Multi-Asset Perspectives

After a tremendous run in equities and more than a decade without a U.S. recession, we expect muted, albeit positive forward returns. Our portfolio overweight to equities continues to be fortified by high-grade fixed income.

Global monetary policy easing is beginning to revive manufacturing, lowering the risk of a U.S. recession within a year. We therefore retain a modest overweight to stocks.

We view stocks as more attractive than fixed income given our outlook for low, slow, but still positive economic growth.

U.S consumers have stayed resilient despite faltering manufacturing activity and trade-war hindrances; we think corporate profits will hold up better than expected.

Despite the headline worries and higher volatility, we view the macro backdrop as sturdy enough to extend the economic expansion.

We believe the global economic expansion will persist into 2020; despite recent soft U.S. data, Fed support will prolong the cycle.

Global and U.S. earnings revisions are turning up. We look for stabilization of the U.S. dollar, credit spreads and China’s economy as signals of sustainable future earnings growth.

We believe the equity market is in a late-cycle environment, which becomes harder to navigate as recession concerns start to rise.

Potential global economic stabilization and a slowing U.S. labor market should allow risk assets to benefit from loose monetary policies.

Sentiment-driven rallies can be powerful, but we do not yet see enough supports to sustain recent equity market gains.