Transcription
Friends, hello everyone. My name is Zair Yusupov. I am an expert in investing in the US and European stock markets. And in this video, we will analyze the situation that has currently developed in the US stock market. And I want to reveal to you from open sources what, you know, the US Federal Reserve is forecasting for 2026-2027. That is, we will consider the main indicators, based on which it is possible to make some assumption about what investors should expect in 2026 and how these data have changed, you know, were revised in December. That is, in September, certain figures were made, and now they are compared with the December ones, right? That is, the Fed published the last time on December 10, 2025. All this is available in open sources. I just want to give you my interpretation, my vision, and what investors can expect in the stock market in 2026. So, let's get started. Please subscribe to the channel, give it a like, and please write, based on the results of the video, how you see your expectations and your opinion, where the market will go, how much it will grow this year, well, your scenario, right, in your opinion. Your feedback is important to me, let's say. So, let's get started. Uh, well, let's see. This is available in open sources, so, uh, there is this open publication here. So, we will now look at the main ones, that is, we will not read anything globally in the text right now. So, we will look at the main indicators. They are shown for December 2025 in percentages. So, what did the Fed think in September and what does the Fed think now? That is, this whole macroeconomic picture, which can actually change due to pressure from President Trump's policies, you know, Jerome Powell is leaving soon. It is clear that someone else will be appointed to his post. So, this policy can actually change. It is clear that it is not one person who makes the decision, it is a whole, let's say, collegial body. And there are these different internal lobbies, currents. So, there are certain risks of division and risks of revising these, let's say, indicators. In fact, uh, let's just go through what this all means now, what could be, right? So, I will also give my forecast. So, the main thing to pay attention to is the median indicators, the central tendency, there are ranges, so it shows, let's say, the spread, right, the range. The first thing I want to draw attention to is the growth of changes in real GDP in 2026 and 2027. We will indirectly look at 2027 now, but let's focus more on 2026. And why is this important for us from the perspective of planning our portfolio investments? That is, GDP is a consolidating indicator of growth or, let's say, the health of the entire US economy. If you are going to invest, well, in principle, any investor needs to pay attention to what? Where are we moving, where is the economy going, and what do we need to do in our portfolio, what to prepare for, what scenarios to count on when we plan a portfolio for 2026, well, and further, right? That is, it is clear that everyone has a more long-term portfolio. Now we are talking about portfolio investors for the near future, for a year, when we will, you know, revise all these scenarios, approaches throughout the year, but we need to understand, right, where the economy is moving, where the market will go, where certain sectors will go, and where there are risks and where there is potential for opportunities to gain this additional alpha, right? And therefore, well, let's look in more detail now. So, uh, let's look at the central tendency. 2026. So, the Fed revised it. It was in the range of one, that is, previously they thought the range was 1.7-2.1, now it is 2.1-2.5. So, the forecast of expectations for GDP, for growth, is more optimistic, right? So, the economy performed better. Even based on the results now, well, this is in annual terms, based on the results of the third quarter of 2025, there are already preliminary data, the growth will be 4.3%. It's already there. Well, it is clear that this will be adjusted and revised two more times, but it is a good signal, in fact. At the same time, on the one hand, let's say, it is the health of the economy, right? On the other hand, it is a slight hint of inflation, because consumption is not going anywhere, and possibly in some sectors, inflation will be supported. And further, we will see, so, this indicator has been revised for the better. Let's look at inflation. So, uh, at PCE Inflation, so, from 2000, the previous expectations were 2.4-2.7 for 2026, now it is 2.3-2.5. So, this is slightly higher than the target of 2%, but in principle, it is better, right? So, this is a revision downwards, meaning inflation will cool down. So, this is a positive for the economy, so, it gives more reasons for the Fed to lower the key interest rate. And, uh, as a consequence, money in the US economy will become cheaper. Well, and for the whole world, naturally. Next, uh, Core CPI, Core PC, right, this indicator, so, mm, was also revised, that is, 2.5-2.7, now 2.4-2.6, so, this is also, and pay attention that it is 2.3-2.5, so, there is a small difference between them, 2.4-2.6, right? So, in principle, they are moving almost synchronously, although they are different indicators. Well, Core PC, so, here it is without energy and food products, and here it is with food products and energy. We need to understand, you know, this cycle in the economy, right? It is happening smoothly. So, we saw some surge throughout 2025, then a cooling, now inflation is at the level of, uh, 2.7%, the