Style: Growth / Value
Much like the 2000 episode, we expect this year to unfold in two stages: A “Great Rotation” from tech stocks to non-tech names in the first half of 2026 followed by a broad-based selloff in stocks in the second half on the back of a weakening US economy.
This week, our screeners explore ways to play a long-term bullish metals view, sub-sector REITS opportunities as well as Japanese Value stocks.
The economy remains resilient despite a softening labor market. As the economy shifts from labor toward capital, we may be in the early stages of a “jobless boom.” Our bull case for equities rests on strong earnings growth, accelerating GenAI adoption, monetary easing, and stimulus from OBBBA. Key risks we continue to monitor are rising bond yields and the threat of stagflation.
Commercial indices’ limitations have made Value a fertile ground for stock pickers. Our Composite Value model has shown promise in circumventing these flaws and capturing alpha.
The Q2 reporting season underscores the resilience of corporate earnings, supporting our bullish outlook for equities, an outlook further bolstered by expectations of fiscal and monetary easing. However, for now, we are booking profits, closing overweights in Technology and Growth, and initiating a new overweight in Real Estate.
This week, our three screeners cover equity plays for if a US recession is not imminent, avoiding value traps, and which sectors exhibit the highest dividend payers.
This week, our three screeners cover equity plays for “transitory” inflation impacts from US tariffs, a correction in sentiment within the European Aerospace and Defense industry, and Value Investor, Warren Buffett’s Philosophy.
Despite the broad market being expensive and overbought, value plays across US equity sectors exist. Real Estate, Communication Services, and Consumer Staples offer cheaper valuations with higher quality attributes relative to history.