Newscasts - Breakingviews’ 2026 predictions

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08/01/2026 06:38

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Description: Our columnists kicked off the new year by issuing predictions for the coming 12 months, from potential conflict zones to what to do with data centers in an AI bust. In this Viewsroom debate, the team pick their favourite prognostications.

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Video Transcript:

The views expressed on this podcast are those of the participants, not of Reuters News.

The year ahead will be an intense conflict between pain and gain. Those are the paraphrased words of Breakingviews Global Editor Peter Thal Larsen this week. Indeed, as the US launched an attack on Venezuela and captured its President, Nicolas Maduro, a Russian-led war rages on in Ukraine, and extreme optimism around the stocks of artificial intelligence stars continue to defy gravity, it may seem like a fool's errand to try and figure out how the world is going to look in the year ahead. But that is exactly what we've done at Breakingviews, and the end result is a sharp, insightful, and thought-provoking book, which is the focus of this week's Viewsroom. It's Aimee.

And it's Jonathan, and welcome back to the Viewsroom, your weekly podcast that delves into the knottiest issues in corporate finance, business, and economics. Aimee, looking back over last year's predictions, because Breakingviews does this exercise at the end of every year, I think maybe it's worth taking a moment to pause and highlight what we got right and what we got wrong, right? So last year, as predicted, President Trump did in fact face a check from the markets when unveiling his all-out global trade war, and did at least in some measure dial back a little. Germany's new chancellor relaxed the country's debt rules. Mike Henry, the boss of mining giant BHP, briefly renewed his interest in rival Anglo American. Our columnists even scored an M&A win, predicting that Google-owner Alphabet would buy cybersecurity firm Wiz.

Yes, I think that is definitely pretty impressive that we managed to get all of those things correct. And I suppose we should acknowledge as well that the predictions are not really about being a 100% accurate. It's more about giving a kind of provocative and, hopefully, an entertaining way of thinking about things that might plausibly happen in the year ahead. Would you kind of agree, Jonathan?

Yes, exactly. So, there will be some cases where things might still play out, just not on the timeline we imagined, for instance, an OpenAI IPO. Intel perhaps not succumbing to a takeover precisely, although it did welcome the US government as its new largest shareholder. The key thing is that we want to think about how, in a certain sense, we should be viewing the next 12 months and the kind of likely bound of events that are going to happen, right? And so, this year we're forecasting the biggest M&A deal ever. We foresee a truce between antsy debt investors and fiscally stretched governments. We think that there's another possible military flashpoint between Russia and Europe in Poland. We're even seeing the end of the college degree possibly coming over the horizon. And so, if you want to read the Breakingviews Predictions 2026 e-book, we'll have a link to a form in the show notes where you can access it. You can also read Breakingviews Global Editor Peter Thal Larsen's introduction to the book on Reuters.com, link also in the show notes, which also contains a link to access the book, or you can browse our predictions online at reuters.com/breakingviews/predictions. And so, with all that said, to drill down into some of these views a little more, we have our prediction supremo Liam Proud, who shepherded the effort, along with Jennifer Saba, who shaped it over in the United States. Jen, Liam, you are very welcome to the Viewsroom.

Hi, thanks for having me.

Great to be here.

Liam, can you give our listeners a bit of a history lesson here on the predictions process? Like, how did this come about, and what's it like kind of being at the helm of something like this? Because I did this in years past, I am now hopelessly old and out of date. Kind of wondering how it feels doing this in an even more uncertain time.

Definitely a humbling experience, especially when you're working on pieces that either get disproven or proven during the writing process. That's always a fun curveball. I think you had one of them, didn't you, Jen, on the proven side? I mean, it's something that Breakingviews has done for a very long time, certainly as long as I've been here, which is almost 10 years, and we sort of get together in September or October, start doing some brainstorming about what types of areas, what types of companies, what types of people do we think are going to be defining the next year. And then we'll sort of report those stories out, we'll decide which ones are going to be long, which ones are going to be short, how we've kind of blended the balance of the book together, because I think, we print them here, as you can see from my fancy prop, and we want it to sort of be a vaguely coherent product that doesn't have 20 things on AI and nothing on politics or economics. And then it sort of coalesces into a slightly mad and hair-raising rush around kind of late November. Which is always good fun, and then you get to do fun things like this in the new year and present it to people.

So, we're not quite radio, Liam, but we are, for some people, they will be just listening to this. So, can you first of all, tell us the visual that you just held up there, as in what is the image on the front of the predictions book? What is the metaphor we're trying to, to address here?

