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This podcast is being brought to you by John Hancock Investment Management Distributors LLC, member FINRA, SIPC. The views and opinions expressed in this podcast are those of the speakers, are subject to change as market and other conditions warrant, and do not constitute investment advice or a recommendation regarding any specific product or security. There is no guarantee that any investment strategy discussed will be successful or achieve any particular level of results. Any economic or market performance information is historical and is not indicative of future results, and no forecasts are guaranteed. Investing involves risks, including the potential loss of principal.

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John Bryson

Hello, and welcome to the Portfolio Intelligence podcast. I’m your host, John Bryson, head of investment consulting and education savings at Manulife, John Hancock Investments. Today is May 26, 2026. The old stock market adage is “sell in May and go away,” but with all the action in the market lately, I’m not sure that’s good advice anymore. To help us out, I've invited Matt Miskin, our co-chief investment strategist at Manulife Investment Management, to discuss what's happening in global economies and markets.

Matt, welcome to the podcast. As I said, there's a lot going on. Can you walk us through what's happening across global markets and help us understand what's driving investor confidence, and some risks people should be thinking about?

Matt Miskin

Great to be here, John. Thanks for having me. We’ve seen a massive whipsaw in markets. In March, we saw a drawdown in the S&P 500—not as much as 10%—but we'd concerns about software companies being overtaken by AI, private credit concerns, and a spike in prices because of what's going on in the Middle East. Fast forward eight or so weeks, and the market has gone straight up. We’ve seen one of the most risk-on bull markets in history. Lower-quality beta stocks have been outperforming, and we’ve seen credit spreads tighten. Sentiment went from negative—around the war, potential Fed hiking, and oil risk—to walking into earnings season and frankly getting one of the greatest earnings reports, in aggregate globally, we’ve ever had.

So there was a bit of a head spin in terms of markets. But right now we're back near all-time highs, corporate earnings are booming, and the economy, we can discuss a bit more. There have been huge shifts in the first couple of months of the year.

John Bryson

Good to know. You mentioned earnings. We’ve seen surprises to the upside—very significant. What’s driving that, what's doing the heavy lifting, and is that strength durable?

Matt Miskin

We started Q1 with analyst estimates—analysts thought earnings were going to grow at 13%. Earnings growth is good, but it's coming in at 28%. We’re seeing a massive amount of beats—an 85% beat rate. What’s driving it? I'd say it's AI, AI, AI, and a little more AI. Not to overdo it, but here’s the way to think about this. First, technology capex is booming year over year. Semiconductors are acting like they're sold out. There’s pricing power and massive volume. They’re building all these data centers, so semiconductors are benefiting from that. The data centers are also being built by industrial companies, and utility companies are supplying the power, so that's lifting earnings right there. Earnings are so strong because of AI, and that's lifting the stock market. Who benefits from the stock market? The financial sector, because the wealth management business is booming right now, as equities do so well. And then the final one is corporate profit margins. This is a little hokey, but my mom had a small business, and she'd always tell me: It’s not what you make, it’s what you keep. Right now, corporate profit margins—the difference between revenue and net income—are basically the best they’ve been in history. Corporate profits are booming. A lot of companies are finding ways to use AI to be more productive, to be lean, and to use technology to provide similar services or products with less cost. That’s another driver of corporate profits. It’s concentrated on one mega theme, but that mega theme of AI is rippling across corporate America today and driving profits to be as good as they've ever been.

John Bryson

The promise of AI is starting to take shape. When you think about the AI trade, what signals are you watching for to make sure it's still healthy versus the market starting to roll over?

Matt Miskin

Right now, the profit growth in some of these semiconductor companies—the epicenter of the AI trade—is 100% earnings growth. When you think about valuing a business with growing earnings at 100% per year, it's hard to value that accurately. That’s unheard of in history for companies this size. These are trillion-dollar companies that have been around for decades. I don’t like saying “this time is different,” but we’ve never seen this kind of booming growth from such big companies. The valuation isn’t that bad because earnings are growing so fast that the E is going up even as fast as the P, when you think about the price-to-earnings ratio.

That being said, semiconductor stocks and tech are becoming everything in every market. I’m on the multi-asset team here at Manulife John Hancock, and we're trying to get portfolios diversified. In the old days, you could have an equity index of 500 stocks, and that would be diversification. Now, the majority of those stocks are being driven by AI, and the biggest stocks in the index are AI stocks. Another thing you could do is say, “I don’t like growth, I’m going to go value,” or go mid-cap, small-cap, or international. But the biggest value stocks internationally are now semiconductor stocks. Across large-cap, mid-cap, and small-cap stocks, the technology sector weight is ballooning by the day. Every single index in nearly every equity market around the world is becoming a semiconductor stock index. That’s the challenge. The earnings are great, but how do you manage the concentration? How do you use asset allocation to take some of that overconcentration out of the portfolio? To us, that’s the biggest risk developing.

John Bryson

How are you recommending people think about that? If you're going to diversify, where do you start?

Matt Miskin

We have to use asset allocation more than just style or manager selection. That said, manager selection—active management—is one lever. You can find managers saying, “I’m not going to buy more semiconductor stocks after a 600% move,” which can help take some edge off. Another big one is alternatives: infrastructure-related equities and long/short strategies are ways to reduce beta and not have the same equity portfolio as the index. Also bonds. Bonds are having a tough year so far, but it’s because sentiment is so risk-on. No one wants boring old bonds, but they’re providing nearly a 5% yield right now. That’s not a bad alternative to sit and wait if things get bubbly and overconcentrated. So: alternatives, opportunistically looking at fixed income, and active management.

