David Wheildon / February 2026
In the last few weeks we have seen the President of Venezuela kidnapped and put on trial, the reiterated proposal for the Untied States to annex Greenland and the introduction of tariffs on goods entering the US for those countries continuing to trade with Iran. It isn’t all about President Trump but he does appear to be behaving more and more like Meryl Streep’s formidable character Miranda Preistley from The Devil Wears Prada. He is by no means alone as a character on the global stage but there is a real sense of purpose about his endeavours currently, that will continue to create volatility in world markets. Markets do sometimes show human traits and we must be wary of them developing “Trump fatigue” such that his latest bombastic announcement is met with virtual disregard by markets. Although in the short term we will appreciate this stability, with the ongoing potential lack of volatility, the danger lurks of a major market reaction if the markets “cry wolf” once too often. We must be prepared through 2026 for volatility created by the world’s politicians and remind ourselves that it is the economic fundamentals that drive returns which are either enhanced or deflected by shorter term sentiment.
Expectation of another year of decent returns.
On the investment market front it is still a case of “despite our politicians not because of them” with the expectation of another year of decent returns. You have read before that the intention of Central Banks is to continue to drive inflation down, but that it is being “sticky”, however as they succeed, interest rates should follow downwards. An environment of falling inflation and interest rates is one in which we should see companies growing their earnings and therefore an increase in investment values. The consumer can play their part as they spend less on debt (with falling interest rates) and don’t see prices rising quite as fast as they used to (falling inflation) so they should have more disposable income to spend on a wider range of goods. Admittedly the consumer argument is hampered (particularly in the UK) by the increase in the personal tax burden but consumer confidence is a powerful weapon in the fight for decent investment returns and is likely to help this year.
AI expansion
The AI sector (I am keen to stop calling it a bubble) continues to expand and we are now beginning to see the investment in this area broaden out away from the technology companies to those around them. This is seen in the building of infrastructure, data centres and even the houses for those working in the data centres in which to live. It is worth remembering that all the money raising and capital expenditure involved in AI does actually go somewhere and represents turnover to other businesses which leads to profit (all being well) for them. We are still in the very early days of AI and there are innumerable obstacles to overcome before we all become settled with it. Nonetheless anybody who thinks that AI is going to drift away is wholeheartedly mistaken. There have even been suggestions that this review should be written by AI (as if!). In a wider sense the advent of AI has a similar feel to that of the internet in the late 1900s; we all knew it was going to herald a new world of communication and business but did not know how and for whom it was going to be profitable. At the time we might have predicted the demise of the daily postal service but who could have foreseen the disappearance of cash from pubs, the steady demise of traditional media such as program television and newspapers and that it would be possible for so many to work from home.
Short term volatility concerns
As we look further into 2026 I expect to see decent investment returns by the end of the year but do have concerns about short term volatility. The United States mid term elections are due in November when 35 Senate and all of the Representative elections will be held. Voters tend to use the midterm elections to vote with their wallets and those up for re-election will be pressing President Trump to enhance their cause. This may mean a reduction in the more volatile outbursts and proclamations through the year but I am loath to say this is guaranteed! Either way, we do anticipate making profits for your invested money through the year but we may well have the odd moment of concern when the volatility ramps up. The benefits of holding a widely diversified portfolio will come to the fore through these periods and, as always, it is the regular monitoring of your portfolio that keeps it in the most suitable assets and funds.
This article is the opinion of David Wheildon