Monthly house view | October 2025
Context
The US economy is showing remarkable resilience despite higher trade tariffs and a soft labour market. This strength is largely thanks to the growth of artificial intelligence (AI) and consumer spending. These two drivers of economic growth are closely linked: consumer spending is being fuelled by the wealthiest Americans which are enjoying substantial AI-led stock market gains. This affluent cohort also benefits from large wage increases, in stark contrast to lower-income groups, who are struggling in an increasingly divergent US economy.
Another feature of the AI-led economy is the so-called “circularity” among technology giants, which are investing in each other’s businesses. This circularity introduces a vulnerability and places the economy at an inflection point: should the AI-driven momentum falter, the wealth effect that is supporting economic resilience could unwind. However, if AI adoption broadens across enterprises, productivity gains could spread across the broader economy and put it on a sturdier footing.
At a macroeconomic level, fiscal support in the US, Japan and Europe next year should help broaden economic resilience. However, inflation remains a major risk, as consumers still face the delayed impact of tariffs, while labour market tightness may drive up the cost of services.
Real assets
The planned fiscal stimulus is coming on top of already substantial public deficits. In the US,this is exemplified by the One Big Beautiful Bill Act (OBBBA), which extends expiring tax cuts and introduces new ones. The Congressional Budget Office estimates the OBBBA will add over USD 3 trillion to the national debt by 2034.
This fiscal largesse has weighed on the US dollar and is increasing the appeal of so-called “real assets” – those with intrinsic value that is derived from their physical properties, such as precious metals, real estate, and public and private equity. In this environment, we are positive on gold and silver. We also like quality Real Estate Investment Trusts (REITs) and maintain a positive outlook on European private equity real estate. In equities, which are de facto real assets, we like European, Japanese and Swiss stocks.