Candriam, the asset manager that is part of New York Life Investments, has issued a more cautious outlook for the second half of 2019, citing threats such additional tariffs implemented by the US.
The manager cites a global survey of portfolio managers, conducted in mid June, pointing to "high levels of cash in portfolios, a steep drop in equity buckets and a strong downturn in growth forecasts."
And the level of confidence is not helped by unpredictable statements issued by Donald Trump, or unease around central bank QE policy.
However, the manager adds that it is maintaining an overweight stance on equities for the second half unless and until such time that the economic slowdown worsens should the central banks prove unable to curb the slowdown. It does not predict a recession in 2020. The decline in yields seen in May meanwhile has created a fresh challenge for investors, while the equity risk premium has risen compared to 2018.
Candriam says its equities focus remains the US, where it sees a "double put option" in the form of the US Federal Reserve and Donald Trump - who has officially launched a campaign for a second term, and so should be trying to avoid triggering a recession.
Allocations have been reduced to emerging markets and eurozone equities, although over the medium term, EM equities are attractive for their growth potential. China could benefit from averting a trade war in the short term.
On the fixed income side, because of the change in yields since May, it is underweighting European government debt.
Looking to other asset classes, Candriam says the yen could play its part in offering structural protection. Gold is another.