Geopolitical and Market Outlook (with Tim Stenbeck; Emily Grafeo)

David Bianco, CIO at DWS, views the Middle East conflict as inflationary and expensive, but remains overweight tech due to strong earnings and return on capital. He is skeptical of a quick resolution and sees tech as resilient to higher rates, while other market segments face PE compression risk.

implicit

explicit

RUT

implicit

Metals

USD

DWS 7.8
Asset Manager $900.00B
David Bianco 9.5

Geopolitical and Market Outlook (with Tim Stenbeck; Emily Grafeo)

ndx

We are moderately overweight tech and communications... Tech is the most resilient part of the equity market to higher interest rates.

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no reliable edge (random outcomes)

12/8/2025 7:06:53 PM	medium term cautious up	20 days later	-0.56%	-0.28%

wti

Geopolitical announcements move oil prices, but a quick resolution is viewed with skepticism. The conflict is expensive and inflationary.

yields

Conflict is inflationary, and the bond market may be losing patience. Other market segments with high PE multiples are at risk if yields go higher.

Tim Stenbeck

Asks about the inflationary view given the Middle East conflict, linking it to inflation expectations and energy prices.
David Bianco

Conflict is expensive and inflationary, signaling less global cooperation, weighing on productivity and growth. Actions matter more than words; markets may be running out of patience. The US should seek a good deal, not a bad one.
Emily Grafeo

Asks for the portfolio trade based on the Middle East conflict setup.
David Bianco

We are sticking with tech until we see concrete movement on a Middle East deal. We are moderately overweight tech and communications.
Tim Stenbeck

Questions what a 'good deal' with Iran looks like, referencing the JCPOA and uranium enrichment.
David Bianco

A good deal would suggest Iran doesn't want to militarize the region. Their track record is very poor, so the US should keep options open.
Emily Grafeo

Asks how much tech equity optimism hinges on rates staying under control, given the sell-off in Treasuries.
David Bianco

Tech is the most resilient part of the equity market to higher interest rates. The debate is about return on capital, not cost of capital. Other market segments with high PE multiples are at risk if yields go higher.
Tim Stenbeck

Asks about the best way to invest in the AI build-out trade.
David Bianco

The main hyperscalers will get good returns. Data center CapEx will also happen in China and the Middle East, requiring Western semiconductor equipment. Key names include AMAT, LAM, KLAC, ASML, and Tokyo Electron.

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