As we turn the page to 2026, investors find themselves navigating a market that has defied expectations. The volatility of early 2025 — driven by geopolitical uncertainty and policy reversals — gave way to a powerful rebound, reminding us that fundamentals (the key principles of investing), not headlines, ultimately steer the course of markets. The recession fears have faded, replaced by signs of reacceleration across global economies. In this year’s outlook, we explore the forces shaping this new phase of the cycle and what they mean for investors seeking clarity amid the noise.

We’ve anchored our 2026 outlook in four key macroeconomic pillars: monetary easing, fiscal expansion, the AI supercycle and the wealth effect. Central banks are shifting from restrictive policy to accommodation, with continued rate cuts expected from both the Bank of Canada and the U.S. Federal Reserve. This boost in liquidity is already supporting stock values, particularly in long-duration sectors like technology.

Governments are leaning into fiscal stimulus, with Canada prioritizing housing and productivity, and the U.S. locking in tax cuts to bolster consumer spending. Meanwhile, the AI investment boom continues to reshape capital expenditure trends, driving productivity and earnings growth. The wealth effect, fuelled by strong household balance sheets and rising equity markets, is reinforcing consumption, especially among higher-income households that account for a disproportionate share of spending.

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