“Last year, everyone believed it [a recession] could not happen,” he said. “Now, it’s a bigger threat than Brexit [for investors]”. An unexpected recession is the bigger issue because Brexit is a “known unknown,” he explained.
“The bond market is pointing to a recession,” Coombs said. “It is one of the many signals we look at. It does feel like there is a complete disparity between the bond market and equity market at the moment.”
Coombs said he suspects a recession is most likely to take hold during the summer, in Q2 or possibly Q3. “It is a threat that we need to make sure we mitigate,” he added.
Coombs said that Rathbones is overweight US and Japan, neutral on Europe and Asia while being underweight emerging markets and the UK.
The firm has been underweight UK assets since last year.
