Ideas
Low earnings bar fuels risk-on rally
U.S. large-cap earnings expectations have been revised down, with consensus expecting a quarter-over-quarter profit decline and eight of 11 S&P sectors down; this low bar increases the chance that even high earnings trades are exceeded, providing the next bullish catalyst for equities and risk assets.
Hot inflation hedge: dollar, credit, value
If January or February inflation or labor data show inflation moving from 4.40% toward 4.20%/4.10%, or if inflation prints are hotter, long-end yields could rise too far or too fast, creating a 2022-like environment where all asset classes suffer; in that scenario the only hedges are long dollar, short-dated credit, and value over growth.
Hot inflation hedge: dollar, credit, value
If January or February inflation or labor data show inflation moving from 4.40% toward 4.20%/4.10%, or if inflation prints are hotter, long-end yields could rise too far or too fast, creating a 2022-like environment where all asset classes suffer; in that scenario the only hedges are long dollar, short-dated credit, and value over growth.
Banks set for 1990s-style outperformance
Bank stocks have a positive 12-month outlook, reminiscent of 1995-1997; real GDP around 2%, loan growth picked up to 5-6%, a steepening yield curve with Fed cuts, benign credit, overcapitalized banks buying back stock, and regulatory relief in 2026 should drive outperformance.
Regional bank picks for 2026
Within regional banks, U.S. Bancorp and M&T Bank are names to look at because they should benefit from loan growth, a steeper yield curve, and regulatory relief, and have a good outlook for 2026.
Index concentration makes S&P riskier
The S&P 500's concentration and high embedded earnings growth expectations of 14-16% make the index path risky; Mag 7 growth is mathematically decelerating and puts the burden on the rest of the market, so active stock picking is preferable to passive index exposure.
Favor financials, healthcare, industrials, energy
In a high earnings-realization environment, she prefers sectors that can deliver: Financials, Healthcare, Industrials, and potentially Energy; below the surface she wants stock picking in Consumers, Tech, and Communication Services.
Small caps lack needed scale
She does not like the small-cap trade because companies need skill, scale, and pricing power to achieve high earnings growth expectations, and small caps may lack those capabilities, especially with GenAI implementation.
Rest of world catch-up trade
Rest of World and emerging markets should continue to outperform the U.S. because the U.S. is fully priced for a positive halo/guard-rails effect while the rest of the world has not been valued that way, creating a catch-up trade as global markets move in tandem.
Venezuela $500B investment opportunity
Venezuela is a major geopolitical and investment inflection; he is taking 25 investors to Caracas in late March and sees a $500 billion opportunity over 10 years across oil/gas, infrastructure, mining, steel, and tourism, with the White House calling the shots and potential government backstops; defaulted Venezuelan sovereign bonds are part of the opportunity.
Europe defense spending is ramping
Europe is seriously rearming; the first €100B German package was small, another €800B is coming, 2026 is the first year money flows and production peaks in 2027-2028, which is huge for European defense.
Rheinmetall can hit €50B sales
Rheinmetall has already booked around €80B of European business this year, is building 13 factories, has invested more than €7B in working capital to secure materials and independence from China, and targets €50B of sales by 2030; he believes the investments are safe for investors and the stock can grow.
AI productivity boom lifts tech
A productivity revolution driven by AI and related future technologies (semiconductors, quantum, fusion, fintech) could lift U.S. potential growth from 1.8% to as high as 4% by decade-end; real revenue growth has been ~20% in tech and communication services, and although there is frothiness, AGI winners could be worth 5x current value.
Tech upside flows to corporate bonds
The upside from technology flows to business/corporate bonds; with strong corporate profitability and a 4-to-1 upside/downside ratio for U.S. potential growth from tech versus policy risks, corporate credit should benefit.
American exceptionalism supports U.S. equities
U.S. growth could accelerate to 4% by decade-end, and historically higher growth has produced higher equity returns; corporate sector profitability is strong, supporting American exceptionalism.
Higher rates now favor Russell 2000
The equity market's reaction function to higher rates is changing: higher rates used to mean Mag 7 up while Russell 2000 and cyclicals fell, but recently higher rates have translated into Russell 2000 outperforming Mag 7 because cyclicals are less restricted and hyperscalers have issued so much debt; this supports continued reflation/broadening.
Expect market broadening and rotation
With 2026 earnings growth expectations of 10-15% and a robust, policy-supported economy, it is difficult to be bearish; she expects continued market broadening and rotation this quarter, a change from her prior five years of not favoring broadening or small caps.
This Bloomberg Markets video, published January 13, 2026,
features Max Kettner, Gerard Cassidy, Lisa Shalett, Charles Meyers, Armin Papperger, Nouriel Roubini, Ohsung Kwon, Lauren Goodwin
discussing SPY, UUP, Value relative to Growth, VCSH, KBE, USB, MTB, XLF, XLV, XLI, XLE, IWM, VXUS, EEM, Venezuela, Venezuelan sovereign bonds, European Defense, Rheinmetall, AI-SECTOR, SMH, XLK, LQD, Russell 2000 relative to Magnificent 7, U.S. cyclicals.
17 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
Max Kettner,
Gerard Cassidy,
Lisa Shalett,
Charles Meyers,
Armin Papperger,
Nouriel Roubini,
Ohsung Kwon,
Lauren Goodwin
· Tickers:
SPY,
UUP,
Value relative to Growth,
VCSH,
KBE,
USB,
MTB,
XLF,
XLV,
XLI,
XLE,
IWM,
VXUS,
EEM,
Venezuela,
Venezuelan sovereign bonds,
European Defense,
Rheinmetall,
AI-SECTOR,
SMH,
XLK,
LQD,
Russell 2000 relative to Magnificent 7,
U.S. cyclicals
