Empower's Norton: The market's not bubbly but the economy is facing trouble in '26

Tom Stringfellow, chief investment strategist at Argent Trust, says that he expects stock market volatility to increase, especially as the Federal Reserve makes fewer cuts than observers are hoping for, but he doesn't see "a worrisome correction, I just see market testing." Those tests will break some trends in sectors and industries, but shouldn't break the market's ability to post modest gains. In honor of the Thanksgiving holiday being the real start of the holiday shopping season, Todd Rosenbluth, head of research at VettaFi, picks a retail-themed fund as his "ETF of the Week." Sara Enright, senior director of safety and sustainability at Consumer Reports, discusses CR's recently proposed homeowners insurance bill of rights, and points out some of the basics that consumers should know -- but typically don't -- about their policies that insurers often don't disclose because rules don't force them to speak up. Plus, Chuck talks about some things he is thankful for this Thanksgiving, noting that he has had a change in his own attitudes about money, driven by his age, experience, the deaths this year of two people he talked money with and more.  

Marta Norton, chief investment strategist at Empower, says the stock market has high valuations, but notes that it lacks the excessive economic risk-taking and the fear-of-missing-out sentiment that are necessary to create true bubble conditions. But she notes that avoiding a bubble doesn;t mean it's smooth sailing ahead, as she says in Empower's outlook for 2026 that she expects anemic job growth to be a primary economic story. That jobs picture puts the Federal Reserve "between a rock and a hard place and maybe a third hard place," with the labor market making it tough for the central bank to cut rates. As a result, she's suggesting that investors rebalance portfolios, downplay their expectations and anticipate heightened volatility. Julius de Kempenaer, senior technical analyst at StockCharts, says that the market currently is going through a rotation to where "Right now, defense is the play," with money moving to health care, utilities and consumer staples, all defensive sectors. He is expecting the next six to eight weeks to be frothy and to determine whether the recent move away from highs is a blip or a real correction, but he warns that the upside for the Standard and Poor's 500 is "littered with resistance," and "the ease of movement seems to be to the downside."    Plus, in the market Call, Dom Rizzo, portfolio manager for the T. Rowe Price Technology ETF and the T. Rowe Price Global Technology Fund talks about how he looks for linchpin technologies in growth markets, with improving fundamentals and, hopefully, reasonable valuations, and just how he determines who makes that grade now.

Amar Reganti, fixed income strategist at the Hartford Funds, says "The uncertainty is real," over the potential not only for what the Federal Reserve could do but how the market and economy will respond to whatever decision gets made. Reganti says investors are facing the prospect of rate cuts spurring higher inflation, but a lack of action resulting in a tougher employment market and that both outcomes could make things a lot scarier and nerve-wracking than they are now. Rachel Perez discusses a BestMoney.com survey showing two-thirds of consumers say they lose more money paying annual fees on credit cards than they gain from the benefits and perks on those premium cards. David Trainer, president at New Constructs, puts meals-delivery company DoorDash back into the Danger Zone, noting that recent strong results and a big bounce in the price are masking the real trouble that still exists in the balance sheet and that will eventually result in a much lower share price for the stock.  In the Market Call, Martin Leclerc, chief investment officer and portfolio manager at Barrack Yard Advisors, explains why he puts much of his focus and emphasis on companies that can "Show me the cash."  

Zach Jonson, senior portfolio manager at Stack Financial Management, says the stock market is facing a trifecta of bear-market risks that could lead to "one of the great bear markets of our lifetime," with losses surpassing 40 percent and lasting for as long as 18 months when it finally bursts. Despite that, he says there are ways to "invest through it," and that's precisely what he is doing, because despite bubble conditions, there are pockets of value and there could still be a lot of market upside until the inevitable pop of this balloon. But the talk starts today with an interview recorded at Wednesday's Active Investment Company Alliance Fall Round Table in New York City, with David Tepper of Tepper Capital Management revisiting past selections of some classic funds he has held for years and their prospects for the future, plus his outlook on the potential dangers of private credit, what he is worried about if the economy turns and more. Charles Rotblut, vice president of the American Association of Individual Investors, discusses the latest AAII Sentiment Survey, which showed that bearish sentiment was actually decreasing as the market pulled back from record highs, and how high levels of bearish sentiment — which the market has seen for the last year — are part of what lets Wall Street climb the proverbial "Wall of Worry." In the Market Call, Daniel Dusina, director of investments at Blue Chip Partners, talks about how he goes about finding "unappreciated quality" at a time when the market itself has appreciated to near record levels.

