Goldman Sachs Exchanges: Outlook 2026 | Episode 3: Assets and Allocation

Date: January 20, 2026
Host: Allison Nathan
Guests: Peter Oppenheimer, Kamakshya Trivedi, Don Striven, Christian Mueller-Glissman

Episode Overview

In this third and final episode of the Outlook 2026 series, host Allison Nathan convenes Goldman Sachs’ leading strategists for a comprehensive tour of the capital markets. The episode covers key themes shaping global equities, currencies, rates, commodities, and portfolio strategies. With a backdrop of positive economic growth forecasts, the guests dissect the implications for investors, discuss sector and geographic trends, and highlight the critical importance of diversification in the current late-cycle environment.

Key Discussion Points and Insights

1. Global Equity Markets – Peter Oppenheimer (Chief Global Equity Strategist)

Market Outlook for 2026

• Extended global growth cycle and moderating inflation set a positive tone for equities.

• Lower interest rates in the US and a weaker dollar supportive for risk assets, but high valuations are a consideration.

  "Overall we are expecting it to be a good year and a year for equities that's generally driven by underlying profit growth rather than continued valuation expansion."
  — Peter Oppenheimer (00:55)

The Four Phases of the Equity Cycle

• Despair → Hope → Growth → Optimism: The cycle repeats with unique drivers each time.

• Currently in the "optimism" phase, which may last, supported by solid profit growth and the AI narrative.

  "This optimism phase could last quite a long period of time... With the relatively benign backdrop that we’re looking at economically, together with still pretty good profit growth and the narrative of growth in AI, we would expect this still to continue at least through this year."
  — Peter Oppenheimer (02:52)

AI as a Market Theme

• AI remains central, but the focus is broadening from hyperscalers to application-layer companies and sectors like energy and productivity-enhancing firms.

  "We believe that this year investors will be widening their scope of interest... into the application layer... and also in the companies that are helping to drive that growth in other sectors around energy generation data centers..."
  — Peter Oppenheimer (03:45)

Regional and Sector Allocation

• US outperformance in absolute terms, but non-US equities—particularly Emerging Markets (EM) and Asia (notably North Asia)—are gaining traction, supported by better growth and currency tailwinds.

• Beyond technology, financials and select industrials (particularly those linked to AI infrastructure and energy) offer opportunity.

  "We've seen a tremendous year in many financials last year. We expect that to continue. And we like areas around some of the industrials where you can also see better growth rates as companies... help to contribute to building out the infrastructure around AI."
  — Peter Oppenheimer (06:39)

2. Currencies and Rates – Kamakshya Trivedi (Chief FX and EM Strategist)

Dollar Outlook

• The US dollar remains overvalued but is expected to depreciate mildly (~3% trade-weighted decline) in 2026, benefiting pro-cyclical and commodity-linked currencies.

  "In a broad pro cyclical environment, we still expect the dollar to depreciate, but much less so than it did last year."
  — Kamakshya Trivedi (07:44)

End of Global Easing Cycle

• Further interest rate cuts expected primarily from the US Fed and the Bank of England; otherwise, most developed countries and some EMs will likely hold steady.

• Disinflation is expected to anchor inflation and keep bond yields contained, especially in developed markets.

  "We think that there's going to be a kind of broader disinflation playing through much of this year... that should keep a lid on those pressures. It should keep bond yields well anchored."
  — Kamakshya Trivedi (09:33)

Implications for Portfolios

• Growth will be a more significant driver than inflation for bond yields, bolstering bonds as hedges for risk assets in balanced portfolios.

  "Bonds can provide a better hedge to long equities or long risk asset portfolios in that kind of environment."
  — Kamakshya Trivedi (10:19)

Market vs. Macro Cycle

• Market valuations and credit spreads signal a late-cycle position, compared to the macro cycle which feels mid-cycle.

• Stretched valuations could bring higher volatility or wider spreads even if growth remains strong.

  "That tension... could mean that those higher equity prices come alongside higher volatility. Or if you see investors focus on the leverage that, for example, corporates are taking up, those gains in equities could come alongside wider credit spreads."
  — Kamakshya Trivedi (12:13)

3. Commodity Markets – Don Striven (Co-head Global Commodities Research)

Gold

• Still the firm’s "highest conviction" commodity trade, with forecasts of another 10% price rise to $4,900/oz, driven by central bank demand and lower rates.

  "Our base case is that prices rise another 10% to $4,900 by the end of this year. With risk to our forecast skewed to the upside, we expect the same two drivers that drove this phenomenal run for gold last year to basically be repeated this year."
  — Don Striven (12:55)

• Upside risks if private investors increase allocations; investors are structurally underexposed to gold.

  "For every 1 basis point increase in the gold share in portfolios, we estimate about 1.4% of additional upside to gold prices relative to our base case."
  — Don Striven (14:16)

Oil

• Forecasts project further price declines in 2026 before rebounding in 2027 due to oversupplied markets; potential further downside from geopolitical developments unless major disruptions occur.

