Equities

Special Report

Cybersecurity is a strategic investment theme, which looks particularly interesting in light of the trade war and heightened geopolitical tensions. It is less exposed to tariffs than other industries and, if anything, benefits from geopolitical tensions as customers seek protection from international cyberattacks and cybercrime. The industry’s fundamentals are improving, while valuations are moderating. A recent pullback presents an attractive entry point into the theme.

In the front section of the chart pack, we review March’s performance. We will also recommend the portfolio positioning for downward protection.

Equities will find a bottom when the full effects of tariffs on earnings and economic growth are priced in. The bottom of the market appears a long way away, and the S&P 500 may end up as low as 4,300, barring any reversals in trade policy that could undo the damage.

Special Report

QC is on the verge of exciting technological breakthroughs and will eventually present multiple sound investment opportunities. However, the industry is still in its early innings, and buying pure-play QC stocks is akin to buying lottery tickets. Big Tech may end up dominating the space. We recommend a cautious stance.

The US economy faces a new investment regime characterized by tighter fiscal and easier monetary policies. The market corrected fast, and a short-lived equity rebound is likely. However, over the long term, US equities face economic headwinds.

Trump’s foreign policy can be explained by rational US interests, but it requires settling the trade war with allies sooner rather than later. Book gains on EUR-USD for now.

The Q4 earnings results were spectacular but are now in the rear-view mirror. Now, investors are laser-focused on tariff threats, earnings headwinds brought about by a stronger dollar, and an unhappy consumer. Our analysis of earnings commentary found that, while companies often refer to tariffs during their earnings calls, most are perplexed and still in a “wait and see” mode. A strong dollar is negative for earnings, but the recent dollar retrenchment will bring relief. Wealthy consumers are still spending, but there are early signs of stress.

This week we are sending you a sector chart pack. In the front section of the chart pack, we review February’s performance, take stock of the recent macroeconomic developments, and examine whether market rotation will continue. We also review whether the US valuation premium relative to Europe is justified.

Interest rates will decline if the disinflationary trend continues, deficits are reduced, or economic growth falters. Oil prices are likely to spike over the short term, but the long-term outlook is unfavorable. Not all GenAI investments will pay off, and GenAI-induced productivity improvements do not justify current valuations.