House View Monthly Letter

UBS remains positive on equities, raising its S&P 500 year-end target to 7,900 based on a 27% YoY surge in first-quarter earnings and AI adoption.

Key Takeaways

• 1.Strong corporate earnings, especially in AI-linked sectors, are the primary driver for expected equity gains over the medium term.
• 2.Investors should diversify beyond megacaps and the 'Magnificent 7' to include the broader AI value chain and markets like Japan and Switzerland.
• 3.Oil supply disruptions in the Strait of Hormuz represent a significant macro risk, though demand destruction and emergency reserves are currently containing prices.

Table of Contents

• Stirred, not shaken?
• The surge in earnings
• Oil prices
• Bond yields
• Investment ideas
• Diversify across equities
• Invest in transformational innovation
• Lock in yields
• Hedge market risks
• Favor commodities
• Diversify with alternatives

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