Research 18th March 2016 We see equities as oversold and pricing an exaggerated probability of global recession. However what if we are wrong? Video update: We are monitoring four pockets of vulnerability that we cheerfully describe as “the four horsemen”: Macro risk, financial risk, policy risk and political risk. Macro risk seems overstated to us, given the strength of the US labour market. However Financial risk could become problematic and bears close attention, especially if oil prices collapse to $25/bbl or lower. We suspect Mario Draghi will directly target Policy risk this month, with more aggressive easing measures. Finally Political risk, be it Brexit or President Trump, is overstated in our view. However if either were to become a 50-50 proposition markets would face a headwind. Unless we see material deterioration in one of the above risks, we believe medium term investors’ best course of action is to retain a neutral allocation to equities.Against that, we see poor value in bonds at current yields. We have deepened our underweight to this asset class in favour of low correlation strategies and cash. Watch the video: For further details, please log in to access this article via Research.