Analysts at the largest bank in America are sending a new warning to investors as the new year approaches.
In a new note to clients, Marko Kolanovic, chief market strategist at JPMorgan, predicted declining growth and that a potential recession would stifle US stocks. Reports Hey ho! finance.
Kolanovic believes US markets are stuck in a tough spot, and says the Fed may not cut interest rates until investors feel more pain.
“This is a difficult situation… This means that we will first need to see some declines and volatility in the market during 2024 before monetary conditions ease and a more sustainable rally.”
JPMorgan analysts believe stocks may be about to significantly underperform cash, says Sina Smith, a Yahoo Finance anchor.
“We know that Kolanovic tends to be a bit bearish with his forecasts, and it’s limited upside he sees for stocks in the year ahead…
In his expected environment of low growth or recession, he says this group could underperform cash by about 20%.
He clearly sees a lot of downside risks ahead for the markets.
Smith says all eyes will once again be on the Fed, with investors likely to be overly optimistic about if and when interest rate cuts are possible.
“A lot of this forecast is based on what the Fed’s rate cut timeline looks like and exactly when we could see a rate cut. The market is very optimistic, and perhaps too aggressive in pricing in the fact that they are seeing one in the first quarter of Approximately March of next year.
So, when you take that into account and compare it to some of the more conservative projections, there’s certainly a lot of variation in what that timeline is going to be. Not only that, but once the Fed starts cutting, it is also clear that how quickly it will continue to cut is up for debate.
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