Reiterates 2025 outlook themes: AI, global fragmentation, and inflation are playing out. Current situation is a confluence of geopolitical and political agendas changing the fabric of economies and markets, requiring different portfolio construction.

Economic nationalism, countries looking inwards, and national security issues are being met with fiscal activism (e.g., Japan's pro-growth policies), leading to potentially higher growth, higher inflation, and higher inflation volatility.

2026 will be more about fiscal policy than monetary policy. Need to watch monetary policy flow-through; events threatening Fed independence/efficacy could steepen the yield curve (front end down, back end up) without benefiting the economy, impacting cross-asset correlations.

AI evolution: last year was about capex (40% of GDP), this year is about use cases broadening through the economy, with more companies discussing them in earnings.

Job displacement is a remaining question, with evidence in the graduate job market. 47% of S&P companies discussing AI use cases pertain to efficiency gains, which could displace jobs. Hope is that using AI for revenue growth opens new job opportunities.

Expects labor market to bottom out and stay lackluster, not returning to super-strong conditions. Base case: cyclical pro-growth impulse means Fed doesn't need to cut much (probably once). Risk: if growth accrues to a narrow part of the market, it could force more Fed cuts, boosting asset prices but exacerbating capital vs. labor value distribution.

Inflation could start coming up again north of 3% in the first half of 2026, then fade in the back half.

Driven by tariffs and cyclical strength from tax rebates and fiscal spending. Higher growth and higher inflation in the US mean cyclical parts of the market should continue to do well.

US-China is the defining geopolitical relationship. China's economy is bottoming out, property issues persist but people want to move on. China's tech advancement in AI is broader (automation, manufacturing) and presents an opportunity, but not a big allocation. US is still preferred market.

Interesting opportunities in EM due to US-China relationship developments. Europe looks interesting in second half due to cyclical boost from US spending spilling over, defense names, and potential China bottoming helping European sentiment (luxury, mining, industrials).

Oil consensus is particularly tight this year, but one area with wide spread is oil, even before Venezuela/Iran events. Venezuela is less of an issue for current supply. Events in Middle East/Iran need watching closely, not just for direct impact on oil price/Iranian production, but for flow through Strait of Hormuz.

Key commodity remains gold as the ultimate geopolitical hedge, to get away from overweight US dollar exposures. Target is 5300 with high conviction.