Q1 2026 Investment Outlook

by Eric Teal of Comerica, 12/29/25

On the Horizon

A Perennial Gale; not a Minsky Moment for now…

Oh, hush thee, my babe, granny’s bought some more shares, Daddy’s gone out to play with the bulls and the bears, Mother’s buying on tips, and she simply can’t lose, And Baby shall have some expensive new shoes!

— Saturday Evening Post – late 1920s

Introduction

As we pass the halfway mark of the 2020s, comparisons now abound between our current decade and the roaring 1920s. F. Scott Fitzgerald best captured the opulence of the Flapper Era in The Great Gatsby, “They were careless people, Tom and Daisy — they smashed up things and creatures and then retreated back into their money or their vast carelessness.”

Despite some parallels of excess and concentration of wealth in America, let me suggest we are not retracing the 1920’s when markets lacked regulations and any sort of supervision that ultimately led to a cascading of failures and policy mistakes igniting the Great Depression.

Likewise, those of us who professionally came of age in the 1990s may find a closer comparison to the booming New Economy era when the market peaked at 35 times earnings and investors anticipated a technological revolution that would disrupt the economy with the internet at centerstage. Eventually, tighter credit conditions, oversupply, and spending pulled forward due to Y2K lead to a spiraling downward market, otherwise described as a “Minsky Moment” defined by American economist, Hyman Minsky who observed a repeated pattern throughout financial history of leverage, speculation, corruption, and then collapse.

Today’s market has notable differences including the financial attributes of the technology leaders and the underlying macro-economic conditions. Although, we are still monitoring the evidence; it is more likely a “Perennial Gale” which is a phrase borrowed from an Austrian economist Joseph Schumpter who lived in the early 1900s. Schumpeter published his contributions to economics during WWII at a time when the future of capitalism was yet undetermined. The capitalist economy is often swept by a ‘Perennial gale of creative destruction’- a gale of innovation. However, this advancement is a natural process of industrial mutation that leads to dramatic economic changes but also enormous benefits to society and business.

It is this transformation that alters industries. For instance, during the industrial revolution in 1947, 35% of the American workforce was in manufacturing but today less than 15%. We produce fewer textiles in North Carolina and steel in Pennsylvania, and the disruptive innovation has rendered many jobs and companies obsolete, but what the Cassandras do not tell you-- is that in 1947, manufacturing was 11% of GDP and today it is roughly 10% of GDP. We are just doing it more productively and with far fewer workers.

So, resist the temptation to follow the investing “Toms and Daisys.” Stay prudent, avoid being overly aggressive and apply a bit of caution at each turn, even when everyone else is optimistic. That is exactly what we plan to do next year.

Finally, we are particularly excited about our future banking combination and the opportunities it affords our clients across our footprint with increased scale and sophistication to deliver on our promise! So, let us look at what is in store for next year…