sebastian 5.0 3 ideas

We are positioned for risk premium to rise. We are underweight cyclical stocks in Europe, especially those that are very stretched, like semiconductors and mining (which are AI-related cyclical names). These are at multiyear highs relative to the market and are pricing in a significant global PMI rebound, which is highly unlikely. The AI investment boom is not on autopilot and is energy-intensive, so it could be hit if growth momentum weakens.

We are long consumer staples and long banks in Europe as defensive hiding places. No one is interested in defensives because nothing can possibly go wrong, but the market is priced for zero cyclicality, and we expect a hit to growth momentum.