economy is in good condition, so, it is growing, but inflation is cooling, and this is a plus. So. And further, we see that inflation will continue to cool down. And this has been revised compared to, you know, the September expectations, right? So, expectations have now become even better. Now, next. Unemployment. Unemployment is actually a lagging or coincident indicator. What is happening now, that is, companies are laying off people, right? So, well, we look at this in context. So, we need to understand how expectations have changed. And 4.45 was expected in September, now it has been revised to 4.3-4.4. So, unemployment will also decrease, but it is currently at the level of 4.4. This is again the central tendency, right? So, I remind you again that this is just a range, it is an opinion, a kind of, you know, guideline, a criterion, on which we can now, you know, build assumptions for 2026. In principle, uh, we were at this level a year ago, in fact, right? So, it cannot be said that this is a bad picture, but the picture has improved. But in fact, there is always a risk that some market inefficiencies can flare up, right? Some black swans can provoke something. So, unemployment is currently in good condition, and this is good, so, we just need to monitor this. If we see this indicator going to, you know, 4.5-4.7, then this will naturally increase volatility and possibly there will be a deep correction in 2026. Again, if these triggers align, right, if they work, if unemployment, that is, layoffs begin, layoffs can begin, because I will talk about this a little later, you know, the reasons. So. But, let's say, overall, we need to see, uh, whether this scenario will be realized or not. For now, we are following the baseline scenario. I will talk about it later. So, the idea now that I want to explain to you, right, is that we see how the Fed has changed its vision of the market, changed its vision of macroeconomic indicators for 2026. And this is very good. So, there is progress towards, let's say, positivity for the economy. Now, next. We have talked about unemployment, unemployment rate. Now, Federal Funds rate, right, this reduction in the rate. So, if in September they planned 2.9-3.6 in this range for 2026, then this range has actually remained. So, they have preserved this policy, you know. So, for 2025, you see, 3.6-4.1, 3.6-3.9. So, this range has slightly decreased. So, they did indeed lower the rate several times in 2025, but now the rate is at the level of 3.75. 3.50-3.75. In this, let's say, range. So, based on the fact that the economy is currently in a strong position, so, we will continue to look further, there is data. What needs to be said? The strength of the economy is precisely what allows the Fed not to lower the rate so quickly until inflation has not yet gone towards 2%. And it has not yet gone towards 2%. Yes. If we look again, the target for 2026 is 2.9-3.6. In September, they thought the same, 2.9-3.6, this has been preserved, right? This is a hint whether there will be a rate cut in 2026. Possibly not, or possibly there will be one cut. And I draw your attention, right, let's look at inflation again, at Core. So, the Fed forecasts that this Core PC indicator will not fall below 2.4% in 2026. What does this mean? So, if it does not fall, then there is no point in lowering the rate. Do you understand? So, why lower the rate if we forecast that inflation will remain stable in this corridor? On the one hand, this is good, because, well, inflation is a kind of indicator of the economy's overheating, right, and it is confirmed by GDP growth, right? So, GDP will be, you know, the expectations for 2025, and in 2026 there will even be acceleration. So, this is better in annual terms than in the previous year, right? Now, it must be said that the Fed does not expect inflation to fall significantly. So, it will fall, but very, let's say, slowly. So, it will be inflation, so, it will be stable. So. And in this regard, and probably there is no point in lowering the rate. Let's see how this whole movement regarding the criminal cases against Fed Chairman Jerome Powell will unfold. So. But, well, let's say, it is clear that this is just pressure from Trump on this entire collegial body, which, well, as the Central Bank, should be neutral. Therefore, there are certain risks here, right? But we are currently considering the economic, not the political situation. The political situation can cause some volatility. And in portfolios, one must still consider a scenario where things do not go according to this baseline scenario, not according to what we expect now, but there will be some worse periods, right? Therefore, for this, naturally, uh, what needs to be done? So, to form some cash buffers, cash reserves, maintain them, and take advantage of the, let's say, market opportunities that will be provided by the market, right, in the form of some volatility, a decline in certain sectors or individual companies, depending on what you want and what your risk profile is, right, and what you plan to buy. So. But in any case, you need to think through scenarios for yourself. So, the economy, for now, as we are considering, is moving in this direction. And, well, I do not expect the Fed to lower the rate three times. That is for sure. One, well, a maximum of two. So, in my opinion, this is the situation. So, in portfolios, the main thing, right, should be the construction, the principle of portfolio construction. So, we first look at macroeconomics broadly, then more narrowly, we look at