Estimated reading time: 4 minutes

Over the past fortnight, we’ve sat down with a number of fund managers as well as read through dozens of their commentaries. What stood out — more than any specific data point — was tone. Quietly but firmly, many are the most constructive on markets and the economic outlook as they’ve been in one to two years.

That stands in marked contrast to the dominant media narrative. Much of the press continues to emphasise uncertainty: about tariffs, inflation, politics, and bond markets. While these risks are real, the reporting often feels weighed down by legacy concerns — as if still responding to the volatility of 2022–23 rather than the conditions now emerging.

Fund managers, by contrast, are at the coal face. They’re interviewing the companies they invest in, their competitors, and their suppliers. Their views aren’t formed in isolation — they’re grounded in real-time feedback from industries on the move. That makes the recent tonal shift among managers too important to ignore.

Here’s what caught my eye:

1. The Quiet Return of the Cycle
Source: Morgan Stanley Weekly Warm-Up, Ausbil, Falconer Advisers notes

Mike Wilson at Morgan Stanley now leans toward his bull case for the S&P 500, targeting 7,200 by mid-2026. He sees the end of a rolling earnings recession and the beginning of a recovery underpinned by operating leverage, AI diffusion, and a high probability of Fed cuts early next year.

Meanwhile, Ausbil’s mid-year outlook maintains a constructive stance, emphasising that fiscal and monetary supports remain intact so long as recession is avoided. This view aligns with the idea that we’re in the early innings of a new cycle — one likely to reward risk-takers who’ve stayed patient.

2. From Disinflation to Inflationary Boom?
Source: Falconer Advisers Macro Tones, 31 July

Rob Tucker’s latest note reframes the US policy outlook through the lens of fiscal dominance: where the central bank increasingly supports government objectives. The recently passed “One Big Beautiful Bill” adds fuel to this thesis, pointing toward faster growth — but also structurally higher inflation.

The investment implications are significant. Where disinflation rewarded long duration and growth, this shift favours value, small caps, commodities, and international diversification. It’s a pivot worth watching, especially as more managers begin positioning for an inflationary boom rather than a soft landing.

3. Households Reflate, Investors Reposition
Source: Regal AM, Property Updates, Michael Yardney

In Australia, the RBA’s recent rate cuts are already filtering through. Housing data shows momentum picking up, especially finally in Melbourne. And if cuts continue as Charlie Aitken (Regal) notes, Australian households are quick to respond: many will spend, travel, and upgrade — a release valve after several tough years.

The rotation has begun. As yield on deposits erodes, capital will likely start shifting. Listed infrastructure, credit funds, REITs, and high-yield equities are all likely beneficiaries. The shift from “TINA” (There Is No Alternative) to “TARA” (There Are Real Alternatives) is well underway.

Additional Reads

• US Durable goods and shipping data remain noisy but hint at inventory distortion delaying tariff effects — watch for inflation reacceleration into Q4.

• Joye’s China coup thesis remains unconfirmed but worth following. If true, it could mark a pivot in Chinese policy toward pragmatism and private capital.

• Consumer credit data from US banks remains surprisingly strong — spending is more selective, but households are not yet retreating.

Final Thought

Sentiment is always a lagging indicator. Media tends to reflect the last crisis, not the next regime. In that sense, the shift I’m seeing in fund manager tone feels important. It’s not euphoric — it’s measured — but it’s also markedly more positive than what’s showing up in headlines.

We may not be back in a bull market rhythm just yet. But for the first time in a while, more managers are looking through the noise and seeing something they like on the other side.

– Scott