JPMorgan: investors should reduce investments in stocks

One of the biggest «bulls» on Wall Street, Marko Kolanovich from JPMorgan, shared his pessimistic forecasts regarding investing in stocks. In particular, the bank's chief global market strategist has reduced his inflated position on the US equity market due to the growing risk of an error in the Fed's monetary policy.

According to Kolanovich, the increasing harsh rhetoric of central banks and the escalation of the conflict in Ukraine will inevitably delay the recovery of the economy and the market. At the same time, the Fed's too «hawkish» attitude may «break the wood» with its sharp increase in the interest rate.

In his analytical note, Kolanovich reduced the share of shares in the model portfolio by 3% and redistributed it, expanding government and corporate bonds. The economist also noted that amid the flight of investors from almost all asset classes this year, the amount of cash they have set aside has reached a 10-year high. And this indicates support not only for stocks, but also for bonds in the future. 

«We are reducing the overweight of stocks and the underweight of bonds, but generally keeping equities and commodities overweight,» Kolanovich also said. 

Now the driver of stock prices will be the direction of bond yields: and this means strong volatility in bond yields, which has already led to large fluctuations in the stock market. The investor also noted the likely reduction in profit for the third quarter against the background of the continuing decline in the business activity index and the inevitable recession in Europe.