Core Insights - Fed Chair Jerome Powell's statement regarding the uncertainty of a December interest rate cut has impacted financial markets, leading to a surge in the US Dollar Index (DXY) to its highest level since August 2025 [1] - The recent interest rate cut of 25 basis points and the end of quantitative tightening (QT) on December 1 are seen as bullish signs for crypto markets, yet investor sentiment has worsened [2][3] - The Coinbase Premium Gap turning negative indicates weakening institutional demand, suggesting a cautious stance among large players despite positive macro headlines [4] Market Reactions - The DXY climbed to 99.7 points, marking a potential shift from bearish to bullish territory, which has put pressure on crypto markets [5] - Bitcoin (BTC) has fallen below $110,000, and Ethereum (ETH) has lost the $4,000 mark, reflecting a decline in the crypto market by 2% over the past 24 hours [3] - Powell's remarks have dampened expectations for immediate further easing, contributing to the current market environment [6]

Economic Outlook - The probability of a US recession in the current year has decreased significantly from nearly 70% in late April to below 10% today [1] Growth Indicators - The economy has shown decent growth in the first half of the year, contributing to the improved outlook for 2025 [1]

Investment Rating - The report maintains a defensive tactical stance with an overweight (OW) on bonds and cash, neutral (N) on credit, and an underweight (UW) on equities and commodities for the next three months [4]. Core Insights - Financial markets are currently navigating between the risks of a US recession and the concept of US exceptionalism, leading to a sell-off in US cyclicals compared to defensives and a widening of credit spreads [2][3]. - Recent equity market rallies have been supported by easing global growth concerns and more dovish monetary policy expectations, with technology stocks, particularly the Nasdaq, leading the rebound [3][10]. - The report highlights a significant outflow of approximately $60 billion from US stocks by foreign investors since March 1, indicating a shift in investor sentiment [3]. Summary by Sections Market Overview - US existing home sales and Euro area composite PMIs have both come in below expectations, while non-farm payrolls (NFPs) are expected to rise by 140,000 in April, above consensus [1]. - The market has begun to price in higher recession risks, leading to a relative underperformance of US equities compared to non-US equities [2]. Asset Allocation Recommendations - The report suggests focusing on domestic defensive sectors in Europe and taking advantage of resets in cross-asset volatility to add selective overlay hedges [4][15]. - The allocation recommendations include an underweight in equities across various indices, with specific forecasts for the S&P 500 and other major indices indicating potential downside in the short term [15]. Performance Metrics - The report provides performance metrics indicating that US equities, particularly the Nasdaq, have outperformed other indices since April 21, while Asian markets, especially China, have lagged [3][10]. - The correlation between US and non-US equities has started to decline, suggesting a potential shift in market dynamics [3][9]. Valuation and Risk Premia - The report includes a cross-asset valuation table showing current valuations and their percentiles relative to the past ten years, indicating that US equities are at a 71% expensiveness percentile [59]. - The current dividend yield for the S&P 500 is 1.5%, which is at the 16th percentile compared to the last ten years, suggesting a relatively low yield environment [62]. Fund Flows and Positioning - The report notes significant fund flows, with a focus on the cumulative flows across various asset classes, indicating a preference for safe assets over risky ones in recent weeks [74][78]. - The positioning data shows net long positions in equities and commodities, reflecting investor sentiment and market expectations [86][88].

Core Viewpoint - Mondelez (NASDAQ: MDLZ) is highlighted as a high-quality consumer staples stock, known for its popular brands like Oreo and Cadbury chocolate, which has significantly outperformed the broader market in 2025 amid concerns regarding tariffs and a potential US recession [1] Group 1: Company Overview - Mondelez operates in the consumer staples sector, focusing on well-known brands that contribute to its strong market position [1] - The stock has shown substantial performance, indicating resilience in challenging economic conditions [1] Group 2: Investment Strategy - The investment approach emphasizes identifying high-quality companies with strong balance sheets and shareholder-friendly policies [1] - A disciplined valuation method is applied to uncover underappreciated opportunities in the market [1]