Research @ Citi Markets Edition: How to Navigate 2026
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Dec 9, 2025 In this discussion, Adam Pickett, the London macro head at Citi, shares his insights on navigating the markets as we approach 2026. He highlights a 'Goldilocks' scenario for growth and moderate inflation. The conversation delves into China as an equity diversifier and the strategic advantages of sectors like tech, financials, and healthcare. Adam emphasizes the challenges of hedging in a tech bubble, suggests a neutral stance on treasuries, and forecasts a three-phase trajectory for the dollar. Lastly, he expresses a preference for base metals over gold, citing cyclical influences.
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Goldilocks Outlook Supports Risk Assets
- Citi expects a Goldilocks 2026: growth roughly in line with 2025 and modest services inflation.
- This backdrop is risk-friendly, supporting an overweight equities stance despite valuation concerns in the US.
US Equity Valuations Look Bubble-Like
- Dirk believes the US equity market exhibits bubble-like valuation, particularly around AI exuberance and funding concerns for OpenAI-like players.
- He argues the bubble hasn't peaked because positioning and liquidity conditions are not yet extreme or tightening.
Diversify Away From US Concentration
- Diversify equity exposure across countries and sectors, notably adding China as a low‑correlation alternative to US AI-heavy markets.
- Keep tech exposure while the bubble hasn't peaked and favour cyclicals like financials and upgraded healthcare into 2026.