GLOBAL INVESTMENT REVIEW SECOND QUARTER 2026

The global investment outlook remains constructive but requires greater selectivity because earnings and AI-led capital spending support risk assets while valuations, financing conditions and geopolitical risks limit the margin for error.

• The easing of Middle East energy risk during the second quarter reduced the probability of a sustained oil-driven inflation shock, but market pricing moved faster than the normalization of shipping, inventories and production.
• AI has become a global physical infrastructure cycle involving power grids, cooling, labor, permitting and financing, creating opportunities beyond software and semiconductors in utilities, energy, electrical equipment, industrials and commodities.
• U.S. equities have the strongest case because first-quarter S&P 500 earnings grew 28.8% year over year, technology contributed 54.8% of EPS growth, and the median Russell 3000 stock is experiencing its strongest EPS growth in four years.
• The U.S. consumer is uneven rather than uniformly strong: real consumption grew at a 1.2% annualized pace in the first half versus 2.1% last year, while the top 20% of earners account for roughly 40% of total spending.
• International opportunities are differentiated: Japan benefits from corporate reform, wage growth and shareholder returns; Europe gains from lower oil prices but faces structural growth and political constraints; emerging markets offer AI supply-chain and commodity exposure, although technology already represents 37% of the MSCI EM Index.

Takeaway: Investors should favor durable earnings, free cash flow, balance-sheet strength and selective infrastructure or cyclical beneficiaries, while diversifying across regions and avoiding assets whose valuations rely mainly on lower rates or continued AI enthusiasm; the July energy shock is a material risk to the quarter-end view.