Mark and Elise Levy’s December Economic Update
We’re in the final week of our annual office food drive for the Food Bank of Northern Nevada! If you haven’t had a chance to donate yet, you can drop off items anytime before Friday, Dec 12 at 1 PM.
You’re welcome to purchase items and bring them by the office, or shop online and have them delivered directly to us—whatever is easiest for you. We sincerely appreciate everyone who has contributed so far. Your generosity truly makes a difference.
You can view the Food Bank’s most-needed items here: fbnn.org/get-involved/food-fund-drives/
LPL Research has released their Outlook 2026: The Policy Engine.
The year 2025 offered a clear illustration of today’s prevailing market regime — one that has been shaped less by traditional fundamentals and business cycle dynamics and more by fiscal and monetary policy. While policy has always influenced markets, its role has increasingly grown. What does this mean as we look ahead to 2026?
In an environment where policy decisions are one of the most powerful forces steering market direction, we believe patience is essential. Avoid overreacting to short-term sentiment swings, as policy- and momentum-driven markets tend to produce sharp price fluctuations — which can challenge our behavioral biases. We saw this in 2025, when stock prices swung from policy-induced lows to momentum-driven highs.
The good news: We anticipate policy will remain a net tailwind for markets in 2026. Short term interest rates are likely to continue easing as economic growth moderates and inflation stays contained. Corporate earnings may provide support, while core bonds quietly offer value (and should benefit from a more dovish Federal Reserve). In addition, given correlations can spike in policy-driven markets, investors may want to consider non-correlated alternative investments as part of a diversified approach.
Several key themes will likely continue shaping the landscape in 2026. Equity markets should remain resilient but vulnerable to volatility, while a fragmented economic backdrop limits clear trends in bonds. Policy decisions in Washington will remain a dominant force, influencing sentiment. The post-pandemic cycle is still distorted, with growth steady yet uneven, inflation persistently above target, and labor markets gradually softening. Add to this the effects of massive fiscal spending, an AI-driven capital investment boom, and more, and the result is an environment that defies traditional patterns. In this setting, diversification and agility are critical.
You can read all of LPL Research insights in the complete Outlook 2026: The Policy Engine, visit go.lpl.com/investoroutlook.
Hope your holidays are filled with cheer, laughter, and peace.
- Mark and Elise
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