AOR Update (Podcast): The rotation continues

The discussion points to a US economy that appears resilient, with recession odds easing and manufacturing finally re‑accelerating, supported by healthy labor markets and stronger consumer and business spending. Policy remains unusually supportive outside of a downturn, as fiscal stimulus combines with easier monetary conditions to underpin earnings growth in the US and abroad. Equity markets are expected to be driven more by earnings than by multiple expansion, with leadership broadening beyond mega‑cap technology toward smaller caps, value stocks, and non‑US markets where valuations look more compelling.

Advisors may want to watch for volatility tied to layoffs headlines, sentiment surveys, or geopolitical shocks but note that underlying jobless claims remain benign. The key risk is a resurgence of inflation later in the year that could force the Fed to change course on rate cuts; however, the base case still assumes inflation drifts toward target and supports a constructive stance on risk assets while emphasizing diversification across styles, sizes and regions.