Citi's Moore Is Not Worried About a US Recession

Summary

Citi Wealth CIO Kate Moore remains bullish on US equities, driven by earnings rather than multiple expansion, and uses pullbacks to add positions. She expects long-end Treasury yields to stay elevated, keeping her portfolio short duration, while she also prefers equities over corporate credit due to tight spreads. She is not concerned about a recession but warns that a pause in capex spending could hit sentiment.

• Moore says the equity rally is earnings-driven, not multiple expansion, and she buys on pullbacks.
• Sees no slowdown in overall capex spending, with Alphabet's demand-driven increase cited as evidence.
• Expects long-end Treasury yields to remain elevated; stays short duration and sees little reason to add duration.
• Most likely next Fed move is a hike, but not this week; inflation is broad and persistent.
• Prefers equities over corporate credit due to very tight spreads near 15-year lows.
• Notes bond-equity correlation has broken down, prompting a search for portfolio diversifiers.
• Not worried about a US recession, but a pause in capex could shock sentiment without derailing the economy.