SUBODH KUMAR & ASSOCIATES, STRATEGEINVEST INC.

01/31/2026

Note Précis Jan. 31,2026:Q1/2026- High Frequency Volubility, Exogenous and Internal Market Risk - Exogenous and internal market risks need to be incorporated, however imperfectly, into asset mix structure. Buoyant capital markets marked the end of 2025. It was driven once more by momentum. Despite central bank intonations, there appear implicit capital market expectations of solace in 2026, notably from further Federal Reserve policy ease. After five decades, governmental hubris on monetary policy has returned to impact Federal Reserve and laterally global monetary risks. Amid dispersion, steadfast wait-and-see, have been the Bank of Canada at 2.25% and potentially the Bank of England at 3.75%. At its January 28, 2026, FOMC, Fed Funds rates were flat at 3.50% on employment/inflation. Currency volatility looms. Not unlike the ECB at 1998 inception and even the 250-year-old Bank of England, a centenarian Fed needs to underscore independence especially in 2026. Even as circumstances and leadership change, central banks tend to be collegial. Under the surface loom variate dark pools of risk.

Vision appears a work in progress at best within global and domestic politics, from actual and potential warlike behavior with adversity. Unpleasant unknowns and fissures expand. Deliberately or unknowingly, politicians appear ignoring the lessons about coveting territory. It was often for resource gain and encapsulated in two world wars, in- between such as Ethiopia, Manchuria and east Europe and the collapse of the League of Nations. Freestyle policies are likely to affect growth and trade.

Global geopolitical meetings into 2026 seem closer to an i jumble bazaar. The United States appears to wish to break apart linkages developed since 1945. Post Davos 2026 versus multilateral rules, bilateral redirection is intense, incrementally in EU/Mercosur and EU/India trade agreements. Upfront cruciality appeared earlier for BRICs. Decades of local interest procrastination have given way to clearing pathways. It still means market uncertainty volatility.

Hence, risk premiums are likely to increase. Within capital markets, cracks appear over fundability in areas in favor until recently. It includes private equity and the likes of art asset backed lending. After five decades since its collapse, governmental hubris on monetary policy has returned. It raises risks for Federal Reserve and laterally global monetary stability. Amid potential for currency volatility even in G7 countries, precious metals potential is still incomplete activity due to individuals, central banks, and shadow governmental holdings. Preferring clarity in ownership, we have increased direct investments and reduced private equity.

In FICCs (Fixed Income, Currencies and Commodities), the lack of focus on deficits across countries and more belligerence on trade raise volatility risk in currencies. Recent Yen and Swiss Franc behavior are potential harbingers. Already from south compared to north Europe, spreads have favored those forcibly into early restructuring. Absent incumbent government forward capital budgetary planning, the same potential exists about vigilance. Spread volatility risks loom between advanced and emerging markets. It is existent in Asia, Europe, and North American fixed income. Such risk behooves diversification. For exposure in Fixed income, we favor early restructuring, short duration and quality in sovereign and corporate issues - as well as diverse cash.

Equities globally appear to have been beholden to perceptions about Federal Reserve policy. Equity valuation appears elevated compared to earnings for instance with the S&P 500 at 25x trailing or even 21x consensus for 2026 and versus 10-year Treasury yields potentially rising to 5% amid elevated deficits. Few investible areas can be judged as being unusually squeezed out, apart from Energy alternates and hydrocarbons with crude oil at around $60-70/Bbl. WTI. In contrast to durbar like visits by others, we found the Energy executives in Washington to be factual and precise on risk and opportunity. We favor diversification in sector allocations to override geographical dispersions.

On style with intermittent outperformance by value across the size spectrum, momentum and growth did outperform over 2025. We anticipate change. Even if not formal policy, on fiduciary like considerations versus global and S&P 500 weightings, in growth we would cap Information Technology at 25% to make selective room for Healthcare. Iin cyclicals, we favor industrials over consumer areas. We assess materials and energy as systemic critical. In Financials, we favor early restructuring strong banks over nonbanks due to potential dark pool leverage

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11/21/2025

Note Précis November 21, 2025: Hidden In Plain Sight-

With capital sloshing and spilling in late 2025, much is hidden in plain sight. The full impact on capital market behavior may not be seen until in early 2026 when12 months of portfolio runway exists. Across asset classes it has been unlike the late 1990s when vigilantes especially in Fixed Income policed markets. The current milieu has been dominated by ultra high frequency trading. Its role in volatility is present but is opaque in ferreting out value. Over time, value is a key for liquid capital markets. Not just as a pithy moniker, diversification within and about asset classes is called for.