So, I'm holding up now-

So, "Far Side of the Boom".

Yes, "Far Side of the Boom" is what the book is called, and it has a picture of a moon with a sort of exploding- what is actually a firework, but it sort of looks like the moon is kind of starting to disintegrate. So, people will have- music fans will have picked up the Pink Floyd reference there. It's a famous album. But I think- I mean, what's the right analogy? The way we're sort of generally thinking about the world is this tension between this sort of late cycle, things are feeling quite stretched there's been a stock market boom for a very long time without haven't had a real sort of business cycle recession in a very long time. AI bubble, all these kinds of, you know, slightly overextended ideas. Also twinned with a sense that actually inflation's coming down, central bank interest rates are coming down, maybe things could keep going like this for a while. I mean I'd probably characterize the general spirit of the thing. It's like it's 2:00AM at a party and it's going to go one of two ways. You know, either we're going to run out of alcohol and it's going to kind of get messy and everyone's going to sort of start having a terrible time. Or we're going to find a bottle of liquor in the cupboard and then we've got another one last hurrah for the next year. So that's kind of conveyed in a crazy image of a moon. So, there you go.

So is the vibe then, Liam, that it's basically not nothing good is coming, it may not take as long for it to come about. Is that right? As in, it's funny, actually, my mother is actually reading "Too Big to Fail" right now, which I took to be like, "Why are you reading that?"

It's a leading indicator.

But it does seem like that is- yes. And I think people are really struggling to kind of follow the news cycle at the moment, because it's so negative right now. So, the idea that we're in some sort of like 2:00AM, that actually things could get worse, I think that is sort of an interesting idea. But is that- do you think that's the vibe, or is it more is a little bit more positive than that?

I think it probably leans positive. If you're trying to pin me down to a bullish or a bearish, I think is slightly more bullish than bearish, if you just count them up. I mean, we think that bond investors are going to kind of stop worrying about fiscal problems for major Western economies. So, that's a kind of big call that kind of structures a lot of other things being kind of slightly less worrying in the world. And that will just be structured by the fact that rates and inflation we think are probably going to keep going in downward direction. You know, there's a lot of stuff in there about AI, which is not exclusively, I think we're saying that maybe there'll be a sort of data center kind of pullback, but not a kind of total AI bust. I mean, we think that chatbots will increasingly become audiobots. Your prediction, Aimee, which I think it'd be great for you to talk about at some point, is kind of premised on AI becoming so useful that it starts making college students wonder why they're bothering with this degree when AI could do it. Maybe they could go and do something else instead. So, I would say marginally bullish with a lot of kind of chin-strokey caution thrown in.

Right. And to step back to the metaphor, if we're taking stock of the liquor cabinet right now, Jen, I'm kind of curious from the US perspective, like how full does that look? Obviously, you were shepherding through a bunch of views coming from, you know, life under year one of the second Trump Administration. Like, are there any that you would pluck out there that kind of give a pointer to the general vibe?

Yes, I mean, look, I think M&A totally is one of the big things, right? And our colleague Jeff Goldfarb wrote a great piece about the big M&A deals that are, not just any M&A, like $10 billion deals plus, right? And we've seen that towards as the year kind of unfolded last year with EA, Electronic Arts, being one of largest buyouts was, what, $55 billion. We see this fight over Warner Bros. Discovery, which is a huge, almost $70 billion, between Netflix and Paramount. Railroad mergers. So, I think that is only going to continue. And what was great about that is Jeff kind of put on his hat and was like, "What are some fun things we can think about that could happen?" Who needs to kind of continue down this road? And one of them- and, Liam, maybe you can kind of talk a little bit about this, because it's in your patch, but UBS over in Europe might need to get a toehold in the US and that could be like Morgan Stanley bought E-Trade, maybe they could do something similar, which I think is a really interesting kind of idea. So, definitely more deals are probably on the horizon. Going back to the data centers, like I was at a holiday party and someone like pressed me in the corner when they found out I wrote for Reuters. And they're like, "Do you think we're in a bubble, an AI bubble?" And I'm like, "Yes?" And then she was like, "I don't think so, this person worked for a bank." She's like, "NVIDIA is real." And I was kind of like, "Well, all these things are real. I'm not, you know, for sure. But that doesn't mean they're not inflated." And we have a great, great view written by Rob Cyran, which I just love so much, about kind of what could happen to data centers if the bust happens, right? And effectively, he compares them to malls. And he makes up this sort of fictional character named Cash Winbury. And he's in this podcast called The Big Spew, which is just awesome. And Cash Winbury like sweeps in, takes all these data centers and turns them into pickleball courts. So, like, it's just- that's awesome. I also think we'll probably see - and, Jonathan, you can talk about this as well - more IPOs kind of in the whole like deal scenario. Andreessen Horowitz was one of your predictions, which I think is great, considering that he kind of- Marc Andreessen opened the first dotcom boom. He was kind of like the poster child for that when Netscape, excuse me, when Netscape went public in the 1990s, late 1990s. So, he could be taking his VC firm public in the same way that private equity has. So, yes.

