Before I take you down the rabbit hole, let me remind all that I am not an advisor, nor do I make investment recommendations. I use my 30 years on Wall Street in one form or another to write my observations, conjectures, opinions, thoughts and guesses in a way that is informative, irreverent and engaging. Enjoy the review of what I said about last year and make a similar list for 2026. For once I make them, there is indeed no going back.
Source: RedBubble
Very early in 2025 I gave the year a musical theme that I hoped would pan out to describe the action in the world’s biggest casino. The song was the Beatle’s Let it Be. As in, let markets be. Let them flow freely, trades taking true risk without a backstop. Get the Fed and White House out of the way and let’s see what happens. Get some Scream up into all these market’s hizzle with sizzle.
Source: Edvard Much
Did that end up being what happened? Negative, Ghostrider. The pattern was full of positive performance. Across the board, literally. For the fifth time in eighteen years, you didn’t lose money in the markets. Assuming the markets cover these sixteen asset classes. Which I would argue, they pretty much do.
What are we going with for this year’s theme? Better make it good, because time is a wasting and it’s later than you probably think. So, let’s set our tune to 1983 and epic disco classic, Stayin’ Alive. That’s right, no dirt naps for this group of paupers and princes.
Source: RSO Records
Along the road to 2026’s view, I’m going to frame them with what took place last year. That will set the backdrop for today.
2025: Observation number one, 2025 will be the ‘year of the bond’, as in the credit markets are going to be in charge for once.
Actual: This looked like it had the chance to be the call of the year starting in April when yields spiked on everything in the corporate credit world. This had much to do with market pricing in an avalanche of problems related to Trump directed tariffs. This proved to be a false tell, and from May on it was a march lower for yields.
High Grade Corporates
High Yield Corporates
Spread on Best to Worst
Looking out though, we do have a ‘pig in the python’ of levered loans coming through in the next three years and if anything goes bump in the economic night, there will likely be a problem.
2026: That ‘bonds are in charge’ trade worked for three months, then faded hard. The core was going to be higher rates on a tougher economic outlook and a larger rise in yields. Given what the strength of the world economy, I can’t see the higher for longer trade anywhere in the future. And with that, I’m tapping out.
Source: Fighters Only
2025: Number two, yields return to a newer, more progressive, normal. And I love to see this happen. If we could get the ten-year yield to average out around 5% that will go a long way to ‘normalizing’ the markets
Actual: Swing and a miss here as well. Turns out equity guys don’t make for great predictors of the bond market world. Same deal, while the headlines said one thing, bonds reacted another as 2025 turned out to be a ‘yawner’.
2026: Like corporates, I’m taking 2026 off from calling anything related to the treasury bond market. If Trump gets his way, and that seems to be the deal now, whoever the next chairman of the Federal Reserve will be under immense pressure to lower rates. This would be unprecedented, but that’s the world we live in. If I were a betting man, I’d be putting my dollar down on Kevin Warsh.
Source: Bloomberg
2025: A very important number three, the January Fed meeting will be the inflection point for sobriety, and they will do nothing for the next few meetings, then it’s rate hike regime part deux come mid-year. A little bold, but the Lord hates a coward.
Actual: The exact opposite of what I thought would happen, did happen.
2025: Third round of bowing out. I have zero clue what a mandate by the President of the United States means for the Chairman of the Federal Reserve. I don’t see the other Fed Governors going quietly into that good night. That said, this guy and his crystal ball isn’t going away for three more years.
Source: The Irish Times
2025: A correlated number four, the labor market will continue to show little in the way of cooling.
Actual: The labor market showed a lot of signs of cooling.
Source: BLS
2026: Barring something I don’t see in this, I’m going with a tough year for jobs. Might be that we are simply running out of people. The other side of that is the soft underbelly of the proletariat economy starts to fall apart, more than it already has. The bouge has been in charge, is there a revolution coming?
Source: Wikipedia
2025: Number five is the prediction that this is the year we find out how wrong the Fed, and most everyone else was in terms of claiming that the inflation monster was dead for this cycle. It isn’t…
Actual: This chart says I was wrong.
Source: BLS
But these charts say I was right…
Houses
Cars
Groceries
2026: On bended knee I beg and plead that we get out of calling this an affordability crisis. It’s a ZIRP crisis. As in, when you run a Zero Interest Rate Policy for too long, bad things can happen. Covid was new, global, and scary. The response was as well. Nobody has an answer for this, and the only one I can see is a legit recession making prices go down.
