There’s something tautological about maintaining a “pro-risk asset allocation” until “risks” to that view materialize.

I mean, that’s kinda like saying “I’m maintaining my sunny day outlook until clouds start to show up.”

That said, I guess it’s reasonable to remain some semblance of optimistic on risk assets in general and equities specifically given that the growth outlook is still pretty solid globally and although we’re late cycle in the U.S. (and although President Dennison’s fiscal folly seems destined to pull forward the end of cycle by giving an adrenaline shot to an economy already operating at full employment), there’s still not much in the way of convincing evidence that things are going to go imminently off the rails (default rate forecasts are still benign, etc.). And then there’s the buybacks, expected to clock in at between $650 billion and $850 billion this year thanks in no small part to the tax plan – so that’s a literal “plunge protection” bid and it was evident last month.

With those obligatory caveats out of the way, there are obviously a set of readily identifiable risk factors on the horizon including, but certainly not limited to, the possibility that the synchronous upturn in global growth slows down (or at least becomes less synchronized), Trump accidentally stumbles everyone into a trade war (and I use “accidentally” there to reflect the distinct possibility that he’s just using the tariffs as a political gambit ahead of the midterms) and the possibility that rates rise rapidly.

For their part, Goldman thinks all three of those risks should be actively hedged.

On the growth slowdown risk, the bank writes that because literally everything is expensive (diversification desperation) “hedging growth risk will increasingly need to be done by directly hedging downside risk in the growth asset equities.”