Transcript:
CAROLINE WOODS
Let’s look forward to 2026 with Jay Woods, Chief Market Strategist at Freedom Capital Markets. He joins me right here on the desk at present. Nice to have you ever right here.
JAY WOODS
Nice to be right here.
CAROLINE WOODS
Let’s kick issues off. What’s your finest funding concept for the brand new 12 months?
JAY WOODS
Wow. That is an funding. I shrug after I say this, however I believe Tesla, from a tactical viewpoint, perhaps time to get again in. But when you are going to get on this, have a cease loss set. This inventory simply broke out of a 5 12 months base, a one 12 months development, a 5 12 months development, a number of time frames. As a technician, I look to cost motion to inform us what is going on to steer and going into 12 months finish.
JAY WOODS
This can be a historic breakout. Then whenever you put the basic story, you bought to carry your nostril whenever you purchase this one. As a result of if you are going to concentrate on automobile gross sales, you are going to be disillusioned. We’re shopping for this on the hopes and desires that Elon Musk will get issues going with that pay bundle and the robotics story and the autonomous driving story is actually what we purchase into.
JAY WOODS
Going ahead, the automobile gross sales that the place that ship has sailed very long time in the past. However the know-how, what he is doing and people objectives for the longer term. After which give it some thought, he simply navigated an entire 12 months within the Trump administration and got here out okay. So I believe this could possibly be the 12 months of Musk and the 12 months of Tesla. If this does drop under 420 a favourite variety of Mr. Musk, I might get out and take a bit little bit of a loss.
JAY WOODS
However I believe it is poised to have an important 2026.
CAROLINE WOODS
What about the remainder of the magic seven? Is 2026 going to be the 12 months that tech leaves once more, or is it going to be the 12 months of the opposite 493?
JAY WOODS
Yeah, I believe that is going to be the 12 months of the opposite 493. And I believe 2025 after we have a look at it, it form of was that magic seven was extra of a lag seven, the place you solely had two performing shares in it. Google and Nvidia that really outperformed the S&P 500. So to me that these different 5 nonetheless have their time, however meta has damaged down.
JAY WOODS
Microsoft is a bit toffee apple gradual and regular. Not a nasty inventory to personal. However is you going to have that explosive development? No. Google is the place I nonetheless wish to be. I believe their story, the entire image there may be simply large technically main breakout. Amazon is the disappointing one to me. Is somebody that owns the inventory and touted it final 12 months.
JAY WOODS
I wish to see it break and keep above 240. It struggles to try this. I nonetheless suppose it is there for them to truly have an important 12 months. We’ll see if they’ll go. However you recognize, the magic seven proper now. It is most likely in a congestion part the place it goes sideways in a impartial development for some time.
JAY WOODS
And that explosive development, the momentum, it appears to be shedding that, steam. So we’ll have a look at different locations for alternatives.
CAROLINE WOODS
And the place are these different.
JAY WOODS
Nicely, that is the issue. Boring is again. We’ll see the financials, which had an important 12 months this 12 months. Proceed to do nicely. Industrials proceed to do nicely. Good trajectory robust development. The expansion is there. The economic system is doing advantageous. It is simply not these excessive development names with the explosive upside that we will see. So we will have extra winners than losers in 2026.
JAY WOODS
However when the management or shares that do not have the large sufficient weighting to hold the key indexes to highs, I favor the Dow over the S&P 500 as a result of it is value weighted. I nonetheless suppose Goldman’s going to have a very good 12 months. JP Morgan seems nice. And my favourite within the financials can be Citigroup. So financials nonetheless the place you wish to be.
JAY WOODS
Supplies beginning to choose up a giant vitality is the X issue. I do not wish to say hey go in on vitality as a result of it hasn’t proven us that it is there but. With crude breaking now 55, as we take this alongside the trajectory to go a bit decrease, I believe that will likely be a giant alternative sooner or later in 2026 to leap into the vitality names Exxon Mobil in significantly.
JAY WOODS
However proper now I wish to see how, you recognize, the turmoil with Venezuela, Ukraine, Russia, they resolve themselves earlier than I bounce in. However I believe oil is one thing to regulate as nicely.
CAROLINE WOODS
So if it isn’t mega-cap tech that is main this market greater subsequent 12 months, do we’ve got to degree set our expectations when it comes to what we may doubtlessly see when it comes to returns? Yeah.
JAY WOODS
Nicely, I believe whenever you have a look at it traditionally, second 12 months of a presidential time period, we noticed it in 2018 was a tough 12 months below Trump, 1.0. We’re going once more into that election cycle. We now have tariff uncertainty nonetheless looming. The Supreme Courtroom resolution didn’t. It would not look like developing earlier than the tip of the 12 months.