Source: San Francisco Fed
2025: Onward to six, there will be no material earnings contraction, not that one was predicted. Another good sign that central bankers don’t need to setup the drip machine again.
Actual: Finally, a legit winner of a call.
Source: Moneta
2026: It’s been three strong double-digit growth for earnings. On this one I’m simply going to play the regressions to the mean card. For 2026 I think EPS earnings growth falls to sub 10%. That’s still a good number. Not lights out like they have been. This runs counter to what Wall Street consensus is saying.
Source: FactSet Earnings Insight
2025: Lucky number seven, because the Pacific Palisades could use some luck. With 100% certainty, the place will be back. I’ve seen it myself in smaller scale in the hills above Santa Barbara. It will rise from the ashes again.
Actual: I’ve driven through the a few times now. Nothing prepared me, not even the fires in the (805) that I dealt with, for what I’ve seen. This very long journey has now started with one
Source: LA Times
2026: When the going gets tough, keep on going. Just keep on going.
Source: Politico
2025: Number eight is that the people of the Republic of California hit the (leftward) tipping point.
Actual: While these results would have been public before I made the call, they support the theme of what I’m seeing. As a California ex-pat, one who saw a lot in 46 years of living there, the tectonic shift to center-right is on.
Source: KTVU
2026: I’m sticking with this one. I truly think that the ‘regulate everything’ mentality is fading. Those in charge are in no way ready to start rolling things back, but I do believe the level of legislative over-reach is over. Boots on the ground, you see laws and regulations all the time that you simply don’t understand why they exist. I think this every time I go to the market.
2025: On to number nine, every ounce of effort political or otherwise, will be used to bring the price of crude down. I’m not even sure what cards are in play as it’s a strong global economy, and any production increases are going to take time. But the guy or gal who does help facilitate a new $60 to $75 range for WTI (West Texas Intermediary) is going to be king or queen. I think it’s doable, I just don’t know how.
Actual: Walk off!
Kingmaker
2026: It’s not there yet, but crude oil ‘lower for longer’ is in play. The overall oilpatch isn’t feeling it yet. But check back in at the end of the year and it will be different. That chart on the left is the picture of a great short.
2025: Regarding progressiveness, but one that I think is worth the fight, observation number ten is that psylocibin will have another year of making serious inroads into the global conversation about treatments for challenges of the mental health kind. And these aren’t just west coasters; our eastern brethren are in on it as well.
Actual: While I have no actual numbers to prove it, psylocibin products keep showing up, almost as if there is no regulation against it. I stand very firmly behind the view that properly dosed, it will change the way we treat mental health issues in this country.
Source: ResearchGate
2026: Because if it’s legal to go into liquor stores and load up, why shouldn’t the government get on board with something far more effective, cheaper, and less detrimental to society in general in terms of ‘taking the edge off’’? This is criminal, in my opinion. psilocybin works. Jack Daniels doesn’t.
Source: Yelp!
2025: Selection number eleven, and I’m almost embarrassed to write this, but 2025 is the year that the gene pool for short sellers gets so small, it can no longer reproduce and is now locked in on extinction.
Actual: Say goodnight, Michael.
2026: It is now mathematically impossible for those of us who once called ourselves short sellers to reproduce.
2025: As it’s a tough year for ideas, I’m going to go ‘putter off the tee’ with my number twelve observation. Wall Street analysts will continue to become less relevant.
Actual: Can the last man off this career Titanic please make sure the deck chairs are properly arranged
2026: This is a trend that you simply can’t stop, at least in my lifetime, I think. If you have a seat, keep it. If you lose that seat, don’t spend long trying to get it back. I did for a while only to find out that I was truly a dinosaur, and that was at age 45.
2025: Trump is going to go hard after Iran on the economic side and let Israel deal with them militarily. That’s the number thirteen observation. And the whole of the Middle East knows what’s coming next.
Actual: Trump went hard after Iran both politically and militarily, leaving Isreal out of the need to fire up the missiles. Turns out we had a few bombs of our own on hand.
Source: Breaking Defense
2026: In case you’ve missed it, Donald Trump took the TACO (Trump Always Chickens Out) hard. It’s going to be game over for the ruling regimes of Iran at some point this year. He wants it for a lot of reasons, crude oil to $40 is one of them. A big one of them. Notice a theme here.
