Juggling Dynamite

After three years of unusually high stock market gains, Wall Street equity analysts entered 2026 with record bullishness and no “sell” recommendations.

After being burned on recession calls in 2022, no mainstream economist is calling for a recession in 2026, and no strategist is willing to forecast a flat or down market. Major asset classes are all priced in expectation of favourable financial conditions. The public is buying with record inflows to Exchange Traded Funds (shown below, courtesy of The Daily Shot).
In reality, the probability of negative outcomes rises with prices and investor optimism, so record levels of both mean the prospects for disappointment have rarely been higher.

There has never been an instance in which stock markets trading at currently extreme valuations did not generate losses over the following 1-, 3-, 5-, and 10-year periods.

With more than 35% of the US stock market concentrated in just ten mega-cap growth stocks (in yellow below, via The Daily Shot), market concentration is at its highest since 1900 and now exceeds the legendary late-1990s market bubble.

The “AI” trade that inspired market mania in 2025 faltered in the final quarter (as shown below since November 2024, courtesy of my partner Cory Venable), with only Google and Tesla still finding some lift.

The Canadian stock market is even more concentrated, with the top 10 most expensive companies (major banks, energy and materials companies) accounting for 44% of the TSX market capitalization. The second-half surge in metals and financial shares (shown below since 2022) catapulted the TSX to the best-performing among major developed markets in 2025.

In the real world, labour-market stress is spreading, with the broadest US U-6 unemployment rate at 8.7%, a level last seen in August 2021, and at the onset of the 2001 and 2007 recessions. Canadian labour market conditions have been deteriorating since mid-2022.

December’s US ISM Manufacturing PMI contracted for the 36th time in the last 38 months (shown below since 2015).New orders (in black) and employment (in blue) both remained in contraction (sub 50).

As in 2000, 2007, and 2021, serious risk management is being rejected by the masses, while seasoned value investors like Warren Buffett’s Berkshire Hathaway hold nearly a third of its assets in cash.

Each person must decide for themselves how much they wish to participate in price bubbles. But there’s little chance that those who are long now will avoid the drubbing of the next bear market and the lost decade likely to follow. No one gets cycles all their way.

New year, same problems; these segments offer some insight.

This week on Move Smartly, I’m joined by Doug Hoyes, Licensed Insolvency Trustee and co-founder of Hoyes, Michalos & Associates, one of the most experienced consumer debt relief firms in Canada. Doug works on the front lines with households facing financial distress, giving him a real-time look into what’s happening beneath the surface of the economy – long before it shows up in official data.

We unpack what he’s seeing inside his practice today: who’s struggling, what’s driving the rise in consumer proposals and bankruptcies, and how closely those trends are connected to housing costs, mortgage renewals and rising debt loads. We discuss the growing role of HELOCs, the psychology of debt in a real-estate-obsessed culture, and whether insolvency trends could signal more forced home sales and pressure on the housing market in 2026. Here is a direct video link.

Predatory business models continue to undermine economic strength and stability.

A hidden housing crisis is sweeping the US as debt collectors revive forgotten mortgages to seize homes. Bloomberg reporters uncover how outdated laws and predatory tactics have left millions at risk. Here is a direct video link.

Electricity bills are rising in the US — and politicians are mostly blaming either renewable energy or data centers and AI. But do either of those really explain the problem? And is there any way to fix it? Business Insider producer Elizabeth McCauley sifts through the noise and talks to experts to find out the truth. Here is a direct video link.

For decades, rising carbon emissions have accelerated climate change, but this year marked a critical turning point that could finally reverse that trend. Renewable energy has now graduated beyond the need for subsidies and incentives, emerging as a cheaper alternative to fossil fuels in many countries. News Editor Tim Appenzeller and policy expert Li Shuo describe the economic forces behind this shift, and the obstacles that remain to the continued rise of green energy. Here is a direct video link.