Highly bifurcated, global economies are doggedly operating in a 3% annual global GDP growth. In fiscal budgeting priorities, defense allocations are up but deficits massive. Credit risk is not always exotic. Recent collapses in various individual jurisdictions globally demonstrate complacency exists. Worldwide, individual company have taken to announcing layoffs that number tens of thousands, individually even in supposedly stable Consumer Staples, in Energy, in the much-espoused Information Technology and in Communications Services. Being the best of the worst seems expressed in the barely passed budget in Canada amid visible budget breakdowns such as in the United States, United Kingdom and France. Central banks do remain with their hard won 2% inflation targets. All are likely to add risk especially at the long maturity end of Fixed Income. We maintain that as benchmark valuation, a yield of 5% would be appropriate in 10-year U.S. Treasury Notes. In Fixed Income, we favor diversification and short duration. Elements are likely to stoke currency volatility higher, already glimmering in the Yen. Arguably stoked by financial sanctions as a tool, central banks, individuals and institutions are likely to add to exposure in precious metals as integral to Asset Mix.

Consensus momentum and Federal Reserve rate ease speculation has been fierce but is likely to fuel volatility.From businesses, simply beating reduced consensus earnings may have run its course. On trailing or anticipated earnings, valuation is not low even outside momentum gorged Information Technology nor geographically, outside the U.S. market. As benchmark, the S&P 500 at 22-26x P/E (depending on if trailing twelve month or upcoming earnings were used) has little margin for error. Neither do other markets geographically when composition is accounted for. We expect a below consensus S&P 500 earnings growth for 2026 to be 5%. It favors quality over size or location. To achieve diversification, we favor a cap of 25% in Information Technology to make room for Healthcare as well as smaller sectors like Energy and Materials. In cyclicals. from defense and infrastructure spending, Industrials potentially have more stability than do Consumer areas from aspiration spending. In the crucial Financials, change looms again and favors those most ruthless in restructuring and credit quality.

Our next note will be in 2026.

E.o.e. For disclosures and more depth please go to www.subodhkumar.com

10/30/2025

Note Précis: Oct. 30,2025:Q4/2025-Markets Continuing Risqué Dance to Music –

Events do not adhere to rigid timetables. Within renewed market momentum into late 2025, particularly key are several observations by monetary authorities on growth distribution and deficit leverage; on countries amid wildly fluctuating trade stress and by central banks facing changed monetary and increasingly political pressures. In capital markets, valuations are high including low credit spreads and P/E ratios in equities.

Several major central banks of the G-7 like the Bank of Canada, the ECB and the Bank of England now signal wait- and- see policy, not serial rate cuts. In reducing administered rates by 25 basis points, the Federal Reserve in its October 29, 2025, FOMC avoided signals of urgency. U.S Fed Funds could be back to 4% by late 2026. With markets continuing risqué dance to music, portfolio diversification seems even more important now. Currency volatility has in the main not been part of this cycle but could easily rear in the present circumstances. Precious metals are likely to remain part of Asset Mix.

According to the IMF, global debt to GDP stands at a rarified level of 235%. We see as reference points, global annual GDP growth of 2% as recessionary and of 4% as robust, with the present 3% as neither. Countries did not use the post pandemic environment to restructure public sector financings. Now, repurposing of public finance is urgent, with defense expenditures a priority. Hot wars and sanctions, tariffs and acceptance for autarky have increasingly transitioned into political considerations.Egregious scandal with misjudged positioning in leverage finance and factor finance were reported in 2021 and once again in September 2025.

With urgent defense requirements and already extended public debt levels , tangible financial restructuring is still obscure but likely. Advantages are likely to reside with first movers on sovereign debt and cost restructuring. Corporate restructuring of balance sheets and cost cutting has commenced, including in payrolls even in Information Technology. In Fixed Income, we would favor quality but in short to medium duration with credit spreads ripe for change and where allowed diversification by currency.

