2026 market risks and profit growth, best-positioned software stocks, the Oscars head to YouTube

Key Concepts

• Santa Claus Rally: A historical tendency for stock prices to rise during the last five trading days of the year and the first two of the new year.
• AI (Artificial Intelligence): A rapidly developing technology impacting various sectors, shifting from investment in development to potential profitability.
• Credit Cycle: The fluctuation of credit availability, impacting borrowing costs and economic growth. A tightening cycle can signal economic slowdown.
• Valuation: The assessment of a company’s worth, considered stable in the current environment if interest rates remain stable or decline.
• Earnings Growth: The increase in a company’s profits, broadening beyond the tech sector into financials, industrials, and smaller cap companies.
• Fed Cuts: Potential reductions in the Federal Reserve’s interest rates, currently projected at two cuts in 2026.
• Precious Metals Rally: The recent surge in gold, silver, and platinum prices, driven by geopolitical factors and potentially a shift from crypto investments.

Market Domination – Summary of December 27, 2025 Broadcast

I. Market Overview & 2026 Outlook

The broadcast opened with a review of the market’s performance on the final Friday of 2025, noting flat trading despite the S&P 500 reaching record highs on Wednesday. The focus was on the potential for continued gains, fueled by the “Santa Claus rally,” and solid weekly gains across major averages. The overarching theme was cautious optimism for 2026, acknowledging potential risks alongside positive indicators.

II. Interview with Tom Hanland – US Bank Asset Management Group

Tom Hanland, National Investment Strategist, was interviewed regarding the outlook for 2026. He expressed a constructive view, but highlighted key risks:

• Weakness in the Job Market: A potential acceleration in layoffs could erode consumer confidence and spending, negatively impacting economic growth.
• Profit Growth Broadening: Hanland noted a positive shift in earnings growth, moving beyond the tech sector to include financials, industrials, materials, and smaller cap companies. He specifically cited industrials and materials as top-performing sectors. This broadening trend extends to Europe and Asia, with positive earnings growth expected across these regions.
• Valuation Stability: Hanland believes valuations can be sustained as long as interest rates remain stable or decline, and inflation stays in check. He emphasized focusing on earnings growth driving stock prices, citing a recent revaluation of European equities.
• Fed Policy: Hanland’s base case anticipates two interest rate cuts in 2026, bringing the Fed funds rate to a neutral range of 3-3.5%. The Fed will monitor inflation and the labor market to determine further action.
• AI & Profitability: Hanland emphasized the shift from AI investment to demonstrable returns on investment. He highlighted the importance of evaluating companies based on the profitability gains achieved through AI implementation, noting strong profit margins in large-cap tech and potential benefits for healthcare and financial services.

III. Sector Specific Analysis & Investment Strategies

• Healthcare: Hanland described healthcare as a blend of offense and defense, with AI potentially driving profitability in areas like insurance.
• Fixed Income: Opportunities exist in municipal bonds (yielding up to 6% for high-tax investors) and mortgages not backed by federal agencies.
• Precious Metals: The surge in gold, silver, and platinum was acknowledged, but Hanland suggested focusing on real asset investments like utilities, pipelines, and railroads for more stable income streams.
• Software Sector (Interview with Steve Kanig, McQuary): The software sector has underperformed the broader market due to valuation concerns and questions about AI’s impact. Kanig believes valuations are fair, around their two-year average (EV/Revenue around 10x), and that earnings growth can support further gains. He highlighted companies like Autodesk, DataDog, and Zscaler as benefiting from AI. He noted an “optical deceleration” in September/October results, but attributed it to tougher comparisons and positive underlying fundamentals. He recommends focusing on companies with strong net new annual recurring revenue (ARR).
• Specific Software Picks: Kanig recommended DataDog due to its pioneering role in cloud observability and potential for growth. He expressed caution regarding Salesforce, citing concerns about sales production and the need for further evidence of improvement.

IV. Market Trends & Alternative Assets (Ines Fay Report)

Ines Fay reported on the contrasting performance of precious metals and cryptocurrencies:

• Precious Metals Surge: Gold (+70% YTD), silver (+165% YTD), and platinum (+175% YTD) are experiencing record highs.
• Crypto Underperformance: Bitcoin (-7% YTD) and Ether (-12% YTD) are struggling, with Bitcoin trading like a high-risk tech stock.
• Potential Crypto Bounce: Fundstrat’s Sean Ferrell predicts a potential bounce in Bitcoin in January if it experiences a third consecutive month of losses.

V. Market Movers & Corporate News

• Target: Shares jumped on news of an activist investor stake by Tom's Capital.
• Oil: Prices declined due to progress in Ukraine peace talks, potentially increasing global supply.
• Nvidia: Shares rose following the announcement of a $20 billion deal to acquire assets from AI chip startup Gro.
• Cava: Stock is down 50% this year, but showing signs of a potential turnaround due to high short interest.

VI. Credit Market Concerns (Jared Blickery Report – “Stocks in Translation”)

Jared Blickery’s report focused on rising concerns in the private credit market:

• Credit Cycle: A potential tightening of credit conditions could squeeze borrowers and lenders.
• Shift in Risk: Risk has shifted from bank loans and housing to private lenders and sectors like growth, media, and cable.
• Stress Barometer: The ratio of Treasury ETFs to junk bond ETFs is currently muted, but warrants monitoring.
• Key Watchlist: Investors should monitor high-yield bonds, regional bank stocks, and companies in the media and cable sectors.

VII. Oscars Move to YouTube (Katie Rich Interview)

Katie Rich, awards editor at The Ankler, discussed the implications of the Oscars moving to YouTube in 2029:

• Prestige & Reach: YouTube offers global reach and prestige, potentially expanding the Oscars’ audience.
• Neutral Platform: YouTube’s neutrality avoids conflicts of interest with competing streaming services.
• Risks: Potential loss of older viewers accustomed to traditional broadcast and the need to rebuild promotional partnerships.
• Impact on Disney/ABC: Disney/ABC likely sees this as an opportunity to reallocate resources to other programming.
• Broader Trend: This move signals a broader shift in the entertainment industry towards streaming platforms.

VIII. Week Ahead (December 29th)

Key economic data releases for the week of December 29th include:

• Pending Home Sales (Monday): Expected to decline slightly.
• Fed Minutes (Tuesday): Investors will scrutinize for insights into policy maker sentiment.
• K Schiller Home Price Index (Tuesday): Expected to show a slight cooling in home price growth.

Conclusion:

The broadcast presented a cautiously optimistic outlook for 2026, emphasizing the importance of monitoring key economic indicators, earnings growth, and the evolving dynamics of the AI and credit markets. The move of the Oscars to YouTube underscored the ongoing disruption and transformation of the entertainment industry. The overall message was to prepare for potential volatility and focus on companies demonstrating sustainable profitability and growth.