In the Markets Now: 2,026 things for 2026

In what has become an annual tradition, a list of notable numbers for the year ahead—a bit gimmicky perhaps, but intended to bring some perspective to investors as we head into 2026.

8 (Themes Heading Into The New Year)

945 (TWh, IEA projection for data center electricity consumption by 2030) – more than double the 2024 level. Power generation is a critical bottleneck for the AI boom, and U.S. markets are already tightening to a point of noticeable electricity price inflation. This is a problem for incumbents facing 2026 midterm elections, but also for the U.S. more broadly in the race for AI supremacy against China (which is ramping up its power capacity aggressively). Policymakers have a fine needle to thread and few tools with which to rapidly add capacity given labor, supply chain, and other constraints.

$500 (billion, Nvidia's projected orders for key AI GPUs through 2026) – Firms are spending huge dollar amounts to build out AI infrastructure; much of the initial investment was funded by cash from operations, but debt and other financing vehicles are becoming more common. Though overall spending as a percent of cash flow is well-contained (and significantly below late 1990s levels), the biggest question for the market is whether there will be sufficient return on investment for the big tech firms spending hundreds of billions on chips and data centers. The technology is unbelievable…but will the profits follow in kind?  

301 (as in, Section 301 of the Trade Act of 1974) – Which grants the USTR authority to investigate and respond to unfair foreign trade practices, including by levying tariffs. Our partners at Strategas, a Baird company, note that if the Supreme Court rules that President Trump’s IEEPA tariffs are illegal, the administration has a backup plan that involves using Section 301 tariffs to reapply similar rates to most countries. It seems likely that one year from today we’ll have roughly the same level of tariffs as we do now – even if the path is messy.

$158 (billion, Strategas projection for the year-over-year increase in federal tax refunds) – The spike is a result of the consumer-facing tax cuts in the OBBB. Though labor market uncertainty persists, the combination of this expected tax refund boost, still-low claims for unemployment insurance, and more interest rate cuts – when paired with a few tailwinds idiosyncratic to 2026 – should provide the base for an upturn in consumer spending and economic growth across the year.

91% (Nasdaq 100’s return over the last five months of the dotcom bubble) – After rising 500%+ across the five years ending Oct. 27, 1999, the Nasdaq would still go on to nearly double over the following five months. While history’s bubbles all look different, a blowoff top (a quick, steep price move + speculative fervor) is a commonality. Today’s bull market has been robust, but thus far lacks the parabolic price action, euphoric sentiment, and FOMO buying that often define a bubble. If we’re comparing today’s market to the 1990s boom, the truly “bubbly” stage has likely not yet begun.

25% (Avg. return of T. Bills, T. Bonds, Real Estate, & Gold from 2000 to 2002) – Even if today’s market is not a bubble, major indexes remain historically concentrated in AI-related stocks, leaving many investors more exposed to this theme’s risks than they might want or expect. That’s why diversification can be so impactful. From 2000 to 2002, the Nasdaq fell ~75% but the average S&P 500 stock was only down 10% (and plenty of assets actually rose). Diversification may limit upside, but good investing is not about owning the best-performing stock or asset at every turn (an impossibility). It is about reaching goals, managing risk, and sleeping well at night too.

6% (30-year fixed rate mortgage in the U.S.) – The 30-year mortgage rate has been above 6% for 168 weeks, the longest stretch since 1999-02. This has hindered buyer demand – the number of U.S. homebuyers is at its lowest level ever outside of lockdown – and fueled negative homebuilder sentiment. A higher-for-longer rate backdrop will likely continue to weigh on the sector, and affordability issues fed by high rates and high prices will only exacerbate the K-shaped consumer economy. Government intervention remains a possibility.

0 (Fed Chair Powell’s lower bound for breakeven jobs growth) – He suggests that the rate of payroll growth needed to hold the unemployment rate steady could be as low as zero jobs per month due to stagnant growth in the labor force. Aging demographics and declining immigration will continue to weigh on population growth, making productivity advances (i.e., more output per hour worked) an increasingly important driver of economic expansion and debt management. AI, you’re up.

Disclosures

This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Market and economic statistics, unless otherwise cited, are from data provider FactSet.

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