While trade policy and troubles in the manufacturing economy have raised red flags, it’s not at all clear that the U.S. is heading into a recession, according to Liz Ann Sonders, chief investment strategist at Charles Schwab.

Sonders told advisors at the 2019 Schwab IMPACT conference in San Diego on Monday that a more uncertain, volatile year ahead could present opportunities to buy stocks.

The market had a remarkable 2017, said Sonders, and it was no surprise that 2018 and parts of 2019 experienced volatility as a series of “microbubbles” popped.

“What we ended up getting last year was a series of rolling bear markets,” she said. “We saw it across asset classes. This has been a better year, but not without uncertainty.”

While year-to-date performance looks good on paper, Sonders notes that it has been boosted by the fact that U.S. stock prices had declined to near-bear market territory in the fourth quarter of 2018.

Sonders said that uncertainty was likely to persist as a host of macroeconomic questions were answered, while others were left unresolved, including the bifurcation of the service and manufacturing economies, slowing global growth and trade policy,

“Every cycle has a beginning and an end,” she said, noting that when the Federal Open Market Committee raises interest rates, it typically does so into a recession.

But some of the indicators of impending recession have eased in recent months, said Sonders. Credit spreads widened, then eased. Hints of potential weakness in the labor market have dissipated.

In fact, most of the recession argument comes not from “hard data,” quantitative indicators, but more of the “soft data,” confidence and survey-based indicators. Consumer, business and investor confidence is being impacted by trade, said Sonders.

While the “hard data” is improving, confidence is not – and “we may be seeing a dent in confidence become somewhat self-fulfilling,” said Sonders.

While the U.S. manufacturing economy has weakened, that weakness has not yet spilled over into the consumer economy. Sonders said that she is watching employment numbers as a leading indicator of weakness in the consumer economy, and with the labor market strong around the world, consumers are still able to support a healthy – but slow-growing – economy.

Sonders is also on watch for a decline in earnings – analyst expectations are negative for third and fourth quarter earnings.

With the mixed bags of indicators and expectations, Sonders and Schwab are neutral on U.S. large cap stocks. However, volatility may give advisors and investors opportunities to “take advantage of these swings” and open or expand positions in stocks.

But for most investors, it’s best to continue rebalancing portfolios periodically to take advantage of the different level of volatility between asset classes.

“Rebalance more frequently,” she said. “This kind of environment gives you an opportunity to rebalance… rebalancing means it’s your portfolio that’s telling you that it’s time to do something.”