Equity
1.
Deploy cash into bonds: corporate and municipal credit quality is good, and cash rates are biased lower.
2.
Treasure curve volatility leads to a neutral-to-short duration preference, using short duration credit (IG, HY, munis) and balanced with structured products and taxable munis.
3.
Strong fundamentals create an attractive opportunity in structured credit and convertible bonds.
Policity rates have fallen: reinvestment risk still dominates portfolios.
Uncertainty about growth and inflation suggests higher and more volatile market interest rates, making duration an unreliable source of returns.
U.S. public credit quality is expected to remain very strong, supported by still-resilient economic activity.
1.
Deploy cash into bonds: corporate and municipal credit quality is good, and cash rates are biased lower.
2.
While the Q1 pace of European performance is likely not sustainable, we see tactical upside in ex-U.S. equities.
3.
Small caps are unlikely to outperform durably unless interest rates move lower while growth is resilient – unlikely this year.
We are at maximum policy uncertainty, but if earnings quality holds, equity market volatility can provide relief from high valuations and create buying opportunities.
Enthusiasm for U.S. assets is fading, while Europe’s increased defense and infrastructure spending faster interest rates cut offer potential upside.
The AI trend is here to stay, seen in investment in digital and energy infrastructure.
Consider deploying gains into high-yield corporate credit.
While the Q1 pace of European performance is likely not sustainable, we see tactical upside in ex-U.S. equities.
Small caps are unlikely to outperform durably unless interest rates move lower while growth is resilient – unlikely this year.
Diversify equity exposure into AI-related sectors like energy and digital infrastructure.
We are at maximum policy uncertainty, but if earnings quality holds, equity market volatility can provide relief from high valuations and create buying opportunities.
Enthusiasm for U.S. assets is fading, while Europe’s increased defense and infrastructure spending faster interest rates cut offer potential upside.
The AI trend is here to stay, seen in investment in digital and energy infrastructure.
Our
View
How to invest
Consider deploying gains into high-yield corporate credit.
Fixed Income
Alternatives
How to invest:
Our View:
Consider diversifying equity exposure to AI-linked themes in energy, materials, and infrastructure.
Recent macro data suggests a “Goldilocks” backdrop (moderate inflation, balanced employment), but risks like tariffs and valuation volatility remain. Global investors are rethinking U.S. assets amid rising geopolitical risks; traditional relationships between asset classes are shifting.
Small companies are less resilient to input price rises and supply chain issues. Digital and energy infrastructure, including AI, continue to attract diversified investment interest.
Stay invested, with an emphasis on earnings quality.
Consider equity-like risk in high yield corporate credit where fundamentals and yields are attractive.
Pursue prudent global and geographic diversification; expect investors to rebalance U.S./non-U.S. exposures.
Favor large caps over small caps due to better historical resilience.
Diversify equity exposure into broader AI themes: energy, materials, digital infrastructure.
Recent macro data suggests a “Goldilocks” backdrop (moderate inflation, balanced employment), but risks like tariffs and valuation volatility remain.
Global investors are rethinking U.S. assets amid rising geopolitical risks; traditional relationships between asset classes are shifting.
Small companies are less resilient to input price rises and supply chain issues.
Digital and energy infrastructure, including AI, continue to attract diversified investment interest.
Stay invested, with an emphasis on earnings quality.
Consider equity-like risk in high yield corporate credit where fundamentals and yields are attractive.
Pursue prudent global and geographic diversification; expect investors to rebalance U.S./non-U.S. exposures.
Favor large caps over small caps due to better historical resilience.
Diversify equity exposure into broader AI themes: energy, materials, digital infrastructure.
AI remains a durable trend, with digital and energy infrastructure seeing strong, diversified investment and offering a compelling entry point.
Small companies have less buffer against input price rises, and less opportunity to adjust supply chains.
Global investors are questioning U.S. assets amid rising growth and policy risks, prompting a shift toward diversification, including Europe’s defense and infrastructure spending.
Policy risks are rising, with tariff-driven inflation and labor pressures emerging. Data has yet to show the full impact, but growth, costs, and business conditions will be affected, likely reviving volatility and making earnings quality key. Near term, Fed cuts should extend the equity rally and support risk assets.
We strongly prefer large caps. We believe small caps likely lag until growth improves.
Ex-U.S. outperformance may slow, but diversification remains prudent amid global risks.
Consider deploying equity-like risk into high yield credit, where fundamentals and yield outweigh tight spreads.
Stay invested, with a focus on earnings quality.
Alternatives
Fixed Income
Equity
How to invest:
Our View:
U.S. credit quality remains strong, Europe looks attractive, but growth and inflation uncertainty may fuel volatility. We favor “buy and hold” short-duration strategy.
Strong fundamentals support opportunities in structured credit and convertibles; in floating loans, we believe only the highest-quality credit is likely to hold.
Sticky rates and tight spreads raise questions on fixed income, but we see income opportunities as too attractive to ignore.
Fed cuts should be sporadic, not sustained, making careful credit selection vital late in the cycle.
After the September cut, we expect the Fed to cut further in coming months, creating a window to lock in higher yields before they move lower across credit classes.
Treasury volatility supports a neutral-to-short duration stance; favor short duration credit (IG, HY, munis) with taxable munis as an infrastructure play.
Short duration credit can help manage rate volatility and long-term quality risks.
Alternatives
Fixed Income
Equity
How to invest:
Our View:
Private markets are growing and democratizing, with lower rates potentially supporting deal flow.
Qualified investors may diversify into more resilient lower middle private market.
U.S. trade policy remains uncertain, but trends in re-globalization, AI, and energy independence point to higher capital intensity, infrastructure investment, and stickier inflation.
Geopolitical risk has risen since COVID-19, boosting demand for U.S. safe-haven assets. Inflation surprises add pressure, making diversification and inflation-aware strategies important.
Inflation-aware assets – commodities, materials, and real estate – may benefit from the macro backdrop.
Consider hedging geopolitical risk with equal parts oil, gold, and bitcoin as an equity satellite.