The United States Secretary of the Treasury, Scott Bessent, was recently quoted as saying, “I think 2026 will be a very good year”. On his way back from Davos, he popped into his son’s and my boy’s school and gave a talk. When I asked my admittedly very bright 17-year-old what he thought, he said he didn’t think he was very convincing, particularly when Trump came up!!!
As we move into 2026, it feels much the same as last year in that the Trump train is creating ever greater volatility in all markets with his now known as the ” Taco Trade” (Trump always chickens out); I suspect I should quit there, whilst I am still ahead!
More seriously, whilst the forecasts have been for a reduction in growth to 1.8% in 2026, the US grew in the third quarter of last year at an annualised 4.3% and is not anticipated to slow down by much in the 4th quarter despite the record Government shutdown.
The Big Beautiful Bill, enacted last July, incorporates retrospective and future tax cuts for many Americans, which will start to flow through shortly. The funds from the shutdown will also now be spent. The US has also made substantial cuts to its tax service, which is likely to result in more money staying in people’s pockets rather than going to them!
Interest rate cuts over the past 18 months are significant and again now only starting to pass through into the Economy with more likely this year.
This, along with fiscal reform in Germany and consumption boosts to the Chinese economy, along with the Japanese economy making headway and a very low oil price by recent standards, sets the stage for a good year of Economic growth to back up market returns.
Maybe Mr Bessent (albeit with a volatile Journey) will be right. In the meantime, we will continue to focus on growth and income globally in the highest quality investments we can, whilst taking a long-term view as always.
Please may I remind you, nothing in this note represents personal financial advice and should you wish to take any action as a consequence of it, please talk to your authorised GT Wealth Management Financial Adviser first.