Anthony Pompliano.

0:25Before we get into today's conversation, please remember to subscribe on YouTube. My goal is to get to 1 million subscribers, and with your help, we're going to get there. Hit the subscribe button and let's get into this conversation with Ryan. All right, Ryan, I thought a great place to start the conversation is inflation. It felt like in 2025, everyone was very worried about sky high inflation, empty shelves. The next Great Depression was right around the corner due to the tariffs. But we kind of got a different result. We just got two different CPI readings at 2.7 percent. Truflation is showing 1.7 percent.

0:55What's your read on inflation and how important is that for monetary policy and the health of the economy in 2026. Yeah, first off, thanks for having back. And I think we can still say Happy New Year. So there's our joke. Happy New Year. It's interesting because we just talked before camera came on here. You know, in April, we were promised a lot of things, right? Massively higher inflation and an economy that didn't do well in a stock market that did very poorly. Well, fortunately, none of those things happen. And you think about what we've just seen in inflation, right? We just had a CPI report, just had a PPI report.

1:27And both were fine. I mean, And our base case for a while has been we think inflation is going to be a little closer to 3 % than to the onion. I mean, things like shelter and rents and real time rent prices have been telling us for a while. There's probably going to be a little bit of a lid on inflation. But then you look around the globe and you see things like copper and economy. But all in all, you know, inflation closer to three than two is OK. Look, historically, inflation is like four and a half percent. I know some years a lot more, some years a lot less. But all in all, I think it still opens the door for more monetary policy this year in terms of rate cuts.

2:02Now, obviously, there's been a lot of pressure from the administration to the Fed to try to get rates lower. And they did cut 75 basis points going into the end of the year. It feels like the administration is still not happy with that, though. They want rates below 3 percent, probably. And so how do you look at what is likely to happen from rate cuts and then what that impact will be in the market? it. Yeah, well, let's did 75 basis points the fourth quarter last year and did 100 basis points the fourth quarter of the year before that. So it's a 1.75 percent of cuts we've seen the last, you know, what is it, 15, 16 months.

2:32So they've been cutting. I don't think we're going to see any cuts, though, before Jerome Powell leaves. He leaves May 15th. Now, he can stay on the Fed as a governor. That's a whole other story for another day, but he's not going to be leading the bus. Our base case, again, is we're probably going to see three cuts this year, probably more in the second half of the year. That's not a bad thing. But one thing I think is really important for everyone to know. So last quarter, fourth quarter last year, the Fed cut rates three times with the stock market near all-time highs. By near an all-time high, that's within 2 % of an all-time high.

3:0022 times it's happened. Anthony, a year later, S &P 500 is higher, 22 times, a 14 % average. That old saying, don't fight the Fed. I think that's something people should remember. Now, one more quick one on this. Everybody knows it's a midterm year. We can talk more about that if you want. Midterm years usually aren't that great. I get it. 2018, 22, not good years for the stock market or investors. We understand that. The Fed was hawkish. It was clearly a different scenario back then. The Fed is much more dovish now. So I hate to say this time is different, but it really is different this midterm year.

3:31And so you think the Fed is more important than the fact that it's a midterm year? We do. We think monetary policy is probably more important than midterm year. We think fiscal policy with the one big, beautiful bill and everybody's going to get a little bit more money in the first quarter with their taxes and different things definitely matter. And of course, the two we call linchpins to a bull market, profits, earnings and profit margins, both hitting new cycle highs again right now. Those matter more than the fact it's a midterm year. Hey, listen, midterm years are what they are. 17.5 % peak to trough correction.

3:59That's the largest out of the four-year cycle. There's more volatility in midterm years. I mean, I wouldn't be shocked at all if we saw a 10 % to 15 % peak to trough correction at some point this year. That's normal, everyone. Just remember that. But it's probably more of an opportunity not to panic, kind of like we've seen for about three years now. We're talking about big pullbacks. somebody panics, maybe don't do that this year. Now, what I find so interesting is it seems like Trump, Besant and the rest of the administration, they're trying very hard to almost do their own type of QE. We saw them give out, you know, 17, one thousand seven hundred seventy six dollar checks to military members.

4:33We saw them say that they want to take two hundred billion dollars from Fannie and Freddie and start to buy back mortgage backed securities. Like these are things that you would do if you were trying to juice the economy. And so does that start to play into And do we start thinking about that as actually having a bigger impact than even monetary policy could have? Well, I think you're right. And again, what did we just say the question before? It's a midterm year. There is a bunch of news coming out. And it's all about, you know, trying to get things more affordable. Now, listen, the 10 percent caps on credit cards.

