Equities

In the front section of the chart pack, we review May’s performance and adjust our portfolio positioning.

In this report, we take stock of the Q1 2025 earnings season. Corporate commentary and forward guidance provide valuable insights into the state of the economy, tariff mitigation strategies, and consumer spending.

Special Report

Trump’s signature bill is surprising to the upside with budget deficits, as predicted. Some version is guaranteed to pass – but higher bond yields and inflation will weigh on the economy and stock market.

Markets are pricing out the worst trade policy fears, and while tariffs will still dent earnings, the impact looks smaller than initially feared. With sector rotation gaining traction and oversold names rebounding, we are adjusting our portfolio to reflect the rotation thesis.

Utilities remain a long-term structural investment theme thanks to the tailwinds from GenAI, EV, and onshoring. However, there is little upside left over the tactical investment horizon as all the positives are priced in. We close our overweight and book profits.

In the front section of the chart pack, we review April and YTD market performance, provide an update on the Q1 earnings season, examine the outlook for the Magnificent Seven, and adjust portfolio positioning.

Special Report

Cybersecurity is a strategic investment theme, which looks particularly interesting in light of the trade war and heightened geopolitical tensions. It is less exposed to tariffs than other industries and, if anything, benefits from geopolitical tensions as customers seek protection from international cyberattacks and cybercrime. The industry’s fundamentals are improving, while valuations are moderating. A recent pullback presents an attractive entry point into the theme.

In the front section of the chart pack, we review March’s performance. We will also recommend the portfolio positioning for downward protection.

Equities will find a bottom when the full effects of tariffs on earnings and economic growth are priced in. The bottom of the market appears a long way away, and the S&P 500 may end up as low as 4,300, barring any reversals in trade policy that could undo the damage.