A note on Monday from JPMorgan strategist Marko Kolanovic
- “We believe that equities will soon revert back to an unattractive risk-reward"
He cited:
- Fed set to remain higher for longer
- valuations are rich
- earnings expectations remain too optimistic
- pricing power is waning
- profit margins are at risk
- slowdown in topline growth is set to continue
On the current market "bad news is good news" narrative:
- "zone may be quite narrow, as it is difficult to distinguish between a healthy slowdown and the initial stages of recession without the benefit of hindsight,”
- “With the market now pricing in a full ease by mid-2024, valuations rich and the increase in supply, we turn tactically short on 7Y USTs, after taking profit on longs in 5Y USTs, and look for a steeper curve at the long end.”
