AI Valuation Woes; G-20 Summit Saga | Horizons Middle East & Africa 11/21/2025

What do you make of the price action in the last couple of days? This drawback that we're seeing in global equities, not just US.

Joumanna

Manpreet Gill

A number of factors coming together at the same time because we have the stress in AI of course, but it's also at the point where there's debate about whether the Fed can cut in December and a pricing out of those expectations, and the fiscal package and the concerns it raises for yields in Japan.

Multiple worries converging in markets simultaneously

Not one particular driver? Not say the Fed turning more hawkish?

Joumanna

Manpreet Gill

I wouldn't quite characterize them as turning more hawkish. In our view, the labor market still justifies heading into rate cuts. We still think they've got twice by time we get to the end of Q1.

Maintains dovish Fed view despite current uncertainty

Manpreet Gill

The reality is we've got a bit of data fog. We'll skip a month in labor market data and we won't get the November data until after the Fed meeting.

Data timing creates uncertainty for December decision

Manpreet Gill

If we zoom out and look at the data beyond just these two indicators, new job creation, turnover in jobs, all of that in our view still points to cutting rates from what are still somewhat restrictive levels.

Broader labor metrics support easing case

What do you make of the dollar holding up this time around? With volatility picking up in global stocks, you're seeing money go back into USD.

Joumanna

Manpreet Gill

We've always been of the view that the bigger picture de-dollarization story is a very long term one. What we're seeing is a reversal of two factors: one is simple counter-trend after one of the weakest USD years in decades, and US asset performance has been surprisingly good.

Current USD strength seen as temporary counter-trend

Manpreet Gill

If US interest rates are indeed headed lower, if US bond yields are headed lower, then we still think that will go for a gradually weaker dollar. That's unlikely to change.

Maintains structural bearish USD view

What does one do if you want to diversify away from AI but still want to participate in the rally?

Joumanna

Manpreet Gill

We wouldn't let go of the technology sector exposure - momentum strong, earnings still delivering. But there are two things investors can do: within the US, many other sectors not related to AI still look interesting like pharmaceuticals and utilities.

Advises maintaining tech exposure while diversifying

Manpreet Gill

The other is to look at markets outside the US because the entire valuation debate is very US-centric. Asian equities in particular should benefit from domestic stimulus.

Recommends international diversification, especially Asia

Manpreet Gill

Look at Indian equities - as we get reports that they are closer to US-India trade deal taking away some of the headwinds, that can also help benefit broader exposure.

Specifically highlights India as attractive market

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