Citi's Kate Moore: Avoid Adding Risk Assets Amidst Trade War Uncertainty

Market Uncertainty and Tariffs

• ⚠️ The market is not accurately pricing in the significant downside of tariffs, leading to a cautious investment stance.
• 💡 The core message from Citi Private Bank is to avoid adding to risk assets at this moment due to policy and earnings uncertainty.
• 📉 While typically favoring equities, the current environment makes it difficult to have visibility into future prices and earnings.

Big Tech Performance

• 💻 Big tech companies generally have outstanding quality, balance sheets, and cash generation.
• 📌 However, technical pressure, sentiment, and positioning must be closely monitored, especially given their significant overweight in portfolios.
• 📊 The pressure on these stocks is expected to be indiscriminate in the short term, limiting their ability to outperform significantly.

International Market Rotation

• 🌍 A rotation reducing the U.S. overweight has been observed, rather than a strong conviction in better fundamentals outside the U.S.
• ⚖️ This rebalancing has contributed to some outperformance in other regions, but outperformance of European or Japanese equities is unlikely if the U.S. continues to lead global growth lower.

Soft Data and Consumer Confidence

• 📉 Citi observes a softening across all segments in soft data, including consumer and corporate surveys.
• 📈 Expectations are that inflation will remain sticky or worsen, and visibility into decision-making inputs is very low.
• 🗣️ This soft data is expected to translate into hard data in the coming months unless confidence-restoring actions are taken.