markets, sectors, some individual ideas, and then we look at how to combine all this in a portfolio, how to configure it. a normal, stable architecture of the portfolio, that is, how to combine capital correctly, right? So, that it corresponds to the risk profile, market opportunities, and expectations, right? And this whole system needs to be built. And you also need to determine for yourself where you are willing to, you know, close some positions, and where, on the contrary, you are willing to buy more, right? And if we expect some unpleasant surprises, then you need to prepare a cash reserve for this, or initially adapt your portfolio to a negative scenario. Or at least now, the baseline plus negative, right, the optimistic scenario, you can reformat the portfolio itself, but again, everything is possible, everything is individual, everything can be done. Now, what is the main emphasis? First, portfolio protection, and then growth, right? Therefore, we are now considering macro expectations for 2026, the Fed has already shown its scenario, right? So, we interpret it, what do we need to do? We need to prepare. To prepare correctly, one must, naturally, study all this, look at it, and draw conclusions for oneself. So. This is my interpretation: the rate will be lowered once. Twice, with high probability, no. So, most likely, once, and even then closer to September. And inflation, well, it is not planned for inflation to decrease. So, we will see 2% only in 2027. So. We still need to live to see that. Many things can still change. Let's also look at GDP. That is, what they have in terms of median, maximum, minimum, so, this is the median value. 2.3 is for 2026, so, this is very good. 2025 is 1.7. So, 2026 is, you see, the central tendency and the range for 2025 to 2028. Well, in general, GDP will be better than in 2025. So, it is very good. So. But again, we do not exclude that there may be a scenario of some volatility and correction, 15-25% is quite realistic, because the interest rate has been held for a very long time. Yes, it is decreasing, but there may be some residual effects that we do not see now. This is a risk. Therefore, well, with large capital, you cannot work like this. That is, when you have, you know, 200-300 thousand to a million, then you can endure a year or two. When you have large capital, you need to build everything differently, more stably, systematically, and, in general, capital protection should be in place. So, unemployment. What do we expect for unemployment? So, 2025 is 4.5-4.6. So, this is what we have actually seen, right? So, this is, well, their forecast is very good. So, everything that the Fed, in fact, with small deviations, their models coincide. So, we expect that inflation, unemployment will be somewhere in this range. Plus or minus. So. Well, maybe, you see, it can fluctuate up and down, up to 4.6. So, next. PCE inflation, right, in more detail. So, the median is 2.4, so, it can be 2.7. This is what we are seeing with PCE. The upper end of the range, the lower end of the range, right, 2.3. Well, in general, so that you understand, right, this is 2.3-2.7, but there is no scenario here that it will be 2.0. So, we will see 2.0, and even then, with some difficulty, somewhere around 2027-2028. Core, so, the median is 3, so, no, look here, 2.6, the median is 2.5 to 2.7, 2.4, so, in this range for 2026, right? So, this is again, what the Fed's policy on the interest rate will be based on. So, we will look at these numbers again, right? So, this is participant assessment of appropriate monetary policy. So, this is an assessment by participants, right, on, let's say, acceptable monetary policy. What they expect is, so, called, dot plot, right, just shown a little differently. And what do we see for 2026? Three people for the rate of 3.87-4. Well, we see 4.4-4.4 in this range, where most of it fluctuates, right? So, the central tendency is approximately in this scenario, right? Although we have already seen, so, in the first table, Federal Funds Rate, so, they expect 2.9-3.6 for 2026. And if we compare this, so, there is a discrepancy, right? Some members, let's say, assess it differently, so, this is an assessment, right, approximately what they think, how it will be further. So, what do we need this for? To understand that there is a division within, right? So, there is a part of people who say: "No, we want a very low interest rate." And someone says: "No, we think it will be normal." So. I would pay attention to this. So, let's also look at what we have, unemployment rate projections, also for 2026, what is expected, right? So, September and December, right? So, projections, 13, and there was such a spread, and here most expect 4.2, 4.4, 4.5. Next, PCE Inflation for 2026. So, also expectations. So, 11 members, well, five are in the 2.5-2.6 range, and 11 members, the majority, in general, expect it in the 2.3-2.4 range. So, this is their assessment, right, for 2026. And core CPI, so, for 2026. You see, in September there was also such a center of 2.5-2.6. Here the opinion is slightly divided. So, 2.3-2.4. Well, in general, this decrease will go more, you know, around 2027, and then we will come down to two in 2028, somewhere around here, right? Therefore, what I am paying attention to now, well, there is a slight distribution of expectations for inflation as well, only Core without food products and energy, right? This is how it is expected now in this range, so, this is, in principle, good, right? So, the rate will not be lowered quickly. So, we expect that the Fed will continue