This commentary was issued recently by money managers, research firms, and market newsletter writers and has been edited by Barron's.
China's Policy Priorities
UBS House View UBS Dec. 12: China's annual Central Economic Work Conference wrapped up this week, with leaders pledging more government spending, support for private investment, and steps to boost domestic consumption. As expected, there was no major stimulus package, but policymakers reaffirmed a proactive fiscal stance and moderately loose monetary policy. Officials acknowledged ongoing challenges from weak external demand, global uncertainties, and persistent risks in the property sector, and committed to extend the campaign against excessive domestic competition.
Our view: It is no surprise that China's leadership focused on stable, sustainable growth. This suggests any policy changes in 2026 are likely to be gradual, incremental, and data-driven. Fiscal support should be balanced, and monetary policy should stay flexible, with room for adjustments to reserve requirement ratios and lending rates. The top priorities are boosting domestic demand and supporting social welfare, while property market stabilization has slipped down the agenda. With these policies in play, we expect GDP growth to trend near 4.5% in 2026.
We continue to rate Chinese equities as Attractive and the tech sector as Most Attractive. Beyond tech, we also favor financials, which are benefiting from low government yields, as well as healthcare and new consumption stocks.
Ulrike Hoffmann-Burchardi & Team
U.S. Trade-Deficit Math
AM Charts BMO Capital Markets Dec. 11: It's true that the U.S. trade deficit in goods and services in September was the smallest since 2020. However, we can't help but wonder if this recent narrowing isn't just some further reversal of the massive surge in imports earlier this year. Recall, that rush to beat tariffs triggered the largest monthly deficits on record through the first three months of the year.
Looking at the 12-month rolling tally, the annual gap is now at just over $1 trillion. That compares to a full-year deficit of $904 billion in 2024, which was a record. It's likely that the record will be broken this year, even with the nice swing in recent months.
Douglas Porter
The Fed's Cover Story
Macro & Strategy Ideas TS Lombard Dec. 11: The Fed cut and said "that's all folks" until the data roll in, but that was no surprise and far less important than the signaling from the return of balance sheet purchases. Their cover story is that the TGA [Treasury General Account] swells in April, so they need to start buying [Treasury] bills now ($40 billion in January, more in February). The press-conference message from [Fed Chair Jerome] Powell is that they are buying because the Fed wants money-market rates set by policy, not managed through open market operations.
In truth, the return signals that the Fed is ensuring that Treasury spending will be financed without any rate hiccups. The Fed will smooth out the volatility and keep rates tied to the funds rate. You can forget market signaling to the government that it is spending more than the market can absorb.
Steven Blitz
Beyond the Megacaps
Informed Investor Piper Sandler Dec. 10: As 2025 comes to a close, equity markets are ending the year on a high note, with the S&P 500 on track for its third consecutive year of double-digit returns, driven by AI momentum and a resilient economy that has shrugged off fiscal and political headwinds. While the first year of the Trump 2.0 administration mirrored the playbook of 2017, the coming 2026 midterm election year signals a shift that will likely be less about resiliency and more about a rotational bull market. Investors should prepare for a reality check in which outperformance will depend on navigating sector rotations and broadening participation beyond megacap leadership.
We are establishing a 2026 year-end price target of 7150 for the S&P 500 index. After three consecutive years of double-digit returns, the bar is set high for this fourth year of a bull market that began in October 2022. Our research on midterm election years indicates a volatile year lies ahead, with the potential for an average drawdown of minus 20%, likely occurring between Q2 and Q3.
Craig Johnson
'Double Discount' Markets
Insights Orbis Investment Management Dec. 8: The environment has shifted dramatically. Policy in the U.S. has turned inward, emphasizing domestic industrial revival and strategic tariffs. This marks a structural break from the old regime. Export-led growth models are harder to sustain when the main destination market becomes more self-sufficient.
For the export economies, this change forces adaptation. If they can no longer rely solely on U.S. demand, they will need to stimulate their own. Rather than flowing abroad, vast pools of domestic savings may now be redirected inward toward investment, fiscal spending, and local demand.
This has significant implications for investors. Global portfolios are still heavily concentrated in U.S. assets and the dollar -- an understandable legacy of the last cycle but potentially a dangerous one if the tides are turning. Outside the U.S., assets and currencies remain cheap -- a "double discount." Now, they may also have a catalyst: a reversal in the capital cycle as money begins to flow back home. Fiscal expansion in regions such as Asia and Northern Europe could strengthen local currencies and lift long-neglected equity markets.
Graeme Forster
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(END) Dow Jones Newswires
December 12, 2025 18:39 ET (23:39 GMT)
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