Andrew Foster, founder and chief investment officer at Seafarer Capital Partners — manager of the Seafarer Growth and Income Fund — says that it's the "bottom of the first or, maybe, bottom of the second inning with respect to how tariffs will play out," but he notes that emerging markets companies have pushed higher prices back on U.S. consumers, which means the story has a lot of twists and turns left to navigate. Foster also says that domestic investors want to use emerging markets -- and foreign currencies -- to diversify portfolios against what lies ahead, noting that over-exposure to the dollar may lead to greater volatility and risk ahead. Todd Rosenbluth, head of research at VettaFi, heads to the utilities sector and a long-time established fund for his ETF of the Week. The second half of today's show is interviews from Wednesday's Fall Round Table for the Active Investment Company Alliance, which Chuck attended and spoke at in New York City. The conversation starts with Ryan Paylor, portfolio manager at Thomas J. Herzfeld Advisors, which recently converted a closed-end fund from a focus on companies located in the Caribbean Basin — it was ticker Symbol CUBA — to one focused on collateralized loan obligations. Paylor explains the thinking behind the move and how shareholders reacted to such a drastic makeover. Then, long-time activist investor Phil Goldstein of Bulldog Investors discusses the state of shareholder activism and why there seems to be so much less of it than there was just a few years back. Some of the change is good news for consumers — better fund management — while other reasons make it harder for activist moves to succeed.

David Russell, global head of market strategy at TradeStation, says that as artificial intelligence become less of an economic focus, the market will wake up to potential weakness on Main Street, where "recessionary patterns" are already visible. He is expecting "one of the weaker holiday seasons in a while," and says that a lot of signs that have been viewed as bullish have become much more questionable. He would not be surprised to see the market test October lows — roughly 6,550 on the Standard & Poor's 500 — before year's end.    Nate Miles, head of retirement at Allspring Global Investments, discusses the firm's 2025 Retirement Study, which showed that only six in 10 retirees and near-retirees feel financially secure, a significant decline from just a year ago. The study also showed that investors — who have embraced target-date funds and life-cycle funds as a primary savings option — are looking for more personally tailored investment and retirement-spending solutions.    In the Market Call, absolute-value manager Brian Frank of the Frank Value Fund — who has a history of holding cash when the stock market is highly valued — says that a market flirting with record highs is not discouraging him, as he is fully invested, noting that he is not struggling to find individual stocks that are underpriced and that have a likely catalyst to unlock growth.

Joe Quinlan, head of market strategy for Merrill Lynch and Bank of America Private Bank, says that the U.S. consumer higher-income households "are in great shape heading into 2026," and so long as the Boomers continue spending, the economy and stock market can roll along. Quinlan says that the economy can avoid a recession if the Federal Reserve can avoid policy mistakes, if the U.S. stays out of a difficult trade war and if the extraneous factors mostly stay at bay. Given what the market has weathered in 2025, Quinlan says there is reason to believe the rally can continue, even if results are muted a bit compared to the equity returns of the last three years. Chris Vermeulen, chief market strategist at The Technical Traders, says that investors should not be fighting current trends, but they should be getting cautious in a market where there's not a lot of upside left this year. He expects January to be a telling month for whether the rally can carry deep into 2026, and says that investors looking for bigger gains can still get in on the gold rally, which Vermeulen says still has 25 to 30 percent upside from current levels.   Sandra Block, contributing editor at Kiplinger talks about what she learned about dental care for retirees as she made her own transition toward retirement earlier this year, and the choices consumers face as they weigh Medicare options. And Mark Hamrick discusses a recent BankRate.com survey which found that about half of working American adults expect to be reliant on Social Security benefits to handle necessary expenses when they retire, but more than three-quarters of that working population worries that their promised benefits won't be paid when they reach retirement age.

