TSX higher with Bank of Canada, Fed meetings in focus
I am not long enough. You are not long enough.
The global real-economy money printer is going to run very hot in 2026.
The more spendable money global economies print, the higher the nominal growth impulse we are going to get.
Central Banks around the world are not going to fight it.
In some cases, they are going to apply loose monetary policy even in the face of sustained money printing.
The question is: what asset classes benefit the most in this macro setup?
We’ll cover that in a second, but first an important message.
We are closing in on the first year of my macro fund, and I could not be prouder.
Our investment process keeps improving, and allocators’ interest is very high: we will welcome some large institutional investors in Q1 2026.
I am a strong believer in face-to-face interactions, hence next year I’ll be travelling to meet allocators around the world.
Would you like to meet me in 2026?
Let’s take a step back together and look at the macro big picture ahead of us:
- 1) Money creation in 2026 will be through the roof: fiscal from US (OBBB), Germany, Japan, Korea etc + AI Capex will contribute to money printing;
- 2) Central Banks around the world will not be fighting this at all – if anything, they are net loose;
- 3) Housing disinflation will help US core inflation sit in the 2.5-3.0% area for a while longer;
- 4) The setup is: nominal growth at 5%+, Central Banks neutral or loose, ongoing global money printing;
In 2025, net fiscal deficits and private sector leverage (read: money printing) around the world added $8.1 trillion (!) of new inflationary money to global economies.
If we look at 2026, more fiscal stimulus and more debt-funded AI capex will take place.
The global real-economy money printer will continue to go BRRR.
For your reference, here is our projection for the 2026 German money printing activities based on their large fiscal stimulus:
Global money printing correlates with nominal growth: the more aggressively we create new real-economy money, the more likely it is that nominal growth will pick up.
What about global Central Banks? Are they going to stay loose in the face of strong money printing?
The table below shows the Central Bank policy stance around the world - black if around neutral, red if tight, green if loose.
Take a look at the color scale: there is only one tight CB (Brazil), some neutral CBs (+/- 50 bps around neutral), and a big bunch of loose Central Banks around the world. In many cases, the loose policy stance comes from outright ignoring your inflation target.
In the US, Canada and Japan the terminal rate (‘‘2y forward rate’’) is around the neutral rate but there is nothing ‘‘neutral’’ about core inflation - which in all cases sits well above the Central Bank target.
A Central Bank applying neutral monetary policy in the face of core inflation well above their target and ongoing money printing…
…is a very loose Central Bank.
So, what happens to markets in such a macro setup?
My TMC Asset Allocation model says we will be anywhere between ‘’The Squeeze’’ and ‘’Goldilocks’’ depending on inflation: do we sit with core around 2.5-2.8% or do we surpass 3%?
In general, these top-right quadrants are very very supportive for risk assets.
If you look back at previous episodes of sustained money printing plus loose Central Banks, the 2005-2006 period looks like a decent parallel.
Back then, the global CPI rate was around 3% (blue) and Central Banks were gradually raising rates from 4 to 5% (orange) on average around the world.
Today, we have global inflation around 3% and global CB rates around 5% as well.
If anything, today’s setup seems more sustainable because the money printer is now fueled by government deficits, not private sector debt as it was in 2005-2007:
In that period EMs, value-oriented stock markets and commodities did great.
And right now, these are the 3 most under-owned asset classes in institutional portfolios:
After a decade of US/tech dominance and scarse capital flows towards value, emerging markets and commodities the world is largley underallocated towards these asset classes.
I am not long enough these assets.
Are you?
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