I used to think predictions worked like train schedules—delayed sometimes, but ultimately arriving on the same track. The last few years cured me of that illusion. I’ve spent enough time pacing at the metaphorical platform, clutching my bearish ticket, waiting for the Recession Express that was “definitely” arriving in 2023… or 2024… or, surely, 2025. Yet here we are, drifting toward 2026, and the train still hasn’t appeared. Instead, the markets whistle cheerfully past, as if to mock the bond ETFs I bought—TLT, TLH—waiting patiently in my portfolio like umbrellas I insist on carrying despite the endlessly sunny weather.
iShares 10-20 Year Treasury Bond ETF (TLH)
iShares 20+ Year Treasury Bond ETF (TLT)
S&P 500 (.SPX)
Still, the financial world often produces its prophecies, thick with confidence and predictions that stretch into the future. Morgan Stanley’s 2026 outlook is just the latest chapter. Policy support and strong corporate earnings are expected to continue. Risk assets are set to lead, driven by micro factors (AI-related capex), a supportive policy mix (fiscal, monetary, and deregulation), and U.S. economic resilience.
Reading it, I couldn’t shake a sense of déjà vu. The predictions seemed to carry the same air of confidence that market forecasters had in the late 1990s, right before the dot-com bubble burst. They also reminded me a bit of the “global synchronization” story from 2007, which, in hindsight, didn’t age all that well. And, somewhat awkwardly, they highlighted that my own bearish instincts have often been off—enough that I sometimes feel like a modern Cassandra, not gifted with prophecy, but simply stubbornly holding long-duration Treasuries while the world keeps moving on.
Yet even with such a track record, I have my suspicions about 2026.
A Personal Take on One Prediction:
That risk assets will keep leading because “micro factors” like AI capex will remain an uninterrupted growth engine.
One prediction that I find myself thinking about is the idea that risk assets will keep leading because “micro factors” like AI-related capital expenditures might continue driving growth. Personally, I can’t help but wonder if the momentum will remain so smooth. In the 2020s, AI seems to have taken on a cultural role similar to railroads in the 1840s or electrification in the early 1900s. Everything points to it being transformative—and it probably is—but history shows that early investment manias around big innovations often leave tangled tracks and a reminder that even world-changing technologies move in messy, unpredictable cycles.
I don’t doubt AI’s structural potential. What I’m less sure about is the idea of uninterrupted acceleration. If there’s one lesson history seems to teach, it’s that parabolic spending sprees rarely glide perfectly into the future—they stumble, reset, or take unexpected detours before finding their footing. And when I think about the narrative of “AI as an unstoppable engine,” it feels possible—but also easy to imagine a single slowdown, a regulatory shock, capex fatigue, or simply a shift in investor sentiment changing the trajectory.
For now, that’s my personal view: it’s an idea that could happen, but I remain cautious in assuming it will unfold as smoothly as some predictions suggest.
A Personal Take on One Prediction That Might Hold
That the U.S. will remain the key driver of global growth and market returns.
This one feels less like prophecy and more like inertia. The U.S. economy has been playing Atlas so long—carrying innovation cycles, corporate profitability, consumer spending, and now AI infrastructure on its shoulders—that it would take a monumental shift to hand the burden to someone else. Every time another region has been expected to take the baton—Japan in the ’80s, China in the 2010s—it ended in a stumble or slowdown.
Besides, I’ve learned the hard way that doubting U.S. resilience is like shorting gravity. Every time I prepared for the great downturn, the economy responded with a smirk and a better-than-expected jobs report. I’m not saying it can’t break; only that its ability to dodge, weave, and reinvent itself remains undefeated in my lifetime.
A Bearish Heart in a Bullish World
Despite all this, my own predictions skew dark. Call it habit. Call it temperament. Call it an overactive imagination that sketches recessions the way some people dream up plot twists. When I think of 2026, I picture tightening financial conditions finally catching up, corporate margins squeaking under pressure, or credit markets tugging at a loose thread nobody noticed.
I still hold TLT and TLH—odd companions, like survival gear in the trunk of someone who’s driven through nothing but sunny suburbs for the last three years. I keep expecting the clouds to gather. They might not until 2027 or beyond. I’ve been wrong before—spectacularly, repeatedly, even artistically. Market tops and economic contractions have a habit of arriving only after the bears have grown embarrassed enough to stop predicting them.
But humility hasn’t erased my instinct. If I had to share a personal view, I’d say the prediction I’m most cautious about is the idea that the current AI-fueled rally will continue smoothly into 2026, almost as if nothing could interrupt it. On the other hand, I find myself leaning slightly toward the view that American economic resilience will remain a significant factor—something I’ve questioned before, only to see it hold up longer than I expected.
In the end, maybe I’m still the same person waiting at the station for that recession train. But at least now, I’m willing to admit I may have bought the wrong timetable.
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