Despite current the equity market current propensity for high frequency price swings, obscure leverage is among the developments also likely to be far from being exogenous for equities. Since April 2025 and accentuating late in the year, momentum with volatility has again appeared to dominate equities, with seeming reliance that imminent or later “put” or moderate central bank rate cuts would cushion and boost equity markets worldwide. On the S&P 500 which is globally one of the most diversified of indices, consensus operating earnings growth for 2026 appears to be 15%. It compares to our expectation of 5% earnings growth in 2026 for the S&P 500, below long-term averages of 7% amid sedate economic growth. The S&P 500 P/E ratio appears elevated at close to 22x even on anticipated consensus earnings and 25x on trailing operating earnings with yield of 1%, all offering limited cushions for performance in adversity.

We espouse more focus on diversification geographically, in sectors and in style. Information Technology appears at the forefront of U.S. and emerging market performance but favoring quality positioning. The momentum favored Information Technology large and small style segments linked to AI will have to demonstrate over time not just technology but tangible revenue and subsequently, bottom line delivery.

We see the Financials as crucial but would be overweight in banks positioning, under regulation, for another restructuring and systemic risk environment. Major risks likely lie in the non-bank financials segment with obscure instrument leveraged portfolios yet to be tested in adversity. We have Healthcare as overweight to achieve which, we capped euphoria gorged Information Technology at 25% of total portfolios, often ascribed as being cyclicals, we overweight Industrials as in a favorable growth phase in many segments with aspiration consumer areas at underweight. We overweight Energy and Materials as critical for business, consumers and now as AI and G6 roll out, increasingly for Information Technology.

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09/19/2025

Note Précis: September 19,2025 - Incoming Ides of ...... October : It is time to beware of complacency into the ides of .…..October. Multiple market cycle patterns are similar. Scepticism is intense at the bottom (as in 2009), moves into expansion of economies and company earnings and then, into embellishment. Well into 2025 it relates to the ability of central banks to fine tune monetary policy and of companies to deliver spectacular earnings growth over five years. Both are necessities for not just AI(Artificial Intelligence) purveyor valuation but also for capital markets at large. From hot military theaters from eastern Europe to the Middle East into southeast Asia/Asia Pacific, miscalculation is an exogenous but global risk.

At such junctures in the 1970s/80s, those tardy in recognizing changed circumstances suffered severe risk premium adjustment. It stoked stark contrast to the abetting of a striving for yield (as in assertions like “countries do not go bankrupt”). Few leaders or laggards are apparent now in the incoming race to restructure public finance. Currency markets have appeared settled. Fixed income markets have sovereign yields rising well above their lows while junk corporate and emerging market yields skim 12-month lows. This complacent milieu may suit momentum positioning, but change is likely to be brutish, especially on our benchmark valuation target of 5% yield in 10 Year Treasury Notes. Governments may issue more short-term debt to “bend the curve”.

Central banks are likely in a more complex, charged environment than that of executing a seamless exit from quantitative ease. Individually and collectively, economic growth is sluggish, and inflation is stubborn compared to a long held 2% target for most central banks. Absent for four decades and usually rearing up during economic stress, attempted political interference appears again into monetary stances - more mutely in Italy in the European Union; overtly and causing turmoil in Türkiye; and now in aggressive injection from personnel to policy matters in the United States.

Measured policy exists with only 2% rates held by the ECB, 4% by the Bank of England and 0.5% by the Bank of Japan. It appears in rate cuts of 25 basis points by the Bank of Canada to 2.5% and the Federal Reserve to 3.75%. Collectively crucial for growth, individual conditions press emerging country central banks, including China and India. Several central banks allude to meeting-by-meeting flux. Fine tuning of policy seems controversial. A salient IMF annual meeting is upcoming in Washington over October 13-18,2025. Appearing are risks of currency volatility with “put” monetary policy relief being overly expected in capital markets.

