Market Musings 170126: Remaining a nervous bull
Monthly report and video: Investment Strategy Focus January 2026 (click on link to read/watch)
Can stocks maintain their run streak in 2026?
1. US Q1 positive growth surprise? The One Big Beautiful Bill Act passed last year put in place several lower tax rates, resulting in lower 2025 tax bills for many US households and larger Q1 2026 tax refunds (USD 1000+ average per household). This should boost US domestic consumption and GDP growth over Q1 2026
2. Long-term bond yields to rise further? Over 2025, the Japanese 10-year JGB bond yield almost doubled from 1.1% to 2%, while German 10-year bund yields rose from 2.4% to 2.9%. Lower inflation but high debt refinancing requirements pull yields in different directions. Expect little movement in 10-year bond yields.
3. Stock leadership rotates to Value from Tech: in 2025, global value outperformed growth by a record 18% in USD after 8 consecutive years of growth dominating. Favour value-oriented sectors such as Financials, Industrials and Building & Construction. Strong momentum in UK, Spanish, Swiss and Swedish stocks.
4. Strategic industrial metals in a bull market phase: copper, tin and aluminium continue to gain ground, propelled by strong technology and electricity generation-related demand and limited supply. Continue to favour these physical base metals and copper miners.
5. Silver, platinum and palladium have rallied dramatically in December as shortage of supply and strong industrial demand have squeezed physical markets. We return to a positive view on gold and upgrade our 12-month gold price target to USD 5000/ounce. Our silver price target is also increased to USD 80/ounce.
Questions to answer
How long can this bull market for stocks continue?
What could bring it to an end?
If the US stock market and Tech isn’t leading any more, what today are the leading themes, sectors and regions?
What is driving US foreign policy as regards Venezuela and Iran? Is it just about oil?
What new areas of emerging leadership am I looking at now?
Can the bull market continue?
Yes. I consider that this current bull market in stocks began in October 2022, and is thus over 3 years old now. While there has been considerable variation historically in the duration…
