Mish Schneider, Chief Strategist at MarketGauge.com, talks about her expectations for the markets in 2026, citing risk factors such as the U.S. midterm election. She also discusses gold, noting how it "reflects the cracks" beneath the market’s surface.

Wall Street

A market strategist expressed a generally positive outlook for 2026 but cautioned that the latter half of the year could see increased turbulence. The warning is based on historical patterns during midterm election years, potential political changes, and ongoing concerns about rising debt, Federal Reserve actions, and global geopolitical developments.

Additional factors highlighted include the significance of trends in gold and other hard assets, as well as the potential impact of oil prices exceeding $60 per barrel. The strategist also referenced the year of the yang fire horse in Chinese astrology, drawing parallels to 1966, and noted that a breakdown in small-cap, retail, or transportation sectors could signal a shift away from current market optimism.

Strategist warns of potential market turbulence at tail-end of 2026

Look, I want to begin by just getting your broad take on where 2026 is going to take us, because as I understand it, you're bullish overall, but you actually expect some turbulence in the back half of the year. So, Mish, what's got you so concerned about Q3 and Q4 of 2026 that makes this put that warning in your most recent outlook for the market? Well, from a historical standpoint, we have a midterm election year, and that has very often turned out to be negative as we end the year. So that's a possibility that we might see some kind of a sea change in terms of what happens in Congress and in the Senate. But that's only one reason. Another reason is that we cannot dismiss gold and silver and what's going on with the metals. And since I've often said that gold is the mirror really reflecting the cracks under the surface, the cracks on some ways have gotten better, especially if you're looking at the great rotation that we've seen in terms of my economic minor family, so the Russells and the retail sector and transportation in particular. But besides those cracks getting smaller, the other ones are getting wider. As you mentioned, the tepid result of possibly these bombs, the fact that the Fed is actually really doing QE, they're just not calling that. Our debt keeps going up. We have geopolitical situations now all of a sudden popping up, as you mentioned at the top of the show. So all of this is really, for me, means that things could shift. And one other thing, by the way, Dan, and I know in Asia this is extremely popular, but we're going into a very interesting year in terms of Chinese astrology. It's the year of the yang fire horse. Why is this year more important than, let's say, last year, which was the year of the snake, in that we had a water element for years, since 2018, and we're going into fire, but not just fire, double fire. And the last time we had that was in 1966. And the analogies between 1966 and what could happen in 2026 are really interesting. Mish, so interesting that you bring that up. So expand on it for me, because I think what you're saying here is that the market risks are building, and that is ultimately being reflected in the fact that we are seeing risk assets rise, Wall Street continuing to outperform, and again, here in Asia, also money moving into some of these markets. But at the same time, gold moving higher in tandem as well. Does that ultimately underscore the fragility of the bullish trade right now? And if we were to see some kind of pullback, some kind of maybe rebalancing of this optimism, what is that going to look like, Mish? That's why I really make it so clear this year. I mean, there's been obviously a lot of buzz about AI bubble, not a bubble. And we can see that it's not necessarily a bubble. It's just taking a bit of a pause while things are really basically recirculating from the big kingpin stocks that were up so much in the growth that led the market to more of the infrastructure-type stuff. And of course, we're seeing, like I said before, to me the most optimistic thing is when you start to see small caps, which are really U.S.-centric smaller companies doing well, and you're looking at an ETF like IWM starting to not only outperform, but make new all-time highs and possibly go higher, followed by retail, which of course is the consumer, and transportation, which is really measuring how things are moving. That's where the optimism comes from. So where would the optimism stop? You would have to see, first of all, I think growth not just take a pause here, but actually really go down hard. I'm not so sure that's ready to happen yet. You would have to see the three sectors I just mentioned with the small caps really start to break down from these all-time highs. And on top of that, you would have to look at some of these hard assets and the dollar and see what they do. And so right now that dollar to me looks vulnerable, and hard assets outside of the metals might start looking a lot more interesting. And of course, oil being an X factor, at this point now we're seeing some gyration. But if we get a move over $60 a barrel and we sustain that in West Texas intermediate crude, then I think we're really looking at maybe some kind of a cycle of inflation that nobody expects. And that would, of course, create volatility and, of course, would also really upset sort of the apple cart of the stocks.

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