Positive stock market, awaiting a Fed rate cut

No technical U.S. recession on the horizon, thanks to solid earnings, resilient consumption and the Fed's openness to a possible rate cut.

by Filippo Garbarino, manager of the Lemanik Global Equity Opportunities fund
Despite the uncertainty linked to tariffs, 2025 capital expenditure plans have not been materially revised downward by U.S. companies, and this is a sign of great confidence in the performance of their business and of the American economy more broadly.
In addition, the Fed has signaled a growing openness to an interest rate cut if disinflation were to continue or the labor market were to worsen. For this reason, we do not expect a technical recession in the short term, although the U.S. economy is going through a slowdown phase. Supporting it are recent corporate results and 2025 economic estimates, which have proved solid, especially in the technology sector. Moreover, data on credit cards show remarkable resilience in consumption.
The current environment in stock markets remains positive. Uncertainty linked to tariffs appears to have reached its peak, given that recent news on this front has improved. The market will also continue to be supported by solid corporate earnings and capital returns to shareholders, including buybacks. However, there are still two weak spots in the U.S. economy: manufacturing, with the ISM index still pointing to a phase of contraction, and the real estate market, which remains stagnant because of high mortgage rates. From an investment perspective, our portfolio aims to outperform sector benchmarks over the medium term across a range of market scenarios and is overweight in financials, industrials, chemicals and discretionary consumer goods. While it has no exposure to banks, technology hardware, nondiscretionary consumer goods, pharmaceuticals, real estate and utilities. The technology sector is also underweight, for example in Applied Materials.