Financials Have Been 'Less Loved,' Hermann Says

Summary

Julia Hermann warns that elevated semiconductor cyclicality and tighter monetary conditions create ongoing volatility for tech. She sees opportunity in underappreciated financials, which are high quality and poised for positive catalysts. She also notes a flight-to-safety bid supporting the dollar and remains constructive on European financials despite geopolitical uncertainty.

• Geopolitical tensions add uncertainty to oil and inflation outlook.
• Semiconductor memory cycle at extreme levels, vulnerable to pullback.
• Financials offer quality, dividend increases, buybacks, and earnings catalysts.
• Dollar benefits from safe-haven flows and constrained liquidity.
• European equities still favored for valuation, especially financials.
• Diversification back in focus amid wider policy outcomes.