Report by AIR Capital

At a time when economists are slashing year-end targets for major equity indices, star asset managers are forecasting the dollar’s demise, the collapse of the US economy and gold prices surging further, the real story has already begun and it’s the exact opposite. Recent sector rotation suggests markets are anticipating a brief global GDP contraction, followed by a rapid and robust rebound. Q1 results in Europe are strong. Companies are quickly adjusting supply chains to outmanoeuvre Trump’s tariffs. By early Jun, the tariff story will be old news and business will be almost back to normal. Stop overthinking and trust corporate agility. The real opportunity is in quality cyclicals - cash-rich, order-heavy, sector-dominating companies with rock-solid fundamentals. AIR’s top picks include Airbus, ASM International, Renault, Rexel, Schneider and Vestas Wind.

Industrials

Report by MYST Advisors

Although investors have favoured equipment stocks amid a perceived Industrial & Infrastructure Super Cycle in the US, recent 3Q23 earnings results from companies such as ABB and Rexel suggest otherwise as trends are slowing rapidly, with both orders and construction activity worsening as interest rates rise. Investors do not properly appreciate that renters of AHT’s equipment are primarily small businesses that require financing and working capital from small / regional banks. These loans are typically based on adjustable rates and recent NFIB surveys corroborate that credit is drying up. Ultimately, AHT’s margins will be pressured as utilisation rates suffer. TP £30.00 (40% downside).