Many people are expecting markets to aggressively pump in 2026. That expectation may turn out to be wrong — at least initially.
Here’s a possible roadmap of how 2026 could unfold:
PART 1: THE CRASH
Right now, the U.S. economy is already showing clear signs of weakness:
• Layoffs are rising
• Bankruptcies are increasing
• Credit defaults are building
• Housing demand is collapsing
• Home sellers are heavily outpacing buyers
Because of this, there is a realistic probability of a stock market correction within the next 2–3 months, similar to what happened in Q1 2025.
Potential downside scenarios:
• S&P 500: −10% to −15%
• Nasdaq: −15% to −20%
Since crypto largely moves alongside equities, digital assets could experience even deeper pullbacks — including a possible capitulation phase.
PART 2: THE BLAME
During a market downturn, political pressure will likely intensify.
Trump is expected to shift blame toward:
• Federal Reserve Chair Jerome Powell
• The Supreme Court (if tariff rulings go against him)
Jerome Powell’s term as Fed Chair ends in May 2026, making him an easy target.
The narrative will likely focus on:
• No rate cuts
• Tight monetary policy
• Failure to inject liquidity during market weakness
This strategy would ensure Powell does not remain influential on the Board of Governors after his term ends — clearing the path for new leadership.
Trump understands that Powell’s continued presence could complicate policy direction and create resistance to the next Fed Chair.
PART 3: THE EASING
Once Powell exits and Kevin Warsh potentially becomes Fed Chair, monetary easing is expected to begin.
Warsh has already hinted at tools such as yield curve control, which would cap long-term bond yields and reduce borrowing costs.
• Cheaper borrowing = more liquidity
• More liquidity = higher asset prices
At the same time, multiple liquidity drivers could align:
• A possible $2,000 tariff dividend
• Major tax cuts
• Progress on crypto legislation such as the CLARITY Act
All of this would be designed to support and pump both the stock market and the crypto market.
PART 4: THE ELECTION
U.S. midterm elections are scheduled for Q4 2026, and current betting markets suggest Republicans are losing momentum.
If markets recover strongly before the elections — combined with stimulus-style benefits for average Americans — Republican winning odds could improve significantly.
Markets historically forget everything once prices start moving higher.
Additionally:
• Dividend payments and tax cuts would boost small business earnings
• Powell would be positioned as the primary scapegoat for prior market damage
THE THEORY IN SIMPLE TERMS
• Early 2026: Market correction + blame Powell
• Mid 2026: New Fed leadership + liquidity easing
• Late 2026: Market recovery heading into elections
This suggests the next few months could be painful, but once the correction plays out, accumulation opportunities may emerge.
From there, markets could stage a strong recovery moving into Q3–Q4 2026.
