Caveats and Risks

The big things you need to know:

• First, 3Q26 reporting season is off to a slightly soft start on the stats, with company commentary generally still highlighting resilience in the economy and consumers and tailwinds from AI, with some caveats, while giving investors plenty to think about in terms of risks that may lie ahead.
• Second, recurring topics in conversations last week with US investors included midterms, earnings, and positioning. Overall, investors came across as neutral with a dose of nervousness and a bit more short-term focused than usual.
• Third, other things that jump out in our other updates include the broad pivot we’re seeing in a number of key positioning trades and the recent widening in high yield credit spreads, which is a new potential point of concern for Small Caps.