Despite the rather positive on-going stock markets, we are clearly facing a deteriorating economic growth with indicators worsening. Brexit and the still unsolved trade conflict between the US and China further increase insecurities. So, why are investors fairly calm these days? Did we miss something?

First things first: Brexit. It is a complete mess.The votes in the British Parliament are becoming rather a comedy show. Although they all were rejected, the results of the individual votes differed considerably. The proposal of a permanent custom union with the EU, which was rejected by only eight different votes, met with the most approval. The proposal for a second referendum also received a high proportion of yes votes. On the other hand, a No-Deal Brexit and the withdrawal of the resignation request were clearly rejected. It seems as if politicians are working on a second referendum behind the cur tains. Story to be continued.

In the US, growth slowed sharply in Q4 to an annual rate of 2.2 percent. There are concerns of a further deteriorating growth in Q1 this year as global weakness, fading government stimulus and rising trade tensions have taken on a toll on the economy. Economic indicators and PMI are coming under pressure although from elevated levels. All in all, the US economy is not on the bright side. Obviously, the FED is in a waiting position, but more on the central bank in the special topic section on page 3. The EZ's economy remains under pressure from weak global demand and political uncertainty, after a regional poll suggested manufacturing activity was now performing at its worst in more than five years. When you see Germany and France struggling then investors should be cautiously for European exposure. The stabilization of sentiment indicators was not confirmed in March. But we expect in H2 a slight upturn in growth.

Surprisingly, equities are still holding steady despite of the divergence between stock markets and real economy. What we have seen in the past is the phenomenon that central banks are backing up for any issue while equity markets continuing to rise. Also, today, the loose financial conditions and expecting falling interest rates are positive for equities, and likely have been responsible for the bulk of the move out of safety and into risky assets. However, we are more cautiously today and changed our stance a notch down to "neutral" for equites.

In credit, the US yield curve turned inverted for the first time since 2007. Credit Spreads retreated as well in line with the risk-on mood in equity markets. However, we would like to take the opportunity to focus more on safety than on yield and increase high-graded credit. We increase our bond allocation to neutral as well as our duration to a neutral duration.

On the currency markets, the USO offers superior interest rates and the still soft global growth backdrop is supportive due to its role as a safe haven currency. Since the market is heavily short EUR/USO, there might be upside surprises in the coming weeks. Gold should trade sideways due to the stronger USO unless any turmoil occurs. Oil price increased lately but we do not see a rally from here. The softness in the global economy as well as the ability of US oil producers to ramp up production when prices spike are just a few reasons keeping oil in check.

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