Trimmed equity overweight from 3% to 1%, reducing total portfolio risk and active risk after a strong market rally while keeping highest-conviction exposures intact.
Maintained U.S. large cap and AI-driven growth as the biggest equity emphasis, while increasing U.S. overweight versus international stocks through active country selection.
Introduced bond-funded multi-strategy liquid alternatives to create more resilient shock absorbers as traditional bonds have become less reliable diversifiers.
2. Economic Indicators
WTI Crude rose from $65 to $95 and the 10-year yield climbed from 3.9% to 4.5%, creating a meaningful tightening impulse alongside inflation pressure.
Fed expectations shifted from 2.5 cuts to one hike in 2026, a major reversal in easy-policy assumptions, while recession odds moved only modestly from 22% to 20%.
Core PCE sits at 3.2% while new Fed Chair Kevin Warsh’s preferred trimmed mean PCE reads 2.4%, creating policy uncertainty around the timing and pace of any easing.
3. Strategic Focus:
Earnings, not multiple expansion, have driven the rally, with AI infrastructure consensus 2027 EPS estimates up 32% year to date and energy up 19%.
Global dispersion at the country level is unusually wide, making active country selection critical as broad regional buckets become internally inconsistent.
The traditional stock-bond hedge has become less dependable in an inflation-driven environment, making liquid alternatives a key tool for portfolio resilience.
