2026 Outlook

Naming the Next Fed Chair

Arguably, the most powerful seat in the global economy gets a new occupant this year. Jerome Powell’s term as Federal Reserve Chair ends in May 2026, and US President Donald Trump has signaled he’ll name his pick as early as January.

 Why it matters:

• The Fed Chair shapes US monetary policy, influencing global currency, bond, and equity markets.
• Interest rates determine the cost of mortgages, car loans, credit cards, and business borrowing.
• Lower interest rates tend to boost stock prices; rate hikes can cool markets and pop bubbles.

Markets will be in wait-and-see mode until the nomination is revealed.

US Midterms & Global Elections

On November 3, the US heads to the polls for the Midterms, with every seat in the House of Representatives and a third of the Senate up for grabs. The outcome will steer tax, spending, and trade debates for the rest of President Trump’s term. 

Other key elections in 2026:

• Hungary: Parliamentary elections in April are a challenge to Prime Minister Viktor Orbán’s 15-year dominance. A shift could pivot Hungary back toward the EU mainstream.
• Brazil: A high-stakes general election in October pits the left-wing Lula administration against challengers, including the son of jailed former President Jair Bolsonaro. The outcome will impact trade and environmental policy.
• Israel: Prime Minister Benjamin Netanyahu battles for political survival again, with elections due by October. Gaza's fragile peace plan and the regional stability are at stake.

The World Cup Boost to the Economy

This summer, the FIFA World Cup lands in the US, Canada, and Mexico. The men’s football (soccer) tournament is projected to be commercially among the biggest sporting events in history.

• FIFA expects a record tournament income of $11 billion, plus a boost in local spending.
• A 39-day event across three countries and 16 cities features a record 48 teams and 104 matches, with tickets for the final costing thousands of dollars.
• Airlines and hotel chains benefit as matches take place thousands of kilometers apart, from Vancouver to Mexico City.
• Consumer tech gets a boost from big sporting events, as people upgrade their TVs and other screens. Ad spending is also expected to spike.

SpaceX and Chatbots Could Lead a Mega-IPO Year

Initial Public Offerings — private companies going public — perked up last year, but A-listers of the AI boom are still avoiding the spotlight. 2026 could change that with both OpenAI and Anthropic reportedly laying the groundwork for an IPO.

Elon Musk’s SpaceX is preparing to list this year, potentially looking at $1.5 trillion valuation. It may break Saudi Aramco’s record for biggest IPO ever, by raising $30 billion.

Investors are also hoping fintech giant Stripe finally commits to its long-awaited IPO.

If market conditions hold, 2026 could become one of the busiest IPO years in recent memory.

So, What Could Go Wrong?

​2026 holds promise as stock markets in the US, UK, and Japan have repeatedly hit new records. 2025 was the third year of consecutive gains for the S&P 500 index. It hasn’t had a streak longer than that since 2003-2007.

Some of the risks to look out for this year:

• ​AI reality check: After trillions in investment, 2026 is the year big tech must prove AI can generate real value, and not just to chip companies. If profits don't justify the spending, a valuation crash similar to the 2000 dot-com bubble is a possibility.
• ​Energy crunch:  Data centers will consume more energy by the end of the decade than all of Japan, and up to one‑fifth of new projects may face delays, warns the International Energy Agency. As one out-of-this-world solution, startups and big tech are planning solar-powered data centers in space.
• ​Geopolitical "grey swan": Escalation in the Taiwan Strait remains the ultimate "grey swan", a known but unlikely high-impact event. A disruption in chip exports would freeze the global electronics and AI industries overnight.

The Battle of Two Kevins

So far, the race for the next Fed chair has been between two Kevins: Hassett and Warsh, with betting markets swinging between them.

Hassett leads the President’s National Economic Council and is a strong supporter of rate cuts. Warsh is historically seen as more hawkish but has recently signaled tolerance to lower rates.  

Christopher Waller, a current Fed governor, has interviewed for the job and is seen as a safe alternative. The President could also go with a surprise pick, such as Treasury Secretary Scott Bessent or Blackrock’s Rick Rieder.