Key Points
Alpinum Investment Letter sets a cautious but constructive tone for 2026, arguing that markets are entering a “higher nominal world” where inflation and interest rates sit at a higher equilibrium than investors grew used to in the last decade. In its Q1 2026 communication dated Dec. 21, 2025, Alpinum Investment Management says global activity stayed resilient in Q4 2025 despite tariff frictions and geopolitical flashpoints, helping make 2025 a constructive year for multi-asset portfolios.
But the firm’s message is not a victory lap. The Alpinum Investment Letter says concerns are greater looking into 2026—ranging from potential inflation re-acceleration to signs of a tiring consumer—and flags the key question for markets: whether earnings can justify elevated equity valuations.
Rather than pushing an all-in risk stance, the Alpinum Investment Letter emphasizes capital preservation paired with opportunistic positioning. Rising volatility and dispersion across markets and sectors, it argues, should act as catalysts for active management to capture alpha—especially through credit and liquid alternatives.
Alpinum Investment Letter: Why 2026 hinges on earnings and valuations
The Alpinum Investment Letter frames the current environment as one where policy noise, AI exuberance, rich valuations, and recession fears all coexisted in 2025—yet investors were still rewarded across multiple asset classes. It highlights that global equities posted strong double-digit gains, duration benefited as policy rates peaked in a synchronized way, and a weaker US dollar helped gold and non-US risk assets.
Still, the Alpinum Investment Letter is clear that 2026 raises the level of difficulty. It points to persistent fiscal deficits, rising protectionism, and competitive currency devaluations as drivers of a higher nominal world—conditions that can amplify dispersion and sharpen the divide between winners and losers.
In that setting, the Alpinum Investment Letter says the positive bias on risky assets can persist because a severe recession looks unlikely. But it also suggests volatility may remain elevated and potential conflicts under the Trump administration could become a nearer-term factor in market behavior.
What the Alpinum Investment Letter says about the US in Q4 2025
The Alpinum Investment Letter describes the US economy in Q4 2025 as slowing but still positive, with disinflationary trends and intensifying policy and trade uncertainty.
A major complication was a record-long federal government shutdown, which delayed official data and weighed on confidence. Even so, the Alpinum Investment Letter cites private indicators suggesting a softening labor market: payroll gains decelerated, unemployment rose to 4.4%, and job cuts surged, while jobless claims remained contained.
It also describes a “two-speed” economy. In the Alpinum Investment Letter’s view, higher-income households continued to sustain consumption, while weaker retail sales and plunging sentiment pointed to fatigue further down the income distribution.
On inflation, the Alpinum Investment Letter says the data surprised on the benign side. September CPI and PPI prints undershot expectations, core goods and services disinflated, and pipeline pressures eased. The firm adds that tariff-related cost shocks appeared to be compressing margins rather than reigniting a broad inflation upswing.
Policy remained a swing factor. The Alpinum Investment Letter says the administration oscillated between aggressive tariff announcements and tactical truces, including using tariff relief on selected goods to offset domestic inflation and pursue geopolitical objectives—an environment where markets operated under what it calls a “bad news is good news” equilibrium.
Markets in the US: equities up, Fed cuts, QT ends, and credit steadies
The Alpinum Investment Letter says US equities extended year-to-date gains into high-teens percentages, while November featured rotation into defensive sectors as valuations and tech concentration drew greater scrutiny.
On monetary policy, the Alpinum Investment Letter notes the Federal Reserve cut rates by 25 basis points in October and December, bringing the fed funds range to 3.50%–3.75%, and formally concluded quantitative tightening.
In rates and credit, the Alpinum Investment Letter says US Treasuries outperformed credit as disinflation, shutdown-related growth uncertainty, and rising expectations of additional easing in 2026 drove a bull-steepening of the curve. Credit spreads, it adds, traded sideways to modestly wider, reflecting healthy but no longer accelerating earnings and a growing focus on late-cycle risks and liquidity premia repricing.
Europe: modest improvement, uneven recovery, and inflation gliding toward target
The Alpinum Investment Letter describes Europe as improving modestly in Q4 2025, though the recovery remained uneven amid external trade distortions, tighter fiscal policy, and industrial softness.
It highlights that early in the quarter, Eurozone indicators surprised positively. The HCOB Composite PMI rose to a 17-month high of 52.5 in October as services strengthened and manufacturing stabilized around the 50 threshold.
But the Alpinum Investment Letter says momentum softened again into November, with the HCOB Manufacturing PMI easing to 49.6 and returning to mild contraction. It attributes pressure to intensifying Chinese competition and the cumulative effect of US tariffs on high-value European exports.
Inflation continued to glide toward target. The Alpinum Investment Letter notes headline CPI held steady at 2.1% in October and 2.2% in November, while core inflation stayed stickier—particularly in services—complicating the ECB’s ability to guide markets toward a clearer easing path. Still, it cites resilient labor markets, improving new-order growth, and expectations of German and Italian fiscal support as elements helping maintain a cautiously constructive backdrop.