2025: The average Joe and Joett are going to feel the inflation hit of this far more than the top 25% of the economic pyramid. While everyone loses something in this, it’s those who can’t afford to lose the most, will indeed lose the most.
Actual: See the ‘real’ price charts under the number five call, same story.
2026: As an upright functional adult with a decent amount of compassion and empathy, this hurts. There are two economies in this country, and that’s not a good thing.
2025: Next observation of what I think could happen, is an apolitical view. I’m as independent as they come and don’t even really watch or read much in terms of the subject. What I think I know, and it’s not a shocker, is the Democrat’s brand is in deep trouble. For reasons beyond my comprehension, in this day of the algorithm and big data, they misread the room in a way I can’t understand.
Actual: It’s bad out there, really bad for Democrats.
The good news for all those watching with common sense is that both parties face negative views by the public. I call that a win.
2026: I have a contrarian view of how the mid-terms elections are going to go down in November. Republicans still carry a coherent sales pitch, and democrats are all over the map. Because of that, I think the losses are going to be less for the majority party than is currently expected.
2025: Number fifteen: Why is this important to the economy and markets? Number sixteen on my list, Donald Trump has a real chance to become a very popular president.
Hear that again, a very real chance to become a very popular president. If that’s the case, he has a mandate. More than the one he walked away with. There will be a boldness in his economic policy that is even more bold than before. Let the chips, and everything else, fall where they may.
Actual: Ummm, about as wrong as wrong is. Thank God I didn’t put that one on as a paired trade.
Source: ActiVote
2026: Every man, woman and child are on their own at this point. I understand better why people hate the man, but I can also see the love in certain places. But I also have a life to live. At this point, getting better at putting and matching the hatch is more important than figuring this one out.
Source: Writing, poems, etc.
2025: Seventeen, this will be the year of reckoning for the insurance industry. It’s out of hand, and nobody can keep up.
Actual: While not the year of reckoning the way I saw it, for sure a year of reckoning in terms of the price of insuring one’s…
Car
Home
Source: Central Florida Public Media Or health…
Source: KFF
2026: These growth rates blow the inflation readingas measured by CPI out of the water. For the love of God, Fed Governors, call me (805) 680-8623. I’ll straighten you out. Coffee or a cocktail at the Monocle on me. This must stop, or at least slow down, at some point soon.
Source: TripAdvisor
2025: Number eighteen. After two years, and 24% and 23% returns, the S&P 500 finally takes a needed breather. Maybe something in the sub 10% to make sure the Gaussian curve hasn’t fully shifted to a new normal. If you ever want to know what a ‘hell of a run looks like’ this is it!
Actual: Negative, this market was not ready to cool. The S&P 500 was up just north of 17% in 2025. An otherwise stellar number given the 25% returns in the two previous years. With earnings stable, bonds higher in price/lower in yield, and the Fed in cut mode, why wouldn’t we be seeing such outsized returns.
Source: Yahoo Finance!
2026: I’m out of ammo on this trade. All I have left is reversion the Gaussian Bell Curve mean.
Source: Corporate Finance Institute2025: Pick number 19, I’m sticking with the Yankees as I think they want legit revenge for themselves for the complete meltdown they had in game five. The other side of the card is not my beloved Dodgers, but the New York Mets.
Actual: In the words of Yogi Berra, ‘Baseball is 90% mental, the other half is physical.’ Which of course makes no sense, that’s why they call them Yogi’isms.
2026: It’s like owning the SPY at this point. Don’t take a flyer on the outside, high payoff trade. The Dodgers are simply a special team right now and will go down as one of the best of all time. If Judge comes through and has the Hall of Fame Year he can have, there is a chance for the Yankees. Plus, I need my fellow UCLA Bruin Gerrit Cole to come back from his 2024 train wreck. This one lingers.
Source: New York Post2025:
Last call, number twenty, is what some might call soft. But you know what, I’m okay with that. The last five years have felt like they are moving much faster than the five years before that, and the five years even before that, etc.
This year, we somehow return to the middle of the bell curve. It’s going to be just a ‘normal’ year. Some bad things are going to happen, some very good.
Actual: Ummmm, about that.
Source: Above the Law
2026: Come on, Lama. Work with me here. I need a break.
Source: World Leaders Forum
