Head of Equity Strategy
Summary: Equities worldwide are on a roll, boosted by optimism about a US-China trade settlement. But the cheer isn't universal as both German and South Korean indices are holding back – are they being prudent or just over-cautious?
The US-China trade deal will obviously alleviate some of the nervousness among companies but a lot of damage has already been done. Financial conditions have already eased somewhat but the bigger question is whether they have eased enough to offset the negative dynamics in play. The OECD’s leading indicators suggest the weakest outlook against trend growth since October 2009 with December’s data still suggesting a substantial slowdown with the current slowdown from the recent peak on par with the 2010/11 slowdown driven by the euro area crisis. As a result of this we continue to position ourselves defensively in equities.
The current phase in the business cycle suggests that investors should be:
Underweight:
Banks, insurance, semiconductors, consumer durables
Overweight:
Software & Services, Telecommunication, Retailing, Pharmaceuticals, Biotech & Life Sciences.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
