Co-head of JPMorgan Chase & Co says Marko Kolanovic is confident that things can improve as the year progresses for U.S. Stocks, despite the S&P 500 index tumbling and bullish catalysts rare these days.
The ray of hope for US Stocks
As per Bloomberg News, Kolanovic, in an interview in his New York office last week, referred to stock prices, saying that they can come out of the present hole. According to him, there will be no recession this year with consumer activity increasing in summer, followed by the reopening and China’s fiscal and monetary policies.
Kolonovic’s strengthening opinion is a conviction that inflation has possibly peaked or is on the verge of doing so and will pave the way for price pullback leading to the Federal Reserve moderating the pace of monetary tightening. Fed Chairman Jerome Powell, in his recent statement, sounded hawkish, saying that the central bank will keep on hiking interest rates until there is clear evidence that inflation is retreating.
In April, U.S. citizens got a little respite from inflation as prices for necessities and discretionary spending continued to rise at some of the fastest rates. The consumer prices cooled off slightly from March, signaling a peak as expected by economists; last week’s report still painted a worrying picture as the month’s figures look to advance more than forecast.
On Wall Street, one of the most-watched strategists is Kolanovik, who was elevated to his current position in September along with Hussein Malik. In an Institutional Investors’ survey result published in January, JPMorgan was named the number one equity research team and top global research firm, apart from being awarded the number one research team in global fixed income.
According to a survey by Bank of America, fund Managers, strategists like Kate Moss of BlackRock Inc. and Kolanovic have suggested that recession concerns are overblown as investors pile on cash with worries of stagflation continues. Kolanovic has maintained his bullish stand even as stocks tumbled.
Kolanovic has observed in the past couple of weeks that the markets were overpricing the recession odds. In mid-March, he said that market corrections were over. In contrast, in February, he had been told that bond traders were bond overpricing the hawkish Federal Reserve in February.
Last Friday, after S&P 500 rallied 2.4% from May 12 to close at 3930.08, Kolanovic made those comments. On Wednesday, the index fell back to close at 3923.68. Kolanovic was not available for comments after that, though he said he was taking a long-term perspective with his observations.
Wednesday saw U.S. equities posting their worst decline since June 2020 as investors assessed the monetary policy tightening and the impact of inflation on earnings on the economy’s growth. The slide extends to an 18% decline in this year’s sell-off in the S&P 500 index.
Kolanovic does not recommend interest at specific levels saying that it is still not the right time to gauge S&P 500 with broad brush strategies as the index still has some cheap stocks and many expensive stocks. He sees opportunities in biotechnology, innovation, and international stocks.
