THE MACRO

This report isn’t about politics or predictions. It’s about what’s actually happening underneath the surface as we head into 2026 and what it means for your money.

Most people think the economy is something you watch on TV.  Investors know it’s something you feel long before it becomes a headline.  You feel it when customers hesitate a little longer before spending or when everyone sounds confident at the same time…which is usually a dangerous moment. Markets don’t turn on bad news. They turn on small shifts in behavior that pile up slowly until the story everyone believes no longer matches the reality underneath.

What’s Inside ⬇️ 

Jobs Report and Labor Market
GDP Report and 2026 Expectations
US Trade Deficit & Global Trade Dynamics
Geopolitical Risk & U.S. Global Engagement
What Looked Good in 2025
What Didn’t Look Good in 2025
Dedollarization – Debt Crisis (Includes How I’m Playing It)
 The Investors Lens

Jobs Report & Labor Market

We finally got a jobs report.  Here’s what you need to know:

- 50,000 jobs added in December, well below expectations and the slowest monthly gain since the pandemic.  Total of 584,000 jobs added for the year.

- The unemployment rate dropped to 4.4%.  This can be confusing, but here’s how they come up with the rate:

- Unemployment Rate = People without jobs who are looking ÷ People in the labor force

- Wages are rising modestly.  3.8–4.0% pay growth is real growth.  But after inflation, it’s modest growth. Not enough to make everyone happy.

My take…

The labor market is slowing down but not collapsing.  Companies are still cautious about hiring.  GDP growth is strong but not near a recession, but if you look at each state individually, there’s an argument that about 40% of the states are either in a recession or on the brink of recession.

GDP Report & 2026 Expectations

The economy ended the year on a high note with GDP growing at an annualized pace of 4.3% in Q3.  That beat expectations, and you can attribute it to consumer spending, exports, and government outlays.  Some estimates show 5.1% growth in Q4, even with a slow housing market.  This would mean back-to-back solid quarters. 

I know it’s confusing since half the country is still choosing between groceries and credit cards. But when higher interest costs, housing prices, and expenses rise faster than paychecks, strong numbers don’t always mean easier lives. 

Growth for 2026 is expected to be moderate, roughly 2-3% depending on who you listen to.

U.S. Trade Deficit & Global Trade Dynamics

The U.S. just posted its lowest trade deficit since 2009, a key sign that global trade is starting to rebalance. The narrowing is due to stronger exports, improving supply-chain efficiencies, and a cooling of import demand after years of stimulus-happy overconsumption.  It’s not smooth sailing, but the new trend matters.  The U.S. is becoming less dependent on foreign goods. Trade policy shifts and tougher negotiating stances with Canada, Mexico, and China are reshaping where goods are sourced, and that realignment is now beginning to show in the numbers.

Still Not a Victory…

While the trade deficit looks great, the Supreme Court is expected to decide very soon on whether Trump has the authority to impose tariffs on imports.  Assuming Trump is victorious, inflation and price hikes on goods to consumers will still be a concern.

Geopolitical Risk & U.S. Global Engagement

The U.S. doesn’t want China or Russia gaining a foothold anywhere in the Western Hemisphere. That’s not politics, it’s a power play. When influence creeps closer to home, the response gets sharper. That’s why places most people ignore, like Greenland and Cuba, suddenly matter again. They aren’t just dots on a map, they are leverage.

The bigger pressure point is China. If energy supply lines get disrupted or access to capital tightens, it doesn’t just slow their growth, it hits everything at once. A weaker oil flow or restricted financial channels can derail China’s BRICS currency ambitions, stall AI infrastructure investments, and complicate their long-term plans around Taiwan.

Geopolitical risk is front and center – keep an eye here:

• Venezuela: U.S. strikes and seizures of tankers show a strategic push around oil and regime change. This has implications for investors and markets.

• Cuba: While not immediate military flashpoints, policies around immigration and regional influence could affect economic and security ties.

• Greenland: Trump’s interest in strategic land and resources has drawn pushback from allies and could complicate NATO/EU relations.

