Late cycle musings

UBS Global Risk Radar February 2019

13 Feb 2019

At a glance.

  • CIO believes the US economy is now at a late stage of the business cycle, consistent with positive equity returns on average, but also higher uncertainty and volatility. The business cycle is less advanced in the rest of the world, but the US will likely set the scene for markets globally.
  • Among possible triggers to end the global business cycle, we identify risks to US inflation and Fed policy, risks around ongoing trade tariff negotiations, a maturing US credit cycle, and downside risks to China's economic growth. In addition to these downside risks, we see a number of upside scenarios in which markets could rally.
  • We have removed Italian politics and crude oil prices from our coverage for the time being. Risk scenarios for Fed policy and the US business cycle have been revised.
  • CIO maintains a slight preference for risky assets over a tactical investment horizon of six to 12 months, while hedging our risk exposure with counter-cyclical positions.

Download the full edition of the Global risk radar.

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