Caution in US equity positioning is warranted, economists at UBS report.

Equity backdrop remains challenging

“We see the risk-reward tradeoff for US equities as unattractive.”

“In a soft landing scenario, we think the S&P 500 could rise to 4,400 by year-end (7% upside), but if the economy slips into a recession, we believe the market could fall to 3,300 (20% downside).”

“Given this asymmetric skew, we have a least preferred rating on equities relative to bonds, especially in an environment where high-quality fixed income offers competitive returns.”