JPMorgan strategist Marko Kolanovic in a note issued Thursday, says lower for US equity prices.
His analyst team's outlook is for further weak data, weak earnings, Fed rates staying elevated.
- We think that recession is currently not priced in equity markets
- We do not agree with the argument that because a recession is consensus...the market and economic outcome have to be better
Kolanovic cites:
- the recent weakening of economic data (e.g. ISM, industrial production, regional surveys, retail sales, etc.)
- anticipated decline in earnings expectations
- this economic slowdown and weakening corporate fundamentals are happening in an environment where interest rates are very high (Fed Funds is at its highest level since 2007), rising, and likely to stay high as stated by the Fed on several occasions
- Whether the terminal rate is higher or lower by a few hikes at this point does not matter in our view, given the absolute level of rates and shock that was introduced to the system in the second half last year
Earlier this week from
(if you missed that post, do check it out)