As U.S. earnings growth approaches its cyclical ceiling, the Janus Henderson Multi-Asset Macro and Customized Investing Team is repositioning across a broadening global profit landscape that increasingly favours international equities, real assets, and short-duration fixed income. The team's Q4 2026 Macro Multi-Asset Quarterly, led by Global Head of Macro and Customized Investing Richard Bernstein, frames the current moment with unusual clarity: the world is not finished growing. It is the United States that is.
The Profit Map Has Redrawn Itself
The central argument of this quarterly is structural. Global profits are not only recovering, they are accelerating broadly, and the geography of that acceleration has shifted decisively. While U.S. earnings are expected to decelerate from roughly 30% on a trailing basis toward the mid-teens by 2027, earnings in Europe, Japan, and Emerging Markets are still gaining momentum. Bernstein puts the significance of this plainly: "European and emerging market stocks have been relatively cheap for a long time, but these regions lacked a growth story to support higher allocations. However, right now, nearly 75% of the companies forecasted to grow earnings 25% or more over the longer-term are outside the United States."
This is not a marginal rebalancing note. It is a pivot in the global profit cycle, and the team treats it as such.
Much of the U.S. deceleration traces directly to the Magnificent 7. Consensus estimates that placed Mag 7 earnings growth above 50% for 2026 are now expected to converge toward the broader market by 2027. The era of hyperscaler exceptionalism in earnings, while not over, is narrowing. What once justified enormous concentration is becoming a rationale for diversification.
Liquidity: Accommodative, But Tightening at the Edges
The liquidity backdrop carries a similar arc. Conditions have been broadly supportive, but the team observes that central banks across major developed markets are hiking rates, real yields have climbed to post-Global Financial Crisis highs, and yield curves, while still positively sloped, have flattened since the end of 2025. Deglobalization, the team argues, is introducing a secular inflationary force that complicates central bank optionality, potentially leaving them "with no choice but to raise interest rates for longer than markets currently anticipate."
Credit conditions, while still loose, have seen spreads widen from recent lows. The team remains cautious on high-grade corporate bonds given historically tight spreads relative to what risk in other asset classes would justify. Instead, the focus in fixed income falls on Treasuries, high-quality floating-rate securities, and municipal bonds, with a shorter-duration profile maintained relative to the benchmark.
Sentiment: Exuberance at Home, Neutrality Abroad
Across regions, sentiment is moderate outside the United States. Within the U.S., the team characterizes the prevailing mood as exuberance, concentrated in AI-related themes and the narrow band of mega-cap leadership that has driven the market rally. The concern is not simply valuation, though international markets are demonstrably cheaper on forward price-to-earnings metrics. It is fragility. As the team notes, the market is producing a near-record number of S&P 500 stocks with negative betas, a condition so rare it implies the rally's concentration has grown extreme enough to structurally distort correlations across the index.
Head of Multi-Asset Customized Investing Adam Hetts identifies the opportunity embedded in that distortion: "With U.S. earnings growth set to peak and still concentrated in a handful of hyperscaler and semiconductor names, equity portfolios can benefit from both diversification abroad and within the U.S., given the high number of S&P 500 stocks with negative betas."
The upshot is that genuine equity diversification, both international and domestic, is achievable in ways that have not existed in recent memory.
Where the Team Is Investing
The portfolio implications are direct. The team favours international equities, income and dividend-paying assets, value stocks, select cyclical equities, and real assets. Within Emerging Markets, profits acceleration is broadening beyond Taiwan and South Korea, suggesting healthier, more diversified growth dynamics are taking hold. Japan's earnings growth remains strong and accelerating. Sectors and regions that have been starved for capital during the AI investment boom are, in the team's view, positioned to attract capital again as global liquidity tightens and forces more rational allocation decisions.
The team's avoidance list is equally clear: U.S. mega-cap growth, long-duration bonds, and corporate credit risk.
Five Key Takeaways for Advisors and Investors
- U.S. earnings are peaking, not collapsing. A deceleration toward the mid-teens by 2027 still represents solid growth, but it no longer justifies the concentrated premium the market has placed on a narrow group of stocks. Rebalancing exposure is a disciplined, not defensive, move.
- The global profit cycle is broadening. Europe, Japan, and Emerging Markets are accelerating into 2027. Three-quarters of the companies globally expected to grow earnings above 25% over the longer term are now listed outside the United States. Advisors who have underweighted international equities face a structurally different risk-reward calculation than they did twelve months ago.
- Deglobalization is an inflation risk that does not resolve quickly. Central banks may be forced to hold rates higher for longer than current market pricing reflects. Duration exposure in fixed income remains a material risk, not a defensive position.
- The concentration anomaly within U.S. equities creates an unusual diversification opportunity. The near-record number of S&P 500 stocks carrying negative betas means that thoughtful domestic equity construction can reduce market risk without abandoning the asset class.
- Credit spreads do not adequately compensate for risk at current levels. High-grade corporate bonds, in particular, offer an unfavorable risk-adjusted trade-off versus Treasuries, floating-rate securities, and securitized products. Securitized credit, which offers floating-rate exposure, is preferred.
Footnote:
1 Bernstein, Richard, Adam Hetts, Mike Contopoulos, Lisa Kirschner, Oliver Blackbourn, and Matt Poterba. "Macro Multi-Asset Quarterly: Q4 2026." Janus Henderson Investors, 31 Oct. 2026, https://www.janushenderson.com/en-us/advisor/article/multi-sector-credit-asset-allocation-perspectives-assessing-shifting-yields/.
