Marko Kolanovic, chief global markets strategist at JPMorgan Chase & Co., said on Monday (20th) that bank failures, market turmoil and continued economic uncertainty have brought financial markets into a “Minsky Moment” as the central bank fights inflation. ) chances of increasing.
“Minsky moment” refers to the moment when the market experiences a period of prosperity, asset prices are inflated due to excessive speculation, and the price collapses overnight after the bubble, which symbolizes the turning point of the market from prosperity to recession. In this case, any event could force investors to sell assets in exchange for cash to pay off loans, leading to a crash.
Over the past week, investors have witnessed several US bank bailouts and financial market turmoil. They also saw the collapse of Credit Suisse, and the European Central Bank (ECB) raised interest rates by 2 yards (50 basis points) again. The next key event is the decision of the Federal Reserve (Fed), which will need to carefully weigh the banking crisis and high inflation.
Kolanovic said the Fed will face tough decisions and may already be on its way out, with a soft landing already looking unlikely, with “planes in disarray (due to a lack of confidence in the market) and engines about to die (meaning bank credit will dry up) ).”
“Even if the central bank succeeds in containing contagion, credit conditions are likely to tighten rapidly due to pressure from markets and regulators,” his team said.
JPMorgan Chase predicted that the Fed will raise interest rates by 1 yard this week and warned investors to remain cautious on risky assets. They reiterated that the first quarter of this year will be the high point of the year for US stocks, but investors can still take advantage of the market turmoil to grasp the potential rebound and sell.
In terms of asset allocation, Kolanovic recommends underweighting value stocks and maintaining a defensive layout.
He said: “The above forecast is based on the decline in bond yields, and the rebound in the purchasing managers’ index (PMI) may come to an end. The effects of previous monetary policy tightening will start to be fully felt, and some positive forces (such as deposit buffers during the epidemic, corporate pricing power, etc.) have started to fade.”
He also noted that cracks are starting to appear in the fundamentals of U.S. credit markets, whileEURThe region’s credit spreads will continue to widen unless policy intervention is substantial.
Historically, widening credit spreads have typically been periods of dollar strength, with safe currencies such as the U.S. dollar,swiss franc、JPYCurrencies that face high beta values (ie higher risk coefficients) will appreciate in value.
In terms of commodities, Kolanovic believes that the fundamentals of crude oil are largely unchanged, so the target price forecast is maintained at this stage. At the same time, financial pressure and uncertainties in the general environment will increase expectationsgoldandsilverhedging needs.
Despite last year’s sell-off in U.S. stocks, Kolanovic has been one of the most bullish analysts.S&P 500 IndexThe target price was 4800 points, which was finally confirmed to be 25% higher than the actual level. He has since lowered his forecasts, with a price target of 4,200 for this year, still about 6.3 percent above Monday’s close.