Perennial equity investment considerations are how much to pay up for future growth and at the other end, how much yield is needed for defensive attribution. The just ended reporting season did have momentum aspects of beating oft reduced consensus and of AI concept euphoria. Buoyant tangible revenue or earnings generation assessments were scarce from end users. There continue layoffs in Information Technology. Many corporations globally referred to cutting costs and share buybacks as opposed to revenue expansion.

In equity markets (exemplified in the S&P500 22x consensus forward earnings and 1% in yield), none offers defense, especially in our 5% earnings growth target for 2026. Valuation may be at extreme in concept euphoria over AI but is also extended across sectors and geographies, ostensibly on Federal Reserve relief. Given tariff, hot war, and business uncertainties worldwide, it is more realistic for Equity allocations to diversify more on factors like quality, size, value, momentum, and volatility as well as amongst sectors. Less whimsy, “six season” immediacy and restructuring make consumer areas less attractive. Energy, materials and industrials are mission crucial even for momentum information technology.

In Fixed Income allocations, neither focus singularly may suffice on yield differentials nor credit spreads. Increased attention is needed on the composition of the underlying currency reserves. It would favor a quality melange such as SFr even with low yield being alongside higher yield holdings of other sovereigns with shorter duration with precious metals holding up in Asset allocations by central banks and investment portfolios alike.

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08/25/2025

Note Précis Aug 25,2025: Readjustments Dawn Still Beginning – Eight decades of expanding multilateralism and market-based economies gave rise to burgeoning prosperity. Of impact to be determined, bilateralism readjustments are still at dawn beginnings in intervention in businesses and tariffs between countries. Sharpening in 2025 has been an intertwining of U.S. political and economic relations with shades of state capitalism. It includes tariffs to enforce investment decisions and demands for a state portion in equity for some and of revenues for others. It has echoes of intervention that seem not laid to rest by the massive global privatizations in prior decades to improve efficiency. With global GDP growth skimming 3% annually and realpolitik increased, not momentum but quality of management and flexibility in operations are like to be differentiators.

On fiscal matters beyond political rhetoric, much implementation remains. As a former European Prime Minister observed,the so called ‘peace dividend’ appears overspent. Space in budgets will have to be made for defense increases by ongoing triming in other spending, not via deficist. Drones and even ICBMs appear within the reach of even isolated entities. As counter, ‘iron dome’ systems are likely to be asymetrical in cost but necessary due to changing technologies. As analogy, required expenditures early in the 20th century were for aerial, terrestial tank, and submarine warfare to supersede the prior force multipliers of cavalry on land and battleships at sea. In increases to 5% of GDP for defense spending in NATO and for others, much is malleable.

Central banks have had a golden period when post the sorry 1970s, political second guessing became verbotten. Now, fiscal pressure have been raised as monetary issues in the likes of Argentina, Turkiyie and Italy as well, in the United States. Attaining a 2% inflation benchmark took years of sometimes painful monetary policy and has been reiterated. At Jackson Hole in August 22, 2025, emotive words like elevated were absent but instead present were “…risks to inflation are tilted to the upside and risks to employment are to the downside- a challenging situation”. Central bank rate changes are likely to be of the 25-basis point and not the “put” variety that markets have savoured for momentum positioning. The real impact is likely to be cumulative with ongoing pressures on the overly leveraged.

Global capital flows and liquidity changes often have a greater impact than markets countenance, whether in banking loan portfolios or in investment portfolios including nonbank portfolio structures. So far, currency levels have been calm on bond yield differentials in reflecting sovereign or credit quality corporate risk. Still, fiscal deficits must be differentially addressed, with turmoil already for instance in G7 countries like Britain and France. In asset mix, we favor quality and country diversification up to 10- year quality fixed income. We would also have exposure in precious metals as diversifier amid political and economic uncertainty.

With fiscal rectitude still to come, equity considerations include risk premiums against 10 Year US Treasury Note yields potentially at 5%. Not just on a small coterie, the S&P 500 trades at close to 24x forward earnings. Internationally, the corporate assessments have been tempered from consumer luxury to basics to even information technology with employment reductions. Risk sentiment is likely at the dawn of readjustments whether over tariffs; or from changed technologies in defense; or from valuation and swings of leadership in capital markets. Change is already of impact for trade, politics and central banks. Risk is likely rising for corporate management.

