Contrarian Strategist Forecasts U.S. Housing Boom, Weaker Dollar, and Commodity Surge in 2026

Marko Papic’s 2026 outlook defies prevailing market sentiment with a series of bold macro calls centered on structural misalignments in global capital flows and policy expectations. He anticipates a 25% year-on-year increase in U.S. housing starts by Q3 2026, fueled by a sustained drop in mortgage rates below 5.5%, which he views as inevitable given the Federal Reserve’s looming rate cuts. This shift, he argues, will trigger a broad-based recovery in the real estate sector, lifting SPX index performance by 12–15% over the next 12 months. Papic also identifies a fundamental breakdown in the perceived independence of the Federal Reserve, asserting that monetary policy has long been influenced by political cycles, particularly under a second Trump administration. This expectation of coordinated fiscal and monetary easing—potentially including a $2 trillion infrastructure spending package—drives his forecast of a depreciating U.S. dollar. The DXY index is projected to fall to 98.0 by late 2026, down from current levels near 105.5, making EURUSD a key beneficiary with a target of 1.12–1.15. Commodity markets are central to his thesis, with industrial metals and energy poised for a multi-year rally. He forecasts LME copper prices to rise to $12,000 per metric ton by Q4 2026, driven by green transition demand and supply constraints. Similarly, heating oil (HO) futures are expected to reach $4.75 per gallon, reflecting tighter global refining margins and geopolitical volatility in key producing regions. The implications extend across asset classes: financials and industrials stand to gain from higher economic activity and lower real rates, while materials firms could see earnings upside of 20%+ over the forecast period. These moves suggest a re-pricing of risk across global markets, particularly in Europe, where equities could outperform U.S. peers as dollar weakness enhances export competitiveness.