  "Our base case is that oil prices trend lower in 2026 and start recovering from 2027... The market is still oversupplied on the back of very strong supply."
  — Don Striven (14:51)

AI and Commodities

• Power demand from AI/data centers is driving a unique commodity story in local US power markets, where supply constraints and tightness suggest more upside.

  "For the first time since the 70s, US power demand is outpacing GDP growth... The AI commodity trade is going long US power markets, where the data centers are going."
  — Don Striven (16:04)

• Despite already significant moves in power prices, local tightness could push them higher, especially in regions like Virginia.

4. Asset Allocation – Christian Mueller-Glissman (Head of Asset Allocation Research)

Investor Sentiment and Positioning

• Investors are "pretty bullish" heading into 2026, but equity allocations are high due to market performance, not aggressive buying.

  "Our risk appetite indicator... is at 0.8 roughly. So that’s the upper end of the range. Usually you don't get much above one."
  — Christian Mueller-Glissman (17:50)

Valuations and Drawdown Risk

• Elevated valuations reflect both late-cycle fundamentals and structural AI optimism.

• High valuations increase drawdown risk, but a trigger is needed for a correction; valuations alone don’t signal imminent danger.

  "Valuations are high, but we're not seeing the excesses related to structural optimism that would worry us... You need to have a reason. There needs to be a trigger, a kind of shock, a deterioration in the macro momentum."
  — Christian Mueller-Glissman (19:11)

The Case for Diversification

• In late-cycle conditions, diversification is more valuable than trying to time markets.

• Staying invested is key; the last phase of bull markets can deliver strong gains.

• Overweight equities but focused on protecting that position through diversification.

  "You want to stay invested and manage the risk of an equity bear market as you already are entering that equity bear market, but you don't want to speculate when that peak is. So from that perspective, we are overweight equities."
  — Christian Mueller-Glissman (21:40)

Alternatives and Credit

• Public market diversification is the first defense, but alternatives (less cycle-dependent) are worth more consideration.

• Reduce exposure to credit/carry trades as upside is capped and recession risk remains.

  "You want to get a bit more selective on [credit], considering that the upside is limited. But if there is a recession scare... these carry trades, they tend to really respond very badly to recession risk."
  — Christian Mueller-Glissman (22:54)

Volatility and Hedging

• Historically low volatility across assets opens selective opportunities for portfolio hedges.

Notable Quotes & Memorable Moments (with Timestamps)

• On the optimism phase’s longevity:
  “This optimism phase could last quite a long period of time... with still pretty good profit growth and the narrative of growth in AI.” — Peter Oppenheimer (02:52)

• On diversification:
  “Diversification is a really good way of improving risk adjusted returns.” — Peter Oppenheimer (05:23)

• On the dollar’s likely path:
  “We still expect the dollar to depreciate, but much less so than it did last year.” — Kamakshya Trivedi (07:44)

• On bonds’ role in portfolios:
  “Bonds can provide a better hedge to long equities or long risk asset portfolios in that kind of environment.” — Kamakshya Trivedi (10:19)

• On central banks and gold:
  “Higher central bank demand higher is the new normal...” — Don Striven (13:14)

• On the AI impact on energy markets:
  “For the first time since the 70s, US power demand is outpacing GDP growth.” — Don Striven (16:06)

• On late-cycle portfolio construction:
  “As an asset allocator... in a late cycle backdrop, you should focus on diversification allocation—creating a robust portfolio that can deal with shocks and that can let you stay invested.” — Christian Mueller-Glissman (20:40)

Important Timestamps

• 00:55 – Macro factors favoring equities (Oppenheimer)
• 03:45 – Broadening AI investment opportunities (Oppenheimer)
• 05:23 – Importance of diversification (Oppenheimer)
• 07:44 – Dollar depreciation and cyclical backdrop (Trivedi)
• 09:33 – Disinflation and rate environment (Trivedi)
• 12:55 – Gold outlook and drivers (Striven)
• 14:51 – Oil oversupply and price forecast (Striven)
• 16:06 – AI-driven US power demand (Striven)
• 17:50 – Investor sentiment and risk appetite (Mueller-Glissman)
• 19:11 – Valuations and equity risks (Mueller-Glissman)
• 21:40 – Staying invested late-cycle (Mueller-Glissman)
• 22:54 – Reducing credit risk and using alternatives (Mueller-Glissman)

Summary

The Goldman Sachs team strikes a hopeful but nuanced note for 2026, emphasizing strong underlying economic support for equities, the still-powerful AI theme, and the need for portfolio diversification due to high valuations and late-cycle signals. Despite bullish sentiment, the strategists caution against complacency—stretched valuations and tightening credit spreads require risk-conscious portfolio construction, favoring broad equity exposure and alternatives, while keeping credit risk in check.

For investors:

• Expect further gains in equities, especially in EM and Asia, but balance with diversification.
• Watch for persistent opportunity in gold, local US power, and AI-linked industrials.
• Remain attuned to macro/micro cycle divergences—higher volatility is possible.
• Avoid complacency in credit and seek selective hedges as volatility remains low.

For further details, listen to the full episode or consult Goldman Sachs research.