Welcome to the Lam Lens, where we bring clarity to
the world of finance.
I'm Kelsey Berryman, senior wealth strategy associate at The Lam
Group, joined by Evans Lam, managing director, wealth management and
senior portfolio manager at UBS Financial Services, Inc.
Our team is located in Pasadena, CA, and you can
reach out to us at evans.lam@ubs.com.
Our goal is simple: to educate, debunk financial myths and
share our team's lens on the markets.
Well, happy New Year again.
This is Evan Lam, your blog speaker and thank you
again.
We're going to talk about the 2026 outlook for the
market.
As you know the SP 500 closed at 6846 points
as of December 31st and yet you know our UBS
forecast the SP to reach 7600 by the end of
2026.
Now this is kind of very unusual for Wall Street,
that every investment firm in Wall Street expect the market
to go up. And then the average is 11%. Typically
there's always some deviance and also the average forecast
is about 8%.
So this is very unusual year.
So why the Wall Street are so bullish?
I think it's for the right reason, that first of
all, corporate earnings has been phenomenal and they expect the
interest rate to go down.
And also because this is the midterm election, if you
look at Trump's actions to make sure that the economy
looks good, make sure that the unemployment and also the
economic sentiments among Americans feel good so that the
Republicans can still keep both the Congress and the Senate.
So you look at the recent actions, for example, Trump
has been just branded so-called the Blackstone of the world,
to buy residential housing, so to make the American dream
of owning a home far more affordable.
And then also today forcing the Fannie Mae and Freddie
Mac to buy $200 billion of the mortgage
bond, so that for the mortgage rate, 30 years mortgage
rate, to go down.
And of course, as soon as you announce it, the
mortgage rate has gone down.
So if you look at the economics, the productivities, everything,
everything has been pretty positive.
That's why I agree with Wall Street consensus that this
is going to be a good year.
Now, whether it's going to be 11%, whether it's going
to be 7600 is up to debate.
I really think that the risk is totally different.
My perception of the risk is, first of all is
whether the US will invade Greenland.
It is both an opportunity and a major risk because
literally US is at war, some kind of war with
China and Russia.
Do we need another war with Europe, the all of
Europe because of the Greenland issues.
So this is the major risk
I think the the market has not really fully factored
in and yet it can be an opportunity because according
to the treaty, the US basically have all kinds of
access to Greenland in terms of having military personnel, military
base and everything.
The only thing that we do not have over Greenland
is mineral rights.
And so if we can purchase it instead of invading
it, then I think the market will be very bullish
on this proposition.
So this is really a risk and also an opportunity,
Greenland.
So Greenland is not Venezuela.
It's totally different story altogether.
Then the second risk is the IPO market.
I don't believe that the large cap technology companies have
a bubble because they're supported by very solid earnings.
And I think that, you know, even though they're
going to be leveraged a little bit more to invest
in the AI, but the coverage ratio, the desk service
ratio is still very minimal.
The real risk I think is in the private equity
market, whether, again, whether the SpaceX will get into a
good valuation and whether the open AI right now is
value at 500 billion and the target for the IPO
is to have the company value at a trillion dollar,
which is double the 500 billion.
So those are the major concerns
I think that will set the direction of the market.
So the two risks, again, Greenland, second risk, the private
equity market especially that will be defined by the IPO
of the SpaceX, by the OpenAI and also by
the envelope rate.
So we were going to see whether this kind of
volatility will pan out, but I really appreciate your listening
in.
Thank you.
Thank you for listening to this week's episode of Lam
Lens.
You can visit us at advisors.ubs.com/thelamgroup For more
information.
See you next week.
This podcast is presented for informational purposes only and should
not be relied upon as investment advice or the basis
for making any investment decisions.
It does not constitute an offer to sell or a
solicitation of an offer to buy any specific product or
service.
UBS does not provide legal or tax advice and we
would recommend listeners to obtain appropriate independent professional advice.
Some of the views and opinions expressed may not be
those of UBS AG or its affiliates.
UBS Financial Services, Inc offers investment advisory services in its
capacity as an SEC Registered Investment Advisor and brokerage services
in its capacity as an SEC Registered Broker Dealer.
These services are separate and distinct, differ in material ways,
and are governed by different laws and separate arrangements.
It is important that you understand the ways in which
we conduct business and that you carefully read the agreements
and disclosures that we provide about the products or services
we offer.
For more information, please review the Client Relationship Summary provided at ubs.com/relationshipsummary
Summary.
UBS Financial Services, Inc is a subsidiary of UBS Group
AG and is a member of FINRA and SIPC.