Predictions for 2026
This year, our special square year of 2025 – twenty-five squared – has been a tumultuous year of many extreme surprises, including but not limited to everything related to Donald Trump. Some surprises outside of his sphere of influence included horrific fires in a complex of buildings in Hong Kong, ravaging deadly storms in Thailand and catastrophic floods in Pakistan.
But, putting aside natural disasters, as it pertains to geopolitical events the world over, he has had a say in just about everything. He even had an outsized impact on events he didn’t attend, such as the G20 summit in Johannesburg and the COP30 summit in Brazil.
But, it is especially at this time of year when we begin to look ahead, rather than behind, that we are tempted to hazard predictions about what the next twelve months may hold. Will the war between Russia and Ukraine come to an end? Unlikely. Moscow will likely hold up for another year. Will the Gaza Strip be transformed into the “Pearl of the Mediterranean”? Almost certainly not. The far more probable outcome is that it will continue to be a site of profound human suffering. Will Sudan’s agony of civil war and famine be relieved? Again, probably not. Global attention remains far too limited. Will South Africa take part in the G20 summit in Miami? It seems doubtful. That is, unless Donald Trump can convince Parks Tau to exempt Elon Musk’s Starlink from BEE rules.
These questions, however, are to some extent – at least in the short-term horizon of a year – relatively abstract from a South African perspective. That is, unless your business exports aluminium or any other energy-intensive product offshore, which now faces CBAM (Carbon Border Adjustment Mechanism) tariffs imposed by a blindingly hypocritical Europe or US tariffs imposed by Trump. Or, that is, if – like me – you are moderately obsessed with the future of global democracy and the personal freedoms of movement, of expression, and of self-actualisation that we believed for so long had been achieved and were inalienable and self-evident.
The more compelling question, as far as it pertains to the everyday investor in South Africa, is actually a markets question. Will the markets – and by that I mean primarily the US equity markets and the S&P 500 more specifically – continue to experience the extraordinary growth that they have in the last two years? From October 2022 to October 2024, the S&P 500 achieved a two-year return of 63.10%, four times greater than the long-run average two-year return of 15.87%. That is radical.
Now, this is an interesting question, because, unlike geopolitical forecasts, it’s one that will have an immediate and personal impact on anyone invested in the market, whether it be the South African equity market or in a more diversified global portfolio. Irrespective of how undervalued the South African market may be, when the US markets tank, the rest of the world follows suit. During the Global Financial Crisis, between October 2007 and March 2009, the Dow Jones fell by over 50% and the JSE followed a similar trajectory, losing 46% between May and November 2008, despite having none of the toxic financial instruments that caused the crisis available locally.
The question for 2026 must then be: are the markets now perched at unsustainably elevated levels? Will the AI narrative continue to propel them even higher? Or are we approaching a correction – perhaps even a crash? By this time next year, will we be marvelling at the existence of ten $5 trillion-companies, or will they have all vanished?
In weighing these questions, American economist Nouriel Roubini seems to have momentarily shrugged off his “Dr Doom” moniker and adopted an unexpectedly upbeat stance, as reflected in a Financial Times article published on 25 November. His optimism was so unexpected that one reader joked he had to check his calendar to make sure it wasn’t April the 1st.
In the article, Roubini rejects the pervasive pessimism about the US’s economic future, which is rooted in concerns about deglobalisation, restrictions on movement, sovereign debt, the Federal Reserve’s independence and an undermining of the rule of law. “The argument was that American exceptionalism was over,” he writes.
Countering this, Roubini remains extraordinarily optimistic. His confidence rests partly on the view that market discipline, pragmatic advisers, and the independence of the Fed have prevented the most damaging post-election policies from taking hold.
That argument knocked me off my chair.
Market discipline, or more accurately, market reaction – for one can hardly use the word “discipline” in the same sentence as Trump – has not, in fact, reined him in. On the contrary, the once-popular moniker TACO, short for “Trump Always Chickens Out”, first coined to refer to the US president’s approach to trade policy may, according to financial commentator Robert Armstrong, soon be abandoned for “TANCO” – Trump Absolutely Never Chickens Out – reigniting trade conflicts with potentially severe consequences.
As far as the argument for pragmatic advisors is concerned, I am left speechless.
But these are peripheral to Roubini’s central point, which is that growth will rebound next year, supported mainly by AI-driven investment. To my mind, it is precisely this over-investment, bolted only onto a single dominant narrative – the AI narrative – that poses the greatest risk to the markets. If even a scintilla of the hysteria for an AI singularity is undermined – by a further Chinese breakthrough, for example – then the whole deck of cards may come tumbling down.
It is worth noting that in addition to being a Professor of Economics, Roubini is also a senior advisor at the global investment management firm Hudson Bay Capital. There, he and his colleagues have been conducting research that argues against the use of what they call “crude” price-to-earnings comparisons to measure market exuberance, proposing an alternative metric of their own making. Replacing the long-standing PE metric, which suggests markets are overstretched, seems awfully convenient. It is, however, a position that will no doubt keep the phones ringing pleasantly over at Hudson Bay Capital.
Armstrong, by contrast, takes a more balanced view, pointing to inflation, policy uncertainty, tech profit margin pressures, and the market’s heavy dependence on Nvidia. Most importantly, he considers the extent to which equity markets have become intertwined with crypto. This development is best exemplified by companies like Strategy, which decided to use all of its capital to buy Bitcoin rather than to channel it into what was formerly its primary business of developing software. Recent events have demonstrated the unsustainability of this model: as crypto prices fell, billions of dollars vanished from crypto-hoarding companies’ market value, with Strategy’s shares dropping 50% over the last three months.
In realising that the markets are almost entirely driven by one narrative, I find solace in siding with Jemima Kelly, the Financial Times columnist. Often to her own peril, she persistently eviscerates the crypto bros, the blockchain maniacs, the DeFi evangelists and more recently the AI geeks. Of the recent decline in the crypto market she wrote that this is indicative of “a gradual move away from the era of lol that has defined the years since Trump became president for the first time”. Her argument is that we have, en masse, decided to switch our brains off since 2016, content to watch the spectacle unfold. This mindset allowed us to indulge in the free-money experiment, gamble on crypto, worship false gods in the form of blockchain, and now place similar faith in the increasingly fantastical promise of AI. Actually, the entire AI narrative can be seen as a derivative of the original crypto/blockchain narrative. This is what she calls the “laugh out loud” generation.
I’m not sure I would call it that, but nevertheless, I remain heavily sceptical. I can make out, from even before the election of Trump in 2016, in fact from even before the Global Financial Crisis, a strong distinct through-line of greed-driven consumerism that has overwhelmed all basic societal values. The engine room for this greed has been inhabited first by the crypto narrative, then by the DeFi narrative and now by the AI narrative.
For 2026, it will surprise me tremendously if the market continues to accept this narrative at face value. In the near term, artificial intelligence is unlikely to deliver the transformative technological leaps that many are eagerly predicting. The returns certainly won’t justify the staggering levels of debt currently being taken on to build the data centres upon which the so-called AI revolution relies. As the mismatch becomes clear, investor confidence will falter and the market will follow.
I’m willing to bet my socks on that. See you next year.
This article is an opinion piece by David Buckham. The views in this article are those of Buckham, and do not represent the views of BusinessTech and its associated companies.
David Buckham is the Founder and CEO of international consultancy Monocle Solutions. He is co-author, alongside Robin Wilkinson, of the recently released The Spell: A Story of Human Progress and How the West Lost its Soul.
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