In a dynamic market, process and flexibility are equally important for investors

Today, Citi Wealth released The Short and Long: Q1 Macro Investment View, a new, quarterly report designed to offer global, data-driven guidance to help investors navigate increasingly complex markets with confidence and clarity.

Following an unpredictable and sometimes volatile macro picture in 2025, Citi Wealth’s focus in 2026 is constructing dynamic portfolios with core positions – rather than shifting point-in-time forecasts – as a winning strategy to navigate volatile market cycles.

“We are constructive on the macroeconomic environment for 2026, with corporate profitability anchoring continued global growth, bolstered by favorable monetary and fiscal policy,” said Kate Moore, Chief Investment Officer at Citi Wealth. “Despite last year’s significant macro headwinds, global growth slowed only modestly, showcasing the resilience that companies in advanced economies have built into their balance sheets.”

The report also emphasizes the need for investors to stay grounded and objective in their market views, avoiding the pervasive risk of “narrative fitting.” In 1Q26, Citi Wealth cites five core convictions representing its highest-confidence views on the opportunities and risk in the current macro environment:

1. Monetary and fiscal policy should provide tailwinds to the global economy in early 2026, with the macroeconomic backdrop supporting corporate profits.
2. Current “elevated” valuations (particularly in the U.S.) reflect index composition and healthy fundamentals, and do not give Citi Wealth pause in its equity allocations.
3. Capital expenditures (CapEx) and investments in AI infrastructure have opened potential opportunities both upstream in natural resources and downstream across specialized industrials.
4. Europe’s cyclical bias and stagnant productivity backdrop constrain its upside, while the U.S. continues to offer more durable and predictable earnings growth.
5. A hawkish monetary policy tilt, disruptions in AI investments, and a ruling against tariffs could all be risks to bullish investor sentiment in 1Q26.

In detailing these views, Citi Wealth questions commonly held views about economic growth in 2025, such as the hype around fading leadership of mega-cap tech equities and attributing “all U.S. growth” to AI.

“Despite growing fatigue in AI and Tech market discourse, fundamentals continue to favor the sector, and superior earnings growth and strong cash flow generation support tech as a long-term core holding,” said JP Coviello, Head of Portfolio Strategy at Citi Wealth. “The sector comprises the majority of growth in U.S. equity indices, and it is extremely difficult to be bullish on stocks without also being bullish on tech. We continue to believe that technology investment will power the global economy across global industries.”

For investors looking at medium-term opportunities, Citi Wealth’s report highlights several key investment tenets they need to keep in mind:

• We do not believe in using valuations as an investment thesis. Many investors get intimidated by valuations appearing elevated, fearing a repeat of the Dot Com Bubble, but there are stark differences to previous periods of similar valuation levels.
• Upstream and downstream opportunities in CapEx and AI infrastructure. An aggressive global CapEx pipeline and evolving AI needs support sustained demand for natural resources, specialized labor and niche industrial suppliers, and potential investment opportunities with it.
• Structural drags and cyclical exposure leave Europe trailing U.S. in earnings power. Earnings should drive the bulk of equity returns over the coming quarters, which leaves non‑U.S. markets in a “show me” phase: margin and earnings delivery must now validate the higher multiples of 2025.

About Citi

Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in more than 180 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.

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