Edward Jones' Mahajan Sees 'Benign' Market Environment in 2026

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00:00Both J.P. Morgan and SockGen increasingly bullish on stocks.

00:03Both the analysts at those firms have raised their 2026 year-end forecast.

00:07For the S&P 500, J.P. Morgan is at 7,500, SockGen at 73.

00:13And the strategist there at SockGen writing, the backdrop is positive for U.S. assets.

00:17It's too early to call the bull run over.

00:20Let's add another voice to the conversation.

00:22It's Mona Mahajan, head of investment strategy at Edward Jones.

00:26But I'm having a hard time finding anyone who's not bullish for next year.

00:30Deutsche Bank has 8,000 for their price target.

00:33Are you all bulled up, too, heading into the new year?

00:35You know, look, when we think about 2026, it's a benign environment.

00:39We're looking at fiscal growth, economic growth that could continue in this 2%, 2.5% range.

00:44We're looking at moderate fiscal stimulus coming from the tax bill,

00:47a Fed that is likely moving interest rates towards neutral.

00:51And by the way, the earnings growth picture looks pretty good for next year as well.

00:54So hard to see any cracks in the story right now.

00:58We know markets can change.

00:59They're fluid.

01:00But for now, we feel good about where investors are standing.

01:04The consumer is where I would look if I wanted to be dour about these markets.

01:10You know, we just found out that 42 million Americans are on food stamps.

01:14We know that the subprime auto loan defaults are at the highest level on records going back to the 90s.

01:22Consumer confidence yesterday came in at 88 from the conference board,

01:27far lower than our survey and also much lower than the previous month.

01:32So it seems like the consumer situation is worsening.

01:35Yeah, you know, look, I think there is, and we talk about this often, it is a bifurcated consumer.

01:39And that lower income consumer is still hurting from years of elevated inflation.

01:45They're trying to catch up.

01:46Many are working multiple jobs just to keep pace with the bills that they have to pay.

01:50Now, all that being said, we have, of course, the middle and upper income consumer that

01:54has benefited from stock market growth, that has benefited from potentially home prices stabilizing

02:00and moving higher.

02:01What we see in the U.S. economy and what's interesting is economic growth is actually

02:0670 to 80 percent driven by that middle and upper income consumer.

02:10And so when we think about economic growth, it really does come from those parts of the market,

02:16those consumers that are doing relatively OK.

02:18Just given that in quickly less than a minute here, can you buy staples?

02:22It's been so beaten up partly because of the story.

02:24Yeah.

02:25You know, we actually are inclined to buy consumer discretionary because those consumers that

02:30do have a little bit of that discretionary income, perhaps they are in the middle and

02:34upper income parts of the market, they may start to buy a little bit more.

02:38They may start to spend the bottom part of the market where staples tends to play.

02:42They may still be a little bit under pressure.

02:44So we like that bifurcation.

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