Global Investment Outlook
Take a deep dive into our latest views on the Global Outlook
Dec 4, 2024
Read our insights across asset classes, assessing recent events and their potential implications for tactical and strategic allocations.
2026 INVESTMENT OUTLOOK
Pushing limits
Dec 2 | AI’s buildout is dominated by a handful of companies that are spending on a scale so large, it has macro impact. The challenge for investors is reconciling whether AI will generate revenues of the same order of magnitude as the huge capital spending plans.
Investment themes
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01
Micro is macro
The capital spending ambitions tied to the AI buildout are so large that the micro is macro. The overall revenues could justify the spend – yet it’s unclear how much will accrue to the tech companies driving the buildout. We stay pro-risk and overweight U.S. stocks on the AI theme. We also see this as a great time for active investing.
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02
Leveraging up
The AI builders are leveraging up: investment is front-loaded while revenues are back-loaded. Along with highly indebted governments, this creates a more levered financial system vulnerable to shocks like bond yield spikes. We see private credit and infrastructure supporting this financing and are tactically underweight long-term U.S. Treasuries.
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03
Diversification mirage
With a few mega forces driving markets, allocations made under the guise of diversification could be big active bets. We think investors should focus less on spreading risk indiscriminately and more on owning it deliberately. We think portfolios must be nimble, with a clear plan B. We like idiosyncratic exposures in private markets and hedge funds.
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