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1. Big money managers remain remarkably underweight.

Analysts at firms including Barclays Plc and JPMorgan Chase & Co. see further upside for US stocks, in part because they expect institutional investors to abandon their cautious stance and ramp up exposure to equities.

While stocks have roared back from their tariff-fueled April slide, big money managers remain remarkably underweight: Their overall equity positioning has been lower only 23% of the time since 2010, according to Deutsche Bank AG.

President Donald Trump’s ever-changing trade policies have led them to show restraint, even as bullish retail investors have helped to push the S&P 500 Index back toward a record high. That positioning reflects tentative sentiment on the part of institutional asset managers, but it gives them room to boost their allocations as they seek to keep up with the market.

At Barclays, global head of equities tactical strategies Alexander Altmann says his team is “staying long and strong US equity risks” over the next few weeks, calling both positioning and sentiment “too low.” And with the Trump administration’s focus seemingly moving from tariffs to tax cuts, “the path of least resistance is to new highs,” JPMorgan strategists led by Dubravko Lakos-Bujas wrote to clients last week. “Even after a V-shape rebound in global equities, investor positioning remains light-to-moderate and sentiment is lukewarm.”

At Deutsche Bank, this cautious mood is part of their S&P 500 bull case. If investors become confident that tariff impacts will be modest and temporary, they’ll likely look through any slowing in growth “and turn overweight in anticipation of a rebound,” according to chief US and global equity strategist Binky Chadha and his team.

Source: Deutsche Bank Asset Allocation

2. Trump's trade policies are weakening confidence in the dollar as a haven of value, leading investors to look to other regions.

"The dollar faces pressure from rising protectionism and potentially deficit-increasing fiscal policies, which is likely to lead to a gradual erosion of its value rather than a collapse of its reserve currency status," JP Morgan noted in its Global Investment Outlook 2025 Mid-Year Global Investment Outlook .

In an interview, Nur Cristiani, director of Investment Strategy for Latin America, said that in the face of this dollar weakness, investors still have confidence in the currency, but instead of investing 70% in it, they are turning to markets such as Europe or Japan. "We believe there may be room for a rebalancing in global portfolios, which does not necessarily mean going against the dollar, but of a cyclical weakness of the currency,"

Cristiani explained. It is not that the currency has lost its attractiveness, if we take into account that 60% of the central banks' reserves are in dollars, he explained. It is just that investors are reconfiguring the weight they used to give to the United States, versus other regions.

3. “The rally in European markets has lost some steam since its strong start to the year, but investors are still looking to buy.”

“A renewed threat around US tariffs remains a risk for markets, but investors are likely be respond with less panic, having become more used to the threat. There’s likely to be a 10% baseline tariff, plus sector-specific levies, something that seems “more than adequately reflected in earnings expectations and GDP forecasts. An agreement at our anticipated levels or below should reduce uncertainty and lead to another leg higher in equities.”

A glance at technical indicators suggests some consolidation is under way after the Stoxx 600 hit overbought levels last month, but without any worrying signs. It would take a break of major support at about 541 for the benchmark to validate a proper move downward, according to DayByDay technical analyst Valerie Gastaldy.

Equity investors appear to have reverted to their belief that the Trump administration will be positive for earnings, she notes.

4. Humanoids, magnets and rare earth materials.

“The world economy runs on magnets because anything that moves or involves electricity is likely dependent on magnets. And high end magnets require rare earths (NdPr, Dysprosium, Terbium).

China controls 65% of mining/88% of refining of rare earths and therefore the world will likely remain dependent on Chinese rare earths for the foreseeable future. The average lead times for new mines continues to rise, which could pose challenges for meeting the rising demand for critical minerals. According to S&P Global, the average lead time for mines operational between 2020 and 2024 reached ~17.8 years.

The Humanoid robot revolution further highlights these risks. The average humanoid has around 0.9kg of rare earth metals and could cumulatively add up to US$800bn of incremental demand.

Given the importance of rare earths and their specific uses in defense applications, over time, western countries may need to build supply chains and support projects in order to develop the industry.

China dominates global reserves now, but significant resources could be developed in Brazil (23%), India (8%) and Australia (6%). “

Source: Morgan Stanley

5. China’s nuclear energy boom versus Germany’s phase-out.

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