Beyond noise and narratives
Markets have absorbed a year of policy surprises and tariff headlines with remarkable resilience. After April’s “Liberation Day” shock, risk assets refocused on fundamentals. As 2026 approaches, the backdrop is more stable yet demanding: the Federal Reserve resumed cautious rate cuts in late 2025,
AI-led capital expenditure remains robust, and consumption is softening but still supportive. Structural headwinds – deglobalization, aging demographics, and rising fiscal burdens – argue for slower, more uneven growth. In this setting, we favour disciplined, quality-first investing, with balanced equity exposure, an overweight to high-quality fixed income, and selective use of diversifiers.
The highlights of this edition are:
Balanced growth, not boom or bust – We do not expect a global recession in 2026. AI and digital infrastructure spend, reshoring, and higher defense budgets underpin activity. US consumption should cool rather than cliff, while equity market leadership remains narrow, which calls for patience and selectivity.
Equities – stay close to strategic weights – Valuations, especially in the US, already price in optimism. Earnings growth – not multiple expansion – is likely to drive returns. Rising yields from inflation surprises or debt concerns could trigger a valuation reset reminiscent of 2022, so we keep equity allocations near strategic levels.
AI – focus on quality leaders and the enablers – We do not expect the AI story to burst in 2026. Fundamentals for leaders remain solid, with hyperscalers Amazon, Microsoft, and Alphabet posting strong earnings and self-funding capex. Attractive opportunities increasingly lie with enablers – utilities and grid operators, semiconductor and power equipment makers, and cooling and materials suppliers – where system bottlenecks in power and capacity are most acute. Watchpoints include rising leverage tied to AI infrastructure and any turn in earnings revisions.
Fixed income – overweight quality and keep some duration – The credit cycle is mature, so we favour high-quality issuers and are selective in high yield. Maintain some duration as disinflation should build through 2026. We prefer USD-denominated credit given solid fundamentals and potential Fed easing, while the ECB looks hesitant to cut in H1 2026.
Gold and alternatives – strategic diversifiers – Gold has more than doubled since end-2023. We still see upside, albeit at a slower pace, supported by sustained central bank buying, de-dollarization, and fiscal concerns. For Swiss investors facing low real CHF yields, reallocating part of domestic bonds to alternatives can make sense. Catastrophe bonds offer attractive yields, low correlation, and reduced volatility.
US dollar – bias to mild depreciation with two-way risks – 2025 saw notable weakness: the Dollar Index fell about 8% YTD, while USD declined roughly 10% versus EUR and 11% versus CHF. Structural headwinds include fiscal deterioration (Debt-to-GDP near 124%, net interest ~3.2% of GDP in 2025), valuation, and narrowing rate differentials. Upside risks remain if Fed cuts undershoot, FDI rises, or safe-haven demand returns.
Regional stance – proof over hope – We prefer the US and selected Asia, notably Japan (policy shift, reforms, better shareholder returns), Vietnam (supply-chain diversification), and a selective, quality-centred approach in China. Europe is a show-me story, with improved optics but earnings execution still key despite Germany’s fiscal impulse.
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