5:01I'm not so crazy about that one, because when you look into that, it means less credit cards are probably going to have leverage. Less credit cards are going to be able to allow for credit for different consumers. And look at how those companies have done the last several days under that. So that one might get pulled back. But some of the other ones. to get rates lower. That's something that obviously President Trump ran on. And again, with the one big, beautiful bill and different things to get people feeling good. I mean, I hate talking about politics, to be honest, but it's about politics in this particular case to get things going.

5:26One more quick one on this. We have a large deficit. I'm not crazy about it. You're probably not crazy about it. But listen, if it's if look back in history, years with larger deficits, when you actually have more of a dovish Fed and even a little bit higher inflation and the things do pretty well, we just released our outlook mid-year outlook, or I'm sorry, outlook, 2026 outlook. I'll get there called riding the wave. Right. And we've talked about this. There are a lot of waves behind us from momentum to the economy, to the Fed, to fiscal policy, monetary policy. All those things still suggest, again, a higher deficit is not necessarily the end all be all end of the world like we're being told.

5:59History would say you usually have better economic growth when you have higher deficits. I know it's not what you probably expect to see, but it is what we see throughout history. Now, one of the things I find very interesting is I think you, I, and most people who pay attention in finance would pay a very large warning to the deficit, to the spending, to what we would consider inflationary pressures. For a year now or so, I think one of the aspects that could bring deflation was tariffs. And I know it was very controversial, you know, a year ago saying tariffs could be deflationary. But now we also get people like Elon Musk talking about the fact that artificial intelligence and robotics, these are deflationary forces.

6:41I think the term he uses, it is a supersonic tsunami that is coming to the U.S. economy. And his belief in a recent podcast is that actually maybe the United States government and the Fed is going to be asked to print more money rather than less because of this big deflationary force that's going to hit the economy. Do you have any thoughts in terms of whether deflation or inflation is actually the bigger risk? Well, that's a great point. I think for this year, let's call it 2026, inflation is still the bigger risk. But what you just talked about, going out into the future, absolutely. I mean, think about the Internet.

7:13The Internet is obviously similar somewhat to this with a major technological change and how deflationary that was. And we saw that for decades, obviously, and then COVID and then all the money printing and all that stuff that happened that spiked inflation. So I'm with you there. Again, I think this year we're still closer to 3 % than 2%, but going out into the future, those major, major deflationary pressures from AI, I think it's real. And again, what does it mean? What does all that mean? Well, listen, I think lower inflation is usually a pretty good thing, but it probably is going to have lower rates.

7:42So people who have a lot of money aren't going to be getting 4 % or 5 % of the money markets. You have to go other places. There are alternative things you can invest. You want to talk about gold and silver and that stuff. Maybe that's what's going to continue to benefit from all in Bitcoin, from all of what we're talking about here. Now, what are you concerned about in 2026? Right. Yeah, obviously, there's a lot of good news or things that are tailwinds. But what are the big risks or obstacles? Yeah, I think it's back to that F word, if we can use the F word, the Fed. You know, again, we think they should be cutting.

8:08But what happens if the economy continues to improve? I mean, we just had a 4.2 percent GDP print, 4.9 percent productivity print in the third quarter. That's pretty good. Last time I checked, things still are looking pretty good. You know, what if they continue just to keep cutting with inflation and maybe get a little hotter economy, a little bit hotter. I mean, is it a lot 2021 when people are getting money from the government? Everybody's like day trading and making money. And what happened in 22? Well, the market has a funny way of correcting things with the bear market in the worst year for bonds since George Washington was the president in 2022.

8:40So that's when we're watching. I'm not saying we're there yet. I'm not saying that's our base case, but clearly that. And then the obvious one, geopolitical concerns. I mean, literally last couple of days when I'm the oil, it spiked up because we're going to strike Iran. We're not going to strike Iran. What's going on with China? you know, Taiwan. I mean, these are things no one knows the answer to. I mean, no one knows the answer, but those are always out there. But I think that's why you'd keep a diversified portfolio. We are still overweight equities come on you for a long time saying be overweight equities, but we still think it's a global bull market.

9:06It's not just about the U.S. anymore. U.S. up 18 percent last year. Listen, emerging markets of 34 percent, most developed countries up over 30 percent. I'm not saying that they're going to have that much leadership from the rest of the globe, Anthony, but I think the rest of the globe is going to keep doing pretty well. So stay diversified in 2026 and help you sleep at night when those scary headlines inevitably happen. How do you balance emerging markets in the sense of is it just one big index or one big bucket? Or do you try to go and actually identify which markets may outperform? Yeah, we kind of keep it simple, I guess, is one big bucket.

