Happy New Year

We look at the eventful start to 2026 and try to put some context around potential market impacts. Geopolitically, we saw the renewed vigor of the Monroe Doctrine in full force with U.S. action against Venezuela's Nicolas Maduro. Whether stemming the flow of drugs or increasing the supply of oil was the primary factor is undetermined, though decades of underinvestment in infrastructure make any meaningful near-term effect on oil supply unlikely; lower oil prices have been one of the few things keeping inflation in check. We also discuss saber rattling as it relates to Greenland, whose strategic location has perhaps been underappreciated, and Iran, where citizen protests are increasingly being met by violence. Affordability has been top of mind for the electorate, and the Administration, and we have seen presidential social media posts on housing and credit card interest rates. Though executive power has increased, barring institutions from buying single-family homes and capping credit card interest at 10% seems to have little likelihood of actually being implemented. However, housing affordability is a huge problem; according to Apollo: 54 million households can only afford a house priced less than $200k Another 40 million need prices between $200k and $400k With around 133 million households total in the U.S, and the median home price over $400k, the American dream of home ownership is simply out of reach for most One mechanism viewed as a way to improve affordability is lower interest rates, though compelling the Fed to reduce rates by having the DoJ go after the current Fed chair may not have the desired effect. We discuss Chair Powell's stern response to the charges and the importance of maintaining Fed independence. Finally, we recap a strong 2025 for equities (at least some of them), and look at the statistics showing just how few stocks outperformed the S&P 500 (fewer than one in five). This was the third year in a row where active managers had the deck stacked against them. For 2026, expectations are universally bullish. We look at the math behind higher equity prices in terms of multiples and earnings, and why a broader market, which started to take shape in December, might help investors but not necessarily matter for the index. Learn more about Formidable Asset Management, Will Brown, and Adam Eagleston by visiting www.formidableam.com.