Macro view:
- The stars are aligning for equities in 2H25. Ample liquidity, fading geopolitical noise, lower inflation stemming from tariffs and EPS reacceleration should justify current multiples and even a further rerating in 2H25.
- Tariffs likely to be resolved shortly – markets could finally turn the page, another strong catalyst for 2H25.
- The US economy is showing early signs of slowdown but no recession – a first rate cut could be around the corner.
Equity calls:
- Several serious uncertainties have been dispelled, which justifies current higher-than-average valuations and provides support for the recent equity rally. Furthermore, with government debt supply projected to balloon c.6% annually (vs c.2% shrinkage of equities), we cannot find any obvious alternative to equities. Confidently ‘buy-the-dips’.
- The US definitely remains our ‘place-to-be’ vs. Europe while we remain positive on China and Brazil. US higher valuations compensated by (i) EPS growing again with undemanding 2Q & 3Q earnings expectations; (ii) FX tailwind for US equities in terms of EPS and flows. We confirm our 6,500 TP for the MSCI USA we set out in our House View 2025.
Investment ideas:
- Precious Metals: it is not all about BTC, as ‘old-fashioned’ investment in precious metals is in focus with gold at the forefront.
- Wellness & Obesity: obesity remains a major long-term investment theme – growth driven by demand and innovation.
- EU tariffs: soft regime in sight, but tail risks remain – With a 9 July deadline looming, a trade deal is still possible, although retaliation risks will persist if the talks collapse.
- Quantitative edge: our signal model highlights compelling mean-reversion opportunities, with US Health Care screening as a strong buy while EU Communication Services are a strong sell.