European equities offer a catch-up trade as the AI-led rally broadens out from US mega-caps and Asian semiconductors; the region's sector composition, particularly financials, is less dependent on tech hype and has been performing well, making it a solid core holding in a broadening portfolio.
The yen is one of the most undervalued currencies. As the Bank of Japan keeps hiking rates and the rate gap with the US and Europe narrows, the yen should strengthen significantly over a 12-18 month horizon.
If stagflationary risks rise, inflation expectations will rise first. Treasury Inflation-Protected Securities (TIPS) are a good hedge against that scenario.