Citi Wealth Releases Macroeconomic and Markets View for 1Q 2026 – Staying Grounded in a Noisy World

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Key Terms

capex financial

Capex, short for capital expenditures, refers to the money a company spends to buy, upgrade, or maintain physical assets such as buildings, equipment, or technology. It matters to investors because these investments can help a company grow and improve its long-term performance, but they also represent significant costs that can impact profitability and cash flow.

ai infrastructure technical

AI infrastructure consists of the hardware, software, and systems needed to develop, run, and support artificial intelligence applications. Think of it as the foundation and tools that enable AI to process large amounts of data quickly and accurately, similar to how a strong foundation supports a building. For investors, AI infrastructure is important because it underpins advancements in technology that can drive new business opportunities and competitive advantages.

monetary policy financial

Monetary policy is the set of actions a country’s central bank uses to influence the amount of money and the cost of borrowing in the economy, mainly by adjusting interest rates and other tools. Like a thermostat for the economy, it helps control inflation and growth; changes affect borrowing costs, consumer spending and corporate profits, so investors watch it closely because it can move interest-sensitive assets, stock valuations and bond yields.

tariffs regulatory

Tariffs are taxes imposed by a government on goods imported from other countries. They increase the cost of those goods, which can lead to higher prices for consumers and impact international trade. For investors, tariffs matter because they can influence the profitability of companies, affect supply chains, and shift economic stability across different regions.

01/07/2026 - 09:00 AM

In a dynamic market, process and flexibility are equally important for investors

NEW YORK--(BUSINESS WIRE)-- Today, Citi Wealth released The Short and Long: Q1 Macro Investment View, a new, quarterly report designed to offer global, data-driven guidance to help investors navigate increasingly complex markets with confidence and clarity.

Following an unpredictable and sometimes volatile macro picture in 2025, Citi Wealth’s focus in 2026 is constructing dynamic portfolios with core positions – rather than shifting point-in-time forecasts – as a winning strategy to navigate volatile market cycles.

“We are constructive on the macroeconomic environment for 2026, with corporate profitability anchoring continued global growth, bolstered by favorable monetary and fiscal policy,” said Kate Moore, Chief Investment Officer at Citi Wealth. “Despite last year’s significant macro headwinds, global growth slowed only modestly, showcasing the resilience that companies in advanced economies have built into their balance sheets.”

The report also emphasizes the need for investors to stay grounded and objective in their market views, avoiding the pervasive risk of “narrative fitting.” In 1Q26, Citi Wealth cites five core convictions representing its highest-confidence views on the opportunities and risk in the current macro environment:

Monetary and fiscal policy should provide tailwinds to the global economy in early 2026, with the macroeconomic backdrop supporting corporate profits.
Current “elevated” valuations (particularly in the U.S.) reflect index composition and healthy fundamentals, and do not give Citi Wealth pause in its equity allocations.
Capital expenditures (CapEx) and investments in AI infrastructure have opened potential opportunities both upstream in natural resources and downstream across specialized industrials.
Europe’s cyclical bias and stagnant productivity backdrop constrain its upside, while the U.S. continues to offer more durable and predictable earnings growth.
A hawkish monetary policy tilt, disruptions in AI investments, and a ruling against tariffs could all be risks to bullish investor sentiment in 1Q26.

In detailing these views, Citi Wealth questions commonly held views about economic growth in 2025, such as the hype around fading leadership of mega-cap tech equities and attributing “all U.S. growth” to AI.

“Despite growing fatigue in AI and Tech market discourse, fundamentals continue to favor the sector, and superior earnings growth and strong cash flow generation support tech as a long-term core holding,” said JP Coviello, Head of Portfolio Strategy at Citi Wealth. “The sector comprises the majority of growth in U.S. equity indices, and it is extremely difficult to be bullish on stocks without also being bullish on tech. We continue to believe that technology investment will power the global economy across global industries.”

For investors looking at medium-term opportunities, Citi Wealth’s report highlights several key investment tenets they need to keep in mind:

We do not believe in using valuations as an investment thesis. Many investors get intimidated by valuations appearing elevated, fearing a repeat of the Dot Com Bubble, but there are stark differences to previous periods of similar valuation levels.
Upstream and downstream opportunities in CapEx and AI infrastructure. An aggressive global CapEx pipeline and evolving AI needs support sustained demand for natural resources, specialized labor and niche industrial suppliers, and potential investment opportunities with it.
Structural drags and cyclical exposure leave Europe trailing U.S. in earnings power. Earnings should drive the bulk of equity returns over the coming quarters, which leaves non‑U.S. markets in a “show me” phase: margin and earnings delivery must now validate the higher multiples of 2025.

About Citi

Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in more than 180 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.

Additional information may be found at www.citigroup.com | X: @Citi | LinkedIn: www.linkedin.com/company/citi | YouTube: www.youtube.com/citi | Facebook: www.facebook.com/citi