Citi Wealth CIO on 2026 outlook, inflation, and portfolio strategy (with Matt Miller)

10/9/2025 11:58:10 PM	short term up	5 days later	+8.40%	+8.40%
9/23/2025 7:37:45 PM	medium term up	20 days later	+13.32%	+13.32%

Asks about Morgan Stanley's Mike Wilson prediction that weak payrolls (bad news) could be good for stocks in a 'good is bad/bad is good' regime.

Matt Miller

Kate Moore

Acknowledges sentiment is tepid and there have been rotations, but sees plenty of reasons for strong nominal growth in 2026. Labor market data suggests strength, and tax receipts indicate people/companies have money.

We would say the economy looks like it's in solid shape and likely will be strong in the first part of next year.

Questions if more Fed rate cuts are needed, noting the 10-year yield has remained stable despite past cuts.

Matt Miller

Kate Moore

Monetary policy works with lags. Sees signs of stability and regional strength. It's not a slam dunk the Fed cuts at every meeting in Q1 2026. Believes inflation will stay 'spicy' near 3%, making the Fed's decision harder.

Our assessment of the economy and of prices and inflation would suggest that they can pause and wait to see what the impacts of some of these rate cuts have been.

Asks if underperforming sectors (real estate, staples, energy, discretionary) will pick up in 2026, referencing 'dogs of the Dow' theory.

Matt Miller

Kate Moore

Does not want to rotate for rotation's sake. Some underperformers have incredibly weak fundamentals relative to tech. Focused on strongest earnings growth trajectories.

We're really, really grounded in the fundamentals.

Asks if the M&A and IPO boom continues into 2026 given economic tailwinds.

Matt Miller

Kate Moore

Capital markets activity will pick up in 2026. Notes a disconnect between solid capital markets activity and concerns about economic weakness. In a weakening environment, companies don't come to market.

We're of the view that capital markets activity will pick up again in 2026 and that it will be an opportune time for high quality companies to offer shares to investors.

Asks if the economy can do well without the Fed cutting rates.

Matt Miller

Kate Moore

The economy and markets can do well without additional rate cuts. The ideal positioning is for inflation near 2% with strong growth, but Citi sees prices elevated near 3%.

I don't think the Fed needs to continue to cut rates.

Asks if commodity-driven inflation will continue.

Matt Miller

Kate Moore

Yes, inflation will continue. Added more gold to portfolios as a ballast, not just for price appreciation, to build resilience. Also constructive on commodities, seeing upstream AI/tech plays as a way to broaden the theme.

We're looking at gold as a portfolio ballast... we still want to build resilience in portfolios.

Asks if the economy is strong enough to overcome higher commodity prices and rates.

Matt Miller

Kate Moore

Yes, data suggests higher commodity prices and slightly higher inflation can be absorbed. No cracks in the story yet, but recognizes consensus risk.

Everything that we're seeing right now suggests that higher commodity prices and even this slightly higher inflation than many people are expecting can be absorbed and dealt with in this economy.

Asks about regional investing, noting Europe's recent outperformance.

Matt Miller

Kate Moore

Focus is on fundamentally-driven outperformance in emerging markets, especially emerging Asia and China, not multiple expansion in Europe. US has the strongest and most consistent earnings trajectory.

We want to be really kind of focused on taking more active risk in Europe rather than saying, hey, we're betting on further multiple expansion.

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