J.P. Morgan's Kolanovic Believes Near-Term Recession Will Ultimately be Avoided By Investing.com

J.P. Morgan's Kolanovic Believes Near-Term Recession Will Ultimately be Avoided

Stock Markets Jun 13, 2022 05:21PM ET

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J.P. Morgan's Kolanovic Believes Near-Term Recession Will Ultimately be Avoided

By Davit Kirakosyan

JPMorgan strategist Marko Kolanovic discussed the impact of Friday’s strong CPI print that led to a surge in yields, as well as the sell-off in crypto over the weekend, which are weighing on investor sentiment and driving the market lower.

The analysts believe the move lower in markets prices in more than enough recession risk, and a near-term recession will ultimately be avoided given consumer strength, COVID reopening/recovery, and policy stimulus in China. Moreover, the analysts see strong support from low investor positioning, depressed sentiment, and corporate buyback inflows.

While the analysts anticipate markets to recover year-to-date losses in H2/22 to finish roughly flat, they don’t advocate indiscriminate buying of broad risk markets. The analyst stated they keep a large overweight in commodities given their supercycle thesis and for the purpose of hedging inflation and geopolitical risks while remaining underweight credit vs. equities given the greater vulnerability of the former to higher interest rates and QT.

The brokerage favors segments, such as innovation, China, small caps, and biotech within Equities, which sold off strongly and are trading near record low relative valuations, while underweighting crowded/expensive segments such as defensives.

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Comments (1)

John Avenetti Jun 13, 2022 5:43PM ET

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Only.liars or crazy people think that. The economy is a sham, a house of cards. Could Nato and Ukraine stop shelling Ukraine? Sure that would help. Could Chyna stop shutting down over a sneeze and stop destroying our supply chain and economy? Sure. Could the Fed in their infinite wisdom decide to stop raising rates the fastest they've ever raised after leaving rates at basically zero for almost a decade? Anyone who thinks this organic and not a plan is completely in the dark. And that makes the majority of people. The Federal Reserve is a private banking cartel of the wealthiest people in the world who are left off the richest people list. come on

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