WHAT TO WATCH FOR IN 2026?

• The commercial real estate crisis gets contained. Banks extend loans instead of foreclosing. Extend and pretend.
• China stabilizes its property sector. They inject stimulus. Local governments get bailed out quietly. No headlines. The global economy slows but does not collapse.
• The Fed cuts rates 50 to 75 basis points, just enough to ease pressure.
• Stocks correct 10 to 15%, not a crash, a correction.
• GDP growth slows to 1.5%, but we avoid recession.
• Unemployment ticks up to 5%. Manageable.

This is the base case. The most likely outcome.

• Commercial real estate starts collapsing in the second quarter of 2026. A major regional bank fails. New York Community Bank Corp or Valley National Bank. The government steps in. FDIC takes over. But it triggers fears. Are other banks at risk? People start moving money from regional banks to big banks. A slow motion bank run.
• China’s property crisis deepens. More developers default. Local governments miss payments. The PBOC cuts rates, but it does not help. Deflation sets in. The Chinese economy contracts.
• Commodities crash. Oil falls to $50 a barrel. Copper down 30%.
• Emerging markets go into crisis. Brazil, South Africa, Indonesia. Their currencies collapse. Debt defaults. The Fed cuts rates 150 basis points to 2.25%. But inflation is still above target. They are constrained. It is not enough. The US enters recession in the second half of 2026.
• The stock market crashes 20 to 30%. The VIX hits 60.
• Unemployment rises to 7%. Corporate earnings fall 20%. High yield defaults spike.

• Multiple triggers hit at once. A major bank fails. China announces a hard landing. Property prices down 30%. Multiple local governments default. Commodities collapse. Oil to $30. Copper down 50%.
• Emerging markets crisis. Currency collapses. Defaults.
• Contagion spreads to Europe. Banks with exposure to China and emerging markets go under. Deutsche Bank, HSBC, Standard Chartered, Credit Suisse 2.0.
• The Fed cuts rates to zero. Emergency meetings. They announce unlimited QE, but the bond market revolts. Yields spike. The 10-year Treasury hits 6%, even with QE.
• Investors lose confidence in the dollar. They sell treasuries. They buy gold. The dollar crashes.
• Inflation returns. 7% CPI. But the economy is in recession. Stagflation.
• The stock market crashes 40 to 50%. The Dow loses 20,000 points. The VIX hits 80. Circuit breakers activate multiple times. Trading halts. But when it resumes, the selling continues.
• Unemployment hits 10%, mass layoffs, corporate defaults, malls close, restaurants shut down, real estate prices collapse, 30% down, household wealth destroyed.
• Social unrest, protests, riots, political chaos.
• The government passes emergency measures. Debt jubilee. Helicopter money, capital controls, anything to stop the panic. But confidence is gone.