JPMorgan’s Kolanovic Says Buy The Dip Despite His Boss Predicting More Than 4 Rate Hikes This Year
There are three certainties in life: death, taxes and a weekly dose of stock market pep talk from JPMorgan’s head of global strategy, Marko Kolanovic. Today is an example of the third, because in the latest weekly JPMorgan View note, the Croat writes that with the Nasdaq officially sliding into correction early on Monday and stocks broadly sold, it is time to “buy the dip” as “markets can handle higher yields” (none of which is to be confused with another JPMorgan strategist, Mislav Matejka, saying exactly one week ago that it’s time to stay bullish as “positive catalysts are not exhausted”, which in turn followed the third JPM Croatian strategist, Dubravko Lakos-Bujas saying precisely the same in late December, urging traders to buy high-beta stocks (oops) and so on).
Extending up on a theme he first broached in late 2021 when he said that the recent oil spike is no reason for concern as the economy can comfortably handle a triple digit oil price without it eating away at growth, Kolanovic writes that “the pullback in risk assets in reaction to the Fed minutes is arguably overdone” because he predicts that “policy tightening is likely to be gradual and at a pace that risk assets should be able to handle, and is occurring in an environment of strong cyclical recovery.”
Here, one could easily argue that this is a rather naive view, especially if the growing consensus of 4 rate hikes in 2022 coupled with some $300 billion in balance sheet runoff becomes reality, a consensus which has materialized in near market certainty of a March rate hike.