This is a somewhat familiar refrain from JPMorgan analyst Marko Kolanovic. Its difficult to argue that he is wrong, but buyers of equities don't care.
Goldman Sachs, for example:
- this has been one of the most powerful short-cycle rallies we’ve ever seen
- the 19% rip in $SPX over the past three months registers in the 99th percentile of market history
- this type of move usually happens coming out of recessions
Anyway, back to Kolanovic:
- “A few bad inflation prints would likely upset both bond and equity markets, as risk markets could again start pricing a higher probability of a 'hard landing'”
- “This outcome is very underpriced in large cap equities and credit, which price close to zero probability of recession, as the strong rally since the end of October has pushed both credit and equity markets into expensive valuation territory.”