Gargi Chaudhuri, chief investment and portfolio strategist for the Americas at BlackRock, says the market's recent action represents "a fairly healthy pullback," the kind of periodic "cleansing" that markets go through, and that the recent action is less based on whether earnings can continue to drive valuations higher than it is on nervousness over the Federal Reserve's next move. Chaudhuri says that the current focus on whether the Fed will cut rates again in December is misplaced, because continued earnings growth, gross domestic product numbers and the fundamentals of the stock and bond markets will do more to determine how long the bull market lasts. That long view also coincides with BlackRock's latest "People and Money Survey," which Chaudhuri noted showed that staying invested long-term and riding out markets rewards investors more than trying to time markets. David Trainer, founder/president at New Constructs, says that agentive artificial intelligence has advanced to where it can provide investors with a real edge when it comes to choosing superior stocks and funds, and he warns that people who don't adopt AI for at least a part of their portfolio will be dooming themselves to below-average returns. He also explains how these forms of AI are different from the ones that are known for giving bad answers to personal-finance questions, which Chuck discussed on the show last week with Robert Farrington of The College Investor. Plus, Peter Krull, director of sustainable investing at Earth Equity Advisors, returns to the show after his recent appearance in the Market Call to discuss his new book, "The Sustainable Investor: Responsible, Impactful, and Values-Driven Investing Strategies and Practices for Financial Professionals." Krull discusses past, current and future forms of "responsible investing."

Buck Klintworth, senior vice president and portfolio manager at Chase Investment Counsel, says the market isn't looking like it will make dramatic moves before the end of the year, but he does expect a "small correction." Because he believes that the underpinnings for the economy are solid and forces like the artificial intelligence boom are backstopping the market, he expects that correction to be a buying opportunity for investors. Tani Fukui, senior director for global economic and market strategy for MetLife Investment Management, says she expects the Federal Reserve to follow through with rate cuts — even as the market seemed to waver in its confidence in cuts on Thursday — and that the move and the coming rate-cut cycle will help the U.S. economy avoid a recession. Josh Duitz, global head of income for Aberdeen — manager of the Aberdeen Total Dynamic Dividend Fund — talks about where he is finding success in generating elevated income at a time when rate cuts are making it harder for investors to earn easy yields. Duitz discusses international investing and whether the rally overseas can continue in the face of reduced currency impacts, where high-flyers like the Magnificent Seven stocks fit in with his portfolio (or don't), and which sectors he is finding most attractive right now. Beth Pinsker, financial planning columnist at MarketWatch, discusses her recent piece on what the release of new tax brackets for 2026 means for investors who are considering Roth IRA conversions. Pinsker notes that the bracket changes will change the math, especially for people who were on the fence about whether a conversion could be worthwhile.

Robert Farrington, founder of The College Investor, posed 100 personal finance questions to Google AI and came away with 37 "misleading or inaccurate" answers, and while that sounds horrible, it actually represents an improvement of six percentage points over the results Farrington got making the same queries a year ago. Farrington notes that the outcomes are only as good as the inputs, meaning that consumers who don't know the right questions to ask will be more poorly served by artificial intelligence than those who know enough to ask solid questions. Catherine Collinson, president of the Transamerica Center for Retirement Studies, discusses "Retirement Throughout the Ages: The American Middle Class," which showed that U.S. adults earning between $50,000 and $199,999 annually are struggling to stay afloat and get ahead when it comes to retirement planning.  Todd Rosenbluth, head of research at VettaFi, looks to mid-cap stocks with momentum as he makes an offering from Invesco his ETF of the Week. Plus, Chuck tackles the subject of 50-year mortgages and how the real problem with the idea may be more on how it addresses housing affordability — or not — rather than the massive amounts of extra interest paid over the life of the ultra-long loans.