Global markets, policy shifts and portfolio strategy: Insights from Jurrien Timmer - December 8, 2025

Diversification beyond U.S. tech giants

Jurrien emphasized the importance of broadening investment horizons beyond the concentrated U.S. MAG7 technology stocks. In 2025, equities in Europe, Japan and emerging markets delivered solid gains, offering a diversified "pond to fish in" amid the U.S. market’s tech-heavy concentration. Market pricing currently reflects expectations for earnings growth of approximately 14–15% in emerging markets, _~11% in the U.S. and _~8–9% in EAFE regions. These figures are based on consensus estimates and may change as market conditions evolve. While these expectations suggest optimism, actual results may differ and volatility remains a consideration.

Impact of U.S. tax policy and deregulation on capital expenditure

A significant development is the presence of permanent tax cuts and enhanced expensing provisions in the U.S., with further deregulation still being defined. Jurrien highlighted that this policy environment reflects a form of state capitalism, where government initiatives actively shape market winners and losers, particularly in sectors like artificial intelligence and technology. The resulting capital expenditure growth driven by favorable tax treatment can enhance corporate earnings and support equity valuations, especially across AI-related technologies.

Federal Reserve policy shift and yield curve dynamics

Jurrien discussed the anticipated leadership transition at the Federal Reserve, with Kevin Hassett expected to succeed Jay Powell. This change is likely to bring a new policy approach characterized by deregulation and interest rate cuts aimed at steepening the yield curve. Unlike the Fed’s historically uniform stance, the new regime may introduce greater policy fragmentation, impacting market expectations and volatility. Banks could play a significant role by purchasing treasuries and expanding their balance sheets, which could potentially influence the market, like historical practices from the 1940s.

Private credit growth and market complexity

The expansion of private credit markets is notable, with private credit funds increasingly financing developments including AI, offering attractive returns outside traditional public markets. However, Jurrien cautioned about prudence and delinquency risks due to the opacity inherent in private markets. This complexity necessitates careful risk assessment and due diligence.

Stability amid geopolitical and market volatility

Despite geopolitical uncertainties, including tariff-related repricing events earlier in the year, the U.S. dollar and 10-year Treasury yields have remained relatively stable. Jurrien noted that the market has shown resilience in absorbing tariff shocks without significant capital flight or term premium spikes. This stability could support a balanced global allocation approach, combining developed and emerging markets to optimize risk-adjusted returns. Looking ahead, the market’s trajectory could hinge on Federal Reserve decisions, particularly potential rate cuts in December, which could influence bond yields, currency movements and equity sentiment.

Conclusion: Strategic positioning for 2026