With a presidential election in the US in 2020, inevitably political news will continue to dominate the headlines.

However, from a market standpoint, investors will be much more focused on corporate earnings and interest rates. On this front there is some room for optimism.

Normally at this stage of the cycle, and we are at the late stages of economic expansion in the US, we would be worried about recession risk.

But we think the risk of recession has come down. The imbalances that usually cause a recession are absent.

At the same time the easing of trade tensions and the very loose monetary policy are both supportive of corporate activity.

We are overweight equities and quite positive in those markets. However, I don’t think we should party like it is 1999.

Global growth is still anaemic, trade has to recover much more strongly for us to be cyclically exposed and there is a risk that higher wage costs could eat into US profit margins.

So, we still like government bonds as a hedge against global growth disappointment.

All in all, we are positive on equities but with some stabilisers.

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