UBS On-Air: Market Moves Top of the Morning: CIO Strategy Snapshot - What if?
May 5, 2025
Jason Draho, the Head of Asset Allocation Americas at UBS Chief Investment Office, shares his insights from Zurich. He examines the recent surge in U.S. equities, attributing it to optimistic trade signals and strong corporate earnings. Despite a negative GDP figure, Draho discusses the resilient U.S. economy and its adaptability amid challenges like tariffs. He also outlines asset allocation strategies, emphasizing the importance of defensive investments such as gold to navigate expected market volatility.
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Drivers of Market Rally
- The U.S. equity market rise is driven by optimism on trade deals, solid economic data, and technical factors like short covering and volatility strategies.
- These combined elements have led to a strong bounce back despite uncertainties around tariffs.
Economy Shows Resilience Despite Tariffs
- Q1 GDP contracted due to tariff-related import front-loading but underlying consumer demand remains solid.
- Labor market shows resilience with steady hiring and low layoffs, suggesting the economy has buffered tariff impacts so far.
What If Economy Performs Better?
- There is an upside scenario where the economy could moderately absorb tariff impacts without falling into recession or stagflation.
- Dynamic price adjustments in today's economy act like surge pricing, helping supply and demand equilibrate faster than before.