‘Crypto could be the AI story’: Expert sees 2026 market swing

Key Concepts

• Artificial Intelligence (AI): The dominant force driving market gains in 2023-2025, expected to continue impacting earnings and efficiency.
• Deregulation: Anticipated easing of regulations, particularly in financial services, expected to boost corporate earnings.
• Initial Public Offerings (IPOs): A robust IPO pipeline is expected in 2026, heavily concentrated in AI, technology, and potentially blockchain/crypto.
• Federal Reserve (Fed) Policy: Debate surrounding future rate cuts, with a focus on balancing inflation and labor market concerns.
• Ten-Year Treasury Yield: Considered a critical factor for housing affordability and economic stimulus; breaking below 4% is seen as key.
• Russell 2000: Small-cap index expected to outperform, benefiting from deregulation and economic growth.
• SG&A (Selling, General & Administrative Expenses): Areas expected to see efficiency gains through AI implementation.

Market Performance & Outlook (2025 & Beyond)

The year 2025 is closing with stocks achieving a third consecutive year of double-digit gains, primarily fueled by optimism surrounding Artificial Intelligence (AI). Despite geopolitical tensions and trade policy concerns, investors experienced strong returns. While the traditional “Santa Claus Rally” didn’t materialize in late December, AI remained the defining factor in market performance. Specifically, Alphabet saw a 65% increase, NVIDIA gained 40%, and Amazon experienced single-digit gains.

Anton Schutz of Menden Capital Advisors anticipates this rally will broaden in the coming year. He highlights that Americans are receiving increased disposable income, which will be spent, saved, and partially invested, contributing to strong GDP growth. He also expects central banks globally, including the Federal Reserve, to adopt more accommodative monetary policies, particularly with a potential change in Fed leadership. Schutz predicts the Russell 2000 index will outperform, with value and financial sectors appearing “incredibly cheap” and poised for growth. He emphasizes that deregulation will significantly contribute to increased corporate earnings. He notes that companies are investing heavily in AI infrastructure, including power facilities, and that banks will be major beneficiaries of AI-driven operational efficiencies.

Marcus Lemonis adds that the efficiency gains from AI will be visible in companies’ SG&A expenses, with potential for labor model adjustments and streamlined operations, particularly within the banking sector.

Deregulation & Corporate Earnings

A significant theme discussed is the anticipated deregulation, particularly within the financial services industry. While a comprehensive deregulation package hasn’t yet been implemented, Anton Schutz asserts that it is “all coming” and will positively impact earnings. He predicts fewer employees and increased Mergers & Acquisitions (M&A) activity. He points to the Office of the Comptroller of the Currency (OCC) focusing on company size (above $700 billion) as a catalyst, driving companies to strive for that threshold.

IPO Landscape in 2026

The discussion shifts to the expected surge in Initial Public Offerings (IPOs) in 2026, which were partially delayed by the government shutdown. A “blockbuster pipeline” is anticipated, with a strong focus on AI and technology companies. Notable potential IPOs include:

• Motive: Backed by Alphabet, slated for a 2026 debut.
• SpaceX: Planning to raise $30 billion to go public.
• DataBricks & Anthropic: Also considered for 2026 IPOs.

Marcus Lemonis believes that while large tech IPOs like SpaceX will attract institutional investors, the real opportunity lies in blockchain and cryptocurrency IPOs. He suggests that these offerings could unlock significant value and potentially mirror the impact of AI in 2026, offering consumers understandable investment opportunities with perceived life-changing potential.

Federal Reserve Policy & Economic Concerns

The December Fed minutes revealed a sharp division among officials regarding potential rate cuts. Some favored a balanced approach, while others advocated for holding rates steady due to upside risks to inflation and downside risks to the labor market. Anton Schutz acknowledges the Fed’s “dual mandate” problem – balancing low inflation with job losses, partly attributed to AI-driven automation. He believes inflation is largely under control, particularly with the resolution of tariff-related issues (though acknowledging potential workarounds by a future administration).

Schutz emphasizes the need to address housing affordability, suggesting the Fed consider “Operation Twist” – shifting from buying short-term to long-term Treasuries to drive down long-term rates, facilitating refinancing and new construction.

The Importance of the Ten-Year Treasury Yield

Marcus Lemonis underscores the critical importance of the ten-year Treasury yield breaking below 4%. He argues that until this happens, mortgage relief, housing starts, and refinancing opportunities will remain limited, hindering economic growth and preventing consumers from benefiting from increased disposable income. He states, “There’s only one unlock that will change the economy in 2026 and that’s the ten year treasury breaking 4%.”

Notable Quotes

• Anton Schutz: “I think inflation calms down. I think the tariff stuff is largely behind us.”
• Marcus Lemonis: “There’s only one unlock that will change the economy in 2026 and that’s the ten year treasury breaking 4%.”
• Cheryl (Host): “I think it's going to be a real game changer. I agree with Anton. You're going to see it in the earnings reports sooner rather than later.”

Technical Terms & Concepts

• GDP (Gross Domestic Product): A measure of the total value of goods and services produced within a country's borders.
• SG&A (Selling, General & Administrative Expenses): Costs associated with operating a business, excluding the cost of goods sold.
• OCC (Office of the Comptroller of the Currency): A bureau of the U.S. Department of the Treasury that charters, regulates, and supervises national banks and federal savings associations.
• Operation Twist: A monetary policy tool where the Federal Reserve buys long-term Treasury securities and sells short-term Treasury securities to lower long-term interest rates.
• Dual Mandate: The Federal Reserve’s objective of promoting both maximum employment and stable prices.

Logical Connections

The discussion flows logically from a review of 2025 market performance (driven by AI) to an outlook for 2026, focusing on IPOs, deregulation, and Fed policy. The conversation consistently links these factors to their potential impact on economic growth, corporate earnings, and consumer affordability. The emphasis on the ten-year Treasury yield serves as a unifying theme, highlighting its crucial role in unlocking broader economic benefits.

Conclusion

The overall takeaway is a cautiously optimistic outlook for 2026. While acknowledging potential challenges related to inflation and labor market dynamics, the panelists anticipate a broadening market rally driven by AI, deregulation, and potential Fed policy adjustments. The success of this outlook hinges on key factors like the ten-year Treasury yield falling below 4% and a robust pipeline of IPOs, particularly in the AI and blockchain/crypto spaces. The anticipated deregulation is expected to significantly boost corporate earnings and contribute to overall economic growth.