Markets are digesting strong corporate earnings and shifting central bank signals, while investors eye opportunities outside U.S. equities.
BNN Bloomberg spoke with Brenda O’Connor Juanas, senior vice-president and financial advisor at UBS, who says undervalued Chinese tech firms, private credit and infrastructure investments could outperform as rate cuts unfold and returns moderate in public markets.
Key Takeaways
- UBS sees the S&P 500 reaching 7,300 next year, supported by strong earnings and minimal guidance revisions.
- Chinese tech firms remain attractive short-term trades with solid fundamentals at half the valuation of U.S. peers.
- Alternatives such as private credit and infrastructure can offset muted equity returns in 2026.
- Infrastructure is positioned to benefit from the “picks and shovels” demand behind the AI boom.
- UBS expects continued Fed easing, with two more rate cuts likely and opportunities emerging in quality fixed income.
Read the full transcript below:
ANDREW: Investors are digesting the latest batch of earnings from the tech giants. There are some worries about metals and the massive level of capital expenditure. Of course, we’ve heard this before — we’ve been to this rodeo before. Zuckerberg doesn’t hold back, and there have been concerns in the past about his huge spending on growth. The market is also assessing that trade truce between the U.S. and China. We’re joined now by Brenda O’Connor Juanas, senior vice-president and financial advisor at UBS. Thank you very much for joining us, Brenda.
BRENDA: Great to be on, Andrew.
ANDREW: What themes have jumped out for you this earnings season — in particular, the techs?
BRENDA: Well, first of all, I’m surprised anyone cares about the markets in Toronto right now after last night’s win, but let’s give it a shot anyway. We’re in earnings season here, and about 30 per cent of the S&P has reported. On the whole, things look relatively good. We have EPS growth at 9.2 per cent and 87 per cent of companies are beating their guidance. Remember, this follows a second quarter that was also very strong, with 80 per cent of companies beating to the upside.
UBS just upgraded its EPS growth forecast for this year to 10 per cent and to seven per cent for next year. This really supports our view for a 7,300 target on the S&P by next year. My key takeaway from earnings so far is that guidance is solid, revisions are minimal, and the Fed is cutting rates. We can talk about that now. And we also know that the big, beautiful bill — love it or hate it — is probably going to act as a tailwind to stocks in subsequent quarters.
So while we have a positive view on the U.S. market overall, I’d say our better ideas — as you alluded to before the break — are probably outside the U.S. and maybe not even in equities.
ANDREW: That’s interesting. And Chinese tech stocks have been catching your eye, right?
BRENDA: Andrew, when we were talking last month, we noted that U.S. markets are pretty fully valued here at 22 to 23 times earnings. No matter how strongly you feel about the fundamentals, as an investor, you have to ask yourself whether there’s better value elsewhere.
We also talked about emerging markets more broadly. They’re trading at 14 times earnings — at a discount to developed markets and below historical averages. Let’s double-click on what we actually like in emerging markets and get to that Chinese tech theme. We like Asia, we like China, and within China, we like Chinese tech.
Here’s the thesis: some of these companies have strong balance sheets, solid earnings and comparable business models to their U.S. counterparts, except they’re trading at half the multiples. I wouldn’t necessarily look at Chinese tech as a structural addition to portfolios over the long term — more as a tactical trade over six to 12 months. We’re stepping into names in e-commerce, cloud computing and digital infrastructure. I think that could be a really interesting area for outperformance going into 2026.
ANDREW: Alternative investments — we’ve heard a lot about those. Of course, they’re often non-publicly traded assets, so you can’t quickly check their value. It depends, to some extent, on alchemy and astrology. It’s very hard to value private assets. You say they may be suitable for some investors, but keep a limit on them, right?
BRENDA: I think, on average — and everyone’s situation is different — 20 to 25 per cent of an overall portfolio in private assets is what we’re targeting. Let me take a step back and explain why.
Look at the markets: we’re up roughly 18 per cent on the S&P this year after two stellar years. Essentially, markets have brought forward returns given the strong performance. As I talk to clients, we’re asking: where are you going to get yield, income and returns going into 2026? If that’s not necessarily going to come from public markets because those returns have been pulled forward, we’re looking to private markets.
Within private assets, we like private credit. I know it’s had some bad headlines lately, but you can still generate nine to 12 per cent in returns. The strategy is to stick with large, blue-chip funds that are lending to their portfolio companies. Default rates remain low.
Another interesting area is infrastructure. Retail investors have generally been under-allocated there, and I think the risk-return profile is compelling. You have more or less the risk of a bond, with expected returns in the high single digits. This is also another way to play the AI theme. The bottleneck in AI is really about delivering capacity — power and energy — to data centres. That’s where infrastructure can come in. You can play this through private markets or through public investments in power and energy.
ANDREW: We’ve never had a woman top central banker in Canada or the U.S. It’s time to remedy that. But in any case, central bankers need to be kind of macho, don’t they? “I’m in no hurry to cut interest rates. I’m resolute. I’ll headbutt inflation if I need to.” Mr. Powell at the Fed seems at pains not to spark hopes that he’ll cut interest rates in December. However, you do see reductions over the longer term.
BRENDA: Let’s take stock of where the markets stand on Powell. I think markets now have a much clearer picture of where he stands. We saw that rate cut yesterday. He was cautious about what he’ll do in December, but our view is that quantitative tightening could be accelerated by year-end or early next year.
This is no longer a question of whether to cut rates — we’re on that path. It’s really about determining the pace. Markets are pricing in about a 70 per cent chance of a December cut. We’re still targeting two additional cuts over the next few months.
For investors, this means several things. It should be a tailwind for public markets. But the conversation I’m having with clients is about cash. Many have been over-allocated to cash for the past few years — it’s been a great store of wealth. But if we think the 10-year yield will be around 3.75 per cent in the coming months, this is a good opportunity to start allocating to quality fixed income in anticipation of further cuts.
ANDREW: Brenda, thank you very much indeed. Have you been watching the Blue Jays games?
BRENDA: One hundred per cent. I’m a Toronto fan, even though I’m not physically there. One more game tomorrow, Halloween night, so I’m hoping for a big win.
ANDREW: It’s just incredible — what a fairy tale story yesterday, with that pitcher setting a World Series record. Brenda, thank you very much indeed. Brenda O’Connor Juanas, senior vice-president and financial advisor at UBS.
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This BNN Bloomberg summary and transcript of the Oct. 30, 2025 interview with Brenda O’Connor Juanas 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.