JAY WOODS
In order that needs to be one thing we watch in January that may throw uncertainty. If the tariffs are deemed unlawful, then we’ve got to have a look at what the Trump administration does to attempt to go round it, after which how corporations react to it and what it does to inflation. That CPI quantity has ticked up. Unemployment has ticked up. So we do have fears in the case of the twin mandate that the fed is watching, that there are considerations.
JAY WOODS
After which talking of the fed, we’ve got a brand new chief coming in in in Could for that Could assembly. So we’ve got three extra conferences with Jerome Powell. Pay attention, for him to set the tone for his legacy. I believe that legacy is to look again at how he did navigate that comfortable touchdown, if not no touchdown.
JAY WOODS
Worst case state of affairs. I believe he will likely be judged nicely over time. And he will set that tone. After which the independence of the fed, he will stress that going ahead. However when a brand new fed chief is available in, I do not count on everyone to simply okay, now we’re slicing charges. No, it is a large committee. And for those who suppose he will get a brand new fed chief, charges are going to go decrease and that is going to assist growth, the inventory market.
JAY WOODS
I simply do not see that coming.
CAROLINE WOODS
So some pink flags as you concentrate on subsequent 12 months, ought to buyers be making ready for a pullback?
JAY WOODS
I believe you’ll be able to simply rotate. And rotation is the theme we have seen within the final quarter very closely. And also you wish to get a bit extra defensive. Take a look at the patron staples shares like Common Mills Procter Gamble Clorox have been overwhelmed down. Simply horrible downturns. However we’re beginning to see indicators of a backside. First they pay a pleasant dividend.
JAY WOODS
That dividend has elevated as a result of the worth has gone down. So it could possibly be a very good place to park your cash for a short while. And you are not going to get that each day pleasure you get with a few of these tech names, however, it is a sensible strategy to play it. After which know-how will not be going away. Cybersecurity shares nonetheless look nice.
JAY WOODS
But it surely’s hit and miss. And we’ve got pink flags with Oracle. And we’re speaking in regards to the debt issuance. And the way that may play out. There’s a whole lot of smoke round that story. And that will get me a bit concern going ahead. So I believe form is the way in which individuals are going to play it. And that is why you wish to search for a few of these overwhelmed down names to attempt to make a turnaround.
CAROLINE WOODS
So boring is again for.
JAY WOODS
Subsequent morning’s large.
CAROLINE WOODS
Time to get defensive.
JAY WOODS
Yep.
CAROLINE WOODS
What would you say is your most unpopular opinion for subsequent 12 months?
JAY WOODS
We have seen some topping patterns right here. We see it already in Netflix and Costco. Shares breaking down. I am involved that that is going to return into a few of these large names, like a Microsoft, dare I say Nvidia, Nvidia has been testing help round this 175 degree for fairly a while now. I don’t suppose it should occur, however I’m watching value motion very fastidiously in Nvidia as a result of we have seen pockets the place it is consolidated over an extended time period six months, seven months, that may be most of subsequent 12 months.
JAY WOODS
So I do not suppose it should be the one inventory that we wish to be in. But when I owned it, I would not promote it primarily based on any of that. So the priority is simply congestion, some consolidation, just a few breakdowns right here and there. After which, let’s examine what coverage and an election does to this market. I’m not by any means saying this bull run is over, however the stampede greater goes to be slowing down, and we’ll see minimal positive factors total for the indexes with, some good pockets of volatility.
JAY WOODS
So the merchants again right here will likely be fairly completely happy about it, that is for positive.
CAROLINE WOODS
If buyers want to recollect one rule for subsequent 12 months, what would it not be?
JAY WOODS
One rule. Endurance. It is all the time endurance. However, subsequent 12 months I believe we will want it loads. We had been ignoring headlines early, this 12 months, and, that did as nicely, as a result of when that market bought off on Liberation Day and among the headlines that adopted, you recognize, 100 offers in 100 days, keep in mind, these headlines did not ever come to fruition.
JAY WOODS
Simply concentrate on these tendencies. Concentrate on alternatives. And those who did this 12 months had been rewarded properly. And I believe if we’re affected person, we’ll be rewarded as nicely. However these large positive factors, they could be robust to return by. I hope I am incorrect. There.
CAROLINE WOODS
All proper. Jay Woods, all the time a pleasure.
JAY WOODS
Thanks. And completely happy New Yr.
CAROLINE WOODS
Blissful New Yr. That is Jay Woods, chief market strategist at Freedom Capital Markets.
