Multi-Asset Portfolio at the Core
Chart of the Week:
U.S. Corporate Capex Remains Firm as Markets Bet on Economic Resilience
The U.S. equity market has entered earnings season, with mega-cap tech companies’ spending and AI-related revenues once again becoming key focus areas:
- Meta (META) reported 4Q25 results with revenue up 24% YoY, beating expectations by 3%; non-GAAP adjusted EPS rose 11% YoY, beating estimates by 9%. Because 4Q25/1Q26F revenue and guidance were 3%/7% above expectations, the stock rose 8% after hours. Advertising and AI-related revenue also remained strong.
- Microsoft (MSFT) reported F2Q26 results with revenue up 17% YoY, roughly in line with expectations; adjusted EPS rose 60% YoY, exceeding expectations by 38%. However, MSFT’s quarterly capital expenditures surged 66%. With cloud growth slowing and earnings only meeting expectations, the stock came under pressure.
- U.S. GDP grew at an annualized 4.4% in 3Q25, driven by the AI boom. The Atlanta Fed estimates that 4Q growth may accelerate to 5.4%. Markets are betting that Trump’s tax cuts, deregulation, low interest rates, and the “Big and Beautiful” agenda are gradually showing positive effects. In addition, with this year being a midterm election year, Trump is expected to continue supporting strong economic momentum, which remains favorable for U.S. equities.
Market Recap 1:
U.S. Equities Trade Firm, but Lower-Than-Expected Medicare Advantage Reimbursement Weighs on the Dow
Last week, President Trump proposed a Medicare Advantage (MA) reimbursement increase that fell well below market expectations, pressuring insurance stocks. Sentiment weakened further after UnitedHealth (UNH) reported first-quarter results and guidance that also missed expectations, extending its share-price decline and dragging the Dow Jones Industrial Average lower.
Market Recap 2:
Trump’s Comfort With a Weaker Dollar Pressures USD; Gold Pulls Back After Record High
Last week, President Trump stated that he feels “comfortable” with a weaker U.S. dollar while criticizing Asian currencies for being excessively weak. His remarks accelerated the dollar’s decline, with the Dollar Index briefly falling below 96 — its lowest level since early 2022. The euro and major Asian currencies (JPY, CNY, TWD) strengthened, and capital outflows alongside a shift away from USD-denominated assets further intensified the dollar’s slide.
What’s Trending:
Fed Holds Rates Steady; Outlook Points to Moderate Economic Growth
At its meeting this month, the Federal Reserve kept the policy rate unchanged at 3.50–3.75%, in line with market expectations. Governors Waller and Miran continued to advocate for a 25 bp rate cut, indicating ongoing divisions within the FOMC.
In Focus 1:
Multi-Asset Portfolios Show Strong Resilience and Can Serve as Core Allocation
Traditional equities and bonds differ fundamentally in nature: Equities represent ownership in a company, offering uncapped potential returns but carrying higher risk. Dividends are discretionary, and equity investors typically seek capital growth. Bonds, by contrast, provide predefined interest and principal payments, making them a more conservative investment focused on stable income. The goal of a mixed equity–bond portfolio is to strike a balance between these two characteristics.
In Focus 2:
“L.E.A.D.” to Become the Driving Force Behind Multi-Asset Portfolios in 2026
We expect the 2026 investment framework, “L.E.A.D.”, to become a major driver of multi-asset portfolio performance. As mentioned previously, on the Liquidity front, the U.S. remains in a rate-cutting cycle, and the Fed has halted QT, resulting in ample liquidity. Since multi-asset portfolios contain risk assets, they stand to benefit from a liquidity-rich market environment. On the Earnings front, U.S. companies have entered earnings season, and the market continues to price in a resilient U.S. economy. For Adding Credit, we believe multi-asset portfolios emphasizing investment-grade bonds are more suitable, as they allow exposure to credit with controlled risk.
