蜜豆视频

C1 Podcast: Jump Start 鈥� Recession fears, global easing, and Eurozone spending (4:42)

C1 Podcast: CIO's Eva Lee and Delwin Kurnia-Limas on the AI rally and China tech (12:30)

C1 Video: CIO's Sundeep Gantori on navigating tech volatility (2:17)

C1 Video: Asset allocation amid tariffs with CIO's Mark Andersen (11:01)

Podcast: (25:00)

What happened?
Stocks ended a volatile week on a positive note, with the S&P 500 rising 2.1% and Nasdaq advancing 2.5% on news that the Senate might pass a funding bill that could avert a government shutdown. US President Donald Trump over the weekend signed the bill into law, providing funding for government operations until the end of September.

Trump also stated on Friday his view that there would be a 鈥渧ery good chance鈥� that the war between Russia and Ukraine would end, following 鈥減roductive鈥� discussions with Russian President Vladimir Putin on Thursday.

Despite Friday鈥檚 market optimism, the S&P 500 and Nasdaq registered their fourth consecutive week of declines amid elevated political and economic uncertainty. US equity futures on Monday are down 0.5% at the time of writing. Economic news on Friday was also weaker than expected, as the University of Michigan's consumer confidence survey showed a drop in sentiment to 57.9, below a consensus forecast of 63.2.

Investors are likely to now look ahead to the Federal Reserve policy meeting this week, where futures indicate a greater likelihood of interest rates remaining unchanged.

What do we think?
The passage of the six-month funding bill is not in itself an economic positive, but should provide some optimism about the ongoing reconciliation process that will decide on tax cuts and spending decisions for the years to come, as it pointed to unity within the House Republicans.

Historically, the Senate has often forced the House to capitulate on larger bills, but the House acted first this time and delivered a bill that a bipartisan majority in the Senate found difficult to oppose. Were this sentiment to be carried over into future debates over government spending, it could potentially mean swifter resolutions on funding issues, though it remains to be seen whether this will be the case.

Outside domestic politics, business sentiment surveys have pointed to deteriorating confidence in the economy, and the Atlanta Fed鈥檚 closely watched GDPNow is now pointing to a first quarter contraction in activity of 2.4%. However, we note that this reading has been distorted by a surge in gold imports. The Atlanta Fed has pointed out that actual GDP will not be affected by the gold imports, and GDPNow would be 2 percentage points higher if the gold effect were stripped out.

We believe that a resilient US labor market should continue to underpin economic growth, despite recent signs of weaker confidence. February鈥檚 jobs report highlighted solid payroll growth, historically low unemployment, and rising wages, all of which should help support consumer spending.

Meanwhile, slowing inflation should allow the Federal Reserve to cut rates later in the year, in our view. February鈥檚 consumer price index (CPI) report further reinforced the broader disinflationary trend as both headline and core prices increased less than expected. We expect the Fed to deliver two further 25bp rate cuts this year, in June and September.

The threat of further tariff escalation remains a key concern for investors. In our base case, we expect aggressive trade policy to weigh on US economic growth, but not so much as to drive the US toward a recession or to prevent a recovery for equity markets. That said, last week we changed our scenarios to reflect that the risks around our central scenario are now skewed to the downside. We see a 20% chance of a stagflationary market outcome, caused in large part by highly aggressive US tariff policies and a 10% probability of a cyclical bear market.

How to invest?
Our core messages remain鈥攕tay invested in stocks, but also hedge equity exposures to manage ongoing tariff-related and geopolitical volatility. Risk-tolerant investors should ensure portfolios are well-diversified with assets such as quality bonds, gold, and alternative investments to navigate current challenges.

Navigate political risks. Tariff-related uncertainty and trade policy shifts reinforce the need for portfolio diversification and risk management. In equities, capital preservation strategies can potentially help limit losses in the event of stock declines, but retain exposure to stock rallies. We continue to favor high-quality fixed income like investment grade corporate bonds, which may hedge against trade risks.

More to go in stocks. In our base case, we expect US equities to end the year meaningfully higher than today鈥檚 levels, with a December 2025 S&P 500 target of 6,600. US policy uncertainty could lead to short-term volatility, but we believe that continued structural AI tailwinds and solid earnings growth should drive markets higher once policy uncertainty peaks.

Seize the AI opportunity. The fourth-quarter results season demonstrated that AI fundamentals remain intact. Although economic and policy uncertainty are likely to contribute to near-term volatility, we continue to see broad-based long-term investment opportunities across the value chain, particularly in AI infrastructure with strong pricing power and megacap platform beneficiaries. Near-term volatility should present an opportunity to build strategic, long-term AI exposure.