'This is a period of unusual uncertainty' — $50 billion manager urges investors to play it safe

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It's a bad time to get aggressive in the stock market, QMA's Ed Keon suggests

QMA's chief investment strategist has significantly pulled back the firm's risk exposure during the past few weeks due to the escalating U.S.-China trade war.

Ed Keon, who runs more than $50 billion in multi-asset portfolios for QMA, says stocks are in a danger zone because it's becoming increasingly unclear whether a resolution on tariffs is coming.

"We're not bears. We just think this is a period of unusual uncertainty," he told CNBC's "Futures Now " on Tuesday. "It's a question of balancing risk and expected return."

He said a deal now would add just 3% to 4% to the market. That's the level stocks were trading around a few weeks ago when the White House had suggested an agreement was imminent.

"The risk is significantly higher if you go to a full-blown trade war with tit-for-tat retaliation," said Keon. He said that scenario could push the market back into correction territory.

So without a good way of handicapping which way trade negotiations will go, Keon opted to bring his asset allocation exposure just below the standard weighting of 60% stocks and 40% bonds to 59% stocks and 41% bonds.

"I try to hedge my risk in the bond portion of the portfolio by adding a lot of longer duration Treasurys in there — so, kind of a barbell approach," he said.

However, one big mitigating factor is baked into Keon's forecast that could turn him from cautious to securely bullish even without a trade deal: U.S. productivity continuing to grow above 2%.

"The best news to me would be productivity really does pick up in a sustained way," Keon said. "Then you're going to be much more aggressive in your equity allocation."