As fervor has built up for secondary and tertiary potential purveyors of AI services and products, ‘pump and dump’ schemes are apparently emergent. Investment positioning needs to include diversification among sectors as well as in accepting rapid factor rotation between quality, value, momentum, low volatility, and size. In sector rotation, less succor is likely from consumer aspiration and more from broadly defined industrially driven restructuring.

E.o.e. For disclosures and more depth please go to www.subodhkumar.com .

Subodh Kumar & Associates, a division of StrategeInvest Inc. We provide perspectives on markets and investment opportunities through our independent investment strategy consultancy.

07/21/2025

Note Précis July 21,2025:Q3/2025- Hardly Sotto;Policy, Valuation and Public Finance Exuberance Needs Managing : A political hiatus on monetary commentary/interference did likely already peak just after the 2008 credit crisis. The present amalgam in politics has cracks, markedly but not exclusively by the United States. Wars begetting sanctions, hidden subsidies begetting tariffs and defensive fears from the Indian Ocean into Asia Pacific are also challenges. Hardly sotto are the gale force winds stoking obscurely systemic risk, Valuation and public finance exuberance needs managing via diversification in investment portfolios.

Partly due to prolonged quantitative ease that is lower but still present, currency volatility stresses remain likely to flare unexpectedly in affecting returns. In asset mix, we expect precious metals to have an elevated role. In present fixed income activity, the noteworthy performance has been far from favoring sovereign debt yield. Instead, in currencies, the U.S. dollar weakened despite its higher yield while mid yield currencies like Canada as well as low yields ones like Japan and Switzerland held their own. In Fixed Income, we favor a likely continuation of diversification by currency rather than by spread differentials alone.

In momentum, equities valuation has yet to gain respect. Despite the strongest companies reporting early, consensus S&P 500 earnings were cut to our 5% gain for 2025. However, market P/Es have expanded, again on reduced expectations being exceeded. On U.S. Treasuries as benchmark, risk premiums of 200+ basis points above risk free rates remain latent, could reoccur and de-minimis stoke volatility. Momentum has in 2025 been spreading globally beyond coteries of mainly Information Technology, now driving aspiration plausibility for artificial intelligence. Metrics involving relative valuations classes seem not rigorous. For example, outside momentum in the U.S., favorable size, quality and even value as factors have selectively emerged. We expect sector diversification to play a greater role than would geographical rotation from the U.S. to Europe.

Momentum capital market exposures appear to be overlooking the criticality of smaller sectors. We favor strongly financed and risk assessment cognizant companies in Energy, and Materials. Defense spending and economic growth amid tariff tussle realities have us overweighting Industrials anticipating less business cyclicality than the much larger consumer areas. In growth, broadening diversification has had us at a 25% cap for Information Technology. Much business and policy restructuring remains in Communications Services. Healthcare offers growth diversification but lacks the value and/or momentum excitement last generated during pandemic about aspiration potential. Systemic risk derives from slow economic growth, excess public finance deficits and obscurely leveraged fixed income holdings via non-bank financials raises. It favors again the strongest in restructuring in the Financials.

E.o.e. Copyright Reserved For disclosures and more depth please go to www.subodhkumar.com .

Subodh Kumar & Associates, a division of StrategeInvest Inc. We provide perspectives on markets and investment opportunities through our independent investment strategy consultancy.

06/09/2025

Note Précis June 9,2025: Navigating Markets Riven with Shoals.

Capital markets and especially equities appear back into a momentum mode, dependent on a few. The investment focus needs to be broader especially on political evolution. Upcoming is G-7 from June 15,2025 hosted by Canada, deterioration into haggling would be negative . Post Asia/Pacific assessments, high stakes mark the June 24,2025 NATO summit in the Netherlands. The same holds later in South Africa in the November 22,2025 the G20 with BRICs much expanding economic heft. Defense and trade belligerence has inestimable fallout, with the 1930s being salient.



The U.S. administration may be opting for generating crisis to be then followed by resolution. It would be very costly for business and hard-pressed consumers. Many items are crucially globally sourced to form engineered goods from nuts and bolts to aerospace and information technology with the U.S. also being in raw materials deficit.



