Vi e w p o i n t | 22 Dec 2025 18:15:17 ET │ 39 pages EM Equity Strategy Compass Tailwinds Aligning CITI'S TAKE We remain Overweight EM equities in a global context and see c.13% upside for the MSCI EM in 2026. Our constructive stance rests on three aligning tailwinds: (1) solid fundamentals (consensus forecasts +17% EPS growth), which could justify extended valuations; (2) Fed easing coupled with "goldilocks" global economic conditions; and (3) continued support from the AI thematic. Key risks to our outlo ...

Economic Concerns - The Federal Reserve expressed concerns about the labor market during the Jackson Hole meeting, indicating that recent labor market data supports these worries [1] - There are conflicting signals from the Fed, with some officials more worried about inflation than job losses, creating tension in the market [7] Market Performance - Bitcoin has underperformed for at least three weeks, reflecting a risk-on, risk-off sentiment in the market [2] - The S&P 500 was noted to be 13% above its 200-day moving average, suggesting that the market was overextended [8] - Companies exposed to consumer lending and mortgage servicing are under pressure, indicating potential consumer concerns [6] Stock Analysis - Amazon and Apple have shown negative price action despite positive earnings reports, suggesting a potential reversal in market sentiment [3] - Oracle's stock retracing entirely is seen as significant, indicating broader market implications [3] Investor Behavior - There is a historical tendency for investors to buy the dip, but there are concerns that this trend may not hold in the current market environment [10][13] - The VIX is expected to rise, indicating potential further market volatility and a possible wave of downside [12][14]

They've got a few things on their plate. One is they're looking to do a big fiscal expansionary budget that typically leads to a stronger currency because you're boosting your growth. But they usually need the central bank to raise rates in response to this.And that's the problem. There's a slight political lie in the markets pricing for the BBJ with the new prime minister, the first woman to ever lead Japan in that role, making it clear her views in the past about the BOJ being foolish to raise rates. And ...

"I'm going to disagree with you"State Street's Yie-Hsin Hung says inflation hawks "have it wrong" as Franklin Templeton’s Jenny Johnson says markets are "optimistic" on the number of Fed cuts #BBGWomenMoneyPowerhttps://t.co/D71n0UVSBN https://t.co/9R59jc7yQo ...

🚨 Economist warns rapid Fed cuts could "jolt $BTC and alts up substantially", with at least 2 more cuts expected this year. https://t.co/u7nL3KIVyO ...

Dads with $73 in stables talking about Fed cuts like it’s time to retire. https://t.co/24LHZ2HUJk ...

Group 1 - Ernest Hoffman is a Crypto and Market Reporter for Kitco News with over 15 years of experience in writing, editing, broadcasting, and producing for various organizations [3] - Hoffman began his career in market news in 2007, establishing the broadcast division of CEP News in Montreal, Canada [3] - He developed the fastest web-based audio news service globally and produced economic news videos in partnership with MSN and the TMX [3] Group 2 - Hoffman holds a Bachelor's degree with a specialization in Journalism from Concordia University [3] - Contact information for Hoffman is provided, indicating a direct line for inquiries [3]

Core Insights - The discussion revolves around the upcoming Federal Reserve meeting and its implications for interest rates and market performance, particularly in the context of AI-related stocks and overall economic sentiment [3][4][6]. Federal Reserve Outlook - The Federal Reserve's September meeting is critical, as it will provide insights into future interest rate cuts, with expectations of at least one cut unless retail sales data is significantly weak [3][4]. - There is speculation about potential dissent within the Fed regarding the decision to cut rates, indicating differing views on the economic outlook [4][6]. - The market is currently pricing in expectations for rate cuts, with discussions around whether a 50 basis point cut would be perceived positively or negatively [6][8]. Market Performance and Trends - Year-to-date winners like Micron, Oracle, and Tesla are highlighted, with a suggestion that instead of tax loss selling, there may be a chase for performance as year-end approaches [9][10]. - AI and AI-related stocks are expected to remain strong, driven by market sentiment and performance concerns as the year closes [10][11]. - Small-cap stocks, which are sensitive to interest rate expectations, are also anticipated to perform well if the Fed continues to signal cuts [11]. Economic Sentiment - Concerns about stagflation are mentioned, with a focus on the balance between inflation and economic growth [11][12]. - The impact of tariffs on inflation is debated, with some arguing that the effects are overstated and should not lead to tighter monetary policy [13][14]. - Recent consumer sentiment data is not seen as a major concern for the market, suggesting a divergence between consumer expectations and broader economic indicators [12][14].

More on the market today. Let's bring in RBC head of US equity strategy, Lori Calvsina. Lori, thanks so much for the time today.I'm sure you've been listening. Is that I mean, is what we're talking about why the equities are sort of looking past what would otherwise be disturbing macro data. >> No, I I think that, you know, inflation more or less, right.The pressures are starting to build, but they're not out of hand yet. Um, and maybe they won't be out of hand, but, you know, I think that there's a lot tha ...

Market Overview - The market is currently focused on potential Federal Reserve interest rate cuts, which have been anticipated for several months [3][7][10] - Despite some concerning macroeconomic data, equities are looking past these issues, indicating a complex relationship between inflation and equity performance [1][5] Inflation and Equities - Inflation pressures are building but are not yet overwhelming, with economists expecting certain trends to emerge in labor market reports [2] - Historically, rising inflation has led to increased equity allocations among households, suggesting that the market is currently responding to positive tailwinds despite headwinds from inflation [5] Seasonal Trends - There are concerns regarding the typical negative seasonality seen in September and October, although the market has reached new highs without significant labor market disruptions [6] - Investors are cautious about potential ripple effects from earlier policy disruptions, which could impact market performance [6] Federal Reserve Expectations - The market is anticipating a rate cut next week, with expectations for additional cuts throughout the year and into 2025 [8][10] - There is a debate among investors about the timing and pace of these cuts, with some suggesting that expectations have been pulled forward [9] Valuation Considerations - Current peak valuation levels necessitate careful consideration of market conditions, as much of the anticipated positive developments may already be priced in [10]