Citigroup Inc. strategists are worried about a whole host of threats to equities, but still recommend investors buy the dip. They expect central banks to step in if risks mount.

A resurgence in Covid-19 cases, earnings downgrades, a chaotic U.S. election and stretched valuations may all drag on stocks in the coming months, but any market weakness is likely to provoke “aggressive” policy actions, strategists led by Robert Buckland wrote in a note. They forecast “mild gains” for global equities, predicting the MSCI ACWI Local Index will rise to 705 by mid-2021, or 7.5% from Friday’s close.

“Relying on central banks to provide support in the face of weak fundamentals make us uneasy, but it is what it is,” the strategists wrote on Oct. 2. “Our market targets suggest the best returns in emerging markets, and the weakest in Japan.”

Stocks tumbled in September after a summer rally that was especially strong in the U.S. This month has kicked off on a volatile note too, with U.S. President Donald Trump’s condition clouded by confusion after he tested positive for the coronavirus with just weeks to go before the election.

“Joe Biden seems the most likely winner, although nobody should count President Trump out, with his Covid-19 diagnosis the latest twist,” Citigroup’s strategists said.

Their global bear market checklist -- intended to advise what to do when faced with a dip by measuring how excessive the previous peak was -- still suggests buying this time around, although the U.S. looks “frothier” than Europe, they said.

Citigroup strategists remain overweight on U.S. stocks, as better earnings performance counters election risk and expensive valuations, and cut continental Europe to underweight. Sector-wise, they recommend a growth and defensive tilt, switching back to overweight on IT, while calling financials a “value trap” because of low interest rates.