State Street Investment Management
The latest research and outlooks in the ProAllocate library
- Equities
Midterms add to an AI correction already underway
State Street argues the post-midterm selloff in AI and semiconductor stocks accelerated a repricing already underway, driven by capex, valuation and monetization concerns rather than the election alone. It remains constructive on US equities, favoring selectivity and AI adopters over crowded enablers.
- Equities
Small caps: An opportunity hiding in plain sight
State Street's Krzysztof Janiga argues European investors have under-allocated to small caps despite domestic revenue exposure, cyclical sector tilts and valuation discounts, with a growing range of ETFs now offering access to the asset class.
- Equities
Tin hats and tunnel vision: Equities and higher yields
State Street Global Advisors' Toby Warburton argues equities have kept rising despite higher bond yields because earnings expectations remain strong, particularly in AI-linked sectors like semiconductors. He warns that narrowing valuation cushions and reliance on the AI investment cycle leave markets more vulnerable to earnings disappointment or valuation compression.
- Macro
Midterms change Congress, not the macro regime
State Street's Matthew J Bartolini argues the 2026 midterms won't reset the macro regime, as tariffs, deficits and Fed policy remain executive-branch-driven forces. He recommends broad multi-asset diversification, including real assets and inflation-sensitive strategies, given bonds' reduced reliability as diversifiers.
- Macro
The morning after the midterms
State Street argues the Democratic sweep of Congress was largely priced in and, with a Republican president retaining veto power, will reshape policy debate more than the investment regime. Sector-specific scrutiny of AI and fossil-fuel deregulation may increase, but history suggests post-midterm equity returns typically remain strong.
- Wealth Management
The beauty of compounding: A Q&A with Matthew Bartolini
State Street's Matthew Bartolini argues that long-term wealth building depends on starting early, staying invested and reinvesting income rather than timing markets. He cites a hypothetical $100 monthly contribution compounding at historical S&P 500 returns to illustrate the effect.
- ETFs
Fall back, and look forward
State Street's Matthew J Bartolini reports October ETF flows hit records, with bond funds taking in $74 billion and US equities capturing 80% of equity inflows amid a Technology and Energy sector surge. He argues investors should shorten duration and diversify further as AI, inflation and fiscal pressures persist into 2027.
- Macro
Strong US growth gives the Fed room to wait
State Street Investment Management reports central banks diverging in late October: the Fed and ECB hold rates steady while the Bank of Canada delivers an 'insurance' hike and the BoJ maintains a hawkish bias. It expects further RBA tightening toward a 5% cash rate and continued US growth driven by AI-related investment despite a widening trade deficit.
- Fixed Income
How the US Treasury makes its debt problem the Fed’s problem
State Street Investment Management argues that the US Treasury's growing reliance on bill issuance to fund rising deficits is straining repo markets and pushing the Federal Reserve toward larger balance-sheet purchases to maintain rate control. It recommends defensive short-duration positioning until investors are better compensated for absorbing additional long-term Treasury supply.