Source: Zhitong Finance
Despite the poor performance of risk assets such as U.S. stocks this year, Marko Kolanovic, chief strategist of JPMorgan Global Markets, has remained firmly bullish on risk assets.
Wall Street stubborn bull Marko Kolanovic, chief global markets strategist at JPMorgan Chase & Co., is convinced that despite the S&P 500’s slump and seemingly few bullish catalysts of late, things could turn around for U.S. stocks over time.
In an interview, Marko Kolanovic said the stock market “can climb out of the bottom” and said “there will be no recession this year, and there will be an increase in summer consumer activity in the context of reopening.” He is convinced that U.S. inflation may have peaked (or is about to do so), paving the way for a pullback in prices that will eventually allow the Fed to slow the pace of monetary tightening.
On Tuesday, Fed Chairman Jerome Powell delivered his most hawkish speech yet. He said the Fed will keep raising rates until there is “clear and convincing” evidence that inflation is falling back. “What we need to see is inflation coming down in a clear and convincing way, and we’ll keep pushing until we see that. If this needs to break through what is generally understood to be ‘neutral’, we won’t do anything about it. Do so hesitantly.”
Powell has repeatedly stressed the need to rein in the hottest inflation in decades, saying price stability is the cornerstone of a stable economy; pain, including a small rise in unemployment, is a price worth paying to get there.
U.S. inflation saw little relief in April as prices for a range of staples and discretionary goods continued to climb at their fastest pace ever. The U.S. CPI in April increased by 8.3% year-on-year. Although it was lower than the previous value of 8.5%, some investors believed that inflation had peaked, but it was still higher than the expected 8.1%; 0.2%.
Marko Kolanovic said: “Most of the bad things have happened this year, including a very drastic Fed shift, a very aggressive move towards tightening monetary policy, geopolitical tensions in Europe, and the Russia-Ukraine conflict pushing up global inflation.”
Marko Kolanovic is the No. 1 equity strategist in the 2021 Institutional Investor Survey. Although risk assets such as U.S. stocks have underperformed this year, he has been firmly bullish on risk assets. It is worth mentioning that after entering 2022, except for the week of April 11, Marko Kolanovic has been calling on investors to buy U.S. stocks at the bottom. In the past few weeks, he said markets were overestimating the possibility of a recession; in mid-March, he said the market correction was nearing completion; and in February, he said bond traders overestimated the Fed’s hawkish stance.
In addition to Marko Kolanovic, BlackRock strategist Kate Moore said fears of an impending recession were overblown. But according to a recent Bank of America survey of fund managers, investors are piling up on cash as fears of stagflation grow. Bank of America analysts said the latest survey results reveal that the downward trend in U.S. stocks may continue.
On Wednesday, the S&P 500 closed down 4.04%, its biggest one-day drop since June 2020, as investors worried about the erosion of corporate profits from inflation and the possibility of a slowdown in economic growth as a result of tightening monetary policy by the Federal Reserve. The S&P 500’s losses have extended to about 18% so far this year.
Marko Kolanovic also said that in terms of specific levels of benchmark indices high enough to attract investor interest, now is not the time for a blanket strategy, as indexes such as the S&P 500 have both expensive and cheap stocks. He sees huge opportunities in innovation, biotech and international growth stocks, but recommends avoiding defensive stocks such as dividend payers and staples on the grounds that they are expensive.
Editor/Corrine
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