Investors aren’t generally motivated to look too far into the past. While history provides a guide to what’s likely to come next, it’s more of a compass than a GPS. 

Friday’s first estimate of fourth-quarter GDP growth raises many signposts for 2026. Key is the path forward for a K-shaped economy in which those at the top of the income scale experience a very different vibe from those nearer to the bottom.

That has enormous political implications, of course, with the U.S. midterm elections just a few months away, but it also sets a baseline for what investors will have to navigate over the coming year.

An economy that’s growing but not creating jobs is a headache for central bankers trying to track inflation pressures and set interest rates. An economy that’s reliant on artificial-intelligence investment will find itself dependent on fewer companies with outsized influence on policy and regulation.

Some of those concerns are reflected in the market’s current torpor, with the S&P 500 now just 0.2% higher on the year and investors unsure about how the biggest equity tailwinds of fiscal and monetary policy—as well as corporate earnings growth and AI advancements—will come together in this new K-shaped environment.

The past doesn’t repeat, but it does echo. And the sound of today’s GDP reading will reverberate well into the new trading year.

—Martin Baccardax

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A Supreme Court decision about President Donald Trump’s use of emergency powers to impose tariffs broadly could come as early as today. So far the data show the nation’s trade deficit with the world, which the tariffs are designed to fix, barely budged last year despite Trump’s significant policy shifts.

• Trade was choppy in 2025 as companies maneuvered around the tariff threats and negotiations. But the overall goods and services trade deficit for 2025 hit $901.5 billion compared with $903.5 billion in 2024, the Commerce Department said. The deficit with China narrowed 31% to $202 billion.

• The Trump administration cited the U.S.’s wide trade deficit in justifying its use of the International Emergency Economic Powers Act for many of its global tariffs. The court could uphold the use of emergency powers for some tariffs but not others. Polymarket puts 74% odds on a ruling against the administration.

• The White House insists it has various avenues to rebuild tariffs if that happens. Stephan Becker, a partner at Pillsbury, expects the administration to move quickly to re-create the tariffs, possibly using trade authority under Section 122, which allows up to 15% tariffs for 150 days.

• But Trump may meet resistance. Earlier this month, six Republicans joined Democrats in the House to end the emergency tariffs he had imposed on goods from Canada in early 2025, citing the need to stop fentanyl flows. The Senate could also pass it but it would likely be vetoed.

What’s Next: The White House has eased some tariffs, including on certain food products, and struck a preliminary trade deal with India that reduced tariffs to 18% from 50%. The Wall Street Journal reported last week the administration is considering tweaking its aluminum and steel tariffs.

—Reshma Kapadia

Investor concerns about the growing private credit market spilled over to general stock market anxiety on Thursday, spurred by Blue Owl Capital’s move to halt quarterly redemptions at one of its retail-focused private-credit funds. The move raised concerns about redemptions being curbed at other private-credit funds.

• Firms like Blue Owl, Blackstone, Ares Management, and Apollo Global Management are active in private credit. Blue Owl disclosed it sold $1.4 billion of assets from three of its private credit funds to a group of institutional investors at 99.7% of par value. It disputed the characterization that it was halting redemptions.

• Instead, Blue Owl said rather than halting redemptions, it was accelerating the return of investor capital. It’s returning 30% of capital to investors in its Blue Owl Capital Corp. II. CEO Craig Packer stressed that the sale at nearly full value was a good sign, and a signal of its portfolio strength and integrity.

• The move comes after many funds that are focused on private credit saw elevated fourth quarter redemption requests. Moody’s Ratings put them at an average of close to 5% across nine funds. Blue Owl said it is returning six times as much capital, and doing it over the next 45 days.

• Blue Owl had planned to merge the Blue Owl Capital Corp. II entity with its publicly traded Blue Owl Capital Corp., but called off that transaction in November. That led it to examine other ways of returning investor capital.

What’s Next: Remaining questions for Blue Owl Capital Corp. II include whether Blue Owl continues to sell loans held by the fund and return cash to shareholders. If that occurs, investors will be focused on the prices that Blue Owl receives for the loans.

—Andrew Bary and Janet H. Cho

Groups representing cryptocurrency firms and banks met with White House officials on Thursday in an attempt to work through the latest roadblock delaying long-awaited legislation defining how the industry will be regulated. Crypto firms are running out of time for President Trump and Congress to sign off on the so-called Clarity Act.

• The problem is some senators and banks want to ensure any bill prohibits companies from paying yields to customers for holding stablecoins on their platforms. Some banks and lawmakers say offering the yields could cause customers to pull out deposits and move the money into the tokens.

• The provision is important to Coinbase, which co-created the largest U.S.-based stablecoin, a type of token that is pegged to the dollar. “The dialogue was constructive and the tone cooperative. More to come,” wrote the company’s Chief Legal Officer Paul Grewal in a post on X after the meeting.

• The conflict dominated discussions at a crypto conference held on Wednesday at Trump’s Mar-a-Lago resort. The conference was hosted by World Liberty Financial, the digital-assets firm co-founded by Trump, his sons Eric and Don Jr., and others.

What’s Next: As late as last month lawmakers seemed poised to move forward with the bill, however the Senate’s version of it ran aground. Now there is a high risk that lawmakers fail to approve the legislation before the November midterm elections. Passing a bill is expected to get only harder if Democrats retake the House in November.

—Joe Light

President Trump declared he has won the battle on affordability during a speech on Thursday despite polling that says Americans disapprove of his handling of the cost of living and inflation. For Trump this is the latest effort to change public perception about his performance with the midterm elections looming.

• Trump told steel factory workers during the speech in Georgia that his tariffs were behind their prosperity. “Thanks to what I call the Trump tariffs, business at Coosa Steel is booming again,” he told the crowd. He pointed out record highs in the stock market and rising retirement fund balances.

• While inflation is cooling—annualized inflation for January was 2.4% compared with a 2.7% increase in December from a year before—households are still feeling the effects. Food inflation was almost 3% over the past year and the cost of housing remains high.

• Walmart’s new CEO John Furner said Thursday that while spending remains resilient in the U.S., consumers are choiceful. Much of the company’s market share gains continue to come from households making more than $100,000, he added. Spending is tighter on the lower end of the income spectrum.

• Trump’s approval rating on the economy continues to slip, according to a Reuters/Ipsos poll this week. It sank to 34% from 36% in early January. About 57% of respondents said they disapprove of his handling of the economy, up from 55% in early January.

What’s Next: Trump’s Georgia speech is just one stop on a national tour he started last fall to highlight his economic agenda. He will get another big stage to make his argument next week, when he gives the State of the Union. 

—Liz Moyer and Sabrina Escobar

NASA’s dress rehearsal of its upcoming 10-day, million-plus-mile Artemis II mission around the far side of the moon in early March or April underscores why its model appears increasingly expensive and less competitive in the commercial space business, especially compared with Elon Musk’s SpaceX.

• Four astronauts will be launched aboard an Orion spacecraft made by Lockheed Martin and other companies, propelled by NASA’s Space Launch System, or SLS, which is built by several companies, including Boeing. It will be the first lunar flyby in some 50 years.

• A “wet dress rehearsal” is when crews load the rocket with fuel and practice the countdown without actually launching with astronauts. NASA uses commercial companies to take a payload to the moon, while SpaceX ferries astronauts to and from the International Space Station.

• Unlike SpaceX’s Falcon rocket system, NASA’s Space Launch System isn’t reusable and costs an estimated $24 billion, not including the cost of the capsule or other infrastructure. SpaceX, in comparison, has raised an estimated $12 billion since it began developing its reusable rockets.