2026 Outlook: Geopolitics, policy and your portfolio

Geopolitics and domestic U.S. policy are set to have a large impact on markets and the economy in 2026. As part of the Chief Investment Office’s Year Ahead Outlook, Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank, sits down with Larry Di Rita, head of Public Policy for Bank of America, about the most pressing topics for investors to be aware of in the coming year.

0:00 – Intro
Chris Hyzy introduces the theme: 2026 Outlook for geopolitics, policy, and portfolios.
0:41 – Looking back at 2025
Larry Di Rita reviews major surprises of 2025 and discusses new administration priorities—taxes, tariffs, and deregulation.
1:30 – Tax policy achievements & tariffs
Discussion on rapid passage of tax legislation, its impact on market stability and the evolution of tariff policy.
2:02 – Government shutdown fallout
Federal funding deadline looms in January; risks of another shutdown and political maneuvering.
3:00 – Federal Reserve leadership
Jerome Powell’s term ending in 2026—timing and implications of selecting a new Fed chair.
3:44 – U.S.–China relations
Current detente between the U.S. and China; economic tensions and tariff negotiations.
4:28 – Middle East Dynamics
Saudi Arabia’s role, Israeli elections, Abraham Accords, and unresolved Iran issues.
5:02 – Rare earth minerals & tech race
Why rare earth processing seems to have given China leverage and U.S. efforts to build a critical minerals coalition.
6:22 – Global defense spending
Europe’s $800 billion fiscal capacity for defense; implications for U.S. and European defense industries.
7:24 – Midterm elections outlook
Stakes for congressional control and the president’s agenda in 2026.
8:04 – Artificial intelligence (AI) & digital infrastructure
Washington’s cautious approach to AI regulation and state-level legislative efforts.
9:07 – Deregulation trends
Continued push for permitting reform, faster product approvals, and banking regulation reset.
9:42 – Closing thoughts
Chris Hyzy emphasizes staying invested, remaining diversified, and consulting advisors amid potential volatility.

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