JPMorgan has always been "full of flowers" in strategy, and the strategies of different analysts at the same time can be "nothing in common". But recently, Marko Kolanovic, JPMorgan's chief global market strategist, has seen a surprising coherence in how the market is: "urging" customers to buy on dips every week.
This week, despite widespread rumors in the market about JPMorgan Chase's "non-investable" rating of Chinese stocks, Marko Kolanovic said in two reports that now is the time to bottom out!
Marko Kolanovic, a previous quantitative strategist at JPMorgan Chase & Co., was promoted to chief global market strategist at the bank last year. The comment said that from the above statistical point of view, the strategy of sticking to the bottom will always succeed. In a report on Monday, Marko Kolanovic wrote, "Too many negative factors have been priced, and our position is in favor of increasing exposure because we do not believe we will witness a recession." ”
On Tuesday, Marko Kolanovic released another report saying: "A time of big risks but even bigger market opportunities." In the report, he recalls some of the risk warnings issued over the past year, namely "we warned of commodity supercycles and energy crises; we also warned of bubbles in areas such as innovation, renewables, and so on, and warned of geopolitical risks on the front page of the December Year Outlook as key risks for 2022." According to our assessment, these predictions are now almost fully realized. ”
Marko Kolanovic continues: "It seems to us that while the commodity supercycle will continue, the adjustment of the bubble industry may now be complete and geopolitical risks may begin to wane in a few weeks (and a full resolution may take several months). Markets are likely to anticipate these inflection points more quickly, and we think it's time to start adding risk in many areas where the downtrend so far this year has gone too far. ”
Although Marko Kolanovic has been calling for a bargain buy for some time now. But also in Tuesday's report, it said not all declines should be bought because "not all assets are cheap, and there are still expensive sectors in large-cap, defensive and low-volatility stocks that are sensitive to rising interest rates, a slowdown in the U.S. economy and factor rotation."
For investors who aggressively bottom out with each decline but still have "surpluses," Marko Kolanovic's advice is that "there are great opportunities in high-bay, suppressed market segments, including innovation, technology, biotechnology, emerging markets (such as China), and a wider range of stocks with smaller capital sizes and greater volatility." ”
Why buy high beta assets? //
Marko Kolanovic borrows the market, and these sectors are already pricing a severe global recession, which in Xiaomo's view will not become a reality (although it is impossible to rule out the possibility of a further slowdown in Europe and the United States). From the moment Marko Kolanovic reported that the valuations of some sectors were bubbles, the sectors fell by 60-80%, believing that this was the end of the adjustment, representing liquidity-driven overhaul in some areas. In fact, valuations in many of these segments are at all-time lows, lower than previous periods of recessions and much higher interest rates.
Why do you think a recession won't become a reality? //
Marko Kolanovic expects a sharp slowdown in economic growth, which will force the Fed to stop raising interest rates, cutting interest rates and introducing new quantitative easing policies that will benefit growth and deflationary stocks (that is, buy these stocks when growth and inflation slow and the price will rise). Curiously, he remains "bullish on commodities and commodity stocks, as a "companion" to recent commodity price increases due to recent changes in the tide, rather than the huge supply-demand imbalances that have formed over the past few years due to underinvestment in traditional sectors and the COVID-19 crisis." ”
Thus, paradoxical points arise: Marko Kolanovic argues that the deflationary reinflation catalysts that drive energy stocks higher remain, while he is also pushing for the opposite deal, buying high-bertrand assets in a world where inflation will continue to rise.
How long will the energy sector be stronger? In Marko Kolanovic's view, the energy crisis ends when the energy sector reaches the same relative weights as the previous commodity rally cycle. This will realign economic stimulus, reduce the impact of politically driven capital allocation, and reach the capital clearing points needed to mitigate the crisis. ”
Marko Kolanovic highlighted the impact of political events on energy: energy is also central and critical to geopolitical development. Historically, energy transactions between geopolitical forces during conflict have not been uncommon, but for those experiencing energy shortages, it has almost always come at a high geopolitical cost. Eastern Europe and the Middle East are two key geographies for such deals.
If Marko Kolanovic has been sticking to the strategy of buying on dips and bottoming out when it falls, and has reduced its holdings long enough, it may become the most insightful strategist in the next stock bull market cycle!
WIN (Wansheng Expert)
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