Marco Kolanovic, the strategist at JPMorgan Chase & Co, suggests that investors shift their money to commodities from Equity stocks. Kolanovic, one of the staunchest bulls on Wall Street, advocates t trimming stock holdings equities after they outpaced other assets with fears of recession receding.
The S&P 500 advanced 13% from its June 2022 lows, and Friday’s report on US Payrolls indicated a string of stronger than estimated economic data. In comparison, the Bloomberg index that tracks commodities ranging from copper to crude oil has declined over the same period.
The strategist wrote in a note that investors have the opportunity to shuffle their holdings and balance the risk-on tilt. The stand does not mean that equity stocks will fall, as currently, they are on an upswing. This year the equity stocks are expected to rise, backed by strong corporate earnings.
However, with weakening commodities lately, there is an opportunity to take advantage, according to strategists. They wrote that the equity and credit markets are pricing the recession risks with better economic data. It is a good time to shift risk allocation to commodities lagging behind other asset classes.
The overall recommendation on risky assets remains overweight, while the fixed income and cash are underweight.
The institutional investor survey last year voted Kolanovicas the No 1 equity-linked strategist, who has shifted his recommendation. He is now advising clients to cut back on stocks after telling them to buy the dip earlier during the equity sell-off.
Kalanovic’s team advised investors to withdraw from stocks in April after the equity market staged a comeback. The S&P 500 index fell in the next six weeks. In May, Kolanovic said that the Stock market negativity was so high that a rebound was not far off. The bottom, however, formed only in mid-June.
