Much ado about markets?
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The blue wave
Market reaction to the midterm results has so far been minimal, as we might have guessed. The Democrats have done (even) better than expected.
Interest rates and AI: what's in the price?
Recent weeks have been a reminder that politics still matter for investors. Against a backdrop of renewed geopolitical tensions, resilient economic growth and ongoing enthusiasm around AI, this month's commentary revisits the relationship between politics and markets.
The Midterms
With US midterm elections fast approaching, investors are assessing the potential market impact. But does a change in congressional control really alter the investment outlook?
US Earnings – where on the dial?
Recent market volatility is occurring as US Inc is poised to report a third consecutive quarter of bumper earnings. Analysts' full-year expectations for growth in 2026, at almost 40%, are currently running at levels roughly one-third higher than at the start of the year.
AI jitters return
AI-related fragility has returned, driven by financing concerns and leveraged neocloud companies. Yet strong hyperscaler balance sheets and recurring market rotations suggest it remains premature to call an inflection point.
Debt and taxes
Fiscal debates focus on debt and deficits, but government size may matter more. While debt shows little link to bond yields, higher taxes and spending can affect competitiveness, growth and economic efficiency.