Summary
- Nothing but a relief rally – D. Trump announced a 90 Day pause to retaliatory tariffs, which caused a huge relief rally. We don´t think this changed the overall picture and recommend to fade this rally!
- Demolition Day – The outcome is clearly negative for growth on a global basis and even carries stagflationary elements for the US economy. As a result, we revise our long held positive stance on equites and downgrade our overall view from overweight to neutral.
- US equities: We see further risks to EPS growth expectations, for Large and Small caps. We thus neutralize our preference for US SMIDs, making the equal weighted S&P our preferred US investment. More importantly though, we reduce our overall stance on US Equities from neutral to negative.
- Europe: EPS growth in Europe is at risk, too. We see increasing spill over risks from slower global growth as the overall tariff rates have been above expectations. Europe trades at much lower valuations than US equities and positioning remains light. We thus reiterate our neutral view on the region. Within Europe, UK equities still look attractive. Beyond, we see room for domestic exposure to outperform.
- At the sector level in the US, we downgrade both US Consumer Discretionary and US Information Technology from Neutral to Negative.
- In Europe, we increase our cyclical bias further by upgrading European Chemicals from Negative to Neutral downgrading European Real Estate from Positive to Neutral
