Source: Wall Street News
Marko Kolanovic, chief global market strategist and co-head of global research at JPMorgan, believes the U.S. and global economies will avoid a recession, and he expects the S&P 500 to rebound to around 4,800 by year-end.
Marko Kolanovic, chief global market strategist and co-head of global research at JPMorgan, sees a surge in oil prices, but also gains in U.S. stocks.
Kolanovic said the U.S. economy is strong enough to handle oil prices as high as $150 a barrel. He said in a media interview: “Oil prices may surge further, especially considering the situation in Europe, we should not be surprised. But it may be a short-lived peak, and eventually, oil prices will normalize.”
WTI crude traded near a three-month high, closing at $119.41 a barrel on Tuesday, up 0.77%. Brent crude settled at $120.57.
Kolanovic said:
We think consumers can afford $130 or $135 because we experienced those prices from 2010 to 2014. After adjusting for inflation, this is basically the same level. So we think consumers can accept that.
But at a financial conference last week, JPMorgan Chairman and Chief Executive Jamie Dimon told investors he was bracing for an economic “hurricane” that could be A “mini-storm or super hurricane Sandy.”
Kolanovic believes it is crucial to be prepared for all possibilities. Kolanovic’s base view is that the U.S. and global economies will avoid recession, and he expects the S&P 500 to rebound to around 4,800 by the end of the year.
Previously, Kolanovic was beaten in the face when he shouted for the rise many times, but he was “more courageous”, the more the index fell, the louder he shouted. In the bearish slogans that rumbled on Wall Street during the week of April 20, Kolanovi said the market was too pessimistic and believed that U.S. stocks could rebound in the near future.
Right now, however, the S&P 500 is 16% below its all-time high.
Also, he doesn’t think investors will be holding on to cash all the time. “We don’t think investors will be holding on to cash for the next 12 months,” Kolanovic said. “If we continue to see the consumer (especially the services sector) doing well, then we think investors will gradually return to equities.”
Kolanovic’s top pick remains the energy sector, a sector he has been bullish on since 2019. Kolanovic pointed out: “In fact, despite the rise in share prices, the valuation of the energy sector has fallen. Because earnings are growing faster, energy is actually trading at a lower price-to-earnings ratio now than it was a year ago.”
In addition, he is bullish on small-cap and high-beta technology stocks that have been hit hard this year.
Editor/Corrine
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