The global economy, which has already been forecast to lose momentum recently, is now in a downturn phase. “Leading indicators, such as the purchasing managers’ indices for industry, whose weakness has so far been compensated by the stronger service sector, speak a clear language”, Gerlinger says. “A decline in private consumption, which has so far been mitigated by last-minute reserves, may soon be inevitable due to a loss of purchasing power and a sharp rise in financing costs.”

For companies, in turn, higher wage costs and the prospect of no longer being able to pass on price increases to end consumers if inflation rates continue to fall, and the resulting pressure on margins, are causing disillusionment. “Deteriorating credit conditions have already resulted in noticeable price declines or stagnation in several sectors, such as real estate and construction.” The mood is correspondingly bad. In addition, the currently still optimistic profit forecasts for companies cannot be maintained in this way. As a result, the first economies are already sliding into recession. “Germany is already in a technical recession despite the absence of an energy crisis, and other countries could follow”, says Gerlinger.

It is to be expected that the U.S. economy will prove more resilient to a recession than the economy in Europe in the second quarter as well, despite slowing growth momentum and multiple economic risks. “This should also be reflected in the Stock market”, says Gerlinger.

In the portfolios, the U.S. is therefore weighted more heavily than Europe on a country level. “Another part of the previous overweight of Europe is going to Japan, so the region is slightly overweight”, says Gerlinger. “In the U.S., we prefer large caps, as they should be more resilient in the event of a recession.” Accordingly, the small/mid cap exposure in the U.S. is being sold while the small cap exposure in Europe is being reduced, he says.

“At the style level, we continue to focus on Quality Growth and Value”, Gerlinger says. “Growth should continue to be supported by the AI hype in the tech sector, and in Value we ensure to be broadly diversified across sectors and more defensively positioned.” In view of the economic uncertainties, defensive sectors such as consumer staples or healthcare are also preferred and, in return, exposure to cyclical industrial stocks is being reduced.

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