Summary of Key Points from Citi Research Call Industry and Company Focus - **Industry**: US Equity Strategy with a focus on AI and Cyclicals - **New Baskets Introduced**: - Small/Mid AI Enablers (CGRBSAIE) - Falling Dollar Beneficiaries (CGRBDUSD) [27] Core Insights and Arguments - **Barbell Strategy**: Emphasis on owning select Growth and Cyclicals to navigate a volatile bull market [4][7] - **Growth Exposure**: - Large Cap Growth is favored for its defensive nature amid macro weakness, with earnings revisions trending higher [8] - AI at a Reasonable Price (CGRBAIRP) is highlighted as a core growth basket [5][13] - **Cyclical Exposure**: - Small Cap Value is expected to show the strongest earnings growth inflection, providing a margin of safety for EPS estimates [9] - Positive ROE Trend (CGRBGROE) is recommended for core cyclical exposure [6][64] Performance Metrics - **Year-to-Date Returns**: - S&P 500 Growth: 0.50% - S&P 600 Value: 2.36% - Small Cap Value: 4.75% [11] - **Core Baskets Performance**: - Core Baskets: 3.11% - Core+ Baskets: 1.08% - Russell 3000: 1.47% [16] New Basket Details - **Small/Mid AI Enablers**: - Focus on companies under $40B market cap that are AI Enablers, with a strong revision backdrop and premium growth expectations [28][30] - **Falling Dollar Beneficiaries**: - Targeting exporters of goods and services, with a quantitative approach to identify fundamental beneficiaries [49][50] Earnings and Valuation Insights - **Earnings Growth**: - AI Enablers are expected to see premium EPS growth compared to the broader market, with a narrowing fundamental gap [36][37] - **Valuation Metrics**: - Small/Mid AI Enablers have the most attractive PEG ratio compared to their Large Cap peers [37][40] Market Trends and Risks - **Dollar Sensitivity**: US equities are not overly sensitive to dollar movements unless tied to economic breakdowns [49] - **Cyclical Recovery**: The current earnings season indicates a recovery from the EPS growth recession, with expectations for improved business models [77][78] Recommendations for Investors - **Focus on Quality**: Emphasizing operational improvements and forward-looking ROE trends in investment decisions [66][90] - **Diversification**: Consider non-US AI opportunities for thematic value and growth exposure [99][100] Notable Stocks and Ratings - **Citi Buy-Rated Stocks**: - Top expected total return stocks include Intuit Inc, Palantir Technologies Inc, and Global Payments Inc [95][96] - **Market Cap Focus**: - Stocks with significant market caps like NVIDIA Corp and Amazon.com Inc are highlighted for their growth potential [97][98] This summary encapsulates the key insights and recommendations from the Citi Research call, focusing on the US equity strategy, particularly in the context of AI and cyclical investments.