• Iran: Ongoing sanctions and Middle East dynamics keep crude and defense risk premiums elevated.

• Mexico & Columbia:  Drugs do matter to Trump.  But having leverage and influence over left-leaning governments is at stake for him as well. Countering Chinese economic footholds and pressuring perceived socialist policies.

The U.S. is more assertive than at any point in the last decade, and this shapes trade, investment, and risk sentiment.

Dedollarization & The Debt Crisis

“Dedollarization” isn’t here yet, but the conversation has become more mainstream. Countries continue to slowly diversify away from U.S. dollars in reserves and cross-border trade, driven by geopolitical friction and the search for alternative payment systems.  Central banks continue to hold significant dollar assets, and the greenback is still dominant, but long-term trends point to more multi-currency trade and reserve diversification. Global debt levels are also soaring high in many emerging markets, as sovereigns hedge against dollar risk and currency mismatches in their financing.

The accelerator in the dedollarization story is debt. Global and U.S. government debt isn’t just high, it’s compounding, and a growing share of it is now being paid with new debt.  When interest costs rise faster than revenue, borrowing stops being a bridge and starts becoming the destination.  That cycle is fragile, and every rate hike makes the hole deeper; every refinancing round is more expensive. Over time, that kills confidence in fiat systems and pushes countries to explore new alternatives, not because the dollar is broken today, but because the math makes it harder to defend tomorrow.

Here’s what my portfolio would look like if all breaks loose. Some of it I’ve already started building…

• TIPS (Treasury Inflation-Protected Securities): Adjust for inflation

• Short-term Treasuries (T-Bills): Keep flexibility and liquidity

• Gold: A traditional store of value during times of fiscal uncertainty

• Dividend stocks: Provide steady income and resilience

• Large Cap Growth: Only those with the best balance sheets. No Debt, no excuses!

• Bitcoin: An emerging hedge for those concerned about a dollar collapse and long-term debt expansion.

• Cash: Don’t worry about inflation. You gotta be ready to make moves. There will be opportunities and less competition.

What Was Good in 2025

1. Stock Markets & 401k’s: Equities, especially broad indices, are at or near record highs, lifting household wealth and boosting consumer balance sheets. 

2. GDP Growth: The economy delivered stronger than expected Q3 and early Q4 growth.

3. Gas Prices & Oil: The U.S. remains a global leader in oil & gas output, with export capacity strengthening trade positions

4. Corporate Investment in AI/Productivity: Firms are investing in technology that is lifting productivity, a positive for long-term growth outlook.

5. Reduced Trade Deficits: The trade deficit narrowed significantly, reaching levels not seen in years; exports up and imports down.

6. Executive Actions on Crime
   A host of crime enforcement operations are promoted to cutting crime and improve enforcement.  Many cities are showing promise.

What Wasn’t Good in 2025

1. Labor Market Strength: Job creation has slowed signaling structural hiring challenges. 

2. Dollar Confidence: Experts forecast continued dollar weakness as global markets diversify and the U.S. continues to rack up debt. 

3. Manufacturing Jobs: Sectors like manufacturing and construction have shed jobs or lagged.

4. Tariffs: Tariffs are showing signs as a tax on consumers with mixed effects on jobs and inflation.

5. Cost of Living: While inflation is down, things like groceries and real estate have been lagging.

The Investor Lens

There’s a lot to be excited about going into 2026.  But if I’m being honest, I have some concerns as well.  This is not the part of the cycle where you swing for fences, I think it’s where you get disciplined.  When job growth is soft, debt is compounding, geopolitics is loud, and markets are still priced for perfection, your edge must become about positioning. 

I’ll continue to hold my long-term compounders, but I’ll be stricter with my new positions.  2026 will reward investors who focus on cash-flow durability and balance-sheet strength. Stay away from debt-filled companies. The goal isn’t to guess what breaks next. It’s to own what still works after something breaks.

Oh, and Cash is King again. Having cash that’s ready to move is not a bad thing right now.