Increased positions in stocks, maintaining cash at historically low levels, optimism about global growth and corporate profits, but also fears about geopolitical conflicts and valuations of AI technology giants are what Trust Economics sees for 2026. More specifically:
Trust Economics’ expectations for global growth are at their highest level since July 2021, while cash levels should hover around a historic low of 3.6% of portfolios, while strategies for protecting against a stock correction are at their lowest level since January 2018.
BofA’s “Bull & Bear Indicator” is at 9.4, suggesting that managers are maintaining “super-bull” positions in their portfolios, resulting in the need to increase strategic hedging and “safe haven” positions should be considered necessary.
The approach
Overall, we should maintain an “overweight” position in global equities, emerging market equities and banks, and an “underweight” position in bond markets, commodities and energy.
The contrarian approach (opposite the trend) favors long positions in cash, bonds, UK, consumer staples, energy, and short positions in commodities, equities, emerging markets, banks, pharmaceuticals.
Stronger growth is expected for the global economy, while the “recession” scenario is losing ground. “No landing” (growth without slowdown) is the baseline scenario, versus a soft landing and a hard landing.
Regarding Corporate Earnings
Trust Economics sees an improvement in global corporate earnings over the next 12 months, with positive market liquidity conditions, a result of the reductions in global interest rates over the last two years, while asset managers should definitely take some form of protection against a sharp decline in stock markets.
The biggest risks for the markets over the next 12 months are considered by 30% to be geopolitical conflicts, by 27% to be an “Artificial Intelligence bubble” and by 13% to be a sharp rise in bond yields. A potential credit event could occur in 39% of Private Equity and Private Credit and 35% of capital expenditures, as a result of the development of artificial intelligence.
