Reading the economic and financial market outlooks for 2026
What’s priced in?
The turn-of-the-year economic and financial market outlook is a much-derided genre. But these level setting exercises are nonetheless useful for identifying what is priced in, as well as potential contrarian trades against the market consensus.
Last year, I asked ChatGPT to distill the consensus economic and market outlook for 2025 based on year-ahead outlooks by nine major institutions. The consensus actually did pretty well, more or less calling the year-end values for the S&P 500, as well as economic variables like Fed funds and the unemployment rate. The consensus was wrong footed on the relative performance of US equities and the USD. A trade war was identified as the biggest economic and market risk, although arguably should have been the central scenario.
This year, I have tried to diversify the range of institutions sampled, including greater representation from Europe and Asia, as well as the big name US institutions. The reports sampled this time are from ABN Amro, Allianz, Blackrock, BNY, Coutts, Deutsche Bank, Fidelity, HSBC, Invesco, Goldman Sachs, JP Morgan, LGT, Lombard Odier, Morningstar, Robeco, Santander, UBS, and Standard Chartered.
I initially gave the task to ChatGPT again, but it spent most of its time trying to find ways to economise on compute. Its scratchpad indicated it was looking for shortcuts to avoid reading the text, despite my prompt to read the outlooks in their entirety. It then ended up employing what looked like an incredibly inefficient way of sampling the text on which it eventually choked. So I gave the task to NotebookLM, which it completed promptly and efficiently.
Appropriately enough, the consensus outlook largely hinges on developments in AI, which is seen as central to the economic growth outlook, as well as a key market risk.
Substack annoyingly does not support Markdown, so the results are contained in the following pdf, which is free to download. It is a pretty good summary of where we sit at the end of 2025, but also identifies the least favoured and contrarian trades for 2026.
Enjoy!