to adhere to this, but the majority expects it in this range. So, therefore, if we see inflation at 2.3-2.6, this is normal, right? Let's continue. I want to show you some additional data. So, let's look together. This is JP Morgan Asset Management, so, their interpretation, their assessment. Let's look at it. So, this is a certain, let's say, quite authoritative and respected organization, so, JP Morgan, so, I believe there is something to take from here and compare it with my expectations. So, this is a useful scenario. Let's take the Summary of Economic Projections. So, they say here that they have generally increased, let's say, the growth forecast for the economy and reduced inflation expectations, right? So, this is, in principle, positive, this is normal, this is good. 4% unemployment and inflation, right? So, further, the Fed's policy will be built around these indicators, how they will relate to the movement of the Fed's rate. Well, this is not the most important thing. So, there are, let's say, comments, they expect, right, that the Federal Reserve will continue to look at inflation caused by wages and services, right? So, they will look at this. Indeed, there is a certain division within the Fed. We do not know exactly how they will act, but they emphasize, so, the Fed, in fact, at the last meeting, they emphasized that they reserve, let's say, this flexible policy, a flexible approach to the interest rate, and hinted that everything will depend on the data coming in on macroeconomics, right? So, unemployment, inflation, and so on, right? If inflation continues to rise, it will be stable. They subtly hinted that everything depends on the data, right? And at the same time, they say in these reports that we do not expect inflation to fall significantly. Well, and as a consequence, they will not lower the rate, right? On the other hand, this can be interpreted as that the Fed has some data that we do not know yet and which indicate some negative scenario and deterioration in the economy that we have not yet seen. So, this can also be interpreted this way. So, if there is such a sharp and more frequent rate cut, then the Fed, well, they will not say it directly, but we will perceive it, so, it can be perceived normally as there is data that we do not know yet and which already indicate that the rate needs to be lowered, because there is negativity, something can flare up, and this flare-up will be the negativity that we do not know about yet, but this risk can appear, and when it appears, it will be too late. Therefore, if the Fed really lowers the rate quickly, then they know something that we, you know, the investment community, do not know, that is not yet in the open data. This could be such a risk. There is also a second point, that if the Fed does not give in to the policies of, you know, Trump and so on, most likely, there is a high probability of this, that they will only lower the rate in the second half of 2026. So, they will keep the interest rate in the first half of 2026, and in the second half they will start lowering it. So, they need to wait for 5-6 months for inflation to go from the level of 2.7 to 2, 2.1, 2.3. So, again, this must be a stable trend for several consecutive months. And then they will look, if they see deterioration, let's say, inflation goes down, and at the same time there is deterioration in the labor market. If this deterioration in the labor market occurs, then we will naturally see what? Faster rate cuts. And if we have a scenario where the labor market is stable, GDP is growing, and in fact, we see that unemployment has even decreased, right? So, they are now, you know, chasing all immigrants within the US and so on, everyone is holding onto their jobs, and unemployment figures, in general, are decreasing. So, there is a hint of this, let's say, internal order. This is not all simple. The situation may be quite negative. If we see that unemployment is rising and inflation is falling, then in this scenario, it is very likely that the Fed will start lowering the rate. But, uh, lowering the rate is also positive, right? What do we, as investors, need to extract from all this, right? What conclusion can we draw? So, we need to prepare a portfolio that, regardless of the scenario, whether it is tougher, baseline, or some negative one, our portfolio should withstand it, right? Portfolio structure, diversification, rules, rebalancing, so, cash reserve, so, it all depends on, so, if you are going to replenish the portfolio in tranches, let's say, you form a larger part of the cash reserve. If not, then you need to reconsider, so, to make, let's say, reserve funds. A small central bank within your portfolio, right? So, you need to pay attention to this as well. And, diversification, again, it should stem from what? So, we need to see in which sectors there are risks and rebalance towards some baseline neutral scenario, because now everything is moving towards a neutral scenario, right? And personally, according to my expectations, growth is expected in 2026, 10-12% for sure. No, there will not be such growth as 16 with a fraction in 2025. It will be a little less, but 10-12% is, well, I expect it to be in 2026. But at what cost? So, I expect that there will be more, if now we observe narrow leadership, so, the risk of concentration in some AI, artificial intelligence, so, in sectors related to artificial intelligence, they refinance each other, so, they move money around. So, there is such a risk, concentration is growing only in a certain narrow sector, right? In