Welcome to the Monthly Editorial, where we connect the dots between major macro developments and actionable micro investment cases.

With Iran seemingly out of the equation for now, it’s tempting to return to a market posture of “nothing ever happens.” While we largely agree with that laissez-faire attitude over the next 1–2 months—given the bullish economic backdrop—we believe investors should not overlook a tectonic shift underway in defense, mining, and digital infrastructure.

These sectors are becoming increasingly tradeable with asymmetric return potential, especially in the wake of the largely successful NATO summit, where nearly every member committed to spending 5% of GDP on defense.

In the sections that follow, we’ll present our global macro outlook from a top-down perspective, then walk you through our macro-to-micro investment thinking across the three key tradeable regions: North America, Europe, and Asia-Pacific.

Enjoy the read!

Global Outlook – From Stop to Go

Our slow-brewing “stop-and-go” thesis is finally starting to materialize. After several weeks of macro and inflation surprises trending in non-reflationary directions, we are now moving steadily into the “go” phase. This follows a clear “stop” period in both the macro environment—such as the post-Liberation Day global trade pause—and geopolitics, with tariff concerns, Iran, and the Russia-Ukraine conflict dominating headlines. This transition from “stop” to “go” is inherently reflationary, supporting a constructive outlook for equities, commodities, and potentially even a USD comeback.

Importantly, economies have added substantial liquidity during these “lockdown” periods, and we are now re-entering an environment characterized by easier credit conditions, as well as more supportive fiscal and monetary policy. The soft inflation surprises observed throughout Q2 globally are encouraging central banks and policymakers to declare victory on inflation. Australia’s Treasury is the latest example, ramping up fiscal spending following a dovish CPI report this morning. Meanwhile, multiple FOMC members appear to be positioning themselves for a shot at the Chair role in 2026, signaling openness to rate cuts as early as July—contingent on the continuation of soft inflation data. We hence still see the current state of markets as a “window of opportunity” as equities are still trading with a large gap to liquidity and money trends.

To sum up, the global economic conditions are loosening, obstacles are clearing, and we are laying the groundwork for a broad-based rally in risk assets. With several equity markets already approaching new all-time highs, the next leg higher may just be getting started, and despite global macro surprises not picking up, the soft inflation picture has made one of the best leading indicators for equities (Economic vs Inflation surprises) point towards a melt-up in equities (see chart below).

Chart 1a: Soft inflation surprises will drive equities towards ATHs before growth takes over