Markets Edition: Reassessing the Balance of Risks
KEY TAKEAWAYS
- Global equity risks remain broadly balanced despite rare violent sector rotation defensives outpacing cyclicals by up to 15 percentage points as easing geopolitical tensions and resilient macro data offset rising credit spreads and declining AI sentiment
- U.S. equities tactically downgraded to Neutral as a Democratic blue wave raises concerns over potential AI capex slowdown Continental Europe upgraded to Overweight benefiting from lower oil price sensitivity and reduced AI exposure
- Global EPS growth expected to decelerate by 20 percentage points in 2027 with Tech concentration rising investors are advised to watch lower rates geopolitical easing and a defensive-quality rotation as key drivers of market direction
Beata Manthey and David Groman assess the last few weeks in equities, with AI volatility, the U.S. midterms and geopolitics all moving markets. They look at how our strategies have changed and what investors should be watching from here on out.
This podcast contains thematic content and is not intended to be investment research. Nor does it constitute financial, economic, legal, tax or accounting advice. This podcast is provided for information purposes only and does not constitute an offer or solicitation to purchase or sell any financial instruments. The contents of this podcast are not based on your individual circumstances and should not be relied upon as an assessment of suitability for you of a particular product, security, or transaction. The information in this podcast is based on generally available information and, although obtained from sources believed by Citi to be reliable, its accuracy and completeness are not guaranteed. Past performance is not a guarantee or indication of future results. This podcast may not be copied or distributed, in whole or in part, without the express written consent of Citi. © 2026 Citigroup Global Markets Inc. Member SIPC. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.
Beata Manthey, Head of European Equity Strategy
Beata Manthey is Head of European Equity Strategy in Citi Research. She joined Citi in 2007 as a Global Equity Strategist. Beata is part of a team that focuses on broader equity market issues. Prior to joining Citi, she worked at the European Bank for Reconstruction & Development.
David Groman, Global Senior Equity Strategist
David Groman is a Director on the Global Equity Strategy team at Citi Research. Prior to joining Citi in 2021, he served as a Financial Economist at the U.S. Department of the Treasury. He has also worked as a cross-asset macro strategist at Goldman Sachs in New York.
