HAPPY MONDAY TO THE STREET
And welcome to our final Street Sheet before the holidays! We’re taking the rest of the week off to celebrate the season with our families, friends, and loved ones, and hope you all are able to do the same.
But before then, we have one last special edition to share with you. Today, we’re previewing our final weekly report of 2025, available in full exclusively for Street Sheet Research subscribers.
On December 27, we’re breaking down a dozen 2026 outlooks from Wall Street’s most influential hedge funds and bulge-brackets, alongside our very own unique spin on each prediction.
The full report will only be available to subscribers. But we’re sharing the first three outlooks, from UBS, BNY Mellon, and JPMorgan, here for free. Consider it our holiday gift to you, our valued readers.
And of course, if you want the full report, there’s plenty of time left to subscribe. Happy holidays!
🟩 | US stocks rose today as renewed AI optimism lifted the S&P 500 to its third straight winning day.
📈 | One Notable Gainer: Nvidia $NVDA ( ▲ 1.49% ) rose on reports that its H200 chips will begin shipping to China in mid-February.
📉 | One Notable Decliner: Starbucks $SBUX ( ▼ 2.45% ) slid as its shaky turnaround efforts continued with the appointment of a new CTO.
— Brooks & Cas
Next Year’s Trade Ideas, Today
2026 IN PREVIEW
UBS
5 Key Takeaways
UBS expects 2026’s economic backdrop to be broadly supportive for stocks, with growth uneven early on but improving due to US fiscal stimulus and fading tariff effects.
US growth is forecasted to be nearly 2% in 2026, with an early soft patch followed by acceleration.
Inflation is expected to peak slightly above 3% in Q2.
The US Federal Reserve is expected to implement two additional rate cuts in Q1 2026.
Eurozone growth is seen just above 1%, with momentum building through 2026 as domestic demand and fiscal support offset trade drag.
UBS’s Top Pick
Per UBS, consider allocating up to 30% of your equity portfolio towards structural growth trends around AI’s enabling, intelligence, and application layers. UBS views China’s tech sector as a top global opportunity due to its strong liquidity, earnings, and retail flows.
Our Take
The rate cut forecast strikes us as a little bit of a lowball. Fed Chair Jerome Powell believes that recent already-bleak jobs reports may still be overstating jobs gained by 60,000 per month. That could make further rate cuts in 2026 even more likely.
This is doubly true with the unemployment rate at 4.6%, higher than it has been since September 2021. Falling energy prices, though not a part of the Fed’s preferred inflation gauge, may further help tamp down inflation. At 2.7% in November, it’s already trending towards the Fed’s 2% target.
BNY Mellon
5 Key Takeaways
S&P 500 gains are expected to come primarily from rising earnings and improving margins, not just multiple expansion.
Improving earnings revisions are global, suggesting broad growth across the US, MSCI EAFE, and Emerging Markets.
Global equities will be supported by Fed easing, increased defense/infrastructure spending in Europe, and reforms in Japan.
The US dollar's safe-haven status is vulnerable due to fiscal stress and a global shift toward multiple reserve currencies.
Central banks buying gold signals pressure on major currencies and especially the US dollar, as US debt has climbed from 55% of GDP in 2001 to 125% today, with another $3 trillion in debt to be added in the next decade.
BNY Mellon’s Top Pick
Per BNY, Fed easing and broadening earnings growth set the stage for a global small-cap revival. With small caps trading near their cheapest levels versus large caps since 2001, they see room for outsized catch-up as breadth improves.
Our Take
It’s worth mentioning that small caps have historically benefited more from falling interest rates than larger companies. The former are typically more reliant on floating-rate debt, which is more responsive to lower borrowing costs.
Past performance doesn’t guarantee future results. But this dynamic has asserted itself through multiple low-rate cycles, most recently from March 2020 to March 2021, when the Russell 2000 outperformed the S&P 500 by 44% during the near-zero rates at the height of the pandemic.
JPMorgan
5 Key Takeaways
JPMorgan expects volatile inflation that is more susceptible to upward shocks, increasing drawdown risk, and stock-bond selloffs for traditional 60/40 portfolios.
Core bonds remain vital, but portfolios need added inflation-sensitive assets to diversify against inflation shocks, not just growth shocks.
JPM suggests adding commodities, real assets, and select alternative strategies for positive inflation correlation with lower volatility than stocks.
Gold and diversified hedge funds are key tools for managing simultaneous sticky inflation and slowing growth.
Banks, supported by a potentially steeper yield curve, are a preferred equity sector for navigating the new inflation regime.
JPMorgan’s Top Pick
JPM highlights US housing as a structural winner; in particular, rental housing in family-friendly, commuter markets. Demographics, the rent-vs-buy gap, and long-term demand make residential real assets a compelling income and inflation-resilient play for 2026.
Our Take
To JPMorgan’s argument that we are not in an AI bubble, we would add one point.
In January 2000, on the eve of the dotcom bubble’s collapse and the Nasdaq’s subsequent 77% meltdown, the Nasdaq’s average PE ratio stood at 68, compared to its average of 33 today.
That’s somewhat expensive compared to the historical average. But it’s not necessarily close to what we would expect to see in a tech bubble.
Want more? Subscribe to Street Sheet Research today to get the full report on Saturday, December 27, plus a year’s worth of investing knowledge to help turn your New Year’s resolutions into new realities.
FRIDAY’S POLL RESULTS
Are you bullish or bearish on Lyft $LYFT ( ▲ 2.73% ) over the next 12 months?
▇▇▇▇▇▇ 🐂 Bullish
▇▇▇▇▇▇ 🐻 Bearish
And, in response, you said:
🐂 Bullish — “Autonomous vehicle requires a huge investment to cover all US. Meantime there will be people ready to use their cars for supplemental income. Waymo $GOOGL ( ▲ 0.85% ) will take longer than expected, especially outside the US. In that regard, Uber $UBER ( ▲ 2.46% ) is better prepared.”
🐻 Bearish — “Looks like the odds are stacked against them!”