In markets, the Alpinum Investment Letter says Bund yields edged higher as rate-cut expectations receded, peripheral spreads tightened on improving sentiment and contained political risk, and equities advanced through October before stalling in November as defensive sectors outperformed and valuation concerns resurfaced.
China and Asia: late-cycle slowing, disinflation, and policy-dependent sentiment
The Alpinum Investment Letter says China and broader Asia moved through Q4 2025 in a late-cycle environment of slowing but still positive growth, disinflation, and policy-dependent risk sentiment.
China remained broadly on track for 5% full-year growth, according to the Alpinum Investment Letter, after Q3 GDP expanded 4.8% year on year. Yet it notes sequential momentum cooled amid weaker domestic demand and persistent housing stress.
PMIs oscillated around 50. The Alpinum Investment Letter says manufacturing was stuck in mild contraction and non-manufacturing slipped below 50 in November, underscoring pressure in services and construction even as exports held up and supply-chain rerouting continued.
On policy, the Alpinum Investment Letter says the PBoC stayed accommodative using targeted liquidity injections, window guidance, and incremental housing support, but avoided wholesale stimulus. Deflationary pressures moderated as headline CPI returned to positive territory and producer price deflation narrowed, though the inflation profile remained benign compared with developed markets.
Regionally, the Alpinum Investment Letter says Asia ex-Japan equities modestly outperformed global peers over the quarter, supported by AI-related demand in Taiwan and Korea, solid earnings, and foreign inflows when US-China rhetoric de-escalated. Mainland Chinese equities lagged broader Asia due to property, local government debt, and regulatory concerns. Asian local-currency government bonds benefited from subdued inflation and a Fed easing bias, while onshore Chinese government bonds were supported by entrenched disinflation and a relatively firm renminbi.
2025 performance backdrop the Alpinum Investment Letter points to
To explain why 2025 still worked for diversified investors, the Alpinum Investment Letter highlights broad-based gains across regions and assets.
In its performance table, it lists year-to-date gains (as of mid-December) of 17.4% for MSCI World (USD), 14.3% for the S&P 500, and 17.3% for the Nasdaq 100. It also shows MSCI Emerging Markets up 26.4% and the Nikkei 225 up 24.1%. In commodities and currencies, it shows gold up 65.3% year-to-date, copper up 35.5%, and Brent oil down 20.0%, alongside EURUSD up 13.4%.
The Alpinum Investment Letter also flags valuations, listing a forward P/E for the S&P 500 at 25.2 and for the Nasdaq 100 at 30.6, a backdrop that supports its repeated question: can earnings justify elevated equity valuations in 2026?
How Alpinum positions for 2026: preservation first, opportunities in credit and alternatives
The Alpinum Investment Letter’s core positioning message is built around balance.
It maintains a constructive stance on equities but stresses that the environment favors an absolute return strategy over traditional relative value. It also suggests improving fundamentals can support valuations while encouraging selective rotation toward non-US markets, including emerging markets.
On credit, the Alpinum Investment Letter says near-term defaults may tick higher, but a major default wave is not expected. It sees credit spreads as tight but with modest room to widen, potentially improving entry levels. It highlights loans and non-cyclical short-term high-yield bonds, citing 7%–9% yields as preferred opportunities.
On rates, the Alpinum Investment Letter keeps duration neutral and treats US duration exposure as a diversifier and tail hedge in case a severe recession develops.
It also emphasizes liquid alternatives, describing rising volatility and dispersion as fertile ground for active strategies—particularly as realized average stock correlation has decreased while option-implied volatility increased, creating a more attractive environment for security selection and tactical trading.
Scenario framing for the next six months
The Alpinum Investment Letter lays out a scenario overview for the next six months: a base case of 75%, a bull case of 15%, and a bear case of 10%.
In its base case, the Alpinum Investment Letter expects low real GDP growth in the US of about 2%, with uncertainty weighing on confidence and some investment while deregulation and lower taxes support corporates. It also expects the Eurozone to move from stagnation toward mild growth around 1% that accelerates through 2026, and China to grow just above 4% with government support.
The bear case in the Alpinum Investment Letter centers on a mild recession caused by policy distortion and tariffs, with double-digit equity declines led by highly priced US equities and cyclicals, and a renewed preference for high-quality assets and cash.
Conclusion
The Alpinum Investment Letter argues that Q4 2025 resilience and a constructive 2025 for multi-asset investors do not eliminate the harder questions waiting in 2026. In a higher nominal world marked by fiscal deficits, protectionism, and currency realignment, the firm sees volatility and dispersion rising—and views that as a catalyst for active management.
Its central test for markets is whether earnings can justify elevated equity valuations. Until that becomes clearer, the Alpinum Investment Letter emphasizes capital preservation with opportunistic positioning, preferring credit opportunities such as loans and non-cyclical short-term high yield with 7%–9% yields, staying neutral on duration, and keeping a constructive but selective stance on equities with attention to valuation and regional opportunity.
