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Drew Pettit, director of U.S. equity strategy at Citi Drew Pettit, director of U.S. equity strategy at Citi <\/p>\n
Read the full transcript below:<\/b><\/p>\n
ROGER:<\/b> Equity markets have been at all-time highs this month despite debates over the impact of tariffs, a slowing U.S. labour market, and the offsetting tailwind from Federal Reserve rate cuts. Citi remains constructive on global equities, saying markets continue to broaden with strong growth in earnings per share across regions. Let\u2019s get more on this from Drew Pettit, director of U.S. equity strategy at Citi. Drew, thanks very much for joining us today.<\/p>\n
DREW:<\/b> Glad to be here, Roger.<\/p>\n
ROGER:<\/b> What\u2019s the main reason for the optimism right now?<\/p>\n
DREW:<\/b> We\u2019re finally seeing growth acceleration. For a while, it was really just a one-horse race \u2014 the United States had growth \u2014 and even with tariffs and concerns, the secular growth trends were pushing earnings higher. Looking ahead to 2026, you\u2019ll see Japan and Europe contributing, even though they hadn\u2019t before. Sector-wise, you\u2019ll also see contributions not just from growth, but from cyclicals and defensives across regions. So this broadening isn\u2019t just a U.S. story or a Europe story \u2014 it\u2019s a global story, both regionally and sectorally.<\/p>\n
ROGER:<\/b> Is that a case of people just looking for deals elsewhere since it\u2019s hard to find much value in the U.S. right now?<\/p>\n
DREW:<\/b> Not really. There aren\u2019t many real \u201cdeals\u201d in any good growth story globally. What\u2019s happening is we\u2019re finally getting the earnings tailwind to justify valuations. In the U.S., people often talk about a bubble forming \u2014 we don\u2019t think we\u2019re there yet. But globally, valuations versus history aren\u2019t cheap either. They are relatively cheaper than the U.S., but it\u2019s not about bargains. It\u2019s about fundamentals driving prices higher. From here, it\u2019s all about earnings.<\/p>\n
ROGER:<\/b> What do you want to see when it comes to earnings? What gets you interested?<\/p>\n
DREW:<\/b> It\u2019s about finally seeing the downward revisions for 2025 and 2026 come to an end. That\u2019s been huge coming out of the \u201cLiberation Day\u201d lows when tariff impacts were being worked into estimates and numbers were falling across regions. Now, we\u2019re on the other side of that. We\u2019re seeing currency stabilization, which matters a lot for international companies, and macro conditions outside the U.S. are stabilizing after soft recessionary periods. All of that\u2019s important. Revisions moving higher will confirm the earnings acceleration we want to see.<\/p>\n
ROGER:<\/b> Let\u2019s talk about the U.S. Are you expecting another year of double-digit growth in 2026?<\/p>\n
DREW:<\/b> Yes \u2014 and for once, it\u2019s not just the Magnificent Seven driving it. Other sectors are contributing. Financials have been on a good run with solid early results, even if the price action has been choppy. You\u2019ll also see earnings growth inflect for consumer companies, which have been under pressure, and continued strength for financials. Even energy, off a low base, will be a positive contributor. So next year, the 12 to 14 per cent earnings growth we\u2019re forecasting will be a group effort \u2014 not just tech giants pulling the rest of the index along.<\/p>\n
ROGER:<\/b> How important is that breadth to you?<\/p>\n
DREW:<\/b> It\u2019s massive. Narrow markets can\u2019t push much higher without inflating bubbles. When we have breadth and more opportunities, it takes the pressure off growth to be the only engine in U.S. markets. It also creates room for healthy profit-taking and reinvestment into new growth stories. That even brings small caps back into the conversation, which have been quiet for the last few years. Broadening earnings are critical for another leg higher in this bull market.<\/p>\n
ROGER:<\/b> You\u2019re overweight in continental Europe and emerging markets. Is there a particular focus area, or is everything looking good right now?<\/p>\n
DREW:<\/b> Those are our weights because they balance cyclicals and growth. Emerging markets give you strong AI-driven growth stories, while continental Europe offers more cyclical exposure. But the bigger story hasn\u2019t been regional. Over the past two quarters, the gap between the best- and worst-performing regions has been narrow. The real differentiation is at the sector level. We like cyclicals \u2014 especially financials \u2014 and also growth, particularly tech.<\/p>\n
ROGER:<\/b> Why has performance been so evenly spread? Any indicators?<\/p>\n
DREW:<\/b> It comes back to earnings revisions. We talk so much about valuations, but earnings are the true long-term driver of markets. With more positive earnings contributions, we\u2019re seeing less dispersion between indices. As growth broadens, performance differentials narrow too.<\/p>\n
ROGER:<\/b> We\u2019re in the middle of earnings season. Any indicators it might flatten out, or reasons for concern?<\/p>\n
DREW:<\/b> The concern is we\u2019ve priced in a lot of good news. Valuations are stretched, and if sentiment shifts on some structural themes, that\u2019s a longer-term risk. We\u2019re positive on productivity, margins and secular growth trends, but in the short term, management teams are becoming cautious after the market\u2019s run. Lowering the bar for 2026 guidance could lead to some profit-taking \u2014 but that\u2019s healthy. Expect some near-term volatility and use it as a buying opportunity. The structural growth story remains intact.<\/p>\n
ROGER:<\/b> Drew, thank you very much for joining us today. Have a great weekend.<\/p>\n
DREW:<\/b> You too, thank you.<\/p>\n
ROGER:<\/b> That was Drew Pettit, director of U.S. equity strategy at Citi.<\/p>\n
—<\/p>\n
This BNN Bloomberg summary and transcript of the Oct. 17, 2025 interview with Drew Pettit are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.<\/p>\n","protected":false},"excerpt":{"rendered":"Drew Pettit, director of U.S. equity strategy at Citi, joins BNN Bloomberg to share Citi’s take on global…\n","protected":false},"author":2,"featured_media":128700,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[175],"tags":[79,18,19,17,188],"class_list":{"0":"post-128699","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-eire","10":"tag-ie","11":"tag-ireland","12":"tag-markets"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/128699","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=128699"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/128699\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/128700"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=128699"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=128699"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=128699"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}