ClearBridge Investments

ClearBridge Investments: The ongoing energy crisis is pushing global oil inventories, including many critical product inventories, toward all-time lows, and it may be time to position portfolios given the potential for supply shortages to emerge.

ClearBridge Investments suggests investors could use volatility as an opportunity to deploy capital, while modestly favoring the stronger earnings revisions and more reasonable valuations available in non-US equities.

Energy-driven inflation and geopolitical risk increase the likelihood of higher-for-longer interest rates, which listed infrastructure has several mechanisms for passing through to earnings.

“Party like it’s 1999” is a phrase made famous by the musician Prince’s 1982 song, which experienced a renaissance amid Y2K fears and has since entered the lexicon meaning to celebrate intensely because the future is uncertain.

Shifting geopolitics are causing policymakers in Europe and Japan to step up fiscal spending to gain self-sufficiency and generate growth.

ClearBridge Investments expects a broadening of market participation that should benefit more diversified portfolios in 2026.

ClearBridge Investments believes the outlook for infrastructure in 2026 remains robust, driven by the accelerating demand for power and data fueled by AI.

ClearBridge Investments believes emerging market equities have turned a corner, showing strong performance after years of lagging returns.

lthough AI is often blamed for labor weakness, the data suggests other dynamics are at play, as job creation is slowing most in industries with low AI adoption. Given the strong outlook for corporate earnings and policy support, the authors maintain a positive view, advising investors to "buy the dip."

ClearBridge Investments believes emerging market equities have turned a corner, showing strong performance after years of lagging returns.

Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments, discusses key spending, employment and other policy factors he is following as we look forward to 2026.

US equities underperformed global markets in the first six months of 2025, but continue to trade at a premium to foreign markets. ClearBridge Investments outlines the case for global diversification.

ClearBridge Investments believes positive forces from One Big Beautiful Bill Act passage and future interest rate cuts should soon outweigh negative forces of tariff actions.

Higher interest rates and greater fiscal spending is good for value but is being largely ignored due to the focus on a soft landing.

Key Takeaways

• This new market cycle of higher interest rates and greater fiscal spending is unequivocally good for value but is being largely ignored due to the focus on AI and an economic soft landing.

• We believe the market’s attention on large growth stocks has created an attractive value menu, particularly in energy, insurance and IT hardware manufacturers.

• The relative value of value versus growth is back to all-time highs, suggesting value stocks will have an edge over the cycle and making an investment case for a healthy value allocation.

The value of value relative to growth is back to historic highs, being driven by the extreme concentration of the top seven stocks in the S&P 500 Index. The combination of expanding equity multiples and higher interest rates in 2023 has overshadowed growing risks and created an environment reminiscent of 1987’s “Black Monday”. Value provides investors strong advantages in the face of these growing extremes, offering the potential for downside protection against market declines as well as compelling relative return potential on a decrease in market concentration.