9:38I will say we're not we're not so warm and fuzzy about the Chinese data trusting necessarily China. I mean, you look around like Latin America and some smaller emerging market countries. I mean, they're doing really, really well, I think, fairly quietly. A lot of people don't realize that. So, again, we go in more of the big bucket. I will say with developed international, Carson Group has made a strategic, I guess, bet, if you will, investment in Europe, right? And I think I came over with you last year saying that. We actually started going into Europe, I think it was around March or February of last year when Germany came out with all the fiscal policy and all the spending and defense spending.

10:09We said, listen, something's happening here. Maybe Europe does better. Europe right now, nobody thought Europe would do well. I forget who it was. It was some Goldman Goldman Sachs at a conference a year ago right now, and it was like a record number of people expected the United States to be the top performing group or top performing area in the world. Well, it made sense. 16 years we've been seeing. But if everybody's thinking alike, somebody isn't thinking. General Patton, I like that one. Clearly, it didn't play out last year. So that's kind of how we are. Specific bet on developing international Europe and the rest more just big buckets, I guess.

10:38Now, one of the big tailwinds, I think, in the public markets has been artificial intelligence. Obviously, there's a ton of AI CapEx spend that's been happening. There's a pretty strong argument that if AI wasn't happening, the economy would look very differently. The good news is that you can't just take out AI. So that's been a big proponent for the growth that we've seen. How do you guys see AI developing? And is there anything there that investors should be paying attention to? Yeah, it's not slowing down, I guess, is the short answer. One of the crazier stats, I love stats, I know you do too.

11:07The first half of last year, our economy grew 2.2 % of the GDP. 1.1 % of that was AI and CapEx, so half that. Now, listen, the second half of the year, that came back a little bit, but I think that really shows that's still a major driver. I mentioned monetary policy, fiscal policy, AI spending and CapEx is not slowing down. That's still a major driver. I want to be very clear on something here. We're more evenweight technology. You're not talking to Dan Ives, a big fan of Dan. We're not quite Dan Ives optimistic still about large cap tech, but we are evenweight. When I see things like the Time Magazine Person of the Year last year with all the AI leaders on there, I see Jensen Financial Times Person of the Year.

11:43That's great. I mean, they deserve to be there. These companies have done incredibly for our economy and making earnings and creating a lot of money for a lot of people watching this right now. But when I see that, I'm like, ooh, that's not making me too warm and fuzzy. Then I look at what just happened yesterday. S &P 500 down half a percent, Anthony. 318 stocks were higher on the S &P 500. 63 % of the stocks on the New York Stock Exchange were higher. 63 % of the volume was higher yesterday. It was a down day, okay? I don't know if it's a great rotation. I hate to use words like that, but that's what people are calling it.

12:10We are seeing a rotation here. I'm not saying totally away from technology, but I am seeing tech has been getting beat up lately. Yet the market, I look, is still hanging in there. I think it's a really good sign. So we're even away tech here. Still a lot of momentum to it. I think it's more going to help on the economic front in 2026, though. Now, one of the things that I think is really interesting is the trade deficit. Obviously, we recently got a report that that's come in a little bit. and now is the lowest trade deficit we've had in two decades or so. Again, kind of going back to this balance between it feels like here in the United States, domestically, there's this whole idea of like, we're going to grow, grow, grow.

12:43We're going to run the economy hot, hot, hot. But then we also see our relationship maybe with other countries seems to be kind of going in our favor, maybe a little bit more than people expected. How do you see the balance there? And should investors be paying attention to that trade deficit? Or is that just more kind of headlines? Yeah, I think it's probably more headlines. But it's something I wouldn't argue when I see it. You know, I think, you know, we saw the stats and how many foreigners owned U.S. equities at the end of last year, like the most we've ever seen. How many foreigners own bonds at the end of last year, like the most we've ever seen.

13:14We weren't being told that in April. Right. We weren't being told that in April. But I think from an economic point of view, we have something called our Carson Group, LEI, leading economic indicator. My friend, Son of our geese on our team puts it together for three years now. It is said there's no recession coming this time, three years ago. Everybody and their mother promised us a recession because all these other LEIs were negative. Ours never did. Ours is improving, but it's even more impressive. We look around the globe, developed international emerging markets, Anthony. Both of those leading indicators, the proprietary ones we have, are breaking out.

