Executive Summary
UBS's Head of Asset Allocation Jason Draho outlined a compelling 'running it hot' scenario where the Trump administration prioritizes growth acceleration over inflation control heading into 2026 midterms. The thesis centers on a policy cocktail of aggressive Fed cuts under a new chair (potentially Kevin Hassett), fiscal stimulus from the One Big Beautiful Bill Act kicking in Q1 2026, and strategic tariff moderation. This creates a rare environment where nominal GDP growth could sustainably outpa...
Key Investment Opportunity
Small Cap Rotation Play on Policy Mix Tailwinds
The 'running it hot' scenario disproportionately benefits small caps through multiple channels: lower real rates reduce their funding costs, domestic policy focus favors US small caps over multinationals, and broadening market participation flows naturally toward undervalued small cap names. Russell...
...and 1 more investment opportunities
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