Lots to- there's a lot in there and I think we should, our listeners should definitely check out what happens to data centers if a tumbleweed is rolling through them. Liam, what about Europe and Asia? Two areas, obviously very different, but Europe has got a war on one front. I think one of the biggest problems European companies are facing is that they need to think about how they access the US market, how they handle Donald Trump. And I suppose for Asia, they are facing their own set of problems as well.

Yes. So, I mean, there's a few that would call out with some really cracking ones in Asia. I mean, one that really comes to mind is on Indian politics. So, Narendra Modi will be, by the end of this year, 2026, will be over halfway through his third-year term, four-year term, which is kind of I think a milestone by which you would expect sort of members of his party to start be contemplating what happens next. Is he going to run again? Is that going to sort of- so, we're not project- obviously not predicting a change of leadership in India, but our colleagues Shritama is predicting a bubbling up of names and a sort of a start of the contemplation of life after Modi, which is pretty seismic given that he is now, I think, from memory is or is close to being the third-longest serving Indian premier. Turning to China, our colleague Una, who's the Asia editor, is predicting a very good year for Chinese stocks, which has historically been a very dangerous statement to make. And a lot of people have come undone making that statement, but I think it's very well argued. Essentially, if you think about the state of Chinese business, if you were to think of one word that really characterizes it over the past few years, you just go through the- get AI to summarize Breakingviews coverage of Chinese industry like overcapacity would really figure highly. This concept that there's so much excess, kind of slack production capacity, we can produce more stuff than we can consume and there's too many companies and this isn't any- it's so clear in electric vehicles, for example. So, Una is kind of predicting, I think, rightly, the leadership led by Xi Jinping will kind of really try and push more for rationalization. This is something we're already doing, particularly in electric vehicles, we've done some great stuff on that. And obviously, the flip side of overcapacity is low margins. So, to the extent that overcapacity gets kind of there's more consolidation that over capacity gets less over, then that's probably good for profits and, therefore, the stock market. Turning back to Europe, we've got a pretty eye-catching one which is quite an imaginative take by our colleague Pierre, who is imagining an all too plausible scary scenario where a Russian jet or a Russian drone does something that they seem increasingly prone to do, which is kind of violate European airspace and Poland sort of loses its temper and shoots it down. So, he sort of takes that event, that scary flashpoint as his premise and says, "Well, what happens next?" And it it's a kind of- I'd really recommend people to read this. It's a kind of it follows the tentacles of that and he ends up concluding this would be the moment where Europe sort of- Europe has promised to stand on its own two feet in terms of defense spending, and they've really dragged those two feet just to, sort of, confuse two metaphors that they would actually have to do it if that happened. So, I think that's quite a kind of plausibly scary thing that might happen next year.

Yes, absolutely. I think Pierre's piece was definitely one of the most fascinating in the book, just in terms of just how terrifying the prospect is and how well he kind of plays out the entire scenario of how it might happen. So, that was definitely a highlight for me.

And I mean, yes, Liam, you mentioned overcapacity concerns in China. Obviously, when I think of overcapacity a thing that has kept, let's say, a little bit of anxiety running among folks in the US and elsewhere, is this idea of kind of like elite overproduction. Do too many folks go to college and try to compete for this shrinking part of the white-collar workforce that has still some kind of meaningful semblance of upper mobility. I know, Aimee, you were thinking about what the technological developments in AI mean for the college degree, right? And if people begin to finally see that cost benefit analysis move way over to the cost side for shrinking benefit. You maybe just want to walk us through that a little bit.

So, this is sort of an interesting one because Liam and I talked about this kind of early on and it was sort of from actually being around young people in my life that one of- like my nephew, for example, was talking about becoming a plumber rather than going to university. And AI was a reason that he was talking about that. And you see the dynamic you see is different in Ireland because education is basically free. So, it doesn't really cost you anything to get a degree and you have a great experience and why not? But in a country like the US, where an average degree costs like a half a million dollars, when you factor in all of the costs. If you're not going to get a decent white-collar job at the end of that or you're going to be unemployed for quite a while as you search for that job, I think that that's the kind of point that people are going to start to- young people will start to think, "Well, does this make sense for me?"

