We look at the eventful start to 2026 and try to put some context around potential market impacts. Geopolitically, we saw the renewed vigor of the Monroe Doctrine in full force with U.S. action against Venezuela's Nicolas Maduro. Whether stemming the flow of drugs or increasing the supply of oil was the primary factor is undetermined, though decades of underinvestment in infrastructure make any meaningful near-term effect on oil supply unlikely; lower oil prices have been one of the few things keeping inflation in check. We also discuss saber rattling as it relates to Greenland, whose strategic location has perhaps been underappreciated, and Iran, where citizen protests are increasingly being met by violence.

Affordability has been top of mind for the electorate, and the Administration, and we have seen presidential social media posts on housing and credit card interest rates. Though executive power has increased, barring institutions from buying single-family homes and capping credit card interest at 10% seems to have little likelihood of actually being implemented. However, housing affordability is a huge problem; according to Apollo:

• 54 million households can only afford a house priced less than $200k
• Another 40 million need prices between $200k and $400k
• With around 133 million households total in the U.S, and the median home price over $400k, the American dream of home ownership is simply out of reach for most

One mechanism viewed as a way to improve affordability is lower interest rates, though compelling the Fed to reduce rates by having the DoJ go after the current Fed chair may not have the desired effect. We discuss Chair Powell's stern response to the charges and the importance of maintaining Fed independence.

Finally, we recap a strong 2025 for equities (at least some of them), and look at the statistics showing just how few stocks outperformed the S&P 500 (fewer than one in five). This was the third year in a row where active managers had the deck stacked against them. For 2026, expectations are universally bullish. We look at the math behind higher equity prices in terms of multiples and earnings, and why a broader market, which started to take shape in December, might help investors but not necessarily matter for the index.

Learn more about Formidable Asset Management, Will Brown, and Adam Eagleston by visiting www.formidableam.com.

We take a detour into the Dickensian in evaluating the state of the economy. First, the recent inflation print, which showed a significant decline in the level of price increases, was a fiction worthy of Dickens, with the majority of the data simply made up as a result of the government shutdown. Setting that aside, since 2021, wage growth has not kept pace with inflation for food, shelter, and services, though we can count our blessings that at least alcohol prices have not increased as much…

Challenges face the Fed chair (both current and yet to come), and managing a deteriorating labor market and persistently higher prices presents a conundrum. The Fed is simply not getting what it wants at present in terms of rate cuts translating to a lower yield on the 10-year Treasury, and with deficits soaring in spite of a growing economy, some tough choices will have to be made.

However, stocks have proven remarkably resilient, and predictions from most Wall Street firms argue for a continued move higher supported by AI, solid growth, fiscal stimulus from tax policy, and further rate cuts. However, the math is a little challenging; to cite one example:

• The S&P reaches over 7,700 by this time next year (around 13% above where we are now)
• Earnings grow around 9% (this seems achievable, and maybe even a little conservative)
• Multiples expand to 26x earnings (this would be at peak dot com levels)

We think you might get this level of earnings growth (or better), but that multiple seems a little rambunctious. Even if we do get there, expect some market shenanigans on the way, as history shows mid-term election years tend to see large drawdowns; think back no further than 2022. The average midterm drawdown is around 18%, though the range is very wide.

Will brings it home with a reading from a speech given by Scrooge's nephew Fred so we end on a positive note celebrating the season.

After Thanksgiving, we take a look at poultry, especially how dove-ish the Fed is now expected to be, a sharp reversal from a few weeks ago. We also discuss the odds-on favorite for the next Fed chair and how his political leanings may (or may not) influence which direction the Fed takes. Recent employment data has been lackluster, to put it mildly, which is forcing the Fed's hand as it relates to continued cuts. To wit:

• Total change in private employment – Negative 32k
• Manufacturing and construction – Negative 27k
• Small businesses – Negative 100k

Wage growth, especially for lower income households, is rapidly slowing, and those households spend, on average, over 70% of income on food, shelter, and transportation, all of which are seeing price increases that exceed wage growth. It seems like more pressure could be imminent on both wages and employment as AI continues to make inroads.

We take a detour away from economics into the carnage in the cryptocurrency space and what it may mean for certain types of companies that have built their business models on owning crypto.

In the second half of the show, we juxtapose the threat of AI for employees with the opportunity for employers. AI has been the savior in terms of growth and price appreciation for the stock market. Since the launch of ChatGPT in late 2022, earnings for technology and communications stocks have grown 121% versus a mere 27% for all other sectors. That trend is expected to continue in 2026, with the Mag 7 forecasted to grow over 20% versus 11% for the other 493 stocks. We also discuss just how big the Mag 7 are, with some individual members of the group larger than entire sectors of the economy from a market cap perspective. We discuss whether that is healthy (or sustainable) and why a broadening market is potentially overdue (not to mention healthy).

Learn more about Formidable Asset Management, Will Brown, and Adam Eagleston by visiting www.formidableam.com.