this year, in 2026, I expect that this growth will expand a little. So, we will see, we need to monitor this as well. And some broader sectors will also grow. Better, let's say, to catch up with AI sectors, right? So, artificial intelligence and the technology sector. Therefore, we can see this picture by the end of the year with 10-12% growth of the S&P 500, partly due to dividends, partly due to index growth, so, of everything, right? And most importantly, what I want to draw attention to, last year, in 2025, we saw, right, there was a sharp decline in March, in April, so, we can have a similar scenario, so, where there will be a large rebalancing, a large rotation in portfolios in the market itself, right? So, we can face this. But there, since the rate is higher, maintained longer, pressure on the economy is maintained longer due to expensive money, so, possibly we will see a deeper decline, up to 25%. So, 15-25%. Such a large, serious correction. This can actually happen. Therefore, you need to prepare your portfolios for this, adapt them, so, reconsider them. And this year, the emphasis should be on quality. So, uh, well, asset selection is more qualitative, so, good quality cash flow, good profitability, so, more stable EPS, so, earnings per share, so, the so-called bottom line, right? Or we look more closely at the cash flow statement, because there is a more, let's say, truthful picture. So, if the balance sheet and income statement show more of the accounting side, right, of reporting. So, in cash flows, we should see more justified, let's say, stable cash flows, right, that pay dividends, that we do not have, let's say, at the expense of some other sources paying these dividends, right? So, it should still be stable profit, and profit not from selling some assets, getting rid of something, restructuring, but rather from the main activity of the company, from operational activities, so that the cash flow is more stable. This is what needs to be emphasized, right? So, this is the selection of quality assets, right? So, quality stocks, and by sectors, the picture is slightly different, the approach is different. So. But in Investment Grade, it's the same, right? So, issuers should be more reliable, look at them more closely. So, in general, let's summarize. Those who have not liked and subscribed, please subscribe, give likes. And I want to summarize in general, the year will not be easy, it will be more volatile, right? We expect growth, but there will be surprises, so, there are things that can sharply worsen, right? So, many companies, so, first of all, you will see from the statistics, let's say, layoffs, layoffs in the US have increased significantly, right? So, now is the reporting season. We will see, by the way, based on the results of the fourth quarter of 2025, how companies report. There will also be some information for reflection, but I already have an idea that, for the most part, company earnings will be positive. Banks showed some weaknesses, right? So, in the economy, the banking system showed growth in some areas, and in others, there are already hints of problems, right? Therefore, we will see, right, how companies report, in which sectors, what is better, what is worse. So, the overall conclusion is that there can be surprises, one must still adhere to strategy, discipline, and I would be more, let's say, careful with the selection of stocks themselves, right? So, it is still better to look at more large-sector funds, select more carefully through funds, through some solutions that can be built on funds. Plus stocks. Stocks, naturally, you need to, let's say, watch, monitor quality, so, not everything will fit, and you cannot, let's say, go into some individual stories, so that in the portfolio, you know, maybe 20-25 percent of stocks themselves, right? That is, the rest is built through funds, through some structural solutions, or if it is a large portfolio, then there can be broader diversification. But again, everything needs to be built very, very carefully. So, now we are not chasing profits, we are chasing stability, quality. So, the focus on the portfolio should still be directed towards three main factors, right? So, we form a cash reserve for, let's say, buying some serious, interesting funds or stocks at a discount. So, then, cash reserve, right? Second, I would increase exposure to the bond market. Let's say, I would reduce exposure to stocks. So. But in stocks, again, the part, the share in the portfolio that will be represented by stocks, I would make it, let's say, more, let's say, we need to pay more attention to work, asset selection based on fundamental data. So, therefore, the overall, let's say, expectation for the economy is moderately positive, let's say, the baseline scenario, so, a soft landing. We are moving towards such a scenario of a soft landing, but the risk of a decline and a fall of 15, so, a 15-25% correction, it can happen in 2026. So, there is a significant probability of this. Therefore, one needs to prepare for this, and one needs to, so, that your portfolio can withstand this, right? So, personally, for example, if we work with clients, then we build a system that will withstand such tough scenarios. And you, in your portfolios too, naturally, I recommend this year to focus more on quality and portfolio protection. Let's end here. Thank you everyone for watching the video to the end. Everyone, stay in touch. Have a good evening. Please like, subscribe to the channel. Good luck with your investments. That's all, bye. Take care. Good luck.