When you visit our website, information may be stored or recovered on your device, mainly in the form of cookies. We use essential cookies to ensure the website works as it should, and statistical and marketing cookies for audience measurement and content customisation purposes. We rely on Google for statistical and marketing cookies in order to measure website performance and display relevant advertising. For more information on this, please also refer to the Google policy on Business Data Responsibility.
From the Cookie Management Centre, you can set your preferences with respect to the use of cookies: accept or reject certain categories, accept all, or reject all. For detailed information on all cookies used across these three categories, please refer to our Cookie Policy.
Please note that blocking certain cookies may affect your experience and the services offered.
Essential cookies Always active
Essential cookies help the website to work as it should by enabling necessary functionalities, such as navigating between pages and accessing secure areas. These cannot be disabled in our systems.
Statistical cookies
Statistical cookies help us understand how visitors interact with our site by collecting and communicating browsing information. They make it possible to identify the most and least visited pages and to improve the overall performance of the site.
Marketing cookies
Marketing cookies are used to display relevant advertising and measure the performance of campaigns. If you choose not to allow these cookies, you will continue to see ads, but they will be less relevant to your interests.
Choose the purposes for which we may use Google products to collect and use your data:
User storage: to technically permit advertising functionality.
User data for advertising: to optimise our advertising campaigns.
Ad customisation: to tailor advertising to your interests.
Steering portfolios through a new world (dis)order
Samy Chaar
Chief Economist and CIO Switzerland
Trump 2.0 is turning out very different from markets’ expectations after Trump 1.0.
A slowing US economy is the first casualty of policy uncertainty. Companies are investing less. This is an early effect of the trade war as businesses are faced with tariff unpredictability.
Does that mean we see a US recession ahead? Put simply, no. This cycle has not ended, because the US economy has been running on two engines, corporate and consumer spending. While businesses are hesitant to invest, consumption trends remain healthy.
US growth may slow this year to just under 2%, still far from recession. The Federal Reserve continues to manage the trade-off between downside employment risks against upside inflation risks, mainly from tariffs. We expect two cuts in 2025, which would take the Fed’s terminal rate to 4% at the end of the year.
Meanwhile, Europe is at a tipping point. Geopolitical pressures have catalysed fiscal ambitions, changing decade-old policies in weeks. Fiscal plans from Germany and Europe should improve the long-term outlook for the region, as they radically break from decades of underinvestment. In the years ahead, this spending should translate into a more profound economic boost for Europe.
Potentially we’re at the start of a significant European growth story. Can the region afford it? Absolutely
Meanwhile in China, stock markets recorded gains thanks to the tech sector, and the government announced new policy targets. We think it will be difficult for China to defend its official 5% growth target for 2025, as US and other tariff restrictions will hurt exports.
Sign up for our newsletter
Things are moving fast, so how is this environment reshaping the investment outlook?
Markets had priced in positive impacts from the new US administration. Now, they are coping with erratic and unpredictable policy-making, and volatility has risen significantly.
Markets had priced in positive impacts... Now, they are coping with erratic and unpredictable policy-making
Macroeconomic conditions, earnings growth and liquidity are all still supportive of risk assets. We see more upside, notably in stock markets. But to weather short-term uncertainties, we have lowered global equities to neutral levels, by reducing our positions in US equities to neutral.
European equities have outperformed so far this year. The region is emerging as an attractive investment destination thanks to appealing valuations and the promised fiscal spending. This is a fundamental shift that could lead to further rebalancing of global equity portfolios, which in recent years have heavily relied on US returns.
This shift could lead to further rebalancing of global equity portfolios, which in recent years have heavily relied on US returns
In fixed income, we hold overall exposures at neutral levels. We are still underweight government bonds, where we like the 5-to-7 year maturities, and where now is a good time to lock-in more elevated yields. We also favour the higher yields available from corporate bonds.
The world and global economy are undergoing profound shifts and visibility is poor. We think the best portfolio response is a high degree of portfolio diversification, supported by higher liquidity that allows us to deploy capital as soon as conditions warrant adding risk again.
important information
This is a marketing communication issued by Bank Lombard Odier & Co Ltd (hereinafter “Lombard Odier”).
It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication.
share.