John Bryson 

I want to come back to bonds, because for probably a decade, we talked about how a 5% yield would be everything we wanted, and we couldn’t find it anywhere. Now it’s back. Before I do, I want to wrap up the equity conversation. If you look around the world, the U.S. is doing really well; others might not be. How are you thinking about equity allocation across the U.S., versus international, versus emerging markets right now?

Matt Miskin

A year ago, the U.S. was considered to no longer be exceptional—there was a “sell America” trade. I don’t really like that kind of terminology because a lot of it's sentiment. A year later, PMIs—business surveys—are showing that the U.S. economy is among the strongest in the world. Energy independence is huge. Energy importers like Europe are struggling with higher gas prices. U.S. investment and capex are booming, it’s the epicenter of AI development, and the best growth outside the United States is selling to the United States. In South Korea, they make semiconductors—two or three companies do it in a big way—and they’ve never had exports this strong, driven by AI in the U.S. In other parts of the world, Europe grew 0.1% in the first quarter, and the services PMI was at a 65-month low.

On a relative basis, the U.S. still looks great. We continue to look at mid-cap stocks to take some edge off tech exposure in large caps and valuation risk. We’re using cyclicality like industrials in the U.S. because they typically do better if the economy is doing better. Internationally, we’re very selective. In emerging market, three stocks are driving all the outperformance versus the U.S. As of late May, emerging market equities are up over 20%, and the S&P 500 is up about 10%. That 10% difference is all three stocks—and they’re all semiconductor stocks.

John Bryson

And their fundamentals and earnings are coming in strong—so it’s back to fundamentals as a way to think about it. Let’s pivot back to bonds and other asset classes. Why does it feel like markets are rewarding risk more than safety right now, and what would have to change for bonds—even with that 5% yield—to come back in favor?

Matt Miskin

There’s no concern about an economic slowdown being priced into markets. That’s not the way we'd look at it, but that’s what’s being priced in. To us, it looks like investors are trying to get every bit of return they possibly can anywhere in the world. You’re seeing moves that are historically unheard of. It looks like there’s a bit of greed—investors are using momentum trading. They see something already up a lot and pile in looking for more gains. Momentum can work, but it can reverse fast. What would change that? Two things. One: if the Fed had to put the brakes on later this year because inflation comes back, that could be one reason equities potentially reverse. Or we could see an economic slowdown. Job growth still isn’t that strong, and real wage growth isn’t that good.

The consumer is holding in because the stock market is going up, and the wealth effect is there, but it creates a bifurcated economy. If you keep magnifying the dispersion between the haves and have-nots, at some point, it risks hurting the economy enough that Treasury yields fall. We’ll see where we're in six months, but there are certainly risks out there where bonds could still work in portfolios—they just haven’t been priced in yet.

John Bryson

Final question: where are you seeing the best opportunities in bonds right now, and what other opportunities—mentioned or not—should people be thinking about?

Matt Miskin

Mortgage-backed securities and investment-grade corporates—mostly core to core-plus fixed income. I’d call it a mild credit bias, but mostly high quality. In corporates, we’re looking at single-A as an attractive place to be. That’s about a 5% yield and intermediate duration. We don’t want to be too long; the long end of the curve has moved up, and there’s a lot of volatility, and we don’t need that much volatility in bonds. The short end isn’t yielding what it once was. We’re still down about 375 on the federal funds rate. We can get about 5% with a little bit of credit in the middle part of the curve, so that continues to be where we look. We did the bond math: if the 10-year yield goes back to 4% over the next 12 months, we get an 8% total return out of the U.S. Aggregate Bond Market Index. If we go to 5.5%, we’re down a little bit. I don’t think we’re going to get to 5.5% on the 10-year, but that’s the scenario analysis. I think we can do mid- to high-single-digit total returns from here, which is pretty attractive in our book.

John Bryson

Okay. A lot to be excited about, and a couple of flags to keep an eye on. We’re happy that earnings and fundamentals continue to be strong, but it might be getting a little rich. Your ideas around diversifying and making sure fixed income acts like a bond suggest there’s a great return opportunity there. We’ve also got opportunities in alternatives, etc.

Matt, thanks for joining the podcast and sharing your insights. Folks, if you're a regular listener, you know Matt is one of the architects behind our market intelligence piece, so keep an eye out for that. You’ll also know he’s very active on LinkedIn, so make sure you’re following him to keep up with everything going on in the markets. If you want to hear more, please subscribe to the Portfolio Intelligence podcast wherever you listen, or check out our website for all things investing, great business-building ideas, and much more. As always, thanks for listening to the show. This podcast is being brought to you by John Hancock Investment Management Distributors, LLC, member FINRA, SIPC.

The views and opinions expressed in this podcast are those of the speaker, are subject to change as market and other conditions warrant, and do not constitute investment advice or a recommendation regarding any specific product or security. There’s no guarantee that any investment strategy discussed will be successful or achieve any particular level of results. Any economic or market performance information is historical and is not indicative of future results, and no forecasts are guaranteed. Investing involves risks, including the potential loss of principal. Beta measures the sensitivity of the fund to its benchmark. The beta of the market, as represented by the benchmark, is 1.00. Accordingly, a fund with a 1.10 beta is expected to have 10% more volatility than the market.