Sep 18, 2026 · 19 min
Hawkish Fed shifts equity outlook toward diversification
Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook
The episode examines whether resilient growth and AI enthusiasm can offset higher rates, election uncertainty, and a less supportive Federal Reserve.
- 1The Fed’s hawkish rate hike strengthens the case for expecting additional tightening despite an upgraded growth outlook.
- 2AI remains a major equity-market pillar, but safety concerns, infrastructure spending, and adoption pace are testing investor confidence.
- 3CIO favors diversified exposure across industrials, financials, healthcare, and utilities alongside long-term AI, electrification, and longevity themes.
Don't miss
David Leibowitz reframes the equity bull market’s three pillars, arguing that Federal Reserve policy is no longer providing a tailwind.
The brief
Daniel Cassidy and David Leibowitz of the UBS Chief Investment Office review the latest equity outlook, starting with a hawkish 25-basis-point Fed hike and stronger growth expectations.
Leibowitz argues that monetary policy has shifted from a bull-market tailwind to a potential headwind, while current inflation remains unlike the much higher readings of 2021 and 2022.
AI still supports the equity story, but concerns about safety, data-center construction, compute demand, and adoption speed are forcing markets to reassess its durability.
Midterm elections could bring more market turbulence before voting, yet historically uncertainty has eased afterward; divided government may also limit the policy impact.
CIO’s positioning favors broad equity exposure over a narrow technology bet, with industrials, financials, healthcare, utilities, AI, electrification, power resources, and longevity in focus.
Books & mentions
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