Manufacturing

Acute geopolitical risks, like a massive oil shock, may be abating. But structural geopolitical risk remains high and could upset a blithe market. Cyclical economic risks are underrated as the US slows down and China continues to stumble. Investors should book some profits in anticipation of tariff implementation and a downturn in hard economic data.

Robotics is on the cusp of a new, powerful uptrend, powered by reshoring and technological breakthroughs that make robots more capable and affordable.

After considering some of the most common bullish arguments, we stand by our recession view and reiterate our defensive asset allocation recommendations.

A weakening economy will apply downward pressure to Treasury yields, but the Trump term premium will keep long-dated yields higher than they would otherwise be. This makes Treasury curve steepeners the most attractive trade in US fixed income.