Reassessing the Balance of Risks, Neutralizing Growth

After a rare period of index-level calm and violent rotation, global equities have tumbled in past days. While the selloff has been most aggressive in Tech, volatility has been broad-based. Against this backdrop, we make several changes in our regional and sector recommendations. We tactically downgrade the US, Global Tech, and European Tech to Neutral (from Overweight); while fundamentals look attractive, positioning remains relatively neutral and could therefore adjust further into net short territory. We remain constructive on AI over the medium-term but would look for cleaner positioning and more stable AI sentiment (along with steady EPS revisions) before reestablishing our Overweight call. We upgrade Europe ex-UK to Overweight (from Neutral); the market remains less sensitive to Tech and is more levered to falling oil prices than peers. Our global sector strategy is now a barbell of Cyclicals and Defensives, with Overweights in Materials and Health Care (upgraded from Neutral). T