After a stellar start to the year, the risk abounds global stock It’s worth it now, according to Mislav Matezka of JPMorgan Chase & Co.
“Neither the Federal Reserve nor the European Central Bank will move into hawkish territory going forward,” strategists led by Matejka wrote in a note on Monday. Surprise positively. “We believe that equities still offer the upside, and that the cycle is not over,” he said.
US and European stocks started the year on the wrong foot amid fears that more aggressive monetary tightening to contain inflation would lead to a sharp slowdown in economic growth. While a solid earnings season is helping to ease some concerns on a less forgiving macroeconomic backdrop, the equity market remains volatile, and strategists are divided about the outlook for the rest of the year.
“We think it is wrong to position for a recession, given the still extremely favorable financing conditions,” the JPMorgan team wrote, “a very strong labor market, strong corporate cash flow and low economic growth prospects in China.” .
In contrast, Morgan Stanley’s chief US equity strategist Michael Wilson reiterated today that “winter has arrived” for stocks.
“Earnings risk to a broader swath of the market than most investors expect as growing inventories meet demand,” strategists led by Wilson wrote in a note. He listed the earnings disappointments of pandemic market darlings including Netflix Inc, PayPal Holdings Inc. , and Meta Platforms Inc., the owner of Facebook. As an example of “paying for last year’s excess consumption”.
While Wilson recommends investors position defensively for further downside, the JPMorgan team says investors should follow the opposite strategy, focusing on traditional defensive sectors such as real estate, consumer staples and health care stocks. With low weight condition.
More stories like this are available at bloomberg.com
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