How should I be positioned? with Dan Ivascyn (PIMCO) and Jason Draho (UBS CIO)

**Daniel Cassidy** (0:08)
Hi, everyone, Dan Cassidy here. Welcome back to How Should I Be Positioned on the UBS Market Moves Podcast channel. On this podcast, we do like to catch up with our industry colleagues to exchange views on the markets, the macro environment, as well as thinking when it comes to asset allocation. For this month's episode, glad to welcome back from Pimco, a group chief investment officer, Dan Ivascyn, and joining me here today as well from the UBS Chief Investment Office, Head of Asset Allocation for the Americas, Jason Draho. Jason, Dan, great to be back on the mic with you both. Thank you for dropping by today and spending some time with our listeners and our clients here on How Should I Be Positioned.

**Dan Ivascyn** (0:48)
Well, thanks, Dan. Great to be here. I look forward to an exciting discussion on market opportunities today.

**Jason Draho** (0:54)
Yeah, it's great to be here. Dan, thanks for joining us today. I know we did this about a year ago. Good to reassess where we are in the big picture.

**Dan Ivascyn** (1:01)
Great. Thanks, Jason.

**Daniel Cassidy** (1:02)
Quite a few topics we want to cover with our listening audience over the next 30 minutes or so. Perhaps, Dan, a good starting point, if we look at the big picture, the cyclical outlook for the US and global economy, mindful that oil prices are once again on the rise as we're recording here in mid-July. However, year-to-date, the US economy has been holding up fairly well. Curious as to how you see the macro environment playing out over, let's say, the next year.

**Dan Ivascyn** (1:32)
Sure. So, let me start with the fact that there's considerable uncertainty now.
The bulk of that uncertainty is associated with the situation in the Middle East. We have, of course, you know, outright conflict, you know, again there. And that's going to lead to a lot of uncertainty in terms of oil prices, commodity prices, you know, at a time where, you know, base case growth looks quite strong. And then again, on the positive side, all this real exciting, you know, technological innovation is driving tremendous capital investment, optimism within equity markets. And you still get pretty strong household balance sheets. So, you know, our base case view is quite positive for the global economy, quite positive, in particular for the US economy or other countries' economies that are benefiting from this tech innovation. A K-shaped dynamic that's, you know, typically discussed as it relates to certain co-workgroups here, even in terms of, you know, the global economy more broadly. But the bottom line is base case optimism with the realization that the situation in the Middle East could deteriorate and deteriorate quickly, higher energy prices from here or sustained energy prices could certainly begin to weigh on growth in the coming months. Not the base case, but a risk that I think investors need to think about, given how well some of the riskier segments of markets have done over the course of the last few years.

**Daniel Cassidy** (3:00)
And Jason, from hearing that, Dan made a great point how the geopolitical environment remains very uncertain with that in mind as we're sitting here roughly at the midpoint of 2026 What are your views on the US macroeconomic environment?

**Jason Draho** (3:13)
Well, it certainly is the case that geopolitics remains uncertain, the situation in the Middle East remains uncertain. It does feel like investors collectively are kind of shrugging it off. That's just not a key thing they're focused on, rightly or wrongly, that that's the reality. Well, we do look at the US economy, I think, like, Dan, we're constructive on the US economy. It's been buffeted with a variety of shocks over the past year and a half, from tariffs to higher oil prices, yet continues to chug along relatively well, clearly benefiting from the AI investment thesis, a lot of capex spending that's a wealth effect helping the consumers. This is a global story because the supply chains are very much global, especially with the US and Asia, so you think that's kind of benefiting across the board. So a relatively constructive view, I mean, a month ago, if we'd recorded this, or even maybe three days ago, we recorded this before we got the June inflation data. Certainly more concerns about the inflation story, that's eased off just a little bit, at least for one month, and we remain ultimately optimistic that that will prove as we go forward. So relatively constructive view from a macro perspective, and that is fueling a relatively constructive view for risk assets over the next year.
I do wonder myself if that's a little too complacent, or if conditions fell a little too maybe benign in that regards. That leads the question back to you, Dan. You touched on a couple of things, whether it is the situation in the Middle East, other factors. What is this one, maybe the biggest risk that you worry about out there? Because I'll go through a litany of things of inflation could get sticky.