And I think the UK as well; it has become much more like a commodity. It's become much more like you pay a huge amount for a degree now in the UK. Australia is the same. So, I think in countries like in Europe where you don't pay, I think that the demand and this is certainly when I spoke to people in Europe and Germany, for example, they said, "We don't really see this really playing out too much here because it's free." But yes, I think that- that sort of the way it- the way it works would be you have a lot of people thinking about basically they need to repay that $0.5 million and whether they'll be able to do that. And there is a huge gap between the white-collar workers' salaries now and what tradespeople earn. And what we're imagining is that that gap will actually narrow. And it will become easier for people to get jobs as plumbers and electricians, particularly when you think about the AI boom and all of the data centers and all of the need for that. And do you need, if you're Accenture, if you're Deloitte, if you're these huge employers that people tended to- that tended to be like a first job for many people. If they're not employing in the same numbers, I think that that's how we sort of see that playing out, which would be a huge shift in society. It would be a huge shift for lots of different things.

Right. It's a lot of things that we approach with, let's say, some degree of trepidation over the next year. But like stepping back and casting an eye over all of it. I'm curious, Liam and Jen, like, which predictions do you think will happen first? Like, where do you think we're nailed on to say, okay, yes, this was on the right track? This is what we're actually beginning to see in the real world.

Good question. All of- I think-

You put us on the spot, John.

The quickest one to pay off, I think- I think you will probably see our colleague John, who's the Global Economics Editor, I think you will see a kind of compression in government bond yields relatively quickly. And I'm cheating a little bit because that's already happening towards the end of last year. But I suppose, promise, he started writing this before that started happening. So, in a way, that's the quickest one to deliver, I think. I do also think the one I mentioned earlier from my colleague, Karen, is- which is talking about people getting away from typing words to their LLM and just talking to it. So, it seems like there's quite a lot of reporting last week that OpenAI is trying to make more of a kind audio-friendly model that will be sitting behind its device, this kind of replacement for the iPhone that they've got Jony Ive to work on. So, I think that will probably look pretty good, pretty quickly. And just on the same kind of vein of stuff that was already kind of happening. I mean, Jen, you predicted that things would start looking grimmer for Oracle, and then they started looking grimmer. And I do think that Jen's prediction, which is that they will get grimmer still, I think that will probably play out pretty quickly.

Yes, I'm in a- I'm in a second that, Liam. My prediction, I think, on Oracle. And I will also say, I think Jeffrey Goldfarb's prediction on deals, I mean, I certainly think that that's going to continue at least for the first half of the year, just because I think there is this sort of idea. As Liam was saying, like, we're not quite sure where the party is at 2:00AM and I think everyone's going to try and, like, hunt around for that extra bottle in the cabinet somewhere. And I think dealmakers certainly will do that before everything is shut down. So, and that might be, importantly, before we have another election coming up in the United States, which could kind of, again, swing the regulatory outlook.

Yes. I think if we just finished off with the 2:00AM analogy, has anyone ever- has anyone ever thought that having the bottle at 2:00AM was a good idea?

Oh, I've thought of it at the beginning of the process many times. I don't know if you're talking about it in retrospect, but-

Maybe.

Yes, right. It depends on if I'm at 2:00AM in the party.

The retrospect idea. I don't think anyone ever thinks they wake up and go, "I'm so glad we found that case of beer or wine or hard liquor." So, let's see what happens. But either way, you can read- as I said, it's extremely thought-provoking and there is stuff all over the globe that Liam has pulled together from all of the columnists so it's certainly worth taking a read of that. So yes, thanks, Liam, and thanks, Jen.

Thanks.

Absolutely.

Thanks for tuning in. This podcast was produced by Cheryl Pena in New York and Gregory Garner in Toronto. You can listen to a new episode of the Viewsroom every Thursday on the Reuters app or your favorite platform. And don't forget to tune in to our sister podcast, the Big View, every Tuesday, as well as the other great podcasts from the Reuters team. If you like what you heard, please follow the Viewsroom and let us know what you thought. We have a new email address where you can send us feedback, which is Breakingviews-podcasts@tr.com and check out our views of the biggest stories in business and finance every day on Breakingviews.com and Reuters.com.