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Stocks will fall 20-30% from a 2024 peak - JPMorgan

Published 02/08/2024, 07:06 AM
Updated 02/08/2024, 08:47 AM
© Reuters.  Stocks will fall 20-30% from a 2024 peak - JPMorgan

JPMorgan equity strategists caution that the upside for global stock markets is now largely capped.

“We stick to our view that upside from here appears limited and that equities will fall 20-30% from a 2024 peak,” strategists wrote in a note.

Despite this bleak outlook, the strategists maintain a favorable view towards small caps, suggesting they present a more attractive investment opportunity compared to their larger counterparts in developed markets outside of Japan.

“They could underperform by another 200-300 bps tops, but stand to deliver 34-59% of alpha over the coming 2-3 years,” analysts added.

The strategists highlight several concerning discrepancies in the market, signaling potential volatility and risk. These include an inverted yield curve that typically forecasts economic recession, yet earnings estimates are anticipating an acceleration in growth.

There's also a record divergence between the performance of small and large caps, indicating a risk-off environment, even as large caps reach new highs. Additionally, analysts point out the absence of a risk premium in U.S. equities, with earnings yields falling below the Federal Reserve's fund rates.

Another red flag is the historically low yield spreads, especially given the significant interest rate hikes by central banks – the most aggressive in over fifty years – at a time when corporate balance sheets are notably weaker than before the 2008 financial crisis.

"In our 25-year career, we have seen equity markets behave irrationally before and these were always times to act with caution as 2 + 2 ALWAYS ends up being 4," strategists concluded.

Latest comments

Yeah they fall for sure
well given a large enough time frame there is 99.99% chance of 30% drop from 2024 peak. lol.
JP speakeasy for bullish moves already made.
Dont ever trust these propagandists banks and hedge funds, they hv shorted their positions earlier. Thats why publish these reports.
Only If Trump wins the stockmarket will crash and JP morgans projections will come true.
Trump is for himself.
 Up as he gave major tax cuts to companies while increasing spending - thats why the US is $34 TRILLION in debt and rising (with about $2 Trillion a year now being added to the debt pile)
Did you ever consider the reason the market is going higher is because it’s discounting a Trump victory? Trump is certainly more favorable to corporate America than the crash test dummy currently occupying the WH. Buy the rumor, sell the fact …
Talking down stocks. Typical investment banks!
Did they say how this is The Peak or The Peak is undefined still? Black Swan could be each weekend for the next few months, that part we are aware of, but they don't write about Black Swan.
I just what bankers say
bla bla bla
Interesting
Is this the hurricane they predicted finally arriving or just more fud
JP Morgan analysts are known perma bears and historically are nearly always wrong. Do the opposite of their recommendations and you'll make above average returns.
even Tom Lee, a true perma bull, stated he sees a correction of at least 7%
That comment was sometime ago.
Jamie Dimon is so fake
they were wrong and so was Vanguard. Last 2 years Vanguard predicted 55% chance of recession and no recessions.
Yawn. Unnamed analysts and a "reporter" who brings no examination of their track record to his stenography.
Stock market "COULD" drop by 20-30%....  "COULD" also go up by 20-30% before turning lower by 20-30%..
from a. you're a joke
"JPMorgan equity strategists caution that the upside for global stock markets is now largely capped. “We stick to our view that upside from here appears limited and that equities will fall 20-30% from a 2024 peak,” strategists wrote in a note."
Remember they lied last year saying that three would be 5-6 rate cuts just to artificially inflate all these companies P/E's by hundreds of percent. NVDA has $18 billion profit and gained over $1 trillion market cap over the same time period. Now the truth comes out "JPMorgan equity strategists caution that the upside for global stock markets is now largely capped. “We stick to our view that upside from here appears limited and that equities will fall 20-30% from a 2024 peak,” strategists wrote in a note."
Sooner or later, it's inevitable.
most of the time, whatever the forecast, is blown away by buying opportunities.
Always ask yourself: What do they have to gain by saying this?
Still inverted yield curve cannot be ignored. Risk assets usually fall at the end of tightening cycles, nothing is set in stone of course
stock adjustment to profit and inflation this year
What a joke
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