13:42OK, so again, what's that mean? The rest of the globe is likely going to improve on the economy next year, along with the USA. What is it, 40, 41 percent of revenue when the S &P 500 comes from overseas? It's hard to think that is a bad thing for the U.S. or for that global economy. Now, one other thing that I think is pretty interesting is if you look over the last 13, 14 months, gold, silver, copper, kind of this metals mania has been playing out. What are your guys' thoughts there? I'll get there in a second. I enjoyed you joining Phil on Full Signal. I know you guys talked about that a little bit.

14:14That was awesome. I'm enjoying listening to that. So nice job there. We have been bullish gold since March 31st of 2023. We added gold to our tactical models after the regional bank crisis. I was, I think, one of the few people out there in March of 2023 saying we're about to have a period of years where gold and stocks go higher together. That wasn't very popular then. We're three years in. But look at gold. I mean, I'd argue gold's been in the bull market since 2022 when the sanction on Russia happened and all that stuff happened and gold went up. Now, history tells us, again, these bull markets, especially in commodities, last longer than three or four years.

14:52I'm not saying it couldn't end today. They'd be the shortest bull market we've ever seen for some of these commodities, if that were the case. But silver, listen, it is about as stretched a rubber band as you possibly can get. But I think a lot of these base metals, copper and zinc and aluminum, a lot of these are just now breaking out, a la gold two years ago. Gold, I think, made a new high. I think it was January or February of 24, early 24. How to do the two years after. Yeah, pretty good. I think a lot of these other base metals, industrial metals, are going to continue to play catch up. What we're doing in our models, we have some metals and mining ETFs.

15:24You own materials, you own some industrials, emerging markets. All these things are related to that. So if that bull market continues, those are some areas you want to be in. And we think this bull market in metals in general and gold will likely continue. This time of year from now, we'll probably be hiring them still. And then what about Bitcoin? Obviously, last year, I think it was disappointing to most people who held Bitcoin. But what's your thoughts there? Yeah, we don't have an internal thought necessarily. We do own some of our tactical models. And again, it's because I think it is something that it keeps getting hit with negative news.

15:54It's more your world than mine. I know this, but hit with negative news and it won't go away. I mean, what's it up to? Up over 95 ,000 right now. You know, and it's like everyone kind of threw it out last year. I know the four year cycle usually this year should have been the bad one. You've talked about this. Maybe last year happened a little bit earlier. We still have some in our tactical models. So I think it makes sense. But I wouldn't go all in Bitcoin. I wouldn't go all in gold. We talk about a 60-40 portfolio. I work with RIAs, advisors. The 60-40, the 40 bucket. You don't want to just be in bonds anymore.

16:21I think that's pretty clear to most people because, listen, there's a lot of other stuff in that 40. So I think having some gold, having some different metals, having a very small-ish allocation to Bitcoin in a more tactical model, if it fits your risk tolerance, that's how we're doing it. I think it still makes sense to have a little bit in there because, again, I always said I don't know if it's going to go to a million. I mean, maybe you can say that or not. But if it does, I can't live with myself. So I think you want to own just a little bit of it. And if it doesn't, OK, so be it. There's other stuff you can still own.

16:50There's a famous quote from Satoshi Nakamoto who said, you know, you may want to get a couple just in case it catches on, which I think is perfect. All right. So on a scale of, let's say, zero to 10, 10 being very bullish, zero being not bullish at all. Where are you in terms of optimism for 2026? Oh, we're seven or an eight, I guess. I hate to say 10 because I'd probably be wrong. But I think there's just still a lot of reasons to be optimistic. Again, one more time to wrap this up. I like to look at market breadth. I do have a CMT, Chartered Market Technician. You see me out there. I'm not a CFA.

17:19I'm not talking fundamentals. I'm not talking earnings. I can, or I'm not talking valuations. I can do that. End of the day, I'm about what are the buyers and sellers doing? Literally yesterday, Anthony, on the New York Stock Exchange and the S &P 500, both hit new all-time highs on their advanced decline lines. Market breadth leads price. Historically, market breadth peaks, say, nine to 15 months ahead of price. We just hit new highs and breath yesterday. This bull market is alive and well. Anything can knock it off. I get it. But for what we're seeing right now, there's a lot of tailwinds. And again, we titled our outlook riding the wave.

17:52There's a lot of waves to think this bull market isn't over yet. Incredible. Ryan, thank you so much for doing this. We're super excited. We're definitely going to have you back multiple times this year. And hopefully people are paying attention because I think it'll be a fun one. Anthony, anytime. I appreciate it. Thank you. All right. I hope you enjoyed that conversation with Ryan. I always enjoy talking to him. He's smart. He's funny. and he's got great quotes. That's it for today's show. Thank you guys so much for watching. Please remember to subscribe on YouTube, and we'll see you live tomorrow from the desk of Anthony Pompliano.