There is a base case of positive returns for 2026, says Edward Jones’ Mona Mahajan

Frank Holland (Anchor) 00:00.350

let's talk a bit more about the data this morning in the market with mona mahajan edward jones head of investment strategy joins us here at post nine always good to see you welcome

Mona Mahajan (Head of Investment Strategy) 00:07.830

happy holidays

Frank Holland (Anchor) 00:09.630

you think there's time for a rally to show up before you're in you

Mona Mahajan (Head of Investment Strategy) 00:12.750

know look santa claus came a little bit to town this morning we enjoyed seeing that CPI print come in well below expectations what particularly caught our eye was the core CPI reading nice to see two point six percent you know keep in mind two thirds of the basket is core and

Mona Mahajan (Head of Investment Strategy) 00:26.630

services and if that trend does continue inflation was one of our risks for twenty twenty six and hopefully that's moderating i'd say you know seventy three percent of the time the data shows since nineteen eighty we have seen a santa claus rally between the last five trading

Mona Mahajan (Head of Investment Strategy) 00:41.190

days of of the year first two trading days of of twenty twenty six could we get it again absolutely we're in this period where markets have moved a bit sideways and so maybe we do see a year end push but more broadly we feel pretty comfortable going into twenty twenty six with

Mona Mahajan (Head of Investment Strategy) 00:55.670

the economic and earnings have you have

Frank Holland (Anchor) 00:57.110

you established earnings or or indices targets you know

Mona Mahajan (Head of Investment Strategy) 01:00.390

we don't do targets per se but we will say we know S and P returns are driven by two factors earnings growth and valuation expansion we do see earnings growth double digits next year the scope for valuation expansion a little bit limited especially in the tech and growth parts

Mona Mahajan (Head of Investment Strategy) 01:15.550

of the market but could we get some catch up in parts of the market that are outside you know mag seven four ninety three we think there is for that so there is a base case of positive returns for twenty twenty six

Frank Holland (Anchor) 01:25.950

you think that is most evident in or continues to be most evident in banks or healthcare or transport so there's been a few

Mona Mahajan (Head of Investment Strategy) 01:33.030

there certainly hasn't all those sectors you named are good ones we we particularly like healthcare and industrials here we remain overweight going into twenty twenty six we also actually still like consumer discretionary we think there's some valuation potential there as well

Mona Mahajan (Head of Investment Strategy) 01:45.670

but more broadly the theme is let's get some non tech and growth in the in the baskets for twenty actually to your

Frank Holland (Anchor) 01:51.670

point on discretionary that's the leading sector today and i wonder if you think it has to do there's there's some desk notes today about what a stimulus check would be spent on what income cohort would benefit the most yeah

Mona Mahajan (Head of Investment Strategy) 02:03.270

i think all of the above you know look we're in an environment where the fed is lowering interest rates that's a good backdrop for the consumer overall especially if we see that ten years start to stabilize and maybe impact mortgage rates overall but we think generally the the

Mona Mahajan (Head of Investment Strategy) 02:17.670

high middle and high income consumer is holding in there and that's what really drives the economy overall