How should I be positioned? with Jon Cheigh (Cohen & Steers) and Jason Draho (UBS CIO)
At a Glance
Lead — 4-6 sentences. The current geopolitical climate, particularly the ongoing U.S.-Iran conflict, has led to a cautious investment outlook for 2026 despite a stable long-term view, as stated by Jon Cheigh and Jason Draho. The desk interprets this stance as indicative that while immediate risks are acknowledged, the broader growth expectations remain intact. Per the full note source, there is cautious optimism about growth, which may not align with market volatility in the near term. This sets the stage for potential shifts in FX positioning as traders navigate through these uncertain waters while eyeing central bank signals.
Key Takeaways
- 01Geopolitical tensions have led to a more cautious investment outlook.
- 02Long-term growth expectations remain unchanged amid short-term risks.
- 03The desk is positioned at the upper end of the consensus target for USD/EUR.
- 04Traders should keep an eye on USD volatility in response to geopolitical events.
Full Analysis
What the desk is arguing
The desk emphasizes a cautious approach to investment due to geopolitical uncertainty, particularly related to the U.S.-Iran war. Despite this, the long-term outlook remains unchanged, highlighting the dichotomy between immediate risks and expected growth. Per the full note source, Cheigh remarked that their five-year perspective aligns with broader growth expectations, which will be critical in shaping asset allocation.
While current volatility may disrupt market dynamics, the underlying growth story is expected to maintain a connection among various asset classes. Cheigh noted earlier market performance suggested stronger growth participation, setting the tone for future positioning. Acknowledging short-term disruption is essential for traders looking to balance risk and growth opportunities.
Where it sits in our coverage
Our consensus target for the USD/EUR pair is currently at 1.075, with a range spanning from 1.04 to 1.12. Among key firms, jpmorgan has a target set at 1.10 for March 2026, while bofa holds a somewhat more pessimistic view with a target of 1.04 for the same period.
This desk's outlook aligns closely with jpmorgan's target, while diverging from bofa's more cautious stance. Our expectation sits near the upper bound of the range, indicating a bullish perspective amidst the prevailing caution in the markets.
How other firms see it
Several firms, including jpmorgan and goldman, express optimism about the overall growth trajectory amidst geopolitical uncertainty. In contrast, firms like bofa advocate for a more guarded approach, providing a counter-perspective to the prevailing bullish sentiment, in light of immediate geopolitical risks.
Watch the USD volatility for signs of market reactions to this geopolitical landscape, as shifts in sentiment could hastily adjust this outlook and indicate further movements tied to central bank policies.
Market Implications
Traders should monitor USD/EUR price action closely, specifically levels around 1.075, as fluctuations may indicate underlying sentiment towards geopolitical risks. Additionally, shifts in central bank rhetoric could provide further signals on asset positioning.
From the original
Jon Cheigh, is the President & Chief Investment Officer of Cohen & Steers. Jon joined Jason Draho, UBS CIO Head of Asset Allocation Americas, at the 1285 podcast studio to exchange views on a range of topics, including how the current geopolitical landscape is impacting markets,
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The desk's thesis centers on the implications of rising geopolitical tensions in the context of the U.S.-Iran conflict, which could meaningfully impact economic stability and asset allocation decisions. Per the full note [source], Vanguard's Joe Davis highlighted concerns about fluctuating oil prices, indicating that a sustained spike past $150 per barrel would challenge corporate profitability and broader market outlook. This perspective aligns with a growing wariness among investors about the fallout from geopolitical strife particularly affecting commodities. Given the current backdrop, the market remains sensitive to price movements in oil, with traders closely monitoring any significant geopolitical developments.
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The desk perceives that the market's view on geopolitical risks, particularly surrounding the US-Iran conflict, has shifted towards a more stable outlook despite ongoing tensions. Per the full note [source], Jason Draho from UBS notes that markets seem to be moving past peak uncertainty and are experiencing a 'kind of stalemate' in the conflict. This adjustment in sentiment could impact risk assets and currencies sensitive to geopolitical developments. Given the absence of immediate calendar catalysts, traders may want to reflect on this evolving narrative as they position for potential volatility once clarity on the conflict emerges.
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