Chris Sutton

Equity markets may continue to be supported by a number of positive factors, including an increase in growth forecasts, interest rate cuts, fading tariff effects, and accommodative fiscal policy. AI remains an unknown, with $3 trillion of expected infrastructure spend, and uncertainty on the economic impact. It supports the potential for improved productivity gains, but only if companies can harness its abilities. Primary concern is valuation. Although S&P earning growth in 2025 was 18%, the index is expensive (on CAPE earnings as expensive as it's been since 1999). Expensive markets can continue to get more expensive, but valuation ultimately matters and there may be a little margin for error if the outlook deteriorates. Value looks more attractive than Quality in the US, with a more balanced situation elsewhere. 2026 growth for markets was pulled forward into 2025. We remain broadly positive but expect lower returns this year.

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