Bull, Bear or Badger?
Q1 2026 Market Outlook
“Invincibility lies in the defense; the possibility of victory in the attack.” – Sun Tzu The Art of War
2026 is somehow feeling even more uncertain than 2025, which is a very high bar. It’s easy to forget the many monumental events that occurred this year including the DeepSeek AI scare in January, tariff rollout and subsequent market tantrum in April, wars, unrest, and a litany of events that make your head spin trying to recall them all. Our outlook for 2025 was titled “Piloting Through Noise” and somehow that underestimated the amount flak that would be thrown at the market. Our 2025 outlook had a year-end target of 7,100 on the S&P 500 (implying about a 15% return when we wrote it) and Fed Funds upper bound of 4.00%. This year will end with the S&P hovering around 6,800 (as of 12/15/25) and the Fed Funds upper bound at 3.75% – missed it by 1 cut and a tail off in the rally. Equity markets showcased their ability to ascend a growing wall of worry without breaking a sweat, as all those significant events and announcements did not derail the rally. A reminder that markets care much less about politics than we do personally.
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