© Reuters. JPMorgan’s Kolanovic trims Overweight in stocks amid ‘elevated recession risks’
By Senad Karaahmetovic
JPMorgan’s chief global markets strategist told clients to use the ongoing rally in U.S. equities to reduce exposure as recession risks are still “elevated.”
While the soft October print increased the chances of a soft landing scenario, the strategist argues that it will be difficult to avoid recession with a Fed Funds rate close to 5%. The likelihood of a soft landing scenario would increase if Fed commits toward a “more meaningful pivot.”
“Our optimism is tempered by the still elevated recession risks, and risk that the October CPI data proves anomalous and/or fails to reduce central bankers’ eagerness to push policy into more restrictive territory,” he said in a client note.
While JPMorgan’s top equity strategist is still bullish on equities, especially in the long-term, he sees the risk-on rally “as an opportunity to moderately reduce our equity OW given the above risks.”
Along these lines, he added that the bank exited its long bias and trimmed its Overweight equities exposure.
“We also remain OW commodities given potential tailwinds from easing COVID restrictions in China, and as a hedge for geopolitical risks and inflation,” the strategist concluded.
Be the first to comment