Individually in many other countries all show elevated debt levels that could cause emergency. In the OECD countries, the so-called peace dividend of the 1990s/200s was a misnomer. Unrestructured public finances are faced with substantive defense spending of 5% of GDP. Unlike momentum gorged capital markets, little immediate so called “puts” can be expected through 2026 from the Federal Reserve and major central banks further data..



In recent corporate reporting amid 3% or less global growth and elevated costs for basic living, lesser consumer aspiration appears. We envisage the 2025 onwards business environment as being driven by longer dated defense and infrastructure spending, unlike the immediacy of two prior decades of whimsical aspiration consumer spending.



Elevated debt levels potentially raise funds flow rushes and currency volatility as seen recently in the U.S. dollar, s. Private markets show some deterioration. With 10 Year U.S. Treasury Note yields being potentially sticky at 5% or above, we favor short term duration in Fixed Income and quality and currency diversification. There appears likely to be continued diversification into precious metals .



Equity valuation is elevated with the S&P 500 at 22x 2025. Executing investment transition from prolonged momentum and into valuation and diversification adjustment will be crucial even over slice and dice trading between U.S. and non-U.S. exposure.



Diversification beckons in Information Technology such as via an overall 25% weighting cap with an array of U.S. and global exposure. Server data centers require infrastructure like industrial space, critical minerals, and energy. For defense and in modernising business , the industrials have a key role . In financials so crucial to market behavior, in a world of modest growth obscured by tariff trade tensions, bank loan loss provisions and balance sheets require to be watched, as in 2000 and 2008.




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02/21/2025

Note Synopsis Feb 21, 2025: Capital Markets, Trade And Own Goals -

Chockful in tensions with wars, trade and political economies rending potentially from friend and rival alike, the risk is rising of that called an own goal in soccer and hockey parlance. The February 14/16 2025 Munich Security Conference was notable in its breadth of concerns raised. It is appropriate in investments to review balance between momentum versus risk premium cushions being hitherto ignored. We would recall that in 1985, super power rivalry, trade tensions then with Germany and Japan spilt into calls for currency and rate management which was followed by capital market hubris about so called “portfolio insurance” that was anything but.



Capital markets have been momentum oriented with dependence on a backstop of globally congruent central bank policy that presently shows bifurcation. Classical creative obfuscation in balancing inflation versus growth parameters was buttressed in Semiannual Congressional testimony over February 14/15 2025 by the Federal Reserve Chairman. Bellicose trade tariff positioning and many fiscal worldwide uncertainties likely add support for such a shift.

We expect Fed Funds rates at 4 ¼ % through 2025 with a potential 25 basis point increase in late 2026 as visibility improves. We see 5% yields as also likely for 10 year Treasury Notes, as risk benchmark. Central banks from Europe to Britain to Canada to Australia have cut rates on domestic weakness, despite common concerns about inflation. Multifactor considerations favor precious metals in strategic asset mix. Monetary and fiscal policy bifurcation could lead to currency stresses even for the G7. In Fixed Income, we prefer positioning on high quality and up to 10 year in maturities.

We expect the implications for equities worldwide of 5% 10 year T-Note yields to be to drive down valuation, increase volatility and curb momentum. The slicing and dicing of risk may have sartorial elegance but reality is messy for example in the 1985/87 currency/so called insurance debacle and the 2008 credit/subprime international debacle when political economy permutations also loomed large.



We expect volatility as corporate delivery and valuation incorporate higher risk . In early 2025 releases, corporate managements have appeared more circumspect t. It is seen from luxury, staples, health and now even basic necessity companies otherwise regarded as better managed; from several automobile companies ranged from the U.S. to Europe to Asia; in banking; and even in momentum favorite information technology.



We favor sector diversification and quality of operating delivery. Even at low rates , financial and cash flow management is likely to be critical. Amid strategic heft of defense and infrastructure refurbishment being emphasized, energy, industrials and materials to be especially underappreciated.





E.o.e. Copyright Reserved For disclosures and more depth please go to www.subodhkumar.com .

Subodh Kumar & Associates, a division of StrategeInvest Inc. We provide perspectives on markets and investment opportunities through our independent investment strategy consultancy.