Cronk, Timmerman urge balance of resilient growth data with rising geopolitical risk in client strategies
In a pair of influential January commentaries, senior strategists at Wells Fargo Investment Institute outlined a cautiously upbeat view of the global economy and financial markets for 2026, while spotlighting geopolitical developments that could unsettle investor confidence.
Jennifer Timmerman, senior investment strategy analyst, pointed to recent US economic data as evidence of expanding momentum. In market commentary this week, she highlighted third quarter US GDP growth that “came in at 4.3%, well above expectations and far stronger than long-term historical averages.”
Consumer spending remained robust, business investment in automation and artificial intelligence showed significant contributions, and a narrowing trade deficit bolstered the overall expansion. Retail sales in November and December also exceeded forecasts, extending discretionary demand across travel, dining, and auto purchases.
Timmerman acknowledged that not all sectors are firing on all cylinders, with manufacturing appearing soft and some households feeling squeezed by persistent price pressures. But she argued that these mixed signals have helped pave the way for Fed rate cuts, and Wells Fargo anticipates additional easing through the year.
Overlaying that economic narrative, Darrell L. Cronk, president and CIO of Wells Fargo Investment Institute, broadened the lens to include rising geopolitical tensions tied to the global pursuit of technological dominance.
In a State of the Markets report Cronk described the current era of artificial intelligence and its supporting infrastructure as akin to a global competition: “The AI Revolution … more and more, I find myself thinking about the rapid evolution of AI as ‘The Amazing Race.’" He expanded that metaphor to argue that major economies are jockeying not just over algorithms but over the raw materials necessary to fuel future growth.
Cronk’s narrative weaves historical reference with contemporary strategy, suggesting that nations may increasingly seek control over critical commodities like copper, lithium, and rare earths. He counseled that investors “need to be cognizant of geopolitical risk,” noting that markets have historically faltered when caught off guard by unexpected global events.
The report further emphasized that demand for industrial metals and energy resources tied to AI infrastructure could surge over the coming decade, creating opportunities and risks outside traditional equity and credit markets. Cronk also highlighted that US markets rallied in response to early 2026 geopolitical developments, interpreting